F.N.B. Corporation Reports Record Net Income and 16% Increase In Operating Earnings Per Common Share

PRESS RELEASE

April 23, 2015 - PITTSBURGH, PA

F.N.B. Corporation (NYSE: FNB) today reported first quarter 2015 results.  Net income available to common shareholders for the first quarter of 2015 totaled $38.3 million, or $0.22 per diluted common share.  Comparatively, first quarter of 2014 net income totaled $32.2 million, or $0.20 per diluted common share, and fourth quarter of 2014 net income totaled $37.3 million, or $0.21 per diluted common share.  Operating results are presented in the table below.

Vincent J. Delie, Jr., President and Chief Executive Officer, commented, “The high-quality results, which include a 16% increase in operating earnings per share, demonstrate the successful execution of our organic and acquisition growth strategy.  During the first quarter, we continued to grow revenue, loans, deposits and fee-based income with solid asset quality results.  As we move forward throughout 2015, our strengthened capital levels and balance sheet position enable the organization to support our long-term organic growth objectives.”

Quarterly Results Summary	1Q15	4Q14	1Q14
Reported Results
Net income available to common shareholders ($ in millions)	$38.3	$37.3	$32.2
Net income per diluted common share	$0.22	$0.21	$0.20
Operating Results (Non-GAAP)
Operating net income available to common shareholders ($ in millions)	$38.3	$36.4	$30.8
Operating net income per diluted common share	$0.22	$0.21	$0.19
Average Diluted Shares Outstanding (in 000’s)	175,826	175,630	163,967

First Quarter 2015 Highlights

(All comparisons are to the prior quarter, except as noted; Organic growth in loans and leases and deposits refers to growth excluding the benefit of initial balances obtained via acquisitions.)   

• Organic growth in total average loans and leases was $194 million, or 7.1% annualized, with average commercial loan and lease growth of $81 million, or 5.2% annualized, and average consumer loan growth (consisting of direct loans, consumer lines of credit, indirect installment and residential loans) of $119 million, or 10.1% annualized.
• On an organic basis, average total deposits and customer repurchase agreements declined slightly by $30 million, or 1.0% annualized, due to the impact of seasonally lower customer repurchase agreement balances.  Period-end total deposits and customer repurchase agreements grew organically by $298 million, or 9.9% annualized.
• The net interest margin was 3.48%, compared to 3.54%, with the narrowing reflecting the continued low interest rate environment.
• The efficiency ratio was 56.6%, compared to 56.1% in the prior quarter and 59.0% in the first quarter of 2014.
• Credit quality results reflect further improvement in non-performing loan and delinquency levels.  For the originated portfolio, non-performing loans and other real estate owned (OREO) to total loans and leases and OREO improved 5 basis points to 1.08% and total originated delinquency improved 13 basis points to 0.86% at March 31, 2015.  Net originated charge-offs were 0.24% annualized of total average originated loans and leases, compared to 0.17% annualized in the fourth quarter of 2014 and 0.28% annualized in the year-ago quarter.
• The tangible common equity to tangible assets ratio increased 18 basis points to 7.01% at March 31, 2015.  The tangible book value per share (non-GAAP measure) increased $0.19 to $6.18 at March 31, 2015.       

First Quarter 2015 Results – Comparison to Prior-Year Quarter

(All comparisons refer to the first quarter of 2014, except as noted)

Results include the impact from the OBA Financial Services, Inc. (OBAF) acquisition on September 19, 2014, and the BCSB Bancorp, Inc. (BCSB) acquisition on February 15, 2014.

Net Interest Income/Loans/Deposits

Net interest income on a fully taxable equivalent basis totaled $123.7 million, increasing $14.2 million, or 12.9%, primarily due to strong organic growth and the benefit from a full quarter of BCSB and OBAF.  The net interest margin was 3.48%, compared to 3.62%, with the narrowing primarily attributable to the continued low interest rate environment and a competitive lending environment.  Average earning assets grew $2.1 billion, or 17.2%, through consistent organic loan growth and the benefit of acquisition-related growth.

Average loans and leases totaled $11.3 billion representing an increase of $1.6 billion, or 16.4%, reflecting strong organic average loan and lease growth of $1.1 billion, or 11.5%, and loans added with the BCSB and OBAF acquisitions.  Average organic commercial loan and lease growth was strong, increasing $575 million or 10.4%.  Average organic consumer loan growth (consisting of direct loans, consumer lines of credit, indirect installment and residential loans) was also strong, increasing $556 million, or 13.0%.  Organic growth results reflect the benefit of the increased number of prospects in the greater Pittsburgh, Baltimore and Cleveland metropolitan markets and continued successful sales management.

Average deposits and customer repurchase agreements totaled $12.4 billion, an increase of $1.0 billion, or 9.0%, including average organic growth of $454 million, or 3.9%. Organic growth in low-cost transaction deposit accounts and customer repurchase agreements was $755 million, or 8.6%, led by strong organic growth in average non-interest bearing deposits of $339 million, or 15.1%.

Non-Interest Income

Non-interest income totaled $38.2 million, decreasing $3.9 million, or 9.2%, with the first quarter of 2014 including higher gains on the sale of securities of $9.5 million.  Excluding securities gains, non-interest income increased $5.6 million, or 17.1%, due to organic growth across several fee-based businesses and acquisition-related growth.  Mortgage banking revenues increased $1.6 million, due mainly to higher origination volume and successful cross-selling efforts.  Wealth management revenues, which includes trust income and securities commissions, increased $1.1 million, or 14.9%, reflecting organic sales growth and added benefit from the BCSB and OBAF acqusitions.  Customer swap fee revenue increased by $1.6 million, reflecting solid organic commercial loan growth during the quarter and demand for these products given the potential for interest rate increases in the current interest rate environment. 

Non-Interest Expense

Non-interest expense totaled $94.7 million, increasing $0.5 million, or 0.5%.  Excluding merger and severance costs of $7.2 million in the first quarter of 2014, non-interest expense increased $7.7 million, or 8.9%, primarily attributable to the additional operating costs related to a full quarter of BCSB and OBAF.  The efficiency ratio improved to 56.6% from 59.0%.

Credit Quality

Credit quality results reflect overall improvement from the prior-year period.  The ratio of non-performing loans and OREO to total loans and leases and OREO improved 29 basis points to 0.94%, and for the originated portfolio, the ratio of non-performing loans and OREO to total loans and leases and OREO improved 38 basis points to 1.08%.  Total originated delinquency, defined as total past due and non-accrual originated loans as a percentage of total originated loans and leases, improved 31 basis points to 0.86% at March 31, 2015, reflecting a $12.4 million, or 12.6%, reduction in total originated delinquency.

Net charge-offs totaled $5.6 million, or 0.20% annualized of total average loans and leases, compared to $5.6 million, or 0.23% annualized.  For the originated portfolio, net charge-offs were $5.8 million, or 0.24% annualized of total average originated loans and leases, compared to $5.6 million, or 0.28% annualized.  The ratio of the allowance for credit losses to total originated loans and leases was 1.22% at March 31, 2015, compared to 1.28%, with the change directionally consistent with the performance of the portfolio.  The provision for credit losses totaled $8.1 million, compared to $7.0 million in the prior-year period primarily due to the strong organic loan and lease growth.

First Quarter 2015 Results – Comparison to Prior Quarter

(All comparisons refer to the fourth quarter of 2014, except as noted)

Net Interest Income/Loans/Deposits

Net interest income on a fully taxable equivalent basis totaled $123.7 million, decreasing $1.7 million, or 1.3%, reflecting two fewer days in the quarter and a continued low interest rate environment.  The net interest margin was 3.48%, compared to 3.54% in the prior quarter.  Excluding accretable yield adjustments, the first quarter core net interest margin was 3.43%, compared to 3.49%.  The narrowing in the net interest margin reflects the continued low interest rate environment and a competitive lending environment. 

Average loans and leases totaled $11.3 billion, and total average organic loan and lease growth totaled $194 million, or 7.1% annualized.  Organic growth in average commercial loans and leases totaled $81 million, or 5.2% annualized, and organic growth in average consumer loans (consisting of direct loans, consumer lines of credit, indirect installment and residential loans) was $119 million, or 10.1% annualized.  Commercial and consumer loan growth continued to benefit from the increased number of lending opportunities in the greater Pittsburgh, Baltimore and Cleveland metropolitan markets. 

Average deposits and customer repurchase agreements totaled $12.4 billion.  On an organic basis, average total deposits and customer repurchase agreements decreased slightly by $30 million, or 1.0% annualized, reflecting the timing of seasonally lower average customer repurchase agreements.  On a period-end basis, organic growth in total deposits and customer repurchase agreements was strong at $298 million, or 9.9% annualized.  On an organic basis, average total transaction deposits and customer repurchase agreements increased $10 million, or 0.4% annualized, reflecting seasonally lower business deposits and customer repurchase agreement balances.  On a period-end basis, organic growth in transaction deposits and customer repurchase agreements was strong at $320 million, or 13.5% annualized.  Total loans as a percentage of deposits and customer repurchase agreements was 91% at March 31, 2015.

Non-Interest Income

Non-interest income totaled $38.2 million, decreasing $1.3 million, or 3.2%.  Excluding a non-recurring $2.7 million gain in the fourth quarter of 2014, non-interest income increased $1.4 million, or 3.9%.  The first quarter included positive results from mortgage banking, wealth management and higher swap fee revenue, offset by a seasonal decline in service charges.  Mortgage banking results reflect successful cross-selling efforts, higher purchase volume and slightly increased refinance activity in 2015.  Non-interest income represents 24% of total revenue.

Non-Interest Expense

Non-interest expense totaled $94.7 million, decreasing $2.0 million, or 2.1%.  Excluding $1.6 million of merger and severance costs in the fourth quarter of 2014, non-interest expense decreased $0.4 million, or 0.5%, in the first quarter of 2015, reflecting a $1.0 million decrease in OREO expense, seasonally lower marketing costs and lower professional services fees.  The $1.1 million increase in weather-related occupancy and equipment costs partially offset these items.  The efficiency ratio was 56.6%, compared to 56.1%.

Credit Quality

Credit quality metrics reflect an improvement in the ratio of non-performing loans and OREO to total loans and leases and OREO of 3 basis points to 0.94% at March 31, 2015, and 5 basis points for the originated portfolio to 1.08%.  Delinquency improved 13 basis points to 0.86% at March 31, 2015.

Net charge-offs for the first quarter totaled $5.6 million, or 0.20% annualized of total average loans and leases, compared to $4.7 million, or 0.17% annualized, in the prior quarter.  For the originated portfolio, net charge-offs as a percentage of average originated loans and leases were 0.24% annualized, compared to 0.17% annualized in the prior quarter.  For the originated portfolio, the allowance for credit losses to total originated loans and leases was flat at 1.22%, compared to December 31, 2014.  The ratio of the allowance for credit losses to total loans and leases increased slightly to 1.13%, compared to 1.12%.  The provision for credit losses decreased $1.9 million to $8.1 million.  The ratio of the allowance for credit losses to total non-performing loans increased to 180.8%, compared to 172.1%.

Capital Position

The tangible common equity to tangible assets ratio (non-GAAP measure) was 7.01%, compared to 6.83% and 6.81% at December 31, 2014 and March 31, 2014, respectively.  The tangible book value per common share (non-GAAP measure) increased to $6.18, from $5.99 and $5.58 at December 31, 2014 and March 31, 2014, respectively.  The common dividend payout ratio for the first quarter of 2015 was 54.8%.

Conference Call

F.N.B. Corporation will host a conference call to discuss first quarter 2015 financial results on Thursday, April 23, 2015, at 10:00 a.m. Eastern Time. Participating callers may access the call by dialing (866) 652-5200 or (412) 317-6060 for international callers. Participants should ask to be joined into the F.N.B. Corporation call.  The Webcast and presentation materials may be accessed through the “Shareholder and Investor Relations” section of the Corporation’s Web site at www.fnbcorporation.com.

A replay of the call will be available shortly after the completion of the call on the day of the call until midnight ET on Thursday, April 30, 2015. The replay can be accessed by dialing (877) 344-7529 or (412) 317-0088 for international callers; the conference replay access code is 10062662. Following the call, a transcript of the call and the related presentation materials will be posted to the “Shareholder and Investor Relations” section of F.N.B. Corporation’s Web site at www.fnbcorporation.com.

About F.N.B. Corporation
F.N.B. Corporation (NYSE: FNB), headquartered in Pittsburgh, Pennsylvania, is a diversified financial services company operating in six states,including three major metropolitan areas. It holds a top retail deposit market share in Pittsburgh, PA, Baltimore, MD, and Cleveland, OH. The Company has total assets of $16.3 billion and more than 280 banking offices throughout Pennsylvania, Maryland, Ohio and West Virginia. F.N.B. provides a full range of commercial banking, consumer banking and wealth management solutions through its subsidiary network which is led by its largest affiliate, First National Bank of Pennsylvania, founded in 1864. Commercial banking solutions include corporate banking, small business banking, investment real estate financing, international banking, business credit, capital markets and lease financing. The consumer banking segment provides a full line of consumer banking products and services including deposit products, mortgage lending, consumer lending and a complete suite of mobile and online banking services. F.N.B.’s wealth management services include asset management, private banking and insurance. The Company also operates Regency Finance Company, which has more than 70 consumer finance offices in Pennsylvania, Ohio, Kentucky and Tennessee. The common stock of F.N.B. Corporation trades on the New York Stock Exchange under the symbol “FNB” and is included in Standard & Poor’s SmallCap 600 Index with the Global Industry Classification Standard (GICS) Regional Banks Sub-Industry Index. Customers, shareholders and investors can learn more about this regional financial institution by visiting the F.N.B. Corporation web site at www.fnbcorporation.com.

Non-GAAP Financial Measures
F.N.B. Corporation uses certain non-GAAP financial measures, such as operating net income available to common shareholders, operating net income per diluted common share, tangible book value per common share, tangible common equity to tangible assets ratio and capital ratios defined by banking regulators, to provide information useful to investors in understanding F.N.B. Corporation’s operating performance and trends, and facilitate comparisons with the performance of F.N.B. Corporation’s peers. The non-GAAP financial measures used by F.N.B. Corporation may differ from the non-GAAP financial measures other financial institutions use to measure their results of operations.  Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, F.N.B. Corporation’s reported results prepared in accordance with U.S. GAAP.  Reconciliations of these non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures are included in the tables at the end of this release under the caption “Reconciliation of Non-GAAP Financial Measures.”

Cautionary Statement Regarding Forward-looking Information
We make statements in this press release and the related conference call, and may from time to time make other statements, regarding our outlook for earnings, revenues, expenses, capital levels, liquidity levels, asset levels, asset quality and other matters regarding or affecting F.N.B. Corporation and its future business and operations that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act.  Forward-looking statements are typically identified by words such as “believe,” “plan,” “expect,” “anticipate,” “see,” “look,” “intend,” “outlook,” “project,” “forecast,” “estimate,” “goal,” “will,” “should” and other similar words and expressions.  Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. 

Forward-looking statements speak only as of the date made.  We do not assume any duty and do not undertake to update forward-looking statements.  Actual results or future events could differ, possibly materially, from those anticipated in forward-looking statements, as well as from historical performance.

Our forward-looking statements are subject to the following principal risks and uncertainties:

-        Our businesses, financial results and balance sheet values are affected by business and economic conditions, including the following:

• Changes in interest rates and valuations in debt, equity and other financial markets.
• Disruptions in the liquidity and other functioning of U.S. and global financial markets.
• The impact of federal regulatory agencies that have oversight or review of F.N.B. Corporation’s business and securities activities.
• Actions by the Federal Reserve, U.S. Treasury and other government agencies, including those that impact money supply and market interest rates.
• Changes in customers’, suppliers’ and other counterparties’ performance and creditworthiness which adversely affect loan utilization rates, delinquencies, defaults and counterparty ability to meet credit and other obligations.
• Slowing or reversal of the rate of growth in the economy and employment levels and other economic factors that affect our liquidity and the performance of our loan portfolio, particularly in the markets in which we operate.
• Changes in customer preferences and behavior, whether due to changing business and economic conditions, legislative and regulatory initiatives, or other factors. 

-        Legal and regulatory developments could affect our ability to operate our businesses, financial condition, results of operations, competitive position, reputation, or pursuit of attractive acquisition opportunities.  Reputational impacts could affect matters such as business generation and retention, liquidity, funding, and ability to attract and retain management.  These developments could include:

• Changes resulting from legislative and regulatory reforms, including broad-based restructuring of financial industry regulation; changes to laws and regulations involving tax, pension, bankruptcy, consumer protection, and other industry aspects; and changes in accounting policies and principles.  We will continue to be impacted by extensive reforms provided for in the Dodd-Frank Wall Street Reform and Consumer Protection Act and otherwise growing out of the recent financial crisis, the precise nature, extent and timing of which, and their impact on us, remains uncertain. 
• Results of the regulatory examination and supervisory process.
• Changes to regulations governing bank capital and liquidity standards, including due to the Dodd-Frank Act, Volcker rule and Basel III initiatives. 
• Impact on business and operating results of any costs associated with obtaining rights in intellectual property, the adequacy of our intellectual property protection in general and our operational or security systems or infrastructure, or those of third-party vendors or other service providers, and rapid technological developments and changes.

-        Business and operating results are affected by judgments and assumptions in our analytical and forecasting models, our reliance on the advice of experienced outside advisors and our ability to identify and effectively manage risks inherent in our businesses, including, where appropriate, through effective use of third-party insurance, derivatives, swaps, and capital management techniques, and to meet evolving regulatory capital standards.

-        As demonstrated by our acquisitions, we grow our business in part by acquiring, from time to time, other financial services companies, financial services assets and related deposits.  These acquisitions often present risks and uncertainties, including, the possibility that the transaction cannot be consummated; regulatory issues; cost or difficulties involved in integration and conversion of the acquired businesses after closing; inability to realize expected cost savings, efficiencies and strategic advantages; the extent of credit losses in acquired loan portfolios; the extent of deposit attrition; and the potential dilutive effect to our current shareholders.

-        Competition can have an impact on customer acquisition, growth and retention and on credit spreads and product pricing, which can affect market share, deposits and revenues.  Industry restructuring in the current environment could also impact our business and financial performance through changes in counterparty creditworthiness and performance, and the competitive and regulatory landscape.  Our ability to anticipate and respond to technological changes can also impact our ability to respond to customer needs and meet competitive demands.

-        Business and operating results can also be affected by widespread disasters, dislocations, terrorist activities, cyber-attacks or international hostilities through their impacts on the economy and financial markets.

We provide greater detail regarding some of these factors in our 2014 Form 10-K, including the Risk Factors section of those reports, and our subsequent SEC filings.  Our forward-looking statements may also be subject to other risks and uncertainties, including those we may discuss elsewhere in this news release or in SEC filings, accessible on the SEC’s website at www.sec.gov and on our corporate website at www.fnbcorporation.com.  We have included these web addresses as inactive textual references only.  Information on these websites is not part of this document.

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