) third-quarter 2013 operating earnings came in at 22 cents per
share, beating the Zacks Consensus Estimate and the year-ago
earnings by a penny.
Results were driven by top-line growth, partially offset by
higher operating expenses. Further, growth in loans and deposit
balances and an improved asset quality were the other highlights
for the quarter. However, a drop in non interest income and
deteriorating profitability ratios were the headwinds.
Considering after-tax charges for merger-related costs and other
non-operating items, net income stood at $31.6 million, up from
$30.7 million in the year-ago quarter.
Performance in Detail
FNB's total revenue came in at $142.6 million, almost in line
with the prior-year quarter but surpassed the Zacks Consensus
Estimate of $132.0 million.
Taxable-equivalent net interest income rose 5.9 % year over year
to $101.0 million. The rise was mainly attributable to higher
interest income and a decline in interest expense. However, net
interest margin declined 6 basis points from the prior-year
quarter to 3.64%.
Non-interest income decreased 5.6% from the prior-year quarter to
$32.9 million. The decline was mainly due to a fall in customer
service charges, partially offset by increase in securities
commissions and fees and trust income.
Non-interest expense increased 8.0% year over year to $83.2
million. Merger related costs, additional operating costs related
to the ANNB acquisition and elevated FDIC insurance expense were
attributable to the increased net interest expense.
The efficiency ratio rose to 59.72% from 57.40% recorded in the
prior-year quarter. The rise indicates deterioration in
Asset quality exhibited an improvement during the reported
quarter with nonperforming assets decreasing 2.3% on a
year-over-year basis to $118.6 million.
Annualized net charge offs as a percentage of total average loans
came in at 0.25, down from 0.37% in the year-ago period.
Likewise, provision for credit losses declined 13.6% from the
prior-year quarter to $7.3 million. However, allowance for loan
losses increased 7.1% year over year to $110 million.
Loans and Deposits
FNB's total loans as of Sep 30, 2013 were $8.6 billion, rising
10.7% from the previous-year quarter. All the loan portfolios
performed well in the quarter.
As of Sep 30, 2013, total deposits advanced 6.5% year over year
to $9.7 billion. The increase was primarily due to the higher
level of non-interest-bearing demand deposits.
FNB's capital ratios remained strong in the quarter. As of Sep
30, 2013, the leverage ratio rose to 8.42% from 8.24% in the
year-ago quarter. Ratio of tangible equity to tangible assets was
6.09% up from 6.01% in the prior-year quarter.
FNB's profitability ratios deteriorated during the third quarter.
The return on average assets was 0.99% compared with 1.03% as of
Jun 30, 2012.
As of Sep 30, 2013, return on average equity came in at 8.50%,
down from 8.83% as of Jun 30, 2012. Book value per common share
was $10.20, up from $9.98 at the end of the the year-ago period.
On Oct 3,
Moody's Investor Services
) rated FNB for the first time and conferred an issuer rating of
Baa3 to the bank. Alongside, its banking subsidiary, First
National Bank of Pennsylvania received a Baa2 rating owing to
long-term deposits and other senior obligations.
On Oct 12, FNB completed the acquisition of PVF Capital Corp.
Consequently, the company now operates a total of 29 banking
offices in Ohio.
FNB's consistent organic growth, improving credit quality and a
strong balance sheet are impressive. However, mounting expenses,
the prevailing low interest rate environment and a stringent
regulatory landscape remain major near-term concerns.
FNB currently carries a Zacks Rank #4 (Sell).
Among better performing banks,
Community Trust Bank Corp Inc
SY Bancorp Inc.
) carrying a Zacks Rank #1 (Strong Buy) are worth
considering. While Community Trust came out with its
third-quarter earnings of 81 cents per share, SY Bancorp is
expected to report on Oct 23.
COMMUN TRUST BC (CTBI): Free Stock Analysis
FNB CORP (FNB): Free Stock Analysis Report
MOODYS CORP (MCO): Free Stock Analysis Report
S Y BANCORP INC (SYBT): Free Stock Analysis
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