On Wednesday, Keefe, Bruyette & Woods maintained a Market Perform rating on shares of F.N.B. Corporation (NYSE:FNB), with a steady price target of $16.00. The firm's stance is based on the assessment that the bank's current valuation does not fully reflect its franchise quality.
F.N.B. Corporation's valuation shows an 11-13% discount compared to the KRX based on 2024E/2025E multiples, yet it aligns with the market on a tangible book value (TBV) basis.
The firm highlighted F.N.B. Corporation's potential to realize a 14.1% return on tangible common equity (ROTCE) in the next year, which is 130 basis points above the KRX index. This performance underpins the argument that F.N.B. could justifiably trade at a premium due to its profitability, diversified earnings, and risk profile.
Despite these positive attributes, the firm acknowledged the difficulties inherent in promoting a re-rating story, especially since F.N.B.'s shares are trading slightly above their historical relative multiple.
The absence of a clear catalyst to drive a revaluation leads the firm to adopt a cautious stance, suggesting a watchful approach and expressing a readiness to adopt a more constructive position should the share price experience a decline.
In other recent news, F.N.B. Corporation has reported robust Q1 results, posting an operating earnings per share at $0.34 and net income of $123 million. The company noted significant growth in its loan and deposit portfolios, with non-interest income reaching nearly record levels. Despite a slight increase in operating non-interest expense and a minor decline in net interest margin, F.N.B.'s asset quality metrics remain strong.
In addition, the corporation has recently undergone a reorganization of its bank operations to create a more efficient and risk-focused structure. Justin Kurth has been appointed as Executive Vice President, Director of Banking Enterprise Operations, overseeing Loan Operations and Efficiencies, Deposit Operations and Processing. James Craske, a new addition to the team, will serve as the Director of Operational Risk and Support Services.
These recent developments are part of F.N.B.'s strategy to navigate the challenges of a rapidly evolving financial environment and to prepare for increased regulatory standards. The company also projects a more favorable interest rate environment for the second half of the year, with full-year net interest income forecasted to be between $1.295 billion and $1.345 billion.
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