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F.N.B. (FNB) Up 11.5% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for F.N.B. (FNB). Shares have added about 11.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is F.N.B. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

F.N.B. Corp Q2 Earnings & Revenue Beat, Costs Rise Y/Y

F.N.B. Corp’s second-quarter 2022 adjusted earnings per share of 31 cents surpassed the Zacks Consensus Estimate by a penny. The bottom line reflects no change from the prior-year quarter.

Results were primarily aided by a rise in net interest income (NII) and fee income. Moreover, higher interest rates supported growth in margins. However, higher expenses and provisions were the undermining factors.
 
After considering significant items, net income available to common stockholders was $107.1 million or 30 cents per share compared with $99.4 million or 31 cents per share in the year-ago quarter.

Revenues Improve, Expenses Rise

Net revenues were $335.9 million, up 9.2% year over year. The top line beat the Zacks Consensus Estimate of $332.8 million.

NII was $253.7 million, up 11.3% year over year. Growth in average earning assets, along with the repricing impact of the higher interest rate environment on earning asset yields, partially offset by the higher cost of interest-bearing deposit accounts and reduced PPP contributions, resulted in the upswing.

The net interest margin (FTE basis) (non-GAAP) expanded 6 basis points (bps) to 2.76%.

Non-interest income was $82.2 million, up 3% from the prior-year quarter. The rise was primarily driven by an increase in service charges and capital markets income, partly offset by a fall in mortgage banking income.

Non-interest expenses were up 5.6% year over year to $192.8 million.

As of Jun 30, 2022, the common equity Tier 1 (CET1) ratio was 9.7% compared with 9.9% as of Jun 30, 2021.

Credit Quality: A Mixed Bag

In the reported quarter, the company recorded net recoveries to total average loans of 0.01% against net charge-offs to average loans of 0.06% in the prior-year quarter. The ratio of non-performing assets and 90-days past due loans to total loans and other real estate owned declined 18 bps year over year to 0.39%.

However, F.N.B. Corp’s provision for credit losses was $6.4 million against a provision benefit of $1.1 million recorded in the prior-year quarter.

Share Repurchase Update

In the reported quarter, the company repurchased 1.1 million shares for $13 million.

Outlook

Management expects an additional 150 bps of interest rate hike this year, including 75 bps in July. Also, the guidance does not include the UB Bancorp deal impact.

Third-Quarter 2022

Management expects NII to be in the range of $278-$284 million. Non-interest income is anticipated to be approximately $70 million, given the diversified nature of non-interest income revenue streams. Adjusted non-interest expenses are expected to be $190-$195 million.

Full-Year 2022

The company expects spot loans to grow in the low to the mid-teen range. Excluding the Howard Bancorp deal, spot loans are anticipated to rise in the high-single-digit rate. Total spot deposits (including deposit run-off from the paycheck protection program or PPP and stimulus) are expected to record mid to high single-digit growth.

NII is projected to be in the range of $1.05-$1.09 billion, up from the prior target of between $1 billion and $1.04 billion.

Non-interest income is expected to be in the range of $310-$320 million. This is lower than the prior guidance of $315-$330 million on fall in expected mortgage banking income and market-related fees.

Non-interest expenses (operating basis) are expected to be $760-$780 million.

Provision expenses are likely to be $20-$40 million, excluding $19.1 million Howard-related CECL provision recorded in the first quarter of 2022.

Effective tax rate is expected to be 18-19%.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

At this time, F.N.B. has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions has been net zero. It comes with little surprise F.N.B. has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

F.N.B. is part of the Zacks Banks - Southeast industry. Over the past month, Hancock Whitney (HWC), a stock from the same industry, has gained 9.9%. The company reported its results for the quarter ended June 2022 more than a month ago.

Hancock Whitney reported revenues of $331.39 million in the last reported quarter, representing a year-over-year change of +0.8%. EPS of $1.38 for the same period compares with $1.37 a year ago.

For the current quarter, Hancock Whitney is expected to post earnings of $1.53 per share, indicating a change of +5.5% from the year-ago quarter. The Zacks Consensus Estimate has changed +6.4% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Hancock Whitney. Also, the stock has a VGM Score of C.


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F.N.B. Corporation (FNB): Free Stock Analysis Report
 
Hancock Whitney Corporation (HWC): Free Stock Analysis Report
 
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