F.N.B. Corporation Reports Second Quarter 2020 Earnings per Share of $0.25, a 79% Increase from Prior Quarter

PRESS RELEASE

July 16, 2020 - Pittsburgh, PA

F.N.B. Corporation Reports Second Quarter 2020 Earnings per Share of $0.25, a 79% Increase from Prior Quarter
Revenue increased to $306 million l   Funded $2.6 billion in PPP Loans  l   Continued to serve our customers and communities during the pandemic

F.N.B. Corporation (NYSE: FNB) reported earnings for the second quarter of 2020 with net income available to common stockholders of $81.6 million, or $0.25 per diluted common share. Comparatively, first quarter of 2020 net income available to common shareholders totaled $45.4 million, or $0.14 per diluted common share, and second quarter of 2019 net income available to common stockholders totaled $93.2 million, or $0.29 per diluted common share. The results for the second quarter of 2020 reflect the impact of $2.6 billion of loans originated through the United States Department of Treasury Paycheck Protection Program (PPP), as well as expenses related to COVID-19 of $2.0 million and an estimated $17.1 million of incremental provision for credit losses due to the COVID-19 related impacts on our allowance for credit losses (ACL) modeling results. Total significant, outsized, or unusual items were $19.4 million (pre-tax), or $0.05 per diluted common share.

Vincent J. Delie, Jr., President, Chairman and Chief Executive Officer of F.N.B. Corporation, said of its results, "As we all continue to experience many new challenges, our most recent performance demonstrates the tremendous power and dedication of our workforce and their ability to innovate and adapt to serve our constituents. As essential workers, our team has put in thousands of hours to ensure that customers have access to the funding, tools and expertise they need to maintain their livelihoods. As we move forward, I am confident that our team’s compassionate and resilient attitudes will continue to shape our performance and will translate into results for our customers, communities and shareholders.

Our Company’s efforts are apparent in the performance we achieved in this challenging and difficult economic environment. Operating earnings per share in the quarter increased 63% to $0.26, even with a substantial credit reserve build due to the potential impact of COVID-19 and changing macroeconomic conditions. Core revenue trends remained solid with total revenue increasing 6% annualized to $306 million, and total assets growing nearly $3 billion to end June at $38 billion. Compared to the first quarter, loans and deposits increased $2.3 billion and $3.6 billion, or 10% and 15%, respectively. Capital markets and mortgage banking set new records with revenues of $13 million and $17 million, respectively. Operating expenses were well-controlled as our efficiency ratio equaled  53.7% for the quarter."

Second Quarter 2020 Highlights

(All comparisons refer to the second quarter of 2019, except as noted)

• Growth in total average loans was $2.8 billion, or 12.5%, with average commercial loan growth of $2.8 billion, or 19.5%, and average consumer loan growth of $59 million, or 0.7%. Total loan growth included $2.6 billion of PPP commercial loans originated during the second quarter of 2020.
• Total average deposits grew $3.4 billion, or 14.3%, primarily due to an increase in average non-interest-bearing deposits of $2.1 billion, or 34.2%, and an increase in average interest-bearing demand deposits of $2.1 billion, or 21.4%, partially offset by a managed decrease in average time deposits of $1.1 billion, or 19.7%. Growth in average deposits reflected inflows from the PPP and government stimulus checks, in addition to organic growth in customer relationships.
• The loan to deposit ratio was 92.1% at June 30, 2020, compared to 95.0% at June 30, 2019 as deposit growth outpaced loan growth.
• Net interest income decreased $2.4 million, or 1.1%, attributable to lower interest rates compared to 2019 due to the Federal Open Market Committee (FOMC) lowering its target rate to 0-0.25% from 2.25%-2.50% between July 2019 and March 2020.
• On a linked-quarter basis, the net interest margin (FTE) (non-GAAP) decreased 26 basis points to 2.88%, driven by the impact of the FOMC actions. Average loan yields declined 69 basis points and the total cost of funds decreased 34 basis points, as the cost of interest-bearing deposits decreased 37 basis points. Compared to the second quarter of 2019, the net interest margin declined 32 basis points from 3.20%.
• Non-interest income increased $2.8 million, or 3.7%, led by an $8.9 million, or 117.4%, increase in mortgage banking income and a $2.6 million, or 26.8%, increase in capital markets. Service charges decreased $8.1 million, or 25.4%, largely due to significantly lower transaction volumes in the COVID-19 environment. 
• The effective tax rate was 16.0%, compared to 19.7%, primarily due to renewable energy investment tax credits recognized during the second quarter of 2020.
• The efficiency ratio (non-GAAP) improved 80 basis points to 53.7%, compared to 54.5%.
• The annualized net charge-offs to total average loans ratio decreased 3 basis points to 0.13% from 0.16%.
• The ratio of tangible common equity to tangible assets (non-GAAP) decreased 35 basis points to 6.97%, with net PPP loan balances impacting the June 30, 2020 TCE ratio by 52 basis points. The June 30, 2020 metric also includes the Day 1 Current Expected Credit Losses (CECL) adoption impact of $50.6 million, or 14 basis points, as well as incremental provision for credit losses related to the estimated impact of COVID-19 on our ACL modeling results. The significant, unusual, or outsized items in 2020 totaled $63.7 million after-tax, or 18 basis points, and impacted tangible book value per common share (non-GAAP) by $0.20 per share. On a linked-quarter basis, tangible book value per common share (non-GAAP) increased $0.17, or 2.3%, to $7.63. 

Non-GAAP measures referenced in this release are used by management to measure performance in operating the business that management believes enhances investors' ability to better understand the underlying business performance and trends related to core business activities. Reconciliations of non-GAAP operating measures to the most directly comparable GAAP financial measures are included in the tables at the end of this release. 

Quarterly Results Summary		2Q20					1Q20				2Q19
Reported results
Net income available to common stockholders (millions)		$	81.6				$	45.4			$	93.2
Net income per diluted common share		0.25					0.14				0.29
Book value per common share (period-end)		14.82					14.67				14.30
Pre-provision net revenue (reported) (millions)		129.7					106.3				130.0
Operating results (non-GAAP)
Operating net income available to common stockholders (millions)		$	83.2				$	53.5			$	95.4
Operating net income per diluted common share		0.26					0.16				0.29
Tangible common equity to tangible assets (period-end)		6.97			%		7.36		%		7.32		%
Tangible book value per common share (period-end)		$	7.63				$	7.46			$	7.11
Pre-provision net revenue (operating) (millions)		$	135.7				$	116.5			$	132.9
Averagediluted common shares outstanding (thousands)		325,153					326,045				325,949
Significant items impacting earnings1 (millions)
Pre-tax COVID-19 expense		$	(2.0)				$	(2.0)			$	—
After-tax impact of COVID-19 expense		(1.6)					(1.6)				—
Pre-tax branch consolidation costs		—					(8.3)				(2.9)
After-tax impact of branch consolidation costs		—					(6.5)				(2.3)
Other unusual or outsized items impacting earnings1 (millions)
Pre-tax provision for COVID - impacted ACL modeling results		(17.1)					(37.9)				—
After-tax impact of provision for COVID - impacted ACL modeling results		(13.5)					(29.9)				—
Pre-tax MSR impairment		(0.3)					(7.7)				(1.3)
After-tax MSR impairment		(0.3)					(6.1)				(1.0)
Pre-tax accelerated vesting of certain 2020 stock grants		—					(5.6)				—
After-tax accelerated vesting of certain 2020 stock grants		—					(4.4)				—
Total significant, unusual or outsized items pre-tax		$	(19.4)				$	(61.5)			$	(4.2)
Total significant, unusual or outsized items after-tax		$	(15.4)				$	(48.5)			$	(3.3)
Year-to-Date Results Summary		2020					2019
Reported results
Net income available to common stockholders (millions)		$	127.0				$	185.3
Net income per diluted common share		0.39					0.57
Pre-provision net revenue (reported) (millions)		235.9					260.2
Operating results (non-GAAP)
Operating net income available to common stockholders (millions)		$	136.7				$	188.9
Operating net income per diluted common share		0.42					0.58
Pre-provision net revenue (operating) (millions)		252.2					264.8
Average diluted common shares outstanding (thousands)		325,716					325,697
Significant items impacting earnings1 (millions)
Pre-tax COVID-19 expense		$	(4.0)				$	—
After-tax impact of COVID-19 expense		(3.1)					—
Pre-tax branch consolidation costs		(8.3)					(4.5)
After-tax impact of branch consolidation costs		(6.5)					(3.6)
Other unusual or outsized items impacting earnings1 (millions)
Pre-tax provision for COVID - impacted ACL modeling results		(55.0)					—
After-tax impact of provision for COVID - impacted ACL modeling results		(43.4)					—
Pre-tax MSR impairment		(8.0)					(2.6)
After-tax MSR impairment		(6.3)					(2.1)
Pre-tax accelerated vesting of certain 2020 stock grants		(5.6)					—
After-tax accelerated vesting of certain 2020 stock grants		(4.4)					—
Total significant, unusual or outsized items pre-tax		$	(80.9)				$	(7.1)
Total significant, unusual or outsized items after-tax		$		(63.7)			$	(5.7)
(1) Favorable (unfavorable) impact on earnings.

Second Quarter 2020 Results – Comparison to Prior-Year Quarter

Net interest income totaled $228.0 million, decreasing $2.4 million, or 1.1%, as significant growth in average loans and deposits of $2.8 billion and $3.4 billion, respectively, partially offset the repricing impact from lower interest rates on variable and adjustable-rate loans. Total average earning assets increased $2.9 billion, or 9.8%, due to the average loan growth. The net interest margin (FTE) (non-GAAP) declined 32 basis points to 2.88%, as earning asset yields decreased 83 basis points reflecting lower yields on variable-rate loans as the quarterly average LIBOR and Prime rates significantly decreased. The total cost of funds also decreased 53 basis points to 0.67%, compared to 1.20%, due to reduced costs on interest-bearing deposits of 51 basis points and lower borrowing costs.

Average loans totaled $25.6 billion, an increase of $2.8 billion, or 12.5%, primarily due to PPP loans originated during the quarter. Average total commercial loan growth totaled $2.8 billion, or 19.5%, including $1.7 billion, or 34.6%, growth in commercial and industrial loans and $960 million, or 10.8%, growth in commercial real estate balances. Excluding PPP loans, origination activity remained solid with organic growth in the Pennsylvania, Cleveland, North and South Carolina, and Mid-Atlantic (Greater Baltimore-Washington D.C. markets) regions. Average consumer loan growth was $59 million, or 0.7%, with growth in residential mortgages of $191 million, or 5.8%, and direct installment loans of $165 million, or 9.5%, partially offset by a decline in consumer lending heavily impacted by COVID-19 as indirect auto loans decreased $162 million, or 8.3%, and consumer lines of credit decreased $135 million, or 8.8%.

Average deposits totaled $27.3 billion, an increase of $3.4 billion, or 14.3%, supported by growth in non-interest bearing demand deposits of $2.1 billion, or 34.2%, and interest-bearing demand deposits of $2.1 billion, or 21.4%. The growth in deposits was driven by deposits for PPP funding and government stimulus activities, as well as solid organic growth in customer relationships. The loan-to-deposit ratio was 92.1% at June 30, 2020, compared to 95.0% at June 30, 2019. 

Non-interest income totaled $77.6 million, increasing $2.8 million, or 3.7%. Mortgage banking operations income increased $8.9 million, or 117.4%, primarily due to $16.8 million in origination and secondary marketing revenue, compared to $8.8 million in the second quarter of 2019, as sold mortgage production volume increased 31% to $438 million and gain on sale margins have improved. Capital markets income grew $2.6 million, or 26.8%, to a record $12.5 million, reflecting balanced activity across the footprint. Insurance commissions and fees increased $1.4 million, or 32.3% representing the benefit from new business in North and South Carolina, as well as organic growth in commercial lines. Service charges decreased $8.1 million, or 25.4%, due to noticeably lower transaction volumes given COVID-19, although customer transaction volume began to increase late in the quarter. 

Non-interest expense totaled $175.9 million, increasing $0.7 million, or 0.4%. Non-interest expense increased $1.0 million, or 0.6%, when excluding $2.0 million of COVID-19 expenses in the second quarter of 2020 and $2.3 million of branch consolidation costs in the second quarter of 2019. In the second quarter of 2020, the Company also recognized an impairment of $4.1 million from a renewable energy investment tax credit transaction. The related renewable energy investment tax credits were recognized during the quarter as a benefit to income taxes. Occupancy and equipment expense decreased $1.9 million, or 6.0%. The efficiency ratio (non-GAAP) improved 80 basis points to 53.7%, compared to 54.5%.

The ratio of non-performing loans, 90 days past due, and other real estate owned (OREO) to total loans and OREO remained consistent at 0.75%. Prior to the adoption of CECL, acquired (purchased credit deteriorated, or PCD) loans were excluded from our nonperforming disclosures. PCD loans that meet the definition of non-accrual are now included in the disclosures and resulted in a $65 million increase in non-accrual loans in the second quarter of 2020, compared to the second quarter of 2019. Total delinquency remains at satisfactory levels, and improved 3 basis points to 0.92%, compared to 0.95% at June 30, 2019. Excluding PPP loans at June 30, 2020, total delinquency increased 6 basis points to 1.01%.

The provision for credit losses totaled $30.2 million, compared to $11.5 million, driven by an estimated $17.1 million of incremental provision due to the COVID-19 related impacts on our ACL modeling results. Net charge-offs were $8.5 million, or 0.13% annualized of total average loans, which declined from $9.0 million, or 0.16%. The ratio of the ACL to total loans and leases was 1.40% and 0.83% at June 30, 2020 and June 30, 2019, respectively. Excluding PPP loans that do not carry an ACL losses due to a 100% government guarantee, the ACL losses to total loan and leases ratio equaled 1.54%, or an impact of 14 basis points. The CECL adoption on January 1, 2020, resulted in a Day 1 increase to the ACL of $105.3 million. As of June 30, 2020, total loans in deferral related to the COVID-19 pandemic totaled $2.4 billion. Over 98% of the $2.4 billion of loans in deferment were current and in good standing at December 31, 2019.

The effective tax rate was 16.0%, compared to 19.7%, driven by benefits from renewable energy investment tax credits.

The tangible common equity to tangible assets ratio (non-GAAP) decreased 35 basis points to 6.97% at June 30, 2020, compared to 7.32% at June 30, 2019, as the PPP loan activity impacted the TCE ratio by 52 basis points at June 30, 2020. The tangible book value per common share (non-GAAP) was $7.63 at June 30, 2020, an increase of $0.52, or 7.3%, from $7.11 at June 30, 2019.

Second Quarter 2020 Results – Comparison to Prior Quarter

Net interest income totaled $228.0 million, a decrease of $4.7 million, or 2.0%, from the prior quarter total of $232.6 million as loan and deposit growth mostly offset the impact from lower interest rates. The net interest margin (FTE) (non-GAAP) decreased 26 basis points to 2.88%, driven by a full-quarter impact of the FOMC action to lower the target Fed Funds rate range on March 16, 2020 to 0.00%-0.25%. Additionally, average 1-month LIBOR fell to 0.36% from 1.41% in the prior quarter.

Total average earning assets increased $2.0 billion, or 6.7%, due primarily to $2.1 billion of significant loan growth driven by PPP and strong organic commercial loan activity. The total yield on earning assets declined 58 basis points to 3.54%, reflecting lower yields on variable and adjustable-rate loans due to lower interest rates. The total cost of funds decreased to 0.67% from 1.01%, as costs on interest-bearing deposits decreased 37 basis points.

Average loans totaled $25.6 billion with average commercial loan growth of $2.1 billion, or 14.1%, and a slight decrease in average consumer loans of $15.3 million, or 0.2%. Average commercial loans included growth of $1.2 billion, or 21.9%, in commercial and industrial loans and an increase of $857 million, or 9.6%, in commercial real estate. Commercial organic origination activity was led by the Pennsylvania and Mid-Atlantic regions. Consumer balances included an increase in average residential mortgage loans of $53 million, or 1.6%, largely attributable to higher refinancing activity given the lower interest rate environment and average direct installment loans also increased $66 million, 3.6%. This was partially offset by declines in average balances of indirect auto loans by $94 million, or 4.9%, and average consumer lines of credit by $40 million, or 2.8%.

Average deposits totaled $27.3 billion, increasing $2.7 billion, or 10.8%, driven by an increase in non-interest bearing deposits of $1.8 billion, or 29.3%. Interest-bearing deposits increased $807 million, or 4.4%, net of the managed decline of $273 million, or 5.8%, in time deposits. The loan-to-deposit ratio was 92.1% at June 30, 2020, compared to 96.5% at March 31, 2020.

Non-interest income totaled $77.6 million, increasing $9.1 million, or 13.3%, as mortgage banking operations increased $17.6 million due to $16.8 million of origination and secondary marketing revenue. The mortgage banking results also included a $0.3 million unfavorable interest rate-related valuation adjustment on mortgage servicing rights in the second quarter compared to an unfavorable $7.7 million valuation adjustment in the first quarter. Mortgage production increased $306 million, or 55%, from the prior quarter with large contributions from North Carolina and the Mid-Atlantic regions. Capital markets income increased $1.4 million, or 12.6%, with strong contributions from interest rate derivative activity across the footprint. Service charges decreased $6.2 million, or 20.5%, due to noticeably lower transaction volumes in the COVID-19 environment.

Non-interest expense totaled $175.9 million, a decrease of $19.0 million, or 9.7%, and included $2.0 million of expenses associated with COVID-19 in the second quarter of 2020, compared to $15.9 million of outsized, unusual or significant expenses occurring in the first quarter. Excluding outsized, unusual, or significant expenses, non-interest expense declined $5.1 million, or 2.9%, primarily related to lower salaries and employee benefit expense as higher production-related commissions were more than offset by lower employer-paid taxes, as well as higher production-related salary deferrals from loan origination activities. In the second quarter of 2020, the Company also recognized an impairment of $4.1 million in other non-interest expense from a renewable energy investment tax credit transaction. The related renewable energy investment tax credits were recognized during the quarter as a benefit to income taxes. The efficiency ratio (non-GAAP) improved to 53.7%, compared to 59.0%.

The ratio of non-performing loans, 90 days past due, and OREO to total loans and OREO increased 8 basis points to 0.75%. Total delinquency remains at favorable levels, and decreased 21 basis points to 0.92%, compared to 1.13% at March 31, 2020. Excluding PPP, total delinquency decreased 12 basis points to 1.01%.

The provision for credit losses totaled $30.2 million, compared to $47.8 million. The provision for credit losses exceeded net charge-offs of $8.5 million, or 0.13% annualized, of total average loans and leases compared to $5.7 million, or 0.10% annualized, of total average loans. The ratio of the ACL to total loans and leases decreased to 1.40% from 1.44% at March 31, 2020, but included PPP loans that do not carry an ACL due to a 100% government guarantee. Excluding PPP net loans, the ACL to total loans and leases ratio equaled 1.54%, an impact of 14 basis points.

The effective tax rate was 16.0%, compared to 18.8%, reflecting the benefit of certain renewable energy investment tax credits.

The tangible common equity to tangible assets ratio (non-GAAP) decreased 39 basis points to 6.97% at June 30, 2020, compared to 7.36% at March 31, 2020, as the PPP loan activity impacted the TCE ratio by 52 basis points at June 30, 2020. Tangible book value per common share (non-GAAP) was $7.63 at June 30, 2020, an increase of $0.17 from March 31, 2020.

June 30, 2020 Year-To-Date Results - Comparison to Prior Year-To-Date Period

Net interest income totaled $460.6 million, decreasing $0.4 million, or 0.1%, reflecting a lower rate environment offset by average earning asset growth of $2.0 billion, or 6.9%. The net interest margin (FTE) (non-GAAP) contracted 22 basis points to 3.01%, primarily due to the impact of lower interest rates as year-to-date average 1-month LIBOR declined to 0.90% from 2.47% for the first half of 2019. The yield on earning assets decreased 55 basis points to 3.82%, while the cost of funds improved 34 basis points to 0.83%, primarily due to actions taken to reduce the cost of interest-bearing deposits given the low interest rate environment.

Average loans totaled $24.6 billion, an increase of $2.0 billion, or 8.8%, due to benefit from PPP activity and solid origination activity across the footprint. Growth in average commercial loans totaled $1.9 billion, or 13.3%, including growth of $1.4 billion, or 28.9%, in commercial and industrial loans. Commercial growth was led by strong commercial activity in the Pennsylvania, North Carolina, and Mid-Atlantic regions. Total average consumer loan growth of $113 million, or 1.3%, was led by increases in residential mortgage loans of $215 million, or 6.7%, and direct installment balances of $132 million, or 7.5%, partially offset by a decline of $130 million, or 8.4%, in consumer credit lines and $104 million, or 5.3%, in indirect auto loans.

Average deposits totaled $25.9 billion, increasing $2.3 billion, or 9.8%, due to average growth of $1.7 billion, or 17.9%, in interest-bearing demand deposits and $1.2 billion, or 20.7%, in non-interest-bearing deposits. On a spot basis, total deposits increased $4.7 billion, or 19.6%, driven by deposits for PPP funding and government stimulus activities, as well as solid organic growth in customer relationships.

Non-interest income totaled $146.2 million, increasing $5.9 million, or 4.2%. On an operating basis, non-interest income increased $9.6 million, or 6.7%, attributable to the record growth in our fee-based businesses of capital markets with an increase of $7.7 million, or 48.6%, reflecting FNB's strong relationships with new and existing commercial customers, and mortgage banking income with an increase of $4.0 million, or 34.7%, as production levels increased 32.9% and gain on sale increased 42.2%.  There were also increases in insurance commissions and fees of $3.1 million, or 33.1%, and trust income of $1.5 million, or 10.9%. There was a decline in service charges of $8.2 million, or 13.2%, as there were noticeably lower customer transaction volumes in the COVID-19 environment, however volumes began to increase late in the second quarter.

Non-interest expense totaled $370.8 million, increasing $29.8 million, or 8.8%. Excluding significant, unusual, or outsized items totaling $17.9 million year-to-date in 2020, non-interest expense increased $12.0 million, or 3.5%. This increase was attributable to increases in outside services of $3.0 million, or 9.9%, and higher salaries of $12.2 million, or 6.6%, primarily related to normal merit increases and production-related commissions. The efficiency ratio (non-GAAP) totaled 56.4%, compared to 54.0% in 2019.

The provision for credit losses was $78.0 million, compared to $25.1 million, which included an estimated $55 million of COVID-19 related provision in the first six months of 2020. Net charge-offs totaled $14.2 million, or 0.12%, of total average loans, compared to $16.6 million, or 0.15%, in 2019.

The effective tax rate was 17.0% for 2020, compared to 19.5% in 2019, primarily due to renewable energy investment tax credits recognized during the second quarter of 2020.

Use of Non-GAAP Financial Measures and Key Performance Indicators

To supplement our Consolidated Financial Statements presented in accordance with GAAP, we use certain non-GAAP financial measures, such as operating net income available to common stockholders, operating earnings per diluted common share, return on average tangible equity, return on average tangible common equity, return on average tangible assets, tangible book value per common share, the ratio of tangible equity to tangible assets, the ratio of tangible common equity to tangible assets, allowance for credit losses to loans and leases, excluding PPP,  non-performing loans to loans and leases excluding PPP loans, non-performing loans and 90 days past due and OREO to loans and leases plus OREO, excluding PPP, net loan charge-offs to average loans and leases excluding PPP loans, past due and non-accrual loans to loans and leases excluding PPP loans, pre-provision net revenue to average tangible common equity, efficiency ratio, and net interest margin (FTE) to provide information useful to investors in understanding our operating performance and trends, and to facilitate comparisons with the performance of our peers. Management uses these measures internally to assess and better understand our underlying business performance and trends related to core business activities. The non-GAAP financial measures and key performance indicators we use may differ from the non-GAAP financial measures and key performance indicators other financial institutions use to assess their performance and trends.

These non-GAAP financial measures should be viewed as supplemental in nature, and not as a substitute for or superior to, our reported results prepared in accordance with GAAP. When non-GAAP financial measures are disclosed, the Securities and Exchange Commission's (SEC) Regulation G requires: (i) the presentation of the most directly comparable financial measure calculated and presented in accordance with GAAP and (ii) a reconciliation of the differences between the non-GAAP financial measure presented and the most directly comparable financial measure calculated and presented in accordance with GAAP. Reconciliations of non-GAAP operating measures to the most directly comparable GAAP financial measures are included later in this release under the heading “Reconciliations of Non-GAAP Financial Measures and Key Performance Indicators to GAAP”.

Management believes charges such as branch consolidation costs and COVID-19 expense are not organic costs to run our operations and facilities. These charges are considered significant items impacting earnings as they are deemed to be outside of ordinary banking activities. The branch consolidation charges principally represent expenses to satisfy contractual obligations of the closed branches without any useful ongoing benefit to us. These costs are specific to each individual transaction and may vary significantly based on the size and complexity of the transaction. The COVID-19 expenses represent special Company initiatives to support our front-line employees and the communities we serve during an unprecedented time of a pandemic.

To provide more meaningful comparisons of net interest margin and efficiency ratio, we use net interest income on a taxable-equivalent basis in calculating net interest margin by increasing the interest income earned on tax-exempt assets (loans and investments) to make it fully equivalent to interest income earned on taxable investments (this adjustment is not permitted under GAAP). Taxable-equivalent amounts for the 2020 and 2019 periods were calculated using a federal statutory income tax rate of 21%.

Cautionary Statement Regarding Forward-Looking Information

This document may contain statements regarding F.N.B. Corporation’s outlook for earnings, revenues, expenses, tax rates, capital and liquidity levels and ratios, asset quality levels, financial position and other matters regarding or affecting our current or future business and operations. These statements can be considered as “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve various assumptions, risks and uncertainties which can change over time. Actual results or future events may be different from those anticipated in our forward-looking statements and may not align with historical performance and events. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance upon such statements. Forward-looking statements are typically identified by words such as "believe," "plan," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "will," "should," "project," "goal," and other similar words and expressions. We do not assume any duty to update forward-looking statements, except as required by federal securities laws.

F.N.B.’s forward-looking statements are subject to the following principal risks and uncertainties:

• Our business, financial results and balance sheet values are affected by business and economic circumstances, including, but not limited to: (i) developments with respect to the U.S. and global financial markets; (ii) actions by the Federal Reserve Board, U.S. Treasury Department, Office of the Comptroller of the Currency and other governmental agencies, especially those that impact money supply, market interest rates or otherwise affect business activities of the financial services industry; (iii) a slowing or reversal of current U.S. economic environment; and (iv) the impacts of tariffs or other trade policies of the U.S. or its global trading partners.
• Business and operating results are affected by our ability to identify and effectively manage risks inherent in our businesses, including, where appropriate, through effective use of systems and controls, third-party insurance, derivatives, and capital management techniques, and to meet evolving regulatory capital and liquidity standards.
• Competition can have an impact on customer acquisition, growth and retention, and on credit spreads, deposit gathering and product pricing, which can affect market share, deposits and revenues. Our ability to anticipate and continue to respond to technological changes and COVID-19 challenges can also impact our ability to respond to customer needs and meet competitive demands.
• Business and operating results can also be affected by widespread natural and other disasters, pandemics, including the COVID-19 pandemic crisis, dislocations, terrorist activities, system failures, security breaches, significant political events, cyberattacks or international hostilities through impacts on the economy and financial markets generally, or on us or our counterparties specifically.
• Legal, regulatory and accounting developments could have an impact on our ability to operate and grow our businesses, financial condition, results of operations, competitive position, and reputation. Reputational impacts could affect matters such as business generation and retention, liquidity, funding, and the ability to attract and retain management. These developments could include:
• Changes resulting from a U.S. presidential administration or legislative and regulatory reforms, including changes affecting oversight of the financial services industry, consumer protection, pension, bankruptcy and other industry aspects, and changes in accounting policies and principles.
• Changes to regulations governing bank capital and liquidity standards.
• Unfavorable resolution of legal proceedings or other claims and regulatory and other governmental investigations or other inquiries. These matters may result in monetary judgments or settlements or other remedies, including fines, penalties, restitution or alterations in our business practices, and in additional expenses and collateral costs, and may cause reputational harm to FNB.
• Results of the regulatory examination and supervision process, including our failure to satisfy requirements imposed by the federal bank regulatory agencies or other governmental agencies.
• The impact on our financial condition, results of operations, financial disclosures and future business strategies related to the implementation of the new FASB Accounting Standards Update 2016-13 Financial Instruments -Credit Losses commonly referred to as the “current expected credit loss” standard or CECL.

• The COVID-19 pandemic and the regulatory and governmental actions implemented in response to COVID-19 have resulted in significant deterioration and disruption in financial markets and national and local economic conditions and record levels of unemployment and could have a material impact on, among other things, our business, financial condition, results of operations or liquidity, or on our management, employees, customers and critical vendors and suppliers.

The risks identified here are not exclusive. Actual results may differ materially from those expressed or implied as a result of these risks and uncertainties, including, but not limited to, the risk factors and other uncertainties described under Item 1A Risk Factors and Risk Management sections of our Annual Report on Form 10-K (including MD&A section) for the year ended December 31, 2019, our subsequent 2020 Quarterly Reports on Form 10-Q (including the risk factors and risk management discussions) and our other subsequent filings with the SEC, which are available on our corporate website at https://www.fnb-online.com/about-us/investor-relations-shareholder-services. We have included our web address as an inactive textual reference only.  Information on our website is not part of this Report.

Conference Call

F.N.B. Corporation (NYSE: FNB) announced the financial results today for the second quarter of 2020 at 6:00 PM ET Thursday, July 16, 2020. Chairman, President and Chief Executive Officer, Vincent J. Delie, Jr., Chief Financial Officer, Vincent J. Calabrese, Jr., and Chief Credit Officer, Gary L. Guerrieri, plan to host a conference call to discuss the Company’s financial results Friday, July 17, 2020 at 8:15 AM ET.

Participants are encouraged to pre-register for the conference call at http://dpregister.com/10145866. Callers who pre-register will be provided a conference passcode and unique PIN to bypass the live operator and gain immediate access to the call. Participants may pre-register at any time, including up to and after the call start time.

Dial-in Access: The conference call may be accessed by dialing (844) 802-2440 (for domestic callers) or (412) 317-5133 (for international callers). Participants should ask to be joined into the F.N.B. Corporation call.

Webcast Access: The audio-only call and related presentation materials may be accessed via webcast through the "Investor Relations" section of the Corporation's website at www.fnbcorporation.com. Access to the live webcast will begin approximately 30 minutes prior to the start of the call.

Presentation Materials: Presentation slides and the earnings release will also be available on the Corporation’s website at www.fnbcorporation.com, by accessing the “About Us” tab and clicking on “Investor Relations" then "Investor Conference Calls".

A replay of the call will be available shortly after the completion of the call until midnight ET on Friday, July 24, 2020. The replay can be accessed by dialing (877) 344-7529 (for domestic callers) or (412) 317-0088 (for international callers); the conference replay access code is 10145866. Following the call, a link to the webcast and the related presentation materials will be posted to the "Investor Conference Calls" section of F.N.B. Corporation's website 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 seven states and the District of Columbia. FNB’s market coverage spans several major metropolitan areas including: Pittsburgh, Pennsylvania; Baltimore, Maryland; Cleveland, Ohio; Washington, D.C.; and Charlotte, Raleigh, Durham and the Piedmont Triad (Winston-Salem, Greensboro and High Point) in North Carolina. The Company has total assets of nearly $38 billion and approximately 350 banking offices throughout Pennsylvania, Ohio, Maryland, West Virginia, North Carolina, South Carolina and Virginia.

FNB 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, government 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. FNB's wealth management services include asset management, private banking and insurance.

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 MidCap 400 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 website at www.fnbcorporation.com.

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