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F.N.B. Corp (FNB) Stock Up on Q2 Earnings Beat, Costs Rise Y/Y

Shares of F.N.B. Corporation FNB gained 1.9% in after-market trading following the release of its second-quarter 2022 results. The company’s 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.

Our Take

In June, F.N.B. Corp signed an agreement to acquire Greenville-based UB Bancorp. The all-stock deal, valued at $19.56 per share, or nearly $117 million, is expected to close in the latter part of 2022.

The company expects the deal to be almost 2% accretive to earnings, with fully phased-in cost savings on a GAAP basis. Cost savings worth approximately 45% of UB Bancorp's non-interest expenses are anticipated, with 75% to be achieved in the first year of the deal closure and 100% thereafter.

Thus, F.N.B. Corp’s efforts to improve fee income and opportunistic acquisitions are expected to keep aiding the top line. Its solid liquidity position bodes well for the future. The company's capital deployment activities seem impressive, through which it will keep enhancing shareholder value.

F.N.B. Corporation Price, Consensus and EPS Surprise


F.N.B. Corporation price-consensus-eps-surprise-chart | F.N.B. Corporation Quote

Currently, F.N.B. Corp carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Large Banks

Higher reserve build and a decline in investment banking fees affected JPMorgan’s JPM second-quarter 2022 earnings of $2.76 per share, which missed the Zacks Consensus Estimate of $2.85. The reported quarter’s results included a net credit reserve build of $428 million.

Higher interest rates and a solid rise in loan balances aided JPM’s net interest income. Operating expenses recorded a year-over-year rise.

First Republic Bank’s FRC second-quarter 2022 earnings per share of $2.16 surpassed the Zacks Consensus Estimate of $2.05. Additionally, the bottom line improved 10.8% from the year-ago quarter.

FRC’s results were supported by an increase in net interest income and non-interest income. The company’s capital position was strong in the quarter. Yet, higher expenses and elevated provision for credit losses were the offsetting factors.

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