FNB Earnings 2019-03-31

FNB 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Document

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



☒	Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

For the quarterly period ended March 31, 2019



☐	Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

For the transition period from to

Commission file number 001-31940

F.N.B. CORPORATION

(Exact name of registrant as specified in its charter)



Pennsylvania		25-1255406
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



One North Shore Center, 12 Federal Street, Pittsburgh, PA		15212
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 800-555-5455

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



Large Accelerated Filer	☒	Accelerated Filer	☐

Non-accelerated Filer	☐	Smaller reporting company	☐

		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol(s)	Name of Exchange on which Registered
Common Stock, par value $0.01 per share	FNB	New York Stock Exchange

Depositary Shares each representing a 1/40th interest in a share of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series E, par value $0.01 per share	FNBPrE	New York Stock Exchange

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



Class	Outstanding at	April 30, 2019
Common Stock, $0.01 Par Value	324,748,696	Shares

Table of Contents

F.N.B. CORPORATION

FORM 10-Q

March 31, 2019

INDEX



		PAGE
PART I – FINANCIAL INFORMATION

	Glossary of Acronyms and Terms	3

Item 1.	Financial Statements

	Consolidated Balance Sheets	4
	Consolidated Statements of Income	5
	Consolidated Statements of Comprehensive Income	6
	Consolidated Statements of Stockholders’ Equity	7
	Consolidated Statements of Cash Flows	8
	Notes to Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	52

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	76

Item 4.	Controls and Procedures	76

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	77

Item 1A.	Risk Factors	77

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	77

Item 3.	Defaults Upon Senior Securities	77

Item 4.	Mine Safety Disclosures	77

Item 5.	Other Information	77

Item 6.	Exhibits	78

Signatures		78

Table of Contents

Glossary of Acronyms and Terms


AFS	Available for sale


ALCO	Asset/Liability Committee


AOCI	Accumulated other comprehensive income


ASC	Accounting Standards Codification


ASU	Accounting Standards Update


BOLI	Bank owned life insurance


Basel III	Basel III Capital Rules


CFPB	Consumer Financial Protection Bureau


EVE	Economic value of equity


FDIC	Federal Deposit Insurance Corporation


FHLB	Federal Home Loan Bank


FNB	F.N.B. Corporation


FNBPA	First National Bank of Pennsylvania


FRB	Board of Governors of the Federal Reserve System


FTE	Fully taxable equivalent


FVO	Fair value option


GAAP	U.S. generally accepted accounting principles


HTM	Held to maturity


IRLC	Interest rate lock commitments


LCR	Liquidity Coverage Ratio


LIBOR	London Inter-bank Offered Rate


MCH	Months of Cash on Hand


MD&A	Management's Discussion and Analysis


MSR	Mortgage servicing rights


OCC	Office of the Comptroller of the Currency


OREO	Other real estate owned


OTTI	Other-than-temporary impairment


Regency	Regency Finance Company


SBA	Small Business Administration


SEC	Securities and Exchange Commission


TCJA	Tax Cuts and Jobs Act of 2017


TDR	Troubled debt restructuring


TPS	Trust preferred securities


UST	U.S. Department of the Treasury


YDKN	Yadkin Financial Corporation

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

F.N.B. CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

Dollars in millions, except share and per share data



	March 31, 2019			December 31, 2018
	(Unaudited)
Assets
Cash and due from banks	$	425		$	451
Interest bearing deposits with banks	72			37
Cash and Cash Equivalents	497			488
Debt securities available for sale	3,403			3,341
Debt securities held to maturity (fair value of $3,139 and $3,155)	3,171			3,254
Loans held for sale (includes $25 and $14 measured at fair value) ⁽¹⁾	37			22
Loans and leases, net of unearned income of $0 and $3	22,620			22,153
Allowance for credit losses	(186		)	(180		)
Net Loans and Leases	22,434			21,973
Premises and equipment, net	329			330
Goodwill	2,255			2,255
Core deposit and other intangible assets, net	75			79
Bank owned life insurance	538			537
Other assets	956			823
Total Assets	$	33,695		$	33,102
Liabilities
Deposits:
Non-interest-bearing demand	$	6,124		$	6,000
Interest-bearing demand	9,743			9,660
Savings	2,523			2,526
Certificates and other time deposits	5,492			5,269
Total Deposits	23,882			23,455
Short-term borrowings	4,111			4,129
Long-term borrowings	673			627
Other liabilities	349			283
Total Liabilities	29,015			28,494
Stockholders’ Equity
Preferred stock - $0.01 par value; liquidation preference of $1,000 per share
Authorized – 20,000,000 shares
Issued – 110,877 shares	107			107
Common stock - $0.01 par value
Authorized – 500,000,000 shares
Issued – 326,450,880 and 326,120,832 shares	3			3
Additional paid-in capital	4,052			4,049
Retained earnings	629			576
Accumulated other comprehensive loss	(88		)	(106		)
Treasury stock – 1,934,967 and 1,806,303 shares at cost	(23		)	(21		)
Total Stockholders’ Equity	4,680			4,608
Total Liabilities and Stockholders’ Equity	$	33,695		$	33,102


(1)	Amount represents loans for which we have elected the fair value option. See Note 17.

See accompanying Notes to Consolidated Financial Statements (unaudited)

Table of Contents

F.N.B. CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

Dollars in millions, except per share data

Unaudited



	Three Months Ended March 31,
	2019		2018
Interest Income
Loans and leases, including fees	$	269	$	239
Securities:
Taxable	33		27
Tax-exempt	8		7
Total Interest Income	310		273
Interest Expense
Deposits	50		27
Short-term borrowings	26		15
Long-term borrowings	3		5
Total Interest Expense	79		47
Net Interest Income	231		226
Provision for credit losses	14		14
Net Interest Income After Provision for Credit Losses	217		212
Non-Interest Income
Service charges	30		30
Trust services	7		7
Insurance commissions and fees	5		5
Securities commissions and fees	4		4
Capital markets income	6		5
Mortgage banking operations	4		6
Dividends on non-marketable equity securities	5		4
Bank owned life insurance	3		3
Other	1		3
Total Non-Interest Income	65		67
Non-Interest Expense
Salaries and employee benefits	91		89
Net occupancy	15		16
Equipment	15		14
Amortization of intangibles	4		4
Outside services	15		15
FDIC insurance	6		9
Bank shares and franchise taxes	3		3
Other	17		21
Total Non-Interest Expense	166		171
Income Before Income Taxes	116		108
Income taxes	22		21
Net Income	94		87
Preferred stock dividends	2		2
Net Income Available to Common Stockholders	$	92	$	85
Earnings per Common Share
Basic	$	0.28	$	0.26
Diluted	$	0.28	$	0.26
Cash Dividends per Common Share	$	0.12	$	0.12

See accompanying Notes to Consolidated Financial Statements (unaudited)

Table of Contents

F.N.B. CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Dollars in millions

Unaudited



	Three Months Ended March 31,
	2019			2018
Net income	$	94		$	87
Other comprehensive income (loss):
Securities available for sale:
Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $7 and $(8)	24			(30		)
Derivative instruments:
Unrealized (losses) gains arising during the period, net of tax (benefit) expense of $(2) and $1	(6		)	4
Reclassification adjustment for (gains) losses included in net income, net of tax expense (benefit) of $0 and $0	(1		)	—
Pension and postretirement benefit obligations:
Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $0 and $0	1			—
Other Comprehensive Income (Loss)	18			(26		)
Comprehensive Income	$	112		$	61

See accompanying Notes to Consolidated Financial Statements (unaudited)

Table of Contents

F.N.B. CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Dollars in millions, except per share data

Unaudited



	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
Balance at January 1, 2018	$	107	$	3	$	4,033	$	368		$	(83	)	$	(19	)	$	4,409
Comprehensive income (loss)							87			(26		)				61
Dividends declared:
Preferred stock							(2		)							(2		)
Common stock: $0.12/share							(39		)							(39		)
Issuance of common stock			—		2								—			2
Restricted stock compensation					2											2
Balance at March 31, 2018	$	107	$	3	$	4,037	$	414		$	(109	)	$	(19	)	$	4,433
Balance at January 1, 2019	$	107	$	3	$	4,049	$	576		$	(106	)	$	(21	)	$	4,608
Comprehensive income							94			18						112
Dividends declared:
Preferred stock							(2		)							(2		)
Common stock: $0.12/share							(39		)							(39		)
Issuance of common stock			—		1								(2		)	(1		)
Restricted stock compensation					2											2
Balance at March 31, 2019	$	107	$	3	$	4,052	$	629		$	(88	)	$	(23	)	$	4,680

See accompanying Notes to Consolidated Financial Statements (unaudited)

Table of Contents

F.N.B. CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Dollars in millions

Unaudited



	Three Months Ended March 31,
	2019			2018
Operating Activities
Net income	$	94		$	87
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion	7			24
Provision for credit losses	14			14
Deferred tax expense	2			2
Loans originated for sale	(217		)	(209		)
Loans sold	206			269
Net gain on sale of loans	(4		)	(5		)
Net change in:
Interest receivable	(11		)	(1

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$11.98	325	$3,890

10-Q	2019-03-31	Quarter: 2019-03-31
10-K	2018-12-31	Annual: 2018-12-31
10-Q	2018-09-30	Quarter: 2018-09-30
10-Q	2018-06-30	Quarter: 2018-06-30
10-Q	2018-03-31	Quarter: 2018-03-31
10-K	2017-12-31	Annual: 2017-12-31
10-Q	2017-09-30	Quarter: 2017-09-30
10-Q	2017-06-30	Quarter: 2017-06-30
10-Q	2017-03-31	Quarter: 2017-03-31
10-K	2016-12-31	Annual: 2016-12-31
10-Q	2016-09-30	Quarter: 2016-09-30
10-Q	2016-06-30	Quarter: 2016-06-30
10-Q	2016-03-31	Quarter: 2016-03-31
10-K	2015-12-31	Annual: 2015-12-31
10-Q	2015-09-30	Quarter: 2015-09-30
10-Q	2015-06-30	Quarter: 2015-06-30
10-Q	2015-03-31	Quarter: 2015-03-31
10-K	2014-12-31	Annual: 2014-12-31
10-Q	2014-09-30	Quarter: 2014-09-30
10-Q	2014-06-30	Quarter: 2014-06-30
10-Q	2014-03-31	Quarter: 2014-03-31
10-K	2013-12-31	Annual: 2013-12-31

8-K	2019-05-15	Shareholder Vote
8-K	2019-04-23	Earnings, Exhibits
8-K	2019-04-22	Officers, Exhibits
8-K	2019-02-11	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2019-02-06	Regulation FD, Exhibits
8-K	2019-01-22	Earnings, Exhibits
8-K	2018-10-23	Earnings, Exhibits
8-K	2018-07-24	Earnings, Exhibits
8-K	2018-06-07	Other Events, Exhibits
8-K	2018-05-29	Other Events, Exhibits
8-K	2018-05-16	Shareholder Vote
8-K	2018-04-24	Earnings, Exhibits
8-K	2018-04-02	Officers, Exhibits
8-K	2018-01-23	Earnings, Exhibits

CMI	Cummins	26,040
RDN	Radian Group	4,720
FND	Floor & Decor Holdings	4,140
UE	Urban Edge Properties	2,140
AAMC	Altisource Asset Management	38
TSOI	Therapeutic Solutions	0
UGHL	Union Bridge Holdings	0
ISCO	International Stem Cell	0
QPAG	Qpagos	0
RETC	12 Retech	0

EX-31.1	fnb10-qex311q12019.htm
EX-31.2	fnb10-qex312q12019.htm
EX-32.1	fnb10-qex321q12019.htm
EX-32.2	fnb10-qex322q12019.htm