Shares of F.N.B. Corporation FNB lost 5.7% in after-market trading following the release of its lower-than-expected third-quarter 2024 results. Adjusted earnings per share of 34 cents lagged the Zacks Consensus Estimate of 36 cents. Moreover, the bottom line reflected a decline of 15% from the prior-year quarter’s level.
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The results were primarily affected by higher expenses and lower net interest income (NII). Nonetheless, a higher non-interest income, lower provisions and a rise in average loans and deposits balance offered some support.
After considering significant items, net income available to its common stockholders was $110.1 million, down 23.2% year over year. Our estimate for the metric was $127.8 million.
FNB’s Revenues Improve, Expenses Rise
Quarterly net revenues were $413 million, up 1.2% from the year-earlier quarter. The top line surpassed the Zacks Consensus Estimate of $409.8 million.
NII was $323.3 million, down 1% from the prior-year quarter’s actual. The fall was mainly due to higher deposit costs, partly offset by growth in earning assets and higher earning asset yields. Our estimate for NII was pegged at $319.7 million.
Net interest margin (FTE basis) (non-GAAP) contracted 18 basis points (bps) year over year to 3.08%.
Non-interest income was $89.7 million, which was up 10% on a year-over-year basis. This improvement was driven by a rise in almost all fee income components partly offset by a mortgage servicing rights impairment of $2.8 million and a decline in interchange and card transaction fees, capital markets income and other income. Our estimate for the metric was $89.2 million.
Non-interest expenses were $249.4 million, up 14.4% year over year. Our estimate for the same was $223.4 million. After excluding significant items impacting earnings, adjusted expenses rose 7.4% to $234.2 million.
As of Sept. 30, 2024, the common equity Tier 1 (CET1) ratio was 10.4% compared with 10.2% in the prior-year quarter.
At the end of the third quarter, average loans and leases were $33.8 billion, up 1.6% on a sequential basis. Average deposits totaled $35.6 billion, which was up 2.9%.
F.N.B. Corp’s Credit Quality Improves
FNB’s provision for credit losses was $23.4 million, down 9.7% from the prior-year quarter’s level. Our estimate for provisions was $22.4 million.
The ratio of non-performing loans and other real estate owned (OREO) to total loans and OREO decreased 3 bps to 0.39%. Also, net charge-offs to total average loans were 0.25%, which was down 22 bps from the prior-year quarter’s level.
Nonetheless, total delinquency increased 16 bps to 0.79%.
Our Take on FNB
FNB’s solid liquidity position bodes well for the future. The company’s top line is expected to benefit from its efforts to increase fee income, diverse revenue streams and opportunistic acquisitions. However, persistently rising expenses and significant commercial loan exposures amid expectations of an economic slowdown are expected to hurt profits in the near term.
F.N.B. Corporation Price, Consensus and EPS Surprise
F.N.B. Corporation price-consensus-eps-surprise-chart | F.N.B. Corporation Quote
Currently, FNB carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
First Horizon Corporation's FHN third-quarter adjusted earnings per share (excluding notable items) of 42 cents surpassed the Zacks Consensus Estimate of 38 cents. Moreover, the figure increased 55.6% year over year.
FHN’s results benefited from a rise in NII and non-interest income. Also, an increase in deposits and lower provisions were other positives. However, a rise in expenses and a fall in loan balances were major headwinds.
Hancock Whitney Corp.’s HWC third-quarter 2024 earnings per share of $1.33 beat the Zacks Consensus Estimate of $1.31. The bottom line compared favorably with $1.12 per share registered in the year-ago quarter.
The results were aided by an increase in non-interest income and NII. Lower expenses and provisions were positives. However, the decline in total loans and deposits affected the results to some extent for HWC.
(We are reissuing this article to correct a mistake. The original article, issued on October 18, 2024, should no longer be relied upon.)
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