F.N.B. Corporation Reports Fourth Quarter and Full Year 2017 Earnings

PITTSBURGH, Jan. 23, 2018

Fourth quarter operating net income per diluted common share (non-GAAP) was $0.24, which excludes the after-tax impact of merger-related expenses of $0.7 million and the impact of a reduction in the valuation of net deferred tax assets of $54.0 million due to the enactment of the Tax Cuts and Jobs Act during the quarter. Comparatively, third quarter operating net income per diluted common share (non-GAAP) was $0.24, excluding the after-tax impact of $0.9 million of merger-related expenses, and fourth quarter of 2016 operating net income per diluted common share (non-GAAP) was $0.24, excluding the after-tax impact of $1.3 million of merger-related expenses.  For the full year of 2017, operating net income per diluted common share (non-GAAP) was $0.93, which excludes the after-tax impact of merger-related expenses of $37.7 million, the after-tax impact of merger-related net securities gains of $1.7 million and the previously mentioned reduction in the valuation of net deferred tax assets of $54.0 million.  In comparison, full-year 2016 operating net income per diluted common share (non-GAAP) was $0.90, excluding the after-tax impact of $24.9 million of merger-related expenses. 

"During 2017, FNB continued to grow loans and deposits while adhering to our risk profile, expanded our fee-based businesses and demonstrated disciplined expense management.  The commitment and dedication of our employees led to the successful integration of our largest acquisition, where we entered several very attractive markets," said Vincent J. Delie Jr., Chairman, President and Chief Executive Officer. "As we look to 2018 and beyond, we believe FNB is well-positioned for success in serving our customers, communities and employees, and delivering increased value for our shareholders."

Fourth Quarter 2017 Highlights
(All comparisons refer to the third quarter of 2017, except as noted)

• Growth in total average loans was $158 million, or 3.0% annualized, with average commercial loan growth of $44 million, or 1.3% annualized, and average consumer loan growth of $114 million, or 5.9% annualized.
• Average total deposits increased $1.0 billion, or 19.0% annualized, which included an increase in average non-interest bearing deposits of $106 million, or 7.6% annualized, and an increase in time deposits of $748 million.
• The loan to deposit ratio ended December 31, 2017 at 93.7%, compared to 94.9% at September 30, 2017.
• The net interest margin (FTE) (non-GAAP) expanded 5 basis points to 3.49% from 3.44%, reflecting $2.5 million of increased incremental purchase accounting accretion and $1.0 million of increased cash recoveries.
• Total revenue increased 1.3% to $295 million, reflecting a 2.1% increase in net interest income and a 1.6% decrease in non-interest income.
• Non-interest income declined $1.0 million or 1.6%, attributable to $2.8 million of lower net securities gains.
• The efficiency ratio on an operating basis (non-GAAP) was stable at 53.1%, compared to 53.1%.
• Annualized net charge-offs were 0.22% of total average loans, compared to 0.24% in the third quarter of 2017 and 0.31% in the year-ago quarter.

The tangible common equity to tangible assets ratio (non-GAAP) decreased 13 basis points to 6.74% at December 31, 2017, compared to 6.87% at September 30, 2017. The tangible book value per common share (non-GAAP) was $6.06 at December 31, 2017, a decrease of $0.06 from September 30, 2017.  Both measures of capital were impacted by a reduction in the valuation of net deferred tax assets related to the new tax law.

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.  "Incremental purchase accounting accretion" refers to the difference between total accretion and the estimated coupon interest income on acquired loans. "Organic growth" refers to growth excluding the benefit of initial balances from acquisitions.