) reported its third quarter 2012 earnings of 22 cents per
share, which edged past the Zacks Consensus Estimate by a
cent. The results compared favorably with the prior-quarter
earnings of 21 cents and prior-year quarter earnings of 19
Decent top-line growth along with reduction in operating
expenses contributed to the better-than-expected quarterly
results. Further, continuous improvement in credit quality,
growth in loans and deposit balances as well as steady
capital ratios were the other highlights for the
Net income came in at $30.7 million, improving from
$29.1 million in the prior quarter and $23.8 million in the
Performance in Detail
FNB's total revenue inched up 0.4% sequentially and grew
11.1% on a year-over-year basis to $142.6 million.
Moreover, revenue surpassed the Zacks Consensus Estimate of
$127.0 million by 12.3%.
Taxable net interest income marginally fell 1.0%
sequentially to $95.4 million. The decline was mainly
attributable lower interest income. However, net interest
margin dipped 10 basis points from the prior quarter to
Non-interest income stood at $34.8 million, rising 6.2%
from $32.8 million in the prior quarter. The increase was
primarily due to higher service charges, insurance
commissions and fees, securities commissions and fees, gain
on sale of loans and other income.
Non-interest expense was $77.1 million, down 1.8% from
$78.5 million in the previous quarter. The fall was mainly
a result of lower occupancy and equipment costs,
amortization of intangibles along with a decline in other
real estate owned (OREO) costs and other expenses, partly
offset by higher salary and employee benefits.
The efficiency ratio fell to 56.8% from 57.7% recorded
in the prior quarter. The fall indicates improvement in
Asset quality witnessed improvements in the quarter.
Nonperforming assets dipped 9.9% sequentially and 26.8% on
a year-over-year basis to $121.3 million. Allowance for
loan losses marginally increased 1.1% sequentially, but
declined 5.6% year-over-year to $102.7 million.
Further, ratio of annualized net charge offs to total
average loans came in at 0.37% in the reported quarter,
down from 0.38% in the previous quarter and 0.53% in the
Loans and Deposits
FNB's total loans in the reported quarter were nearly
$8.0 billion, rising 1.5% from previous quarter and 17.5%
from the prior-year quarter. The improvement was mainly
driven by increases in commercial loans and leases, direct
and indirect installments and consumer LOC loans.
Total deposits for the quarter inched up 1.6%
sequentially and surged 23.9% on a year-over-year basis to
$9.1 billion. The increases were primarily due to the
higher levels of noninterest-bearing demand deposits.
Profitability and Capital Ratios
FNB's profitability and capital ratios witnessed mixed
movements in the quarter. As of September 30, 2012, the
estimated total risk-based capital ratio was 12.3%,
compared with 12.0% as of June 30, 2012 and, the estimated
tier 1 risk-based capital ratio was 10.7% compared with
10.5% as of June 30, 2012. The leverage ratio was 8.24%
compared with 8.07% in the prior quarter and 9.01% in the
The return on average assets was 1.03% in the reported
quarter compared with 1.00% as of June 30, 2012 and 0.95%
as of September 30, 2011. As of September 30, 2012, return
on average equity came in at 8.83%, up from 8.57% as of
June 30, 2012 and 7.79% as of September 30, 2011. Book
value per common share was recorded at $9.98, up from $9.82
in the prior quarter and $9.55 in the year-ago
Concurrent with the earnings release, FNB has announced
the agreement to acquire
Annapolis Bancorp Inc
) - the parent company of BankAnnapolis. This all-stock
deal is valued at approximately $51 million. The deal,
which is expected to close in April 2013, will provide FNB
$437 million in total assets, including $343 million in
total deposits and $297 million in loans.
We are impressed with FNB's modest organic growth as
well as constantly improving credit quality and strong
balance sheet. However, rising expenses keep us on the
sidelines. Moreover, we are concerned about the impacts of
the prevailing low interest rate environment, sluggish
economic growth and stringent regulatory landscape on the
company's financials in the subsequent quarters.
FNB currently retains a Zacks #2 Rank, which translates
into a short-term Buy rating.
(ANNB): ETF Research Reports
FNB CORP (FNB): Free Stock Analysis Report
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