F.N.B. Corporation (FNB) Q4 2025 Earnings Call Transcript
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Overview
The earnings call reflects a positive sentiment with strong financial performance, optimistic guidance, and strategic growth plans. The company anticipates loan and deposit growth, raised net interest income guidance, and efficiency improvements through digital initiatives. Shareholder returns are supported by continued buybacks and potential dividend increases. Although management avoided specifics on buybacks and dividends, the overall outlook is positive, with strategic redeployment of capital and strong credit quality. Considering the market cap, a positive stock price movement of 2% to 8% is expected over the next two weeks.
Key Financial Performance
Operating Net Income (Q4 2025) $182 million or $0.50 per diluted common share. This is a record figure for the quarter.
Full Year Revenue (2025) $1.8 billion, reflecting a 14% year-over-year growth in operating EPS. This growth was driven by a 9% increase in net interest income, significant margin expansion, and record noninterest income.
Return on Average Tangible Common Equity (2025) 16%, with a tangible book value per share of $11.87, which is a 13% increase from the year-ago quarter.
Loan-to-Deposit Ratio (2025) 89.7%, improved by over 170 basis points from year-end 2024 due to balance sheet management strategies and deposit gathering initiatives.
Total Delinquency (Q4 2025) 71 basis points, up 6 basis points from the prior quarter. However, NPLs and OREO decreased by 6 basis points, ending at a multiyear low of 31 basis points.
Net Charge-Offs (2025) 20 basis points for the year, showing strong performance despite an uncertain economic environment.
Criticized Loans (Q4 2025) Declined by $147 million or 10.2% on a linked quarter basis, driven by payoff activity and decreases across all commercial segments.
Funded Provision Expense (Q4 2025) $18.7 million, supporting C&I loan growth and charge-offs.
Reserve for Loan Losses (Q4 2025) $440 million, an increase of $2.3 million from the prior quarter, ending at 1.26% of total loans.
Total Revenues (Q4 2025) Nearly $458 million, a 12.4% year-over-year growth on an operating basis.
Net Interest Income (Q4 2025) $365.4 million, up 1.7% sequentially and 13.4% year-over-year. This was driven by higher loan and investment securities balances.
Net Interest Margin (Q4 2025) 3.28%, up 3 basis points sequentially and 24 basis points year-over-year.
Operating Noninterest Income (Q4 2025) $92.3 million, an 8.8% increase year-over-year, driven by growth in wealth management revenues, service charges, and other income sources.
Operating Noninterest Expense (Q4 2025) $256.5 million, a 3.4% increase year-over-year, primarily due to strategic hiring, technology investments, and higher occupancy costs.
Efficiency Ratio (Q4 2025) 53.8%, improved by 307 basis points compared to Q4 2024.
Tangible Book Value Per Common Share (2025) $11.87, a 13.2% increase year-over-year, reflecting strong profitability and capital generation.
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Operating Highlights
Payment Switch Feature: Introduced a new feature enabling customers to easily switch preauthorized payments to their primary checking account through the mobile app, eliminating barriers for customers to move their primary banking relationship to FNB.
Digital Strategy Enhancements: Continued focus on digital innovation, including AI adoption, to enhance client acquisition, engagement, and convenience. Plans to introduce additional unique features in the coming quarters.
Geographic Expansion: Achieved mid-single-digit growth in loans and deposits across a diverse geographic footprint, contributing to market share increase.
Cost Savings: Achieved annual cost savings of $10 million to $20 million since 2019 through disciplined expense management and technology investments. Expecting higher savings in 2026 through automation and process improvements.
Loan-to-Deposit Ratio: Improved loan-to-deposit ratio to 89.7%, reflecting effective balance sheet management.
CRE Concentration Management: Strategically decreased CRE concentration to 197% over the past few years, aligning with desired risk levels.
Capital Deployment: Generated sufficient capital to support growth across the loan portfolio, including CRE, while maintaining strong profitability and capital metrics.
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Risk or Challenges
CRE Concentration: The company has strategically decreased its CRE concentration to 197% over the past few years. However, there is still a focus on managing this risk and exposure, as it remains a critical area of concern.
Economic Environment: The uncertain economic environment poses potential volatility risks, which the company acknowledges as a factor that could impact its operations and credit risk management.
Loan Portfolio Quality: While the company has seen improvements in credit metrics and a decline in criticized loans, there is ongoing monitoring of line utilization and industry concentrations, especially for customers with higher potential long-term impacts.
Renewable Energy Financing: Changes in tax laws have limited certain types of renewable energy projects, which could impact the company's Equipment Finance business and its pipeline in this sector.
Interest Rate Cuts: The Federal Reserve's interest rate cuts have impacted the yield on earning assets, which could affect net interest income and margin stability.
Deposit Pricing: The company is strategically lowering deposit pricing in line with Federal Reserve rate cuts, but this could pose challenges in maintaining deposit growth and customer retention.
Technology Investments: While technology investments are driving efficiency and cost savings, there is a risk of higher technology-related expenses and third-party costs, which have already increased by 15.3% year-over-year.
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Guidance & Outlook
Loan and Deposit Growth: FNB expects mid-single-digit growth in loans and deposits for the full year 2026 compared to year-end 2025, driven by increased market share across its geographic footprint.
Net Interest Income: Full year 2026 net interest income is projected to range between $1.495 billion and $1.535 billion, with first quarter net interest income expected between $355 million and $365 million. This assumes two 25 basis point rate cuts in April and October.
Noninterest Income: Noninterest income for 2026 is expected to be between $370 million and $390 million, with the first quarter projected between $90 million and $95 million.
Noninterest Expense: Full year 2026 noninterest expenses are expected to range between $1 billion and $1.02 billion, representing a 1.5% increase at the midpoint compared to 2025. First quarter expenses are expected to range from $255 million to $260 million.
Provision Expense: Provision expense for 2026 is expected to range between $85 million and $105 million, depending on net loan growth and charge-off activity.
Effective Tax Rate: The effective tax rate for 2026 is projected to be between 21% and 22%, excluding any investment tax credit activity.
Residential Mortgage Loans: Residential mortgage loans are expected to grow in line with the overall loan portfolio in 2026.
Cost Savings and Efficiency: FNB anticipates achieving higher levels of cost savings in 2026 through increased automation and process improvements, leveraging investments in technology, AI, and data analytics.
Capital Flexibility: Improved capital levels and double-digit tangible book value growth year-over-year provide strong capital flexibility for sustainable long-term value creation.
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Shareholder Return Plan
Share Repurchase Program: Share repurchases totaled nearly $50 million for the full year of 2025, the highest level since the program originated in 2020.
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Key Q&A
Q:What factors might lead to achieving the upper end of the fee income guidance range for 2026?
A:Management highlighted diversification as a key factor, with all-time highs in 7 fee-based businesses for the full year and 4 in the fourth quarter. Growth in service charges, insurance, securities commissions, and BOLI offset declines in mortgage banking and capital markets. Contributions from newer businesses, strong performance in core fee-based businesses (wealth, treasury management, capital markets, and mortgage), and favorable macroeconomic conditions (e.g., interest rate environment) are expected to drive growth. New initiatives in treasury management, derivatives, public finance, and M&A advisory are also expected to contribute.
Q:What are the expectations for operating leverage in 2026?
A:Management expects meaningful increases in PPNR and operating leverage in 2026. Expenses are projected to grow in the low single digits, with investments in new initiatives and efficiency improvements. Completed initiatives related to heightened standards and low-income mortgage grants will no longer be headwinds. Cost takeouts, digital investments, AI, and data analytics are expected to improve efficiency. The efficiency ratio is projected to reach the low 50s by the second half of 2026.
Q:What is the loan growth outlook for 2026, and what are the drivers?
A:Loan growth is expected to be in the mid-single digits, with C&I and CRE as the primary drivers. The residential portfolio is also expected to grow at mid-single digits. Strong production in C&I and CRE, capacity from a low loan-to-deposit ratio (89.7%), and low CRE concentration (197%) provide room for growth. Management plans to redeploy capital from mortgage loans to higher-return categories like C&I and CRE. Equipment finance is also expected to perform strongly.
Q:What is the capital management strategy for 2026?
A:The CET1 ratio is at 11.4%, with a target of maintaining flexibility for organic growth and shareholder returns. Management plans to support high single-digit loan growth, continue buybacks (at or above 2025 levels), and consider dividend increases. CRE concentration is expected to remain around 200%, with capacity to originate $1 billion in CRE loans without increasing concentration. Management is focused on deploying capital in high-return opportunities and maintaining a strong return on tangible common equity.
Q:What is the outlook for the net interest margin (NIM) and deposit betas in 2026?
A:The NIM is expected to increase modestly by a few basis points per quarter, with a year-end range of 3.28%. The interest-bearing deposit beta is projected to reach 30% by the end of 2026, with a terminal beta in the mid-30s. Management has been strategic in adjusting deposit rates and expects further opportunities to reduce rates in large segments of the deposit base.
Q:What is the outlook for credit quality and provisions in 2026?
A:The provision guidance assumes the ACL ratio will remain stable, supporting mid-single-digit loan growth. Charge-offs are expected to remain at 20 basis points. Management is confident in maintaining credit quality and has strategically managed concentrations, such as reducing the mortgage portfolio to create capacity for commercial growth.
Q:What is the management's stance on M&A?
A:Management is focused on organic growth and internal capital generation. While open to opportunistic M&A, any potential deal must align with the company's strategy, avoid diluting capital or deposit mix, and provide significant value. Recent M&A activity has been limited to small, strategic deals that enhance the deposit base and cross-sell opportunities.
Q:What are the key drivers of efficiency improvements in 2026?
A:Efficiency improvements are driven by automation, digitization, AI, and data analytics. Investments in a data science platform and the deployment of a common app in the retail delivery channel are expected to enhance operational efficiency. The retail bank, despite its size, is run efficiently and contributes to overall cost management. Management expects these initiatives to sustain an efficiency ratio in the low 50s.
Q:What is the sentiment around lending and deposit growth in 2026?
A:Lending sentiment is positive, with expectations for growth to be back-end loaded in 2026. Discussions around capital investment are increasing, and treasury management pipelines remain robust. Management sees opportunities in high-quality CRE and expects strong deposit growth, supported by a pipeline of $1 billion in deposit prospects.
Q:What is the rationale behind the planned mortgage loan sales?
A:The planned mortgage loan sales are aimed at managing concentration levels (currently 25% of total loans) and redeploying capital to higher-return categories like C&I and CRE. The loans being sold are predominantly out of market, with limited cross-sell opportunities. Management expects the sales to occur at par and to create capacity for commercial growth.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the price sensitivity of buybacks, stating only that they believe the stock is undervalued and that buybacks remain attractive. Additionally, while they discussed the potential for dividend increases, no concrete decisions or timelines were provided, as these are subject to Board approval.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI analytics
AI force
BOLI income
CI loan
Clicks Bricks
FNB
Fed
MSR
balance loan
bps
capital level
checking
core
cost saving
credit transaction
eStore
energy financing
equipment
expense increase
exposure concentration
financing transaction
impairment tax
income record
line utilization
loan basis
loan charge
loan sale
market activity
mortgage loan
noncredit
noninterest deposit
occupancy
payment switch
point basis
profitability
ratio basis
record income
sheet strategy
switch payment
FNB Transcript
F.N.B. Corporation (FNB) Q4 2025 Earnings Call Transcript
Positive1-21
The earnings call reflects a positive sentiment with strong financial performance, optimistic guidance, and strategic growth plans. The company anticipates loan and deposit growth, raised net interest income guidance, and efficiency improvements through digital initiatives. Shareholder returns are supported by continued buybacks and potential dividend increases. Although management avoided specifics on buybacks and dividends, the overall outlook is positive, with strategic redeployment of capital and strong credit quality. Considering the market cap, a positive stock price movement of 2% to 8% is expected over the next two weeks.
F.N.B. Corporation (FNB) Q3 2025 Earnings Call Transcript
Positive10-17
The earnings call reflects strong financial performance with record net interest income and improved efficiency ratio. Despite increased expenses, strategic investments and strong loan and deposit growth are positive indicators. The Q&A session reveals effective risk management and capital strategies, with optimism for future growth in fee income and technology. While some responses were vague, overall sentiment is positive, supported by raised guidance and market share gains. Given the company's market cap, a positive stock price movement of 2% to 8% is expected.
F.N.B. Corporation (FNB) Q2 2025 Earnings Call Transcript
Positive7-18
The earnings call highlights strong financial performance, including record noninterest income, improved asset quality, and a favorable efficiency ratio. Despite slight declines in some metrics, guidance remains optimistic, with expectations of mid-single-digit growth in loans and deposits. The Q&A session reveals a focus on organic growth, technology investment, and shareholder returns, with management maintaining a conservative but positive outlook. Given the positive financial performance and strategic focus, a positive stock price movement is expected, especially considering the company's market cap.
F.N.B. Corporation (NYSE:FNB) Q1 2025 Earnings Call Transcript
Positive4-18
The earnings report shows strong financial performance with increased net income, EPS, and revenue, alongside effective capital management and operational efficiency. The Q&A highlights potential cost savings and upside in net interest income. Despite some risks, such as tariffs and softer loan pipelines, the management appears proactive. The share repurchase plan and high CET1 ratio further support a positive outlook. Given the market cap, the stock is likely to see a moderate positive reaction, around 2% to 8%.
FNB Slides
FNB Report
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