) fourth quarter 2012 earnings of 23 cents per share were ahead
of the Zacks Consensus Estimate by a penny. This also compares
favorably with the prior-year quarter earnings of 19 cents.
Better-than-expected quarterly results were driven by top-line
growth, partly offset by higher operating expenses. Further,
continuous improvement in credit quality, growth in loans and
deposit balances as well as steady capital ratios were the other
highlights for the quarter.
Considering after-tax charges related to litigation settlement
and branch consolidation, net income in the fourth quarter stood
at $29.0 million or 21 cents per share, up from $23.7 million or
19 cents per share in the year-ago quarter. In 2012, net income,
after considering certain non-recurring items, was $110.4 million
or 79 cents per share compared with $87.0 million or 70 cents per
share in 2011.
Performance in Detail
FNB's total revenue in the reported quarter grew 7.9% on a
year-over-year basis to $139.7 million, surpassing the Zacks
Consensus Estimate of $129.0 million.
In 2012, total revenue jumped 10.2% on a year-over-year basis to
$563.4 million. Also, it surpassed the Zacks Consensus Estimate
of $505.0 million.
Taxable-equivalent net interest income marginally surged 16.7%
year over year to $95.7 million. The rise was mainly attributable
higher interest income and a decline in interest expense.
However, net interest margin dipped 13 basis points from the
prior-year quarter to 3.66% reflecting the present low interest
Non-interest income declined 1.4% from the prior-year quarter to
$32.1 million. The decrease was primarily due to significantly
low gain on sale of securities, partially offset by higher
service charges, insurance commissions and fees, securities
commissions and fees as well as gain on sale of loans.
Non-interest expense was $76.6 million, up 7.0% from $71.6
million in the previous-year quarter. The jump was mainly a
result of higher salary and employee benefits costs, occupancy
and equipment costs as well as amortization of intangibles. These
were partially offset by drastic decline in other real estate
owned (OREO) costs.
The efficiency ratio fell to 55.45% from 59.27% recorded in the
prior-year quarter. The fall indicates improvement in
Asset quality witnessed a mixed bag during the quarter with
nonperforming assets dipping 1.9% sequentially and 20.7% on a
year-over-year basis to $118.9 million.
Annualized net charge offs as a percentage of total average loans
came in at 0.38% in the reported quarter, up from 0.37% in the
previous quarter but down from 0.95% in the year-ago quarter.
However, allowance for loan losses increased 1.6% sequentially
and 3.7% year-over-year to $104.4 million. Likewise, provision
for credit losses grew 10.0% from the prior quarter and 11.9%
from the prior-year quarter to $9.3 million.
Loans and Deposits
FNB's total loans as of Dec 31, 2012 were $8.1 billion, rising
18.7% from previous year. The improvement was driven by increases
in all the loan portfolios.
As of Dec 31, 2012, total deposits advanced 24.6% year over year
to $9.1 billion. The increases were primarily due to the higher
levels of non-interest-bearing demand deposits.
FNB's capital ratios witnessed improvement in 2012. As of Dec 31,
2012, the estimated total risk-based capital ratio was 12.2%, at
par with the Sep 30, 2012 level.
Further, the estimated tier 1 risk-based capital ratio was 10.7%,
up from 10.6% as of Sep 30, 2012. The leverage ratio was 8.29%
compared with 8.24% in the prior quarter.
FNB's profitability ratios witnessed mixed movements during the
reported quarter. The return on average assets was 0.96% compared
with 1.03% as of Sep 30, 2012 and 0.95% as of Dec 31, 2011.
As of Dec 31, 2012, return on average equity came in at 8.23%,
down from 8.83% as of Sep 30, 2012 but up from 7.72% as of Dec
31, 2011. Book value per common share was $10.02, up from $9.98
in the prior quarter and $9.51 in the year-ago period.
We are impressed with FNB's organic growth as well as constantly
improving credit quality and strong balance sheet. However,
rising expenses keep us on the sidelines. Moreover, we remain
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 near term.
FNB currently retains a Zacks Rank #4 (Sell). However, other
southeast banks namely
Access National Corp.
Union First Market Bankshares Corporation
) carry a Zacks Rank #1 (Strong Buy) and are worth considering
ACCESS NATL CP (ANCX): Free Stock Analysis
FIRST BCP-NC (FBNC): Free Stock Analysis
FNB CORP (FNB): Free Stock Analysis Report
UNION FIRST MKT (UBSH): Free Stock Analysis
To read this article on Zacks.com click here.