F.N.B. Q2 2025 Earnings Report

F.N.B. EPS Results

• Actual EPS: $0.36
• Consensus EPS: $0.33
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: $0.34

F.N.B. Revenue Results

• Actual Revenue: $438.21 million
• Expected Revenue: $424.39 million
• Beat/Miss: Beat by +$13.82 million
• YoY Revenue Growth: N/A

F.N.B. Announcement Details

• Quarter: Q2 2025
• Date: 7/17/2025
• Time: After Market Closes
• Conference Call Date: Friday, July 18, 2025
• Conference Call Time: 8:30AM ET

F.N.B. (NYSE:FNB), a bank and financial holding company, provides a range of financial products and services primarily to consumers, corporations, governments, and small- to medium-sized businesses in the United States. The company operates through three segments: Community Banking, Wealth Management, and Insurance. The Community Banking segment offers commercial and consumer banking services, including corporate and small business banking, investment real estate financing, business credit, capital market, and lease financing services. It also provides consumer banking products and services, such as deposit products, mortgage and consumer lending services, and mobile and online banking services. The Wealth Management segment provides personal and corporate fiduciary services comprising administration of decedent and trust estates; and securities brokerage and investment advisory services, mutual funds, and annuities. The Insurance segment comprises commercial and personal insurance, and reinsurance products, as well as mezzanine financing options for small- to medium-sized businesses. The company operates community banking branches in Pennsylvania, Ohio, Maryland, West Virginia, North Carolina, South Carolina, Washington, D.C., and Virginia. F.N.B. Corporation was founded in 1864 and is headquartered in Pittsburgh, Pennsylvania.

F.N.B. Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Second quarter delivered record results with net income of $130.7 million ( $0.36 per share), net interest income of $347 million and non-interest income of $91 million.
• Positive Sentiment: Capital metrics strengthened as CET1 approached 11%, tangible common equity rose to 8.5%, tangible book value per share reached $11.14 (+13% YoY), and 725,000 shares were repurchased.
• Positive Sentiment: Net interest margin expanded 16 bps to 3.19% while average deposits grew to over $37 billion (26% non-interest bearing) and the loan-to-deposit ratio fell to 91.9%.
• Positive Sentiment: Asset quality improved further with total delinquencies at 62 bps, NPLs/OREO at 34 bps, net charge-offs of 25 bps and NPL coverage reaching 393%.
• Positive Sentiment: 2025 guidance raised: net interest income expected at $1.37–$1.39 billion, non-interest income at $355–$365 million, assuming two 25 bp rate cuts in September and December.

Presentation

[Operator]

Good morning, everyone, and welcome to the FMB Second Quarter twenty twenty five Earnings Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Lisa Haidoo, Manager of Investor Relations. Ma'am, please go ahead.

[Lisa Hajdu, Manager - IR at F.N.B.]

Good morning, and welcome to our earnings call. This conference call of F. B. Corporation and the reports it files with the Securities and Exchange Commission often contain forward looking statements and non GAAP financial measures. Non GAAP financial measures should be viewed in addition to and not as an alternative for our reported results prepared in accordance with GAAP.

[Lisa Hajdu, Manager - IR at F.N.B.]

Reconciliations of GAAP to non GAAP operating measures to the most directly comparable GAAP financial measures are included in our presentation materials and in our earnings release. Please refer to these non GAAP and forward looking statements disclosed within our related materials, reports and registration statements filed with the Securities and Exchange Commission and available on our corporate website. A replay of this call will be available until Friday, July 25, and the webcast link will be posted to the About Us Investor Relations section of our corporate website. I will now turn the call over to Vince DeLee, Chairman, President and CEO.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

Thank you and welcome to our second quarter earnings call. Joining me today are Vince Calabrese, our Chief Financial Officer and Gary Guerreri, our Chief Credit Officer. The second quarter strong financial performance led to net income available to common shareholders of $130,700,000 or $0.36 per share. FMB achieved linked quarter revenue growth of 6.5% driven by net interest income of $347,000,000 and non interest income of $91,000,000 all at record levels. Pre provision net revenue rose 16% from the prior quarter to $192,000,000 Because of our sustained strong profitability, we continue to grow capital and have achieved record levels with the CET1 ratio approaching 11%, tangible common equity at 8.5% and tangible book value per share of $11.14 up 13% year over year.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

The expansion of our capital base provides flexibility as FNB repurchased 725,000 shares this quarter at a weighted average price of $13.85 Even with strong growth of capital, we continue to produce solid returns with return on average tangible common equity at 14%. There was significant margin expansion of 16 basis points linked quarter resulting in a net interest margin of 3.19%. F and B benefited from continued organic growth throughout our diverse geographic footprint as spreads on new commercial originations in the second quarter remained relatively stable and average annualized loan growth totaled 5.3. Additionally, our aggregate funding costs declined linked quarter while overall deposit balances and other funding sources grew nearly 600,000,000 Average total deposits grew to over $37,000,000,000 while we continue to maintain a non interest bearing demand deposit level of 26%. Our success in growing deposits and maintaining a favorable deposit mix is a key part of our strategy to grow profitably.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

The loan to deposit ratio ended the quarter at 91.9% down slightly from the last quarter and down four fifty basis points since June 2024. These results were driven by our focus on deepening customer relationships by growing deposits and serving as their primary bank. F and B continues to invest in capabilities to gain market share and further outpace our competitors, particularly around non interest income and initiatives to diversify our revenue streams. Adding to a series of records, we reported the highest level of non interest income in the company's history, more than doubling our non interest income over the last ten years. Debt, capital markets and treasury management reached record levels this quarter and are examples of how F and B has established or significantly expanded eight business lines that are now multimillion dollar revenue generators.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

The returns produced are significantly greater than our cost of capital creating value for our shareholders. We continue to deploy this strategy with additional high value businesses including our recent expansion into public finance and corporate investment banking services. We have fulfilled an important milestone in our Flix2Brick strategy by integrating the eStore common application into our in branch origination platform across our physical delivery channel. This is a major milestone as we've completed our industry leading omni channel approach to onboarding customers with the eStore common app now aligning originations across online, mobile and in branch channels. This aids in quicker processing times for our retail team, stronger risk and fraud controls and provides a better experience for our clients.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

Common App submissions increased 108% linked quarter with our full branch network originating applications on this platform starting in June. Through the use of the common application, multi product purchasing is expected to grow as our bankers will now be able to leverage AI to identify the next best products and services tailored for our customers within the same streamlined application process. In addition, business deposit account origination was launched this week providing small business owners with the opportunity to open a business checking account and apply for a loan product simultaneously with the Common App. The increasing utilization of the Common App provides additional data that our data science team leverages for personalization and better customer experiences. AI, data science and digital technology play such an integral role in our operations and ongoing success that we've realigned our organizational structure.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

FMB's digital channels, e commerce, data science, data management and governance, corporate strategy and a new vertical of AI and innovation. We'll now report to our Chief Strategy Officer. This organizational structure further expands the utilization of our digital tools, data driven analysis, predictive modeling and artificial intelligence to position the company for ongoing success. Our organizational alignment is necessary as we continuously invest in our digital and data capabilities to efficiently scale development, data consumption, business insights, lead generation and client personalization across FMB's digital ecosystem. From clicks to bricks to our proprietary eStore and OpportunityIQ, FMB has been an innovation leader in banking.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

Our team is working to further expand our use of AI and evaluate other emerging technologies such as stablecoin and tokenization. We have created a generative AI task force to monitor our existing applications, intake and source new use cases across the enterprise and ensure that we are upholding responsible risk management frameworks and controls around our growing AI usage. This past year, our credit team developed an internal performance monitoring tool that provides a three sixty degree view of our commercial clients. By using internal and external data aggregation through our enterprise data warehouse, we are able to evaluate the real time risk profile of our customers and monitor changes. Our team continues to assess the impact from tariffs and geopolitical events as we monitor our loan portfolio and manage our strong liquidity and capital position.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

Gary and his team remain steadfast in our consistent underwriting standards and credit management program with aggressive and proactive actions, which led to continued strong credit results for the quarter. I will now pass the call over to Gary to provide further detail on the overall asset quality. Gary?

[Gary Guerrieri, Chief Credit Officer at F.N.B.]

Thank you, Vince, and good morning, everyone. We ended the quarter with our asset quality metrics showing notable improvement. Total delinquency ended the quarter at 62 basis points, down 13 bps from the prior quarter with NPLs and OREO down 14 bps, ending at a very solid 34 basis points. Net charge offs totaled 25 bps, bringing the year to date results to 20 basis points, reflecting good performance despite the somewhat volatile economic environment. Criticized loans were down 4.5% on a linked quarter basis, driven by a 20% decline in classified loans.

[Gary Guerrieri, Chief Credit Officer at F.N.B.]

We were pleased with the improvements we saw across these categories during the quarter. Total funded provision expense for the quarter stood at $24,900,000 supporting loan growth and charge offs as we were successful in removing some risk from the loan portfolio. Our ending funded reserve stands at $432,000,000 an increase of $3,200,000 ending at 1.25% unchanged from the prior quarter. When including acquired unamortized loan discounts, our reserve stands at 1.32% and our NPL coverage position improved significantly to 393%, inclusive of the discounts. As mentioned in the previous quarter, we continue to closely review the loan portfolio for tariff impacts, which remains a fluid situation.

[Gary Guerrieri, Chief Credit Officer at F.N.B.]

This includes very granular monitoring of line utilization and industry concentrations by portfolio and country, which we highlighted during the Q1 survey. Of note, our C and I line utilization was down in the quarter as we are not experiencing significant tariff related draw activity. Each quarter, we continue to run allowance sensitivities and a full portfolio stress test. The stress test results reflected further improvement with our current ACL more than covering our projected charge offs in a severe economic downturn. Regarding the non owner CRE portfolio, credit metrics also improved contributing to the decline in rated credits that I mentioned earlier with delinquency and NPLs at sixty four and sixty two basis points respectively.

[Gary Guerrieri, Chief Credit Officer at F.N.B.]

This reflects an improvement from 82 basis and 77 bps at the prior quarter end. We continue to aggressively manage this portfolio as we have throughout this interest rate cycle with a non owner exposure declining by another $137,000,000 in the quarter, bringing the year to date decline to $420,000,000 ending at 223% of capital. In closing, our active credit risk management further strengthened the position of our portfolio as shown in this quarter's results. I would like to thank our banking teams for managing risk in their portfolios throughout a challenging economic environment. With more clarity now around fiscal policy and a somewhat stabilizing economy, we look forward to increasing opportunities to achieve prudent loan growth through the remainder of the year.

[Gary Guerrieri, Chief Credit Officer at F.N.B.]

I will now turn the call over to Vince Calabrese, our Chief Financial Officer for his remarks.

[Vincent J. Calabrese, CFO at F.N.B.]

Thanks, Gary, and good morning. Today, will review the second quarter's financial results and walk through our third quarter and full year guidance. Second quarter operating net income totaled $130,700,000 or $0.36 per share. Total revenues were a quarterly record at $438,000,000 with both net interest income and non interest income exceeding the high end of our prior quarterly guidance ranges. As a result, second quarter operating pre provision net revenues grew 7.9% from the year ago period.

[Vincent J. Calabrese, CFO at F.N.B.]

Second quarter average loans and leases totaled $34,500,000,000 a 5.3% annualized linked quarter increase driven by growth of $365,000,000 in consumer loans and $86,000,000 in commercial loans and leases. Seasonal growth in residential mortgage loans was the primary driver of the consumer loan increase. Owner occupied commercial real estate advances and commercial leases were the primary growth drivers on the commercial side. While C and I loan production was solid in the second quarter, it was largely offset by decrease in line utilization that Gary mentioned. Looking ahead, we are optimistic for a pickup in commercial loan growth in the 2025 given the strong increase in the short term commercial loan pipeline we saw during the second quarter.

[Vincent J. Calabrese, CFO at F.N.B.]

Average deposits totaled $37,100,000,000 a 1.7% annualized linked quarter increase reflecting organic growth in new and existing customer relationships. Average non interest bearing demand and interest bearing demand balances grew linked quarter, while time deposits were relatively stable and savings deposits declined. Spot non interest bearing demand deposits were up slightly the last two quarters and stable at 26% of total deposits and the loan to deposit ratio held steady at 91.9%. The cumulative total deposit beta since the interest rate cuts began in September was 28% at quarter end. Net interest income of $347,200,000 was more than $12,000,000 above the high end of the quarterly guide and grew nearly 10% from the year ago period.

[Vincent J. Calabrese, CFO at F.N.B.]

The quarter's net interest margin of 3.19% was up 16 basis points sequentially and 10 basis points from last year to the highest level since the fourth quarter of twenty twenty three. Earning asset yields increased 10 basis points linked quarter to 5.33 driven by increased yields for both loans and investment securities. The second quarter average loan origination yield was more than 50 basis basis points above the total loan portfolio yield and cash flows from the investment portfolio were reinvested 165 basis points higher than the roll off rate. Purchase accounting accretion from payoffs of previously acquired loans added two basis points to the margin for the quarter. On the funding side, interest bearing deposit costs fell 10 basis points linked quarter on lower average rates paid across the deposit franchise.

[Vincent J. Calabrese, CFO at F.N.B.]

Turning to non interest income and expense. Non interest income totaled a record $91,000,000 Capital markets income grew strongly from the year ago period due to record debt capital markets income and contributions from international banking and customer swap activity. Wealth management revenues increased 5.2% year over year with contributions across the geographic footprint and other income included higher than normal gains from our leasing business. Operating non interest expense totaled $246,200,000 Salaries and employee benefits increased $8,900,000 from the year ago period, primarily reflecting strategic hiring associated with our efforts to grow market share and continued investments in our risk management infrastructure as well as higher production related compensation. Net occupancy and equipment increased 10% year over year, largely from technology investments and De Novo branch expansion.

[Vincent J. Calabrese, CFO at F.N.B.]

Other non interest expense increased 4,300,000 from the year ago period, primarily due to the impact of Community Uplift, our mortgage down payment assistance program that was enhanced and expanded in conjunction with our previously announced settlement agreement with the Department of Justice. The second quarter efficiency ratio remained favorable at 54.8 as we continue to manage our expense base in a disciplined manner and expect positive operating leverage for the second half and full year of 2025. FNB continues to actively manage our capital position for ample flexibility to support balance sheet growth and optimize shareholder returns while appropriately managing risk. Financial performance and capital management strategies resulted in our CET1 ratio reaching 10.8% and our TCE ratio reaching 8.5%. Tangible book value was $11.14 per share at quarter end, an increase of 1.26 or 12.8% compared to last year.

[Vincent J. Calabrese, CFO at F.N.B.]

Let's now look at guidance for the third quarter and full year of 2025. All guidance is based on current expectations, while remaining cognizant of risks in an uncertain economic environment. We are maintaining our balance sheet guidance for spot balances, projecting period end loans and deposits to gross mid single digits on a full year basis as we increased our market share across our diverse geographic footprint. We are raising our 2025 net interest income guidance to incorporate the strong performance in the second quarter. Our revised full year guidance range is 1,370,000,000.00 to $1,390,000,000 This guidance includes an expectation for 25 basis point rate cuts in both September and December compared to our previous expectation for cuts in June and September.

[Vincent J. Calabrese, CFO at F.N.B.]

For the third quarter, we expect to be in the upper half of our $345,000,000 to $355,000,000 guidance range. The non interest income full year guidance range has been revised to $355,000,000 to $365,000,000 with third quarter levels expected between $87,500,000 and $92,500,000 building off the record levels in the second quarter. Full year guidance for non interest expense has been revised to $975,000,000 to $985,000,000 a $10,000,000 increase to the low end of the prior guidance range with the high end of the range left unchanged. This guide reflects results through the first half of the year and the down payment assistance program costs referenced earlier. Third quarter non interest expense is expected to be between $240,000,000 and $250,000,000 The revised full year provision guidance range of 85,000,000 to $100,000,000 reflects a $5,000,000 decrease on the high end given our first half performance and the improvement in asset quality metrics during the second quarter.

[Vincent J. Calabrese, CFO at F.N.B.]

As always, provision will be dependent on net loan growth and charge off activity and we continue to monitor risks posed by the current economic environment. Lastly, the full year effective tax rate should be between 2122%, which does not assume any investment tax credit activity that may occur. With that, I will turn the call back to Vince.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

FMB consistently achieves great results through superior execution from the hard work and dedication of our employees. We remain keenly focused on driving long term shareholder value, benefiting from our strong balance sheet with record capital levels and ample liquidity, organic loan and deposit growth across our dynamic geographic footprint, investments in our e store initiatives, diversified fee income streams and exceptional credit risk management. Thank you. And we will now open the call up for questions.

[Operator]

And our first question today comes from Daniel Tamayo from Raymond James. Please go ahead with your question.

[Daniel Tamayo, Vice President at Raymond James Financial]

Thank you. Good morning,

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

Hey, Dan.

[Vincent J. Calabrese, CFO at F.N.B.]

Good morning, Dan.

[Daniel Tamayo, Vice President at Raymond James Financial]

Maybe one for Vince on the margin guidance to start. Looks like the third quarter number, I mean, you had a significantly wider margin in the second quarter, including some benefit from payoffs. But is there an assumption of a little bit of a contraction in the third quarter to get to that guidance you're talking about before it starts to expand again in the fourth quarter? Is that the way to think about it?

[Vincent J. Calabrese, CFO at F.N.B.]

No, the margin, I would say flattish to up a tick as we go through the next two quarters of the year. I mean, just a comment on the results for the second quarter too. I mean, you saw the dollar increase, net interest income up 23,000,000 really a combination of a few things kind of hitting very well. We had growth in earning assets, we had higher yields on earning assets, we had a lower cost of funds as we had some good success bringing down interest bearing deposit costs during the quarter as well as benefit from $250,000,000 a quarter in swaps that rolled off. So, that all contributed to that big jump in the margin moving up 16 basis points.

[Vincent J. Calabrese, CFO at F.N.B.]

And when you look at the underlying activity, I mean, were putting new loans on 56 basis points above the portfolio rate. We were reinvesting securities 165 basis points above the roll off rate and then the interest bearing deposit costs that I mentioned. So what's baked into our guidance is kind of flattish up a little bit and net interest income moving forward. And we have a September rate cut and a December rate cut baked in there. So right none of us really know what the Fed is going to do, but that's what's baked into our numbers.

[Daniel Tamayo, Vice President at Raymond James Financial]

Okay. So flat to up on the margin, so probably not much average earning asset growth I suppose, excuse me, to get to that upper end.

[Vincent J. Calabrese, CFO at F.N.B.]

Yes, the earning growth will still be there. Danny, I'm sorry. The average earning asset growth in the second half of the year, we get to our mid single digits and we had a really nice move in our short term pipeline less than 90 on the commercial side. So, we're if we get a significant pickup in commercial activity, that would even move us above the kind of mid single digit level. Okay.

[Daniel Tamayo, Vice President at Raymond James Financial]

All right.

[Daniel Tamayo, Vice President at Raymond James Financial]

I will follow-up with you offline if I have additional questions on the margin. And then I think you guys kind of addressed what was going to be my second question on the expenses. It sounds like most of the increase in the guide was due to the Payment Assistance Program. Anything else on that? Is there any kind of additional investment that you're looking to make now that you're expecting the NII side to be stronger than three months ago and the credit environment looking to be more clear?

[Vincent J. Calabrese, CFO at F.N.B.]

Yes. I would say, I mean, the down payment assistance program you mentioned, was $3,100,000 for the quarter, at that same kind of level is what's baked into the guidance for the rest of the year. And then that should start to come down next year as we've kind of fulfilled the commitments that we had from that settlement. So the higher commissions are always a swing item. Those are tied to revenue.

[Vincent J. Calabrese, CFO at F.N.B.]

That was high this quarter, a lot of it tied to the mortgage volume and depending on how well we do on the revenue side, right, you always have that higher commission level that would come through in accordance with that. As far as investments, I mean, we mentioned last quarter about, a couple of the new things that will drive fee revenue going forward, the commodities hedging that we added, as well as adding public finance, and the investment banking firm that joined the team. So those are items that are on board and we expect to start to contribute revenue in the second half of the year. So those are our newest investments as far as driving fee revenue.

[Daniel Tamayo, Vice President at Raymond James Financial]

Okay, terrific. Well, thanks for taking my questions.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

Thanks, Thanks, Dan.

[Operator]

Next question comes from Russell Gunther from D. A. Davidson. Please go ahead with your question.

[Russell Gunther, Managing Director at Stephens Inc]

Hey, good morning guys. Russell Gunther, Steve.

[Vincent J. Calabrese, CFO at F.N.B.]

Hey, Russell. Hey, Russell.

[Russell Gunther, Managing Director at Stephens Inc]

I wanted to follow-up on the margin conversation we just had. What are you guys expecting from a deposit cost perspective? We've heard some kind of increased competition in Mid Atlantic Southeast this quarter. I know you guys are trying to continue to match loan growth like you've done successfully. So really just trying to get a sense for how that incremental margin or spread would be with a focus on deposit costs?

[Russell Gunther, Managing Director at Stephens Inc]

And then in the past, I think you've shared sort of where that deposit rate ended the quarter, even end of the month NIM. So all of those puts would be helpful.

[Vincent J. Calabrese, CFO at F.N.B.]

Yes. I would say,

[Vincent J. Calabrese, CFO at F.N.B.]

I mean, the total interest bearing deposit costs is between now and the end of the year probably kind of around the level that it's at until you get the Fed move, right? So I think we've reduced rates where it's made sense strategically for us to do that and we got the benefit of that in the second quarter. I think as far as any meaningful move down going forward, it's really going to be more tied to a Fed cut and our team has tactics and strategies kind of in place to how we're going to try to capture as much of that as possible, once there is movement down there.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

Russell, we feel pretty confident about our ability to gather deposits given the diverse geographic footprint. I had our folks go back and calculate organic growth rates in loans and deposits over the last fifteen years. We've averaged 9%, roughly 9% both loans and deposits in organic growth not including any acquired loans or deposits. So I think we're pretty well situated and we've invested in the right tools to help our team gather deposits as we move forward. You can see that we had a decent pickup in margin and we still grew our deposits and the demand deposit mix remained at 26%.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

So some of the things we've been talking about is playing out in the numbers here, which is very positive for us.

[Vincent J. Calabrese, CFO at F.N.B.]

And then our total spot deposit cost at the end of the quarter was 196,000,000 kind of all in. Other thing I should mention too is that Russell, we do have a we continue to have a strong pipeline of commercial deposit prospects that we're calling on and we've had good success bringing in new relationships and which helps to support the non interest bearing deposit growth. So there's pretty strong pipeline that the team is going after as we sit here today.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

So our goal internally whether we achieve it or not is a question given the competitive environment, but we would like to grow earning assets and get the loan to deposit ratio down if we can continue to drive it down. So it gives us the capacity to scale when things start to really turn. So that's the internal strategy. We've That's got a huge all very helpful color guys.

[Russell Gunther, Managing Director at Stephens Inc]

I appreciate it. Then just staying through, yes, the NII guide. I hear you on 3Q in the upper half of that. Just trying to get a sense for the puts and takes that would potentially get you to the high end. It sounds like commercial loans could pick up again.

[Russell Gunther, Managing Director at Stephens Inc]

In the absence of any Fed cuts, could we see you guys through the high end? It just seems like you're in a good position relative to guide and would be helpful to get a sense for the drivers behind the high end or potentially exceeding.

[Vincent J. Calabrese, CFO at F.N.B.]

Yes. Would say the September Fed cut is a big swing item, right? So that doesn't happen. Our we still have a benefit from that. We're still very slightly asset sensitive.

[Vincent J. Calabrese, CFO at F.N.B.]

I mean, I think we've done a nice job kind of managing the overall balance sheet, interest rate risk position. And we're at a point now where I think it's like 1%. If you go to a down 100 basis point ramp, it's like 1.2. So it's really we're very much approaching kind of neutral there. But if we don't have the September, cut that's additive that moves you up into that upper end.

[Vincent J. Calabrese, CFO at F.N.B.]

And then the mix of loans that we put on, obviously, I mean, we've the second quarter had a good level of mortgage loans that we put on, which were in the mid to high 6s. So that kind of comes through. And even on the reinvestment side, I mean, we continue to have 1,000,000,000 point dollars cash flows over the next twelve months rolling off at like 3,220,000,000.00 So we're reinvesting in the 4,500,000,000.0 kind of mid-four mid- to high-4s right now. So depending on where we can reinvest that could be additive too. And then the success we have bringing in non interest bearing deposits, right?

[Vincent J. Calabrese, CFO at F.N.B.]

So we mentioned that the pipeline, the better we do there, better the net interest income and margin is.

[Russell Gunther, Managing Director at Stephens Inc]

Great. All right, guys. That's it for me. Thanks so much for taking my question.

[Vincent J. Calabrese, CFO at F.N.B.]

Thanks, Russell. Thanks, Russell.

[Russell Gunther, Managing Director at Stephens Inc]

Thank you.

[Operator]

And our next question comes from Casey Haire from Autonomous Research. Please go ahead with your question.

[Casey Haire, Senior Analyst - US Mid-Cap Banks at Autonomous Research]

Great, thanks. Good morning everyone. Good morning, Casey. So another margin question for you guys. So I guess number one, like the guide for NII feels a little conservative.

[Casey Haire, Senior Analyst - US Mid-Cap Banks at Autonomous Research]

Just wondering if you're doing that on purpose. And then two, just color on the loan yields and the bond yields, which were obviously a positive swing factor for you guys in the second quarter. How are they trending looking ahead?

[Vincent J. Calabrese, CFO at F.N.B.]

Casey, what was the first part of your question because we had to raise the volume a little bit. It was kind of coming in

[Casey Haire, Senior Analyst - US Mid-Cap Banks at Autonomous Research]

I'm sorry guys. So I was just making a point. The NII guide seems a little bit conservative given you have NIM up and accelerating loan growth. Just wondering if that's on purpose. And then a follow-up question on the loaned and bond yields which were obviously can that momentum continue going ahead?

[Vincent J. Calabrese, CFO at F.N.B.]

Yes. No, I would say I mean we're guiding to the upper half and I think Russell's question kind of went to the what are the things that move you into the higher end of that, and just commented on. So, I think it's reasonable. The September cut, who knows what's going to happen. Again, that's probably the biggest swing item. If that doesn't happen, then that's

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

I think it's too early to really call pipe. There's still a lot of noise out there. Who knows what could happen? There's geopolitical issues. You've got interest rate scenario changing.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

So that's why our guide is what it is. I don't think it's too conservative. I think it's spot on. Don't think that's what you think.

[Vincent J. Calabrese, CFO at F.N.B.]

Yes, there's still a lot

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

of uncertainty. If we had more clarity, Casey, we would be more optimistic, but there's still a lot of fog. It's But we're guiding to the upper half.

[Vincent J. Calabrese, CFO at F.N.B.]

The upper half, right. Yes.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

So I don't know if Okay. That helps

[Casey Haire, Senior Analyst - US Mid-Cap Banks at Autonomous Research]

Yes, no, no, that's fine. And then just, Vince, a question for you. As we potentially enter an upcycle on M and A activity here, you guys in the past have been pretty acquisitive and that's really the Yadkin deal obviously has provided a lot of the growth organic growth opportunities that you're enjoying today. But it's not it was not without its cost given the tangible book value dilution at that time. Just wondering how do you guys feel the need to be as aggressive going forward? Or do you feel like you can enjoy the current footprint that you have without being very aggressive?

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

Well, we haven't really done we've done very little over the last ten years. That was almost ten years ago. So I mean we're starting to get to the point where that's ancient history. I mean it's part of the company. It's contributed nicely.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

We're very optimistic about the markets we're in. We've made heavy investments in tech that are paying off. I mentioned in the prepared comments our applications as we integrate the eStore common app into the branch delivery channel. So now in store originations are happening on that same platform. The reason that's important is because now the client can start an application online, come into the branch and finish it, right.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

And that AI oversight that helps those salespeople find opportunities is going to be available to them in the branches. So we can accelerate additional sales hopefully of products and services that meet the needs of the customers that come in. So we're very excited about that. We're very excited about the markets that we entered and the market share growth that we've experienced over the last few years. And if you go back and look at our company over the last ten years, we've grown tangible book value, it accelerated in the last five years.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

I think we're an outlier, we're one of the better growers of tangible book value and it's been 12% over the last two years. So it's high single digit growth. I think that all keeps me pretty excited and sure, mean, know the landscape changes, the M and A landscape changes all the time and I think we're in a great position where we sit today.

[Vincent J. Calabrese, CFO at F.N.B.]

And the 9% organic growth too,

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

the growth Oh, yes, the organic growth. By the way, we look back over the last fifteen years, our loan and deposit growth organically was 9%, loan and deposit. That's setting aside the assets that we acquired. So our business model from an origination perspective, organic origination perspective, it works perfectly fine and there's opportunity for us to continue to grow. And that becomes much more with the capital that we're accumulating, the deployment of that capital, we're much better off deploying that capital with loan growth because the returns on that capital deployed is much greater.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

So we're seeing high teens to low 20 returns on those on that capital that's going towards loan and deposit growth, customer growth in the commercial segment in particular. So I think that's why we're pivoting and have pivoted and I think we have a great franchise. So we're going to leverage that.

[Vincent J. Calabrese, CFO at F.N.B.]

Plus the new businesses we've entered that I mentioned earlier.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

Yes. We've also invested. You can go back and look at that chart too. It's in our deck. I mean, we said a long time ago, ten years ago, this is really going to help us accelerate our non interest income.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

It's more than doubled. So from $160,000,000 to $350,000,000 last year and growing. And I think there's opportunities for us to continue to grow those businesses. And they were organically grown. We didn't go out other than small, the small boutique we bought in the investment banking business and having a very, very small mortgage business.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

The rest of those businesses were all organically grown, Well north of our cost of capital and are extremely accretive to the shareholders. So I think all of that keeping staying focused on that, keeping people focused on the deployment of AI the tools that we've developed internally, which is why we restructured, realigned the company's organizational structure to focus on it. That excites me more than M and A. So of course, opportunistically, if something comes up, sure, we might look at it, but it better be pretty high quality opportunity and provide us with the right tools like really good deposit mix or additional clients that we could use our deploy our model against.

[Vincent J. Calabrese, CFO at F.N.B.]

All I would add too is our de novo expansion strategy has been the key part of us expanding and we've continued to be active into Northern Virginia and DC and other key markets for us Charleston. So that's been kind of quietly way for us to expand geographically and get more customer opportunity.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

We basically either plan to open or have opened 30 branches in these high growth areas over the last few years. So some of the expense build is related to the expansion of those de novo operations. But if you look at the markets that we went into, they're performing very well. Charleston's purely de novo, purely organic and is doing extraordinarily well. So that's an example of a market we went into and we didn't buy anything.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

So I think given our model and what we have, what we've invested in, we're positioning the company to grow without capital dilutive acquisitions.

[Casey Haire, Senior Analyst - US Mid-Cap Banks at Autonomous Research]

Excellent. Totally agree. Didn't mean to bring up ancient history, but it's just good

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

to hear that you guys You gave me an opportunity Casey to lecture, so thank you for letting me go on and on. Thank you.

[Casey Haire, Senior Analyst - US Mid-Cap Banks at Autonomous Research]

Thanks guys.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

Appreciate it. Thanks

[Vincent J. Calabrese, CFO at F.N.B.]

Casey. We'll see you.

[Operator]

Our next question comes from Timur Brazilia from Wells Fargo. Please go ahead with your question.

[Timur Braziler, Director - Mid-Cap Bank Equity Research at Wells Fargo]

Hi, good morning.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

Timur.

[Timur Braziler, Director - Mid-Cap Bank Equity Research at Wells Fargo]

Hoping to get some color on what you guys think the composition of future loan growth is going to look like. Obviously, it's been led by mortgage more recently, some constructive comments around the C and I pipeline. I guess as commercial loan growth becomes a more meaningful part of the story, does that lessen your appetite on the resi side or is that additive? And I guess where do you think loan growth could ultimately end up once commercial starts to manifest in a more meaningful capacity?

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

Yes. I think our guide kind of directs you to what our expectations are globally. So I don't think we want to shift off of the guide yet, right. We will update you next quarter once we see what's happening. Like I said, it's a very difficult time to forecast because it is so volatile.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

But I will tell you that the commercial pipeline, as Vince mentioned, the short term pipeline, we have a ninety day pipeline, we have a long term and long term pipeline is kind of flat and the ninety day pipeline is up 20%. So we've got a lot of deals moving through our pipeline headed towards closure in the C and I business. CRE continues to decline. We expect that to continue to come down. Think we're what Gary?

[Gary Guerrieri, Chief Credit Officer at F.N.B.]

223% of capital at the moment.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

Yes. So our expectation is that continues to decline over time. The mortgage lending business should start to taper off because we're moving out of the peak of the mortgage lending business and the commercial business that we have in that short term pipeline hopefully lands in the next quarter. So the shift will be towards commercial, probably less emphasis on mortgage, right. And then we'll see some growth in the balance sheet in the C and I segment offset by probably continued CRE declines.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

That's what we're seeing. That's what we're using in our forecast for the model. And I will tell you, like Vince said, we haven't exclusively been focusing on the asset side of the balance sheet because it's very competitive. We've been focusing our folks on the depository side with very, very significant treasury management opportunities and we've landed some huge deals recently. So that strategy seems to be paying off.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

As I mentioned earlier, I'd love to see our loan to deposit ratio continue to come down with high quality deposits. And I'm very excited to see the FDIC data when it comes out because we've been monitoring our performance relative to last year's FDIC data and we're showing some pretty strong results across the board and market share gains. So I'm going out on a limb here, I don't know what it's going to say, maybe I'll be wrong. But we've grown ourselves in those markets, in some of those markets fairly substantially. So we've closed the gap and we want to be in the top five share in most of the markets, 10 are the ones that are dominated by some of the largest banks.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

But anyway, that's what we're seeing. And I think we're optimistic about deposit growth. We're optimistic about our C and I pipeline in the short run. I think real estate will taper off a little bit on the resi side and CRE commercial real estate launch should continue to decline with institutional takeouts on the construction financing that we've done.

[Vincent J. Calabrese, CFO at F.N.B.]

And I would just add to that, Vince mentioned earlier the 9% long term loan growth organically. I mean, while we're guiding at mid single digits today, we've historically been in that mid to high single digits for that period, we were high single digits at 9%. So I think that gives you kind of a range.

[Gary Guerrieri, Chief Credit Officer at F.N.B.]

Yes, that's good. Well said. Thank you, Vince. Yes. Tabor, actually during the quarter, we had really strong gross C and I originations.

[Gary Guerrieri, Chief Credit Officer at F.N.B.]

It was a really solid quarter. As I mentioned in my remarks, the line utilization was down fairly significantly, which reduced that loan growth there. With tax policy now finalized and the 100% depreciation, clients are very excited about that. And I think there's going to be some heavy investment as we move forward. So we're very optimistic when we look at Yes.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

To that point, our equipment finance business has done phenomenally well also. It continues to be strong, good credit metrics, good leadership there, even though I tease him all the time, Tim has done a great job. I think they're going to do well in this environment. That's another area that could potentially start to accelerate because of the bonus depreciation.

[Timur Braziler, Director - Mid-Cap Bank Equity Research at Wells Fargo]

Great. That's good color. Thank you. And then, one for Gary. You had mentioned that you had some success in reducing some of the risk on the balance sheet this quarter.

[Timur Braziler, Director - Mid-Cap Bank Equity Research at Wells Fargo]

Can you just maybe provide a little bit of color around that statement?

[Gary Guerrieri, Chief Credit Officer at F.N.B.]

Yes. We were successful in resolving and removing a few CRE credits from the balance sheet. We also saw a little improvement from a migration standpoint, But bringing some CRE exposure down, as I mentioned in my remarks, another significant amount there continues to be a strategy that we focus on. And in terms of the performance of the migration, we were very pleased with a 20% reduction in classified loans is a significant move in any period, let alone one quarter. And it you know, it's the work that we were doing earlier in the year and late in last year in setting those credits up to be removed from the balance sheet.

[Gary Guerrieri, Chief Credit Officer at F.N.B.]

So it doesn't happen overnight, I'll tell you. But we saw some resolutions and we were really, really pleased with those results.

[Timur Braziler, Director - Mid-Cap Bank Equity Research at Wells Fargo]

Great. And then just a final modeling question. The increase in down payment assistant costs this quarter, is that one time in nature? Is that more or less a catch up? Or is that something that sticks around with us as we go forward?

[Vincent J. Calabrese, CFO at F.N.B.]

I was saying that we'd be at that same level kind of next quarter and it would start to kind of come down. Not a forever thing. Yes.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

And just so you know, I mean that we made commitment, we significantly increased the grant money that we were providing on a per loan basis significantly to jumpstart our lending activity in certain areas that where we need the lumps. I think that's going to taper off. It's going to be sustained for a little bit and then it's going to taper off. We're going to revert back to our normal. We always have a grant program, it's reflected in the run rate, just so you understand that we significantly increased it to search volume in certain markets for fair lending purposes.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

And we expect that to taper off because we're the markets that we were targeting were above well above the peer median. That'll taper off over time, but it is something that we felt was important to call out. So you understood what was happening there with the expenses.

[Timur Braziler, Director - Mid-Cap Bank Equity Research at Wells Fargo]

Got it. Thank you.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

Sorry, I appreciate that.

[Timur Braziler, Director - Mid-Cap Bank Equity Research at Wells Fargo]

No, no. Got it. Yes, you got it.

[Operator]

Our next question comes from Kelly Motta from KBW. Please go ahead with your question.

[Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)]

Hey, good morning. Thanks for the question. Maybe turning to the capital base, capital impressively continues to grow. It's at near record levels even with the balance sheet growth you're seeing. It sounded like from your commentary, M and A is in top of mind, but maybe you could walk us through how you're thinking of managing your capital base.

[Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)]

It's a good problem to have excess capital, but how you're thinking of managing that and, if there's any target ratios in mind that you're looking, you have in mind while managing the balance sheet? Thank you.

[Vincent J. Calabrese, CFO at F.N.B.]

Yes. I would just say that when the 10% level we've been talking about was a target, obviously, when we were below that and now that we're above that, we kind of think about that as like an operating floor, guess, one way to refer to it. We think it's very appropriate given the risk profile of the balance sheet combined with the higher levels of earnings and capital that we're generating and payout ratio in the low 30s. So, I think that it talks about to the overall position. And with the prospect of earnings and internal capital generation moving forward, we have flexibility.

[Vincent J. Calabrese, CFO at F.N.B.]

We've been, active on the share repurchase. We've had some level of that each quarter. We're studying dividend as another way, something that we may do at some point. So we have that opportunity. And then to Vince's point earlier, the first thing we're going do is fund loan growth.

[Vincent J. Calabrese, CFO at F.N.B.]

So, I think having the capital cushion or buffer that we have to fund the loan growth when it does accelerate, I think is important. But, we have the flexibility really to generate shareholder value through all those different means.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

To sum it all up for you, we're going to do it. It's absolutely best for the shareholders. We're going to look at the earn back on share repurchases versus valuation and earn back. We're going to look at well, everything's on the table, right, because we want to be as efficient as possible.

[Vincent J. Calabrese, CFO at F.N.B.]

And we feel the shares are still undervalued. So at this point, we'd still be active repurchasing, right.

[Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)]

Got it. That's helpful. And then on a high level, you've mentioned that like the De Novo expansion you've done in the past couple of years I think 30 branches. As you look at your footprint, can you opine on any areas where you see additional need for expansion or density of the footprint? Just wondering how much of a driver that is of the growth outlook over the longer term horizon? Thank you.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

Yes. No, that's a great question. I think because we haven't been very vocal about our expansion. But as those locations start to take off, we've also been hiring commercial bankers in these markets, right, Charleston, Richmond, we're looking at Virginia, Southern Virginia, there's some very attractive markets there from both the C and I lending perspective and from a consumer perspective, mortgage banking, consumer depository services and the like. So we're that's where we've been focusing.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

DC, we've continued to add in the DC market. I think those will be accretive. That takes a while for a De Novo branch, right. That's the difference between going with M and A, taking cost out and having customers immediately versus put investing capital, having expenditure and then needing to grow the customer base over time. There's a period of time that it takes to get to breakeven and then get to the returns that you're targeting.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

And usually that's three to five years to get the maximum return on capital, it's usually five years on these things. Three years is three years to breakeven or three and I think we're going to be seeing that growth is going to come through because we have those locations rolled out. That that'll be part of our guidance as we move forward. But we're doing very well. I mean we're surprisingly doing well in these markets even with big competitors.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

So I think it's been a good strategy and it's going to pay off for us in the long run.

[Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)]

Awesome. I appreciate all the color today. Thank you guys.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

Thank you. Appreciate your time. Thank you.

[Operator]

Our next question comes from Emmanuel Nabas from D. A. Davidson and Company. Please go ahead with your question.

[Manuel Navas, MD & Senior Research Analyst at D.A. Davidson]

Hey, good morning. Can you talk about that confidence on deposit growth? Kind of touch on seasonal trends and where the current pipeline is strong? I mean, talked a little bit about commercial. CD growth was really strong.

[Manuel Navas, MD & Senior Research Analyst at D.A. Davidson]

I'm just wondering how much of that was new versus old customers. Just kind of talk through that confidence on the deposit side.

[Vincent J. Calabrese, CFO at F.N.B.]

I mean, it's been a focus here for as long as we've been here, particularly on the noninterest bearing deposit side. So I think we've had if you look at our success last year, remember the loan to deposit ratio got up into the 96s and really had tremendous growth in deposits across the footprint. What we have in the guidance to mid mid single digits is very comfortable and the prospect list and pipeline that I commented on the commercial side could even bring us above that.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

Yes. If you go to Page 13 in the deck that we put out with the deposit composition, we take you all the way back to 02/2009, which is when I think you're reading this in when I took over, right, as President of the Bank. You could see the difference. Mean, my God, we've done extraordinarily well. There was 9% organic growth driving this deposit growth.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

The mix has improved substantially over time. We were able to maintain a fairly high demand deposit level even after the surge, right, that occurred during the pandemic in 2021 and 2022. And that's despite almost $38,000,000,000 in total deposits. So we're again, I'm very optimistic about our ability to grow deposits organically and to do it in a way that's accretive to earnings. And we've a very strong we're a very strong deposit franchise.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

And I think if you really drill into the banking industry, that's what matters the most. So, your ability to fund yourself, to have granularity, to be able to be the primary bank, all that stuff that we talk about is really important to ensuring that we can continue to sustain that growth in a very profitable way. So I think this kind of sums it up. If you look at it, meanwhile, that's why I'm optimistic about what's coming. In addition to that, we have retold, we've refocused people, we've changed our comp structure slightly, We reorganized our data management and the digital bank, put it up under Chris.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

So we've got corporate strategies in alignment with the data consumption area, your data hub and the digital folks and we now have an AI czar that we put into effect. I mean we're trying to really use all of those tools to drive the appropriate deposit mix and growth. We've rolled out the eStore common app across all those branches so that we can feed leads to those people in real time that are actionable. And they can just simply ask the client if they would like an additional product, put it in the cart and they don't have to do anything additional. That common app basically enables them to do that seamlessly.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

Removes obstacles. Yeah. So I think all of that plus our commercial calling effort, beefing up treasury management, we've added significantly to the treasury management area. We have an initiative to upgrade our treasury management product and services we're in the middle of and that's happening. Our investment in payments is occurring and I think that's going to be an area we're going have to stay keenly focused on given the changes that are happening particularly with the Genius Act and stablecoin and the use of blockchain technology.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

So we're all we're focused on it and I think we're going to continue to be focused on it, continue to drive deposit growth.

[Vincent J. Calabrese, CFO at F.N.B.]

And its de novo strategy obviously feeds that. If you look at some of the regions, I mean year over year Carolinas are up 17% in deposits, Pittsburgh is up 7%. So I mean some of our critical markets really grown quite nicely.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

That did I answer your question or did I just go on too long? I don't know.

[Manuel Navas, MD & Senior Research Analyst at D.A. Davidson]

No, great. That's But Carolinas is good to see that regional strength. And that is an area that's attracting more interest, but you are winning there. How are you kind of fending off competition?

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

How are we fending off competition? Was that the question? I'm having trouble hearing Yes. Carolinas. I'm sorry.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

The Carolinas? We have really good people that work really hard and they're very focused. We're very focused on it. So we monitor pipelines. I know the team down there monitors calling activity.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

Our incentive compensation plans are lined up. You should watch my podcast, Manuel, I talk about it. But we try to align all of those things so that we can compete more effectively. And I think it works. Think paying attention and ensuring that we have a compensation aligned with what our expectations are and being able to report information back to the field very quickly about their performance, that all matters.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

So it's not just one thing. And there's it's not just hiring talent or it's everything. It's there's a lot that goes into it. So the banks that are succeeding are doing the same thing.

[Vincent J. Calabrese, CFO at F.N.B.]

And lead generation keeps getting better

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

and better. Our ability to produce leads and focus people, every there's a finite amount of time per person. So all this technology really helps make people that maybe weren't able to focus as well as others focus on what they need to do to get the job done, to win, to get paid, to benefit the shareholders. So that's I think that's what's happening. I spend a lot of time with those people and down there, so I can tell you they're very hungry.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

They're good people. It's a good culture too. That's the other thing. They want to be there. They want to work.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

They get, you know, They get awards and they get recognized for what they're doing and it keeps driving success.

[Manuel Navas, MD & Senior Research Analyst at D.A. Davidson]

Shifting over to the asset side. I mean, appreciate all that commentary. Shifting over to the asset side, the C and I pipeline increase, is there any like one single driver that kind of increased optimism this quarter in the pipeline? Is it the tax bill? Gary touched on

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

that briefly. I I think we were a little slower. So there's a lot of pent up demand and people were waiting to see what happened with tax reform because of the bonus depreciation. So this is my guess. I haven't this is anecdotal.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

I haven't gone out and surveyed the clients. I've talked to some of them, and they've said the same thing. So all of a sudden, that just broke, right? And they're all like, we're doing it now. So there's we're going to finance this piece of equipment.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

We're going to expand our facility. We're a little more optimistic about demand in the future. A little bit tamer view on tariffs, people were very concerned. Now they're not as concerned, still concerned, but not as concerned. They were worried about supply chain disruption and other things.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

So I think with that out of the way, that's what happened. Everything got pushed forward, the deals that were more likely to get done moved into the ninety day category and hopefully we can get them closed and impact the C and I footings.

[Manuel Navas, MD & Senior Research Analyst at D.A. Davidson]

I appreciate that. Thank you.

[Operator]

And our next question comes from Brian Martin from Janney Montgomery. Please go ahead with your question.

[Brian Martin, Director - Banks & Thrifts at Janney Montgomery Scott]

Hey, good morning guys.

[Vincent J. Calabrese, CFO at F.N.B.]

Good Brian.

[Brian Martin, Director - Banks & Thrifts at Janney Montgomery Scott]

Sorry, I joined here a little bit late. So if you address this, you can I'll go back and relisten. But just I know you talked a little bit about M and A and less focus there. Just to be clear, just on the M and A, but if you do look at M and A strategically, is it would it be more today given all the opportunities you have elsewhere? Is kind it of like a fill in, that's the way to think about how you'd be looking at M and

[Brian Martin, Director - Banks & Thrifts at Janney Montgomery Scott]

A rather than entrance to a new market? Or is that the wrong way based on kind of less focus on M and A today?

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

I'm just less focused on M and A. I have been for the last since we've built out the franchise and we've spread across that broad geography. We've not been as focused on it. People keep talking about it because early on by the way, if you look at the total number if you look at total assets acquired assets here since Vince and I started in what was it 02/2009, think it's like $15,000,000,000 So add $8,700,000,000 to $15,000,000,000 half the company came from organic growth, okay. So let's talk about it.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

I mean we have a better opportunity to grow accretive earnings through I mean honestly that you have to really take a step back and say what did they really buy other than Yadkin everything is small. So the reality is we're focused on what I think are the right things to drive organic growth as a company and we're going to continue to focus on it.

[Brian Martin, Director - Banks & Thrifts at Janney Montgomery Scott]

Sorry. Yes, that's I figured that was a question. It was more filling because like you said, you've got great opportunities with what you've already done and what you're doing, but it's just more clarification. So I'm not suggesting you need to do more. What you've done has been great and that the what you've gotten out in front of you now that you've gone to those markets Yes,

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

pushing M and A on me, okay. Stop pushing it on me, right?

[Brian Martin, Director - Banks & Thrifts at Janney Montgomery Scott]

I'm not pushing it on you. I appreciate the color, Vince. And then how about just on one other question, I know you talked about a little bit earlier about M and A, but on the margin, just in terms of if we see some benefit to the yield curve kind of a more normalized level, kind of where the margin could trend over time in the out quarters, maybe as you get into '26 and you get a little bit of benefit there from the curve. I appreciate the comment that it's more static here in the near term, but just longer term what that could look like? Thank you.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

We're going to let our corporate strategy guy answer this question because it's long term. So go ahead.

[Executive]

Yes. No, Brian, I think there's still a great opportunity for margin in the long term to head higher. I mean, if you just look at the building blocks, clearly loan origination security yields will continue to move up. If you get more rate cuts, mean, that's just going to help us generate more deposits and continue to grow that base. I mean, you can look at where the pieces can go ultimately and kind of come to your own determination as where that level is.

[Executive]

But this is a better rate environment that we're potentially heading to than we've had for the last fifteen, twenty years in the banking industry. I think you can kind of think about it that way as well.

[Brian Martin, Director - Banks & Thrifts at Janney Montgomery Scott]

Got you. Okay. I appreciate the taking the questions guys. Thank you.

[Vincent J. Calabrese, CFO at F.N.B.]

Thanks Brian. Thanks Brian. Thank

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

you.

[Operator]

And ladies and gentlemen with that we'll conclude today's question and answer session. I'd like to turn the floor back over to Vince DeLee for any closing remarks.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

Okay. Thank you very much. Again, I'd like to thank all of our employees for the hard work that they've done. This was a terrific quarter. We got to keep it going.

[Vincent J. Delie, Chairman, President & CEO at F.N.B.]

We it's over, so we now need to focus on the next quarter, okay? So everybody keep doing what you're doing. You're doing a great job. And I want to thank the shareholders for continuing to support us and the best is yet to come. So we're very excited about it. Thank you.

[Operator]

And ladies and gentlemen, with that we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.

Participants

Executives

• Lisa Hajdu, Manager - IR
• Vincent J. Delie, Chairman, President & CEO
• Vincent J. Calabrese, CFO

Analysts

• Gary Guerrieri, Chief Credit Officer at F.N.B.
• Daniel Tamayo, Vice President at Raymond James Financial
• Russell Gunther, Managing Director at Stephens Inc
• Casey Haire, Senior Analyst - US Mid-Cap Banks at Autonomous Research
• Timur Braziler, Director - Mid-Cap Bank Equity Research at Wells Fargo
• Kelly Motta, Managing Director at Keefe, Bruyette & Woods (KBW)
• Manuel Navas, MD & Senior Research Analyst at D.A. Davidson
• Brian Martin, Director - Banks & Thrifts at Janney Montgomery Scott
• Executive