Earnings call transcript: F.N.B. Corp Q3 2025 earnings beat expectations

F.N.B. Corporation reported a strong third quarter for 2025, significantly surpassing earnings expectations. The company’s earnings per share (EPS) reached $0.41, beating the forecast of $0.38, marking a 7.89% surprise. Revenue also exceeded projections, coming in at $457 million compared to the expected $447.84 million. With a P/E ratio of 11.26 and trading near its InvestingPro Fair Value, F.N.B. Corp’s stock rose by 2.25%, reflecting investors’ positive reaction to the company’s robust performance and outlook.

Key Takeaways

• F.N.B. Corp achieved record quarterly revenue and EPS growth.
• The stock price increased by 2.25% post-earnings, indicating strong investor confidence.
• The company launched new AI-driven initiatives and expanded its branch network.
• Positive forward guidance suggests continued growth in loans and income.
• Risks include macroeconomic challenges and competitive pressures.

Company Performance

F.N.B. Corp demonstrated strong performance in the third quarter of 2025, with a 14% increase in EPS to $0.41. The company achieved a record quarterly revenue of $457 million, driven by growth in both interest and non-interest income. The expansion of its product offerings and operational efficiencies contributed to this success.

Financial Highlights

• Revenue: $457 million, up from the forecast of $447.84 million.
• Earnings per share: $0.41, exceeding the forecast of $0.38.
• Net income available to common shareholders: $150 million.
• Non-interest income: $98.2 million, a record high.
• Tangible book value per share increased by 11% to $11.48.

Earnings vs. Forecast

F.N.B. Corp’s actual EPS of $0.41 exceeded the forecast by 7.89%, a significant beat that reflects the company’s effective cost management and revenue growth strategies. This performance is stronger than previous quarters, indicating a positive trend.

Market Reaction

Following the earnings release, F.N.B. Corp’s stock price rose by 2.25%, closing at $14.88. This movement positions the stock closer to its 52-week high of $17.7, signaling strong investor confidence. Analyst price targets range from $17 to $20, suggesting potential upside. The moderate trading volume suggests sustained interest without speculative volatility.

Outlook & Guidance

F.N.B. Corp provided optimistic forward guidance, expecting mid-single-digit loan growth and net interest income between $1.39 billion and $1.405 billion. The company plans to continue its focus on technology and AI-driven efficiencies, with 30 new branches expected by 2030.

Executive Commentary

CEO Vince Delie emphasized the company’s strategic focus, stating, "We’re not in the business of lending to private capital providers," highlighting the firm’s commitment to core banking. Delie also noted the company’s efficiency ratio improvements and its focus on middle-market banking.

Risks and Challenges

Potential risks include macroeconomic pressures such as a government shutdown, which could impact the banking sector. The company also faces challenges in managing its commercial real estate exposure and competitive pressures within the industry. InvestingPro data shows the company’s PEG ratio of 1.33 and overall Financial Health score of FAIR, suggesting balanced growth prospects despite these challenges. Get access to the comprehensive Pro Research Report for detailed risk analysis and expert insights.

Q&A

During the earnings call, analysts inquired about F.N.B. Corp’s mortgage book strategy and prepayment risks. The company addressed deposit growth across different markets and outlined plans for fee income expansion, emphasizing its commitment to core banking and risk management.

Full transcript - F.N.B. Corp (FNB) Q3 2025:

Conference Operator: Good day, and welcome to the F.N.B. Third Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad, and to withdraw your question, please press star then two. Please note, today’s event is being recorded. I’d now like to turn the conference over to Lisa Hajdu, Manager of Investor Relations. Please go ahead.

Lisa Hajdu, Manager of Investor Relations, F.N.B.: Good morning, and welcome to our earnings call. This conference call is F.N.B., and the reports it files with the Securities and Exchange Commission often contain forward-looking statements and non-GAAP financial measures. Non-GAAP financial measures should be viewed in addition to, and not in lieu of, our reported results prepared in accordance with GAAP. Reconciliations of GAAP to non-GAAP operating measures to the most directly comparable GAAP financial measures are included in our presentation materials and in our earnings release. Please refer to these non-GAAP and forward-looking statement disclosures contained in our related materials, reports, and registration statements filed with the Securities and Exchange Commission and available on our corporate website. A replay of this call will be available until Friday, October 24, and the webcast link will be posted to the About Us Investor Relations section of our corporate website.

I will now turn the call over to Vince Delie, Chairman, President, and CEO.

Vince Delie, Chairman, President, and CEO, F.N.B.: Thank you, and welcome to our third quarter earnings call. Joining me today are Vince Calabrese, our Chief Financial Officer, and Gary L. Guerrieri, our Chief Credit Officer. F.N.B.’s third quarter earnings per share grew 14% late quarter to a record $0.41, and reported net income available to common shareholders increased to $150 million. Operating pre-provision net revenue increased 18% from the year-ago quarter, contributing to positive operating leverage and a peer-leading efficiency ratio at 52%. F.N.B. produced another quarter of record revenue totaling $457 million, with strong contributions from fee-based businesses, most notably in capital markets and mortgage banking, driving total non-interest income to a record $98.2 million. F.N.B.’s capital position has reached record levels, with tangible common equity at 8.7% and CET1 at 11%.

Our growing capital base provided our company with flexibility to return $162 million to shareholders year to date through our active share repurchase program and quarterly dividends. The company’s profitable quarter resulted in a return on average tangible common equity of 15% and tangible book value per share growth of 11% to $11.48. Period end loans increased 3% on an annualized linked quarter basis, with growth led by equipment finance, consumer lending, and seasonal residential mortgage production. Commercial and industrial loans grew 2% annualized linked quarter, impacted by lower line utilization and higher than normal attrition driven by outsized customer M&A activity. Equipment finance had a strong quarter with 21% annualized loan growth, reflecting activity across our footprint, likely driven by fiscal policy. We continue to maintain our strict credit discipline with a primary focus on traditional C&I lending.

We are not in the business of lending to private capital providers, particularly entities that engage in direct consumer and small business lending. As we’ve indicated on prior calls, two areas of focus that position F.N.B. for future growth are continuing to grow low-cost deposits and reducing our CRE concentration. This quarter, we made good progress on both fronts, with the loan-to-deposit ratio ending the quarter at 90.9% and our CRE concentration improving to 214%. Our business model and its emphasis on a diverse and attractive footprint is a contributing factor to growing deposits at a favorable level. Annualized linked quarter deposit growth of 7% outpaced the industry and reflected continued commercial client acquisition. The FDIC deposit market share data released in September revealed that F.N.B. grew in nearly 75% of the MSAs we operate in.

We now rank in the top five in nearly 50% of our MSAs and in the top three market share in nearly 30%. Non-interest-bearing deposits comprise 26% of total deposits, stable to the prior quarter, with favorable total deposit costs of 1.93% at quarter end. Our strategy has been to price our deposits competitively to support our client base while protecting our net interest margin by leveraging our digital capabilities and data analytics. We have successfully executed on broadening our household penetration and becoming the primary bank for new and existing clients through our streamlined digital customer experience and our proprietary e-store and common application. Since our in-branch common application pilot concluded in May 2025, the percentage of applications originated through the common application has nearly tripled.

Our data analytics team now mines the data and leverages AI to provide our customer-facing team with quality leads to accelerate sales and grow revenue. We have been able to gain insight on our customers’ preferences and competitor pricing from data points housed in our enterprise data warehouse system and through external data aggregation. This allows us to strategically price our deposits and analyze the relationship holistically. Implementing this pricing approach contributed to our net interest margin expanding six basis points linked quarter. Our newly formed AI and innovation team is actively reviewing and prioritizing high-impact use cases from across the organization. I am energized by the transformative potential of AI to elevate operational efficiency, accelerate revenue growth, and deepen client engagement. As we grow our AI footprint, we remain committed to strong risk management frameworks and controls, ensuring our innovation is both responsible and sustainable.

With that, I would now like to turn the call over to Gary to discuss the strong credit results for the quarter. Gary.

Gary L. Guerrieri, Chief Credit Officer, F.N.B.: Thank you, Vince, and good morning, everyone. We ended the quarter with our asset quality metrics remaining at solid levels. Total delinquency ended the quarter at 0.65%, up 3 bps from the prior quarter, with NPLs and OREO up 3 bps, remaining at a solid 0.37%. Net charge-offs totaled 0.22%, bringing the year-to-date results to 0.21%, reflecting good performance despite the continuation of a somewhat volatile economic environment. Criticized loans were down 7.3% or $113 million on a linked quarter basis, with decreases observed throughout all of the commercial segments. We were pleased with the stability and improvements we saw during the quarter and were successful in removing some risk from the loan portfolio. Total funded provision expense for the quarter stood at $24.9 million, supporting loan growth and charge-offs.

Our ending funded reserve stands at $437 million, an increase of $5.2 million, ending at 1.25%, unchanged from the prior quarter. When including acquired unamortized loan discounts, our reserve stands at 1.32%, and our NPL coverage position remains strong at 368%, inclusive of the discounts. Regarding tariffs, we continue to monitor line utilization and industry concentrations, especially customers with a higher potential impact over the longer term. Since Q1, we have not seen any material impacts on the loan portfolio and have, in fact, experienced positive credit migration, as I mentioned earlier. Also of note, our overall C&I line utilization was down again in the quarter, including sectors that could potentially be impacted by higher tariffs, remaining at stable levels. The government shutdown remains a fluid situation.

We are monitoring the portfolios closely and are having discussions with our customers that are potentially impacted to support them in what should be a temporary event. Each quarter, we continue to run allowance sensitivities and a full portfolio stress test. Our stress test results were stable, with our current ACL more than covering projected charge-offs in a severe economic downturn. Regarding the non-owner CRE portfolio, credit metrics also improved, contributing to the criticized decline I mentioned earlier, with delinquency and NPLs at 0.53% and 0.50%, respectively. This reflects an improvement from 0.64% and 0.62% at the prior quarter end. We continue to aggressively manage this portfolio, as we have throughout this interest rate cycle, with a non-owner CRE exposure declining by another $226 million in the quarter, bringing the year-to-date decline to $646 million, ending at 214% of capital.

In closing, we continue to be pleased with the performance of our loan portfolio. We look forward to increasing levels of activity with the fiscal policies that have been enacted, which are already driving our equipment finance portfolio growth. As uncertainty eases, we expect broad-based growth in a potentially more robust and business-friendly environment. Our consistent credit results through many cycles and uncertain times continue to be driven by our credit risk appetite and credit selection, our robust concentration risk management framework, and our 360-degree view of our customer activity and performance. As Vince referenced earlier, our credit philosophy continues to be focused on core C&I lending activity, which has and will continue to drive our growth into the future. I will now turn the call over to Vince Calabrese, our Chief Financial Officer, for his remarks.

Vince Calabrese, Chief Financial Officer, F.N.B.: Thanks, Gary. Good morning. Today, I will review the third quarter’s financial results and walk through our updated full-year guidance. Third quarter operating net income totaled $147.7 million or $0.41 per share. Total revenues were a quarterly record at $457 million, with both net interest and non-interest income exceeding the high end of our prior quarterly guidance ranges. As a result, third quarter operating pre-provision net revenues grew 18.3% from the year-ago period. Third quarter average loans and leases totaled $34.8 billion, a 3.6% annualized linked quarter increase. Average consumer loans increased $431 million on strong residential mortgage and home equity lending growth, as seasonality and a drop in interest rates provided a favorable environment for consumer lending. Average commercial balances declined $119 million linked quarter, due primarily to a planned reduction in commercial real estate balances, offset by growth in C&I.

Average deposits totaled $37.9 billion, a strong 8.2% annualized linked quarter increase, reflecting organic growth in new and existing customer relationships. Spot non-interest-bearing demand deposits grew 1% linked quarter and were stable at 26% of total deposits. The loan-to-deposit ratio declined nearly 1% from the second quarter level to 90.9%. The cumulative total deposit beta, since the interest rate cuts began in September of last year, was 24% at quarter end, reflecting the timing of the most recent Fed cut late in the third quarter. Record net interest income of $359.3 million grew 3.5% from the prior quarter and over 11% from the year-ago period, attributable in part to our diligent management of deposit costs. The third quarter’s net interest margin of 3.25% was up 6 basis points sequentially and 17 basis points from last year’s third quarter.

Earning asset yields increased 3 basis points linked quarter to 5.36%, driven by higher yields on the investment securities portfolio, with reinvestment rates on securities remaining well above the average portfolio rate and higher yields on new fixed-rate loans compared to maturing loans. The average loan yield held steady sequentially, even with lower mortgage rates and the Fed cut late in the quarter. On the funding side, the cost of total deposits and borrowings was down 3 basis points linked quarter, as a result of a 7 basis point decline in the cost of borrowings and a funding mix shift towards deposits. Average borrowings were down $424 million linked quarter, primarily due to the $350 million of 5.15% senior notes that matured in August of 2025 and the growth reported in deposits. Non-interest income totaled a record $98.2 million, up 9.5% from the year-ago period.

Capital markets income grew 27% on a record debt capital markets and international banking income, as well as contributions from customer swap activity, syndications, public finance, and advisory services. Wealth management revenues increased 8% year-over-year on solid trust income and double-digit growth in securities, commissions, and fees. Mortgage banking income increased $3.6 million from last year due to strong sold loan volumes, net positive fair value adjustments from pipeline hedging activity, and a $2.8 million MSR impairment in the third quarter of 2024. Other non-interest income increased $5.3 million, primarily due to a $5.4 million recovery on an asset previously written off through purchase accounting as part of a 2017 acquisition. Operating non-interest expense totaled $245.8 million, up 5% from the third quarter of 2024. Salaries and employee benefits increased $5.5 million, 4.4%, primarily reflecting strategic hiring, continued investments in our risk management infrastructure, and higher production-related compensation.

Outside services increased $1.7 million due to higher volume-related technology and third-party costs. Other non-interest expense increased $3.7 million, primarily reflecting our mortgage down payment assistance program. Year-over-year operating revenue growth of 10.7% was more than twice the 5% increase in operating expenses. As a result, the efficiency ratio reflected strong improvement and declined nearly 280 basis points from the third quarter of last year to 52.4%. We expect continued strength in operating leverage performance in the fourth quarter and positive operating leverage for the full year of 2025. We are in the process of developing our annual cost savings target for 2026 to maintain our positive operating leverage momentum moving forward by renegotiating vendor relationships and leveraging investments in AI, data science, and machine learning. F.N.B. continues to actively manage our capital position for ample flexibility to support balance sheet growth and optimize shareholder returns while appropriately managing risk.

Our financial performance and capital management strategies resulted in our CET1 ratio reaching 11% and our TCE ratio reaching 8.7%, both record levels. Tangible book value was $11.48 per share at quarter end, an increase of $1.15 or 11.1% compared to last year. Let’s now look at updated guidance for the full year of 2025. All guidance is based on current expectations while remaining cognizant of operating in an uncertain economic environment. We are maintaining our balance sheet guidance for spot balances, projecting period-end loans and deposits to grow mid-single digits on a full-year basis as we increase our market share across our diverse geographic footprint. For loans, we expect to be towards the lower end of the mid-single digit guide, given continued expectations for secondary market activity and our continued active management of CRE exposures.

We are raising our 2025 net interest income guidance for the second consecutive quarter to incorporate the strong performance in the third quarter and our fourth quarter outlook. Our revised full-year net interest income guidance range is $1.39 to $1.405 billion. This guidance includes an expectation for a 25 basis point rate cut in October compared to our previous expectation for a cut in December. The non-interest income full-year guidance range has been revised to $365 to $370 million, with fourth quarter levels expected to approximate $90 million. Full-year guidance for non-interest expense has been maintained at $975 to $985 million. The revised full-year provision guidance range of $85 to $95 million reflects a $5 million decrease on the high end, given our year-to-date performance and strong asset quality metrics.

As always, provision will be dependent on net loan growth and charge-off activity, and we continue to monitor risks posed by the current economic environment. The full-year effective tax rate should be between 21% and 22%, which does not assume any investment tax credit activity that may occur. Lastly, we also remain opportunistic and disciplined in our approach to buybacks, taking advantage of attractive valuation levels. With that, I will turn the call back to Vince.

Vince Delie, Chairman, President, and CEO, F.N.B.: Thanks, Vince. Last month, we announced plans to further deploy our organic growth strategy by adding 30 new branches to our network by 2030, focused primarily in the high-growth Carolinas and the Mid-Atlantic markets. This expansion will build upon our commitment to client service and will incorporate the modern concept design and latest technology, including our AI-driven e-store platform now found in all branches throughout F.N.B.’s multi-state footprint. We also recently announced a leadership transition for the consumer bank with the hiring of Alfred Cho as Chief Consumer Banking Officer, succeeding Barry Robinson upon his retirement. Over his 15 years at F.N.B., Barry has been a valued leader during a period of prolific growth for our company and has contributed to the build-out of our mortgage banking operations, the rollout of our retail scorecards, and the expansion of our distribution network.

I am grateful to Barry for his many years of dedicated service and contributions to F.N.B., and we wish him well in his retirement. Throughout the company, we have continued to attract talent that is aligned with our award-winning culture and key strategic initiatives to drive growth and a superior client experience. As we continue to expand the depth of our strategic management team, we recently hired Frank Schiraldi as Director of Corporate Strategy, who joined us with 20 years’ experience as a prominent New York-based sell-side analyst. I welcome Alfred, Frank, and other recent strategic hires to Pittsburgh and look forward to working alongside them and our current team to create value for all of our stakeholders. F.N.B. remains dedicated to advancing our technology, people, and delivery channels to gain scale and operational efficiency.

This happens by cultivating meaningful, lasting relationships with our clients and communities while simultaneously creating value for our shareholders. With that, I would like to turn the call over to the operator for questions.

Conference Operator: Thank you. We’ll now begin the question and answer segment. To ask a question, you may press star then one on your telephone keypad, and to withdraw your question, please press star then two. At this time, we’ll pause for just a moment to assemble our roster. Today’s first question comes from Kelly Motta with KBW. Please go ahead.

Hey, good morning. Thanks for the question.

Vince Delie, Chairman, President, and CEO, F.N.B.: Hey, Kelly.

Loan growth has been really solid. I know it’s now expected to be sort of on the lower end of the mid-single digit. I’m wondering, just as a high level, you know, you’re one of the few banks who’s had some really nice growth in residential mortgage. I’m wondering, as you mentioned the secondary markets, as we have a look ahead here with rates coming down, if you see any sort of headwind from refi risk of your existing book that was put on at higher rates. Thank you.

Yeah, we obviously analyzed the mortgage book. We spent a lot of time looking at it. I think we shifted strategically a while ago, in terms of pricing, pricing more aggressively in the conforming space. We’ve been moving assets off the balance sheet, through origination for a little bit here. I would expect that to continue. Our hope is that things shift, that we’re able to reduce our, I don’t think the prepayment speeds accelerating in the mortgage book is a negative. Even though there’s a margin impact, we can redeploy that capital in the commercial book and get deposits and really drive return on equity at the company. I think that’s really the strategy in the long run. Most of the production that’s coming online for us is, they’re very wealthy individuals that do jumbo mortgage loans and physicians.

We’re bringing that on our book, which has tremendously good credit metrics. Maybe they’re priced a little thinner because that’s a pretty competitive space to begin with. That’s the book I would see maybe turning over a little bit. Again, that’s not a terribly negative thing because we’re using data analytics on those customers to try to cross-sell wealth and other products and services. We retain the servicing. We try to refinance it if we can, get it into a conforming product, and then retain the servicing and retain the customer over time. We’re not that concerned about that. I think you’ll see a shifting in production over time, less consumer-centric, more commercially oriented as we move through this choppy period. I’m pretty optimistic in certain sectors. We’re a traditional lender. We’re not doing anything fancy. It’s block and tackling. It’s going after clients in the markets. It’s middle-market banking.

It’s the hard stuff. That’s why we don’t produce outsized loan growth. We manage the exposures. We go after the holistic relationship and try to achieve primacy from a depository and treasury management perspective. You can see it in the results that we have. It’s very steady, very stable. There’s really strong credit results. We continue to grow demand deposits and deposits overall. That’s our business. I don’t know. I probably gave you too much information, but I wouldn’t get hung up on a particular asset class within our balance sheet because we’re focused on all of it from an exposure perspective, and there are strategies in place to deal with margin erosion in those portfolios with acceleration and prepayment speeds.

Great. That is actually super helpful and underscores the strength that you guys have. Maybe since you mentioned the deposit days, maybe I could ask a follow-up on that. I mean, deposit growth was really solid and most impressively in, you know, demand deposits, non-interest bearing. Wondering if you could provide additional color and commentary as to how much of that is coming from your growth markets. What’s the drivers of that? I know you guys have been doing a lot with the e-store and AI and just hoping to get additional color. Thank you.

Yeah, you know, I think it’s across the board. I can’t just point to one specific market. We’ve had great success growing deposits in the Carolinas. I know everybody was a little nervous with us moving in there and said it’s highly competitive, but we’ve grown in many, many markets there. A lot of the FDIC data that we refer specifically to those markets in the Carolinas where we have, you know, a pretty decent share. We’ve been able to continue to grow. Pittsburgh, for example, is not a high-growth market from a deposit expansion perspective. I think deposits declined in the market overall because there’s big balances that shift around with some of the custody banks that are located here. There’s two large institutional deposit bases that move around here, and then PNC is based here. It’s kind of hard to say, but we’ve grown deposits outright here.

I think, on a relative basis, we’ve gained share and we’ve solidly positioned ourselves as the number two retail deposit bank in Pittsburgh. That comes from a whole bunch of things. Really solid execution in the field, a technology offering that enables us to compete with large banks, the efficiency contained within the common application to bring customers in quickly and using AI to guide them into depository products right away and let them purchase those products instantly. A lot of those things come into play. On top of all of that, the commercial bankers have really been trained to go after depository-only relationships. They do both. That’s the old traditional corporate banker. That’s what I was trained to do, go after. I don’t just focus on loans. I focused on whatever would drive good results for the balance sheet.

Our incentive compensation plans are aligned to produce results because we incent people to originate low-cost deposits, not specialty priced. They don’t get incentives to bring in high-priced deposits. It’s the solid stuff. There’s a lot of block and tackling. There’s no silver bullet. It takes a lot of people that are pretty dedicated to making that happen, and you have to stay true to the model that you’ve developed. We have a very solid growth model, very good execution in the field, and a laser focus on doing what we think is best for the shareholders and then incenting people to do that. I know that doesn’t give you your answer because you were looking for one specific thing, but I don’t think there is. It’s a combination of things, and we have a very well-thought-out strategy, and it’s playing out. It’s played out over 15 years.

Vince Calabrese, Chief Financial Officer, F.N.B.: I would add too, if you look at the FDIC market share data, the June to June, I mean, we more than doubled the market growth in that period. We grew in 75% of the MSAs that we’re in and outperformed the market in 38. You know, we’re now with this growth and performance we had, we’re top 5 in nearly 50% of our MSAs and top 3 in 30%. It’s really kind of across the footprint.

That’s great. Thank you for all the color there, and I will step back and let others ask. Thank you.

Vince Delie, Chairman, President, and CEO, F.N.B.: Yeah, thank you. Thanks, Kelly.

Conference Operator: All right, our next question today comes from Casey Hare at Autonomous. Please go ahead.

Thanks. Good morning, everyone. One question.

Vince Delie, Chairman, President, and CEO, F.N.B.: Good morning, Marcus.

Hey, guys. Vince C, question for you on slide 15. The interest-bearing deposit beta down to 35% from 40% cumulatively. Just where do you see that going, through the cycle versus the 54% on the upswing?

Vince Calabrese, Chief Financial Officer, F.N.B.: Yeah, I would say just as a reminder, you know, on the way up, you know, we finished the cycle with a cumulative beta total deposit beta of 39.8%. We outperformed the peers by 8% during that period and meaningfully on the deposit cost, 38 basis points. You know, as you would expect, I mean, we have a very active process discussing strategy and tactics for bringing rates down, and we’ve started to do that, you know, in anticipation of the Fed moving and as we move through this cycle. I think we have a very good game plan for how to do that as we move forward, just kind of where we think it might go. I mean, we still think mid-30s terminal down beta seems reasonable for us given our historical performance.

As far as year-end, I guess it depends on if you get a December cut, right, which obviously a cut late in a quarter just affects the math. If we do get that cut, we’re probably in the low 20s or so. Without a December cut, we’re kind of in the, I would say, the mid-20s just for this year, but kind of mid-30s as we move forward through this cycle.

Okay, very good. Switching to capital management, just to see the CET1 ratio at 11%, I don’t think, I mean, that’s a very, very big number. I just wanted to get some updated thoughts. You guys do have a, you know, attractive stock price. You did, you know, hit the buyback a little. I think you could have done it more. What is the go-forward strategy with a very strong capital ratio? If, Vince D, if you want to tell me to shut up about M&A, please take that opportunity.

Vince Delie, Chairman, President, and CEO, F.N.B.: I’m going to preserve the comment. The M&A answer, I’ll give that right away. We haven’t changed our position. We’re still focused on executing our core model, and it’s performing very well. I’ve said it before, often would be opportunistic, but we’re focused internally, and we need to be focused internally right now. I think it’s paying off for us. Again, opportunistic, but not looking to make any huge moves here. Go ahead, Vince.

Vince Calabrese, Chief Financial Officer, F.N.B.: Sure. As far as capital management, like you mentioned, CET1 ratio at a record for us at 11. Dividend payout ratio below 30%. We’re in a great position to deploy capital as we move forward to optimize shareholder value. With the risk of the balance sheet, combined with, as you look ahead and our guidance implies, higher earnings, higher capital generation, we’ll be well positioned to support the loan growth. We do expect the commercial growth to start to pick up at some point and are very well positioned to be able to support that. With where the stock’s trading, clearly the valuation is very attractive. We’ve been active the last three or four quarters. I would expect us to be active again this quarter as we move forward. The dividend is another element. We have regular conversations about the dividend.

In the past, we had a very elevated payout ratio for a long period of time and carried a higher cash dividend. With a sub-30% level, it’s definitely something we’re actively talking about. We still like the flexibility of the buyback to be able to do that opportunistically with valuation, but the dividend is something that we’ll continue to talk about.

Okay, great. Just last one for me. The investor day that’s upcoming in a couple of weeks here, you know, it’s been a while since you guys, I think it was 2019. You guys are a lot bigger. Just wondering what we can expect. Are you guys looking to put out profitability targets? Just a little color on what to expect. Thanks.

Vince Delie, Chairman, President, and CEO, F.N.B.: The purpose of the investor day is to show off the tech, to introduce you to the team. There’s a lot of depth here. I think just having the ability to interact with our digital and AI people and our leadership from the field here in this building, which is brand new, I think it’s going to be very impactful for the investors. You hear a lot of things, people talk about things, but when you come and experience the tangible aspects of the new building and the tech that we have and what we’re doing, I think the investors will leave energized. It’s very impressive, and we wanted to show it off. I think that we pulled it off and we got the building built and we got everybody in here. There’s 800 people or more working in this building.

It’s very impressive, and the employees are very, very proud of it. I thought it would be a great opportunity to bring the investors in to show them what we built for them, right? This is all about us driving business. You’ll see when you come through, the entire building is designed to entertain clients and to drive business, to grow revenue and earnings. You’ll see that when you come.

Vince Calabrese, Chief Financial Officer, F.N.B.: Courage, collaboration.

Vince Delie, Chairman, President, and CEO, F.N.B.: Yeah, collaboration. It’s an awesome space, and, you know, should bode well for us as we move into the future.

Vince Calabrese, Chief Financial Officer, F.N.B.: Great. Thank you.

Vince Delie, Chairman, President, and CEO, F.N.B.: Thanks.

Thank you.

Conference Operator: Our next question today comes from Russell Gunther at Stephens. Please go ahead.

Vince Calabrese, Chief Financial Officer, F.N.B.: Hi, good morning, guys.

Vince Delie, Chairman, President, and CEO, F.N.B.: Morning, Russell.

Hi, Russell.

Vince Calabrese, Chief Financial Officer, F.N.B.: Morning. A question on the expense side of things. Nice to see the revenue guide up and expenses flat, that efficiency come down nicely for the quarter, and it sounds like guided to continue to improve in 4Q. I think for the year, that would still kind of get you toward the higher end of what I believe an internal target has been of 50 to 55%. Is that still the right range to think about for F.N.B.? Do you see you guys making some progress on that ratio going forward? Can that back half of the year efficiency sustain in 2026 after we think about it?

Vince Delie, Chairman, President, and CEO, F.N.B.: Yeah, can I answer it quickly?

Vince Calabrese, Chief Financial Officer, F.N.B.: No, no, no.

Vince Delie, Chairman, President, and CEO, F.N.B.: I’ll turn it over to you, Vince.

Vince Calabrese, Chief Financial Officer, F.N.B.: Yeah, of course.

Vince Delie, Chairman, President, and CEO, F.N.B.: We’re very cognizant of the expenses here at this company. We spend a lot of time focused on it. We actually have a team that reports up through Vince that focuses exclusively on our expense line items, right? We have meetings and talk about it. There’s an expense initiative moving into next year that’s fairly sizable. Vince mentioned it in his prepared remarks. We have, over time, taken expense out, run rate expense out historically at a pretty healthy clip, you know, $20 million per year, for consecutive years. We’re planning on re-engaging and working to optimize our expense base, right? There are certain things that are coming from an efficiency perspective, which is helping us. The common application over time will help us because that’s a very, very efficient onboarding process with a lot of digital components to it.

We’re already starting to see benefits from an operational perspective by using those digital work streams and using that software application to originate across a variety of product areas. That’s all part of the evolution. The other part of this is approaching $50 billion in assets. We have spent a lot of money, invested a lot in our risk infrastructure. We have automation like you couldn’t believe. We’re tracking thousands of metrics internally using AI in our data science. We did process mapping across our entire operations area. We’re very, let’s say, well-prepared to move through a cycle and to benefit from that study from an efficiency perspective. Go ahead, Vince. You can answer it.

Vince Calabrese, Chief Financial Officer, F.N.B.: Yeah, I would just, all I would really add to that, I guess, as we plan for 2026, the focus, we’re always a disciplined manager of expenses. It’s the focus isn’t just on cost savings, but on efficiency, scalability, kind of leveraging the stuff that Vince is talking about. You know, we’ll continue to focus on renegotiating vendor contracts. We’re going after that pretty hard. It’s part of every year, but we’re definitely going after that in a meaningful way, kind of streamlining operations through automation. We’ve made investments in people, technology, data science, AI, and we’re in early stages for some of that. Some of it’s been around for longer, but leveraging those investments to just really drive overall profitability.

Vince Delie, Chairman, President, and CEO, F.N.B.: Yeah, our efficiency ratio is 52%, and we have been making those investments all along. We opened a number of de novo branches over the last few years. We didn’t even talk about it. We’re better positioned to drive revenue growth today, and the expense, a vast majority of those expenses are baked into the run rate.

Vince Calabrese, Chief Financial Officer, F.N.B.: Yeah, as we move forward.

Vince Delie, Chairman, President, and CEO, F.N.B.: We start to see good positive operating leverage as we move forward, right, because we’re going to leverage those investments to drive revenue. Go ahead.

Vince Calabrese, Chief Financial Officer, F.N.B.: Yeah, that’s what I was going to say. That’s the key point, positive operating leverage, right? We’re going to have it for this year and enhance that and grow it even more as we move forward. To the direct question on the efficiency ratio, there’s still room to bring the efficiency ratio down. It really is the overall positive operating leverage combined with the efficiency ratio and then return on tangible common equity driving the profitability.

Vince Delie, Chairman, President, and CEO, F.N.B.: The board and the management team are laser-focused on efficiency, the efficiency ratio. Vince does pretty extensive reporting to the board about our progress. Operating leverage, positive operating leverage is a mandate for operating plans. We’re very focused on it. I would expect it to continue to improve over time.

Vince Calabrese, Chief Financial Officer, F.N.B.: That’s great color, guys. I appreciate both of your thoughts there. Just last one for me, Gary, would you be able to expand upon your comment about having removed some risk from the portfolio in 3Q and maybe size up the exposure you examined as potentially impacted by a government shutdown? It’d just be helpful to get your thoughts about how you’re thinking around that issue.

Gary L. Guerrieri, Chief Credit Officer, F.N.B.: Yeah, I’ll touch on the government shutdown first, Russell. I mean, we’re continuing to watch for fallout from the Doge efforts earlier in the year, as well as the new government shutdown. At this point, we have seen absolutely nothing from an impact standpoint coming out of either one of those situations. You know, the government shutdown is a fluid situation and it twists and turns every day here. You know, we’re keeping an eye on it. We’ll continue to keep an eye on those portfolios that are potentially impacted. As mentioned, nothing at all at this point. In terms of the taking the risk off the table comment, essentially, we saw again another good reduction a couple of quarters running now in our criticized asset levels on a net basis, down about $113 million.

A number of those clients were exits from the bank, just normal payouts getting refinanced at other institutions. We were pleased to see some of that activity with those clients move off the books. We also did see a few upgrades where performance was improved. You know, that’s a chunk of risk that has been taken off of our balance sheet. We’re pleased with that and continue to manage the portfolios each and every day in that manner. Just kind of normal blocking and tackling from our perspective and what we do here every day.

Vince Calabrese, Chief Financial Officer, F.N.B.: Excellent. Thanks, Gary. Thank you all for taking my question.

Vince Delie, Chairman, President, and CEO, F.N.B.: Thank you.

Gary L. Guerrieri, Chief Credit Officer, F.N.B.: Thanks, Russell.

Conference Operator: Thank you. Our next question comes from Daniel Tamayo with Raymond James. Please go ahead.

Thank you. Good morning, everybody.

Vince Delie, Chairman, President, and CEO, F.N.B.: Maybe first one for.

Yeah, maybe first one for Gary here. We’ve had some issues here with other banks, with the non-depository financial institution loans. You talked about it in the comments. That’s really not what you guys are doing. Curious if you can provide kind of where you stand end of quarter. You had pretty low concentration relative to other banks at the end of the second quarter, just from the Y9 data. Curious if that’s changed at all in the third quarter. Maybe if you could give a little bit of a breakdown of what those loans are that you have on the balance sheet to give us some comfort around credit. Thanks.

Gary L. Guerrieri, Chief Credit Officer, F.N.B.: Yeah, the call report, Danny, really casts a pretty large and wide net there. I mean, our customers are primarily in the other bucket, and it’s really diversified across a number of sectors, such as wealth management firms, advisory firms, insurance firms, investment companies. That’s primarily the type of companies that we see in that bucket. When you look at those companies, our lending arrangements are generally for working capital and expansion purposes, direct lending activities. As Vince mentioned earlier, we’re not in the business of lending to private capital funds, including private equity and private debt funds. We’re not in that business, and that’s not where we’re going to play. That was a conscious decision that was made a long, long time ago, and we’re going to continue to manage the book that way. It’s not a business we have any interest in.

Okay. Thanks for those comments, Gary. Maybe one.

Vince Delie, Chairman, President, and CEO, F.N.B.: As I said earlier, the bulk of our portfolio, if you look at our portfolio, is extraordinarily granular, and it’s small businesses, middle-market companies across the seven-state footprint. I don’t think, you know, from a concentration perspective, you’re going to find material concentrations that are unmanageable. Gary and I, you know, people have come forward with proposals on verticals. We have jointly shut them down, okay, because we have a belief that we need to stay true to focusing on serving the communities that we’re in and providing capital to middle-market and small businesses. That’s our end consumers. That’s our goal. I don’t know if you want to. That was our philosophy and passport.

Gary L. Guerrieri, Chief Credit Officer, F.N.B.: No, you’ve heard Vince use the word block and tackle a couple of times today. That’s what we do each and every day here at the company. It’s core banking business, core C&I in the communities that we do business with through all segments of the C&I space, small, mid, and corporate. Those portfolios, we understand really well how they perform through the cycles. We’ve been through many cycles, this management team, and we’ve continued to focus on providing stable EPS streams through good and bad environments. That’s what our focus is and is going to continue to be.

Vince Delie, Chairman, President, and CEO, F.N.B.: We don’t have verticals here to speak of. I mean, there’s a CRE vertical, but that’s intentional for credit management. We don’t believe in institutionally originating credit. We’re character-first. We have to know the customer. It’s very disciplined across the footprint. I guess that’s part of the reason why our performance has been so strong from a credit perspective over long periods of time.

Great, very helpful, Vince and Gary. Thank you. Maybe a follow-up just on the fee income side. In the slide deck, you had a bullet there that said you’ve had 9% fee income CAGR over the last 10 years, which is a certainly nice number. You talked a little bit in the conversation about efficiency ratio, about investments that you’ve been making. Just curious where you see runway for continued growth on the fee income side, kind of in the medium term as we look forward here.

We’ve made recent investments in our investment banking platform in public finance. We have an effort. We’ve expanded our hedging offering and investments in treasury management. Those are the areas that I see the biggest lift in over time. The pipelines are building in public finance. Obviously, we’re a very active player in the municipal space on the depository side. We’re not just taking the high-yielding deposits. We’re actually providing treasury management services and we’re their principal bank. There have been many, many requests over the last few years for us to participate in bond activity. We weren’t able to do it, but we built out the platform. That’s something we’re very excited about. We’re seeing a lot of activity as we build that out. We now are a viable option for a number of municipalities across our footprint and nonprofits who want to raise capital by issuing bonds.

We’re there now. That’s purely fee-based, and we’re excited about that. We’re seeing a pipeline build. From an M&A perspective, the people that we brought over are the best you could find. I mean, they’re just terrific people. I’ve known Greg forever. They’re going to do a great job, and he’s got some really great opportunities out there. We’ll get some benefit from that. I think as we see, the balance sheet has grown. We’re a larger organization. We have a deeper penetration in commercial across our footprint. We will see a pickup in syndications activity as we get through this period. I’m very excited about underwritten, traditional bank deals and our ability to be the left lead in those transactions. That, to me, is a game changer for us from a return perspective. To add on top of that, we’ve been a player.

We built out our debt and capital markets capability with the creation of a broker-dealer focused principally on taking bond economics. That’s also to help Gary, because he’s very risk-averse. We play in the investment grade space and the near investment grade space. Those companies that need capital in that space, the spreads are pretty thin. There’s a lot of unfunded commitments. When you factor in the bond economics, the returns are north of 15%, right, because you’re getting paid to provide capital through the investment banking activity. I think that’s all worked extraordinarily well for us, and those will continue to drive. We’ll be able to drive fee income. From a treasury management perspective, if you look at our treasury management platform, we really have not penetrated the small business segment.

We have 90,000 to 100,000 small businesses, and we have very low penetration from a merchant and treasury management perspective. We’re using AI, and we’re building out tools and bundling products right now to go after that segment. There’s a lot of granularity in that segment. We already have the delivery channel through the retail distribution channel and the BDOs that we have. We’re layering in additional expertise there. I’m very excited about TM as we move forward. There’s mortgage banking. As we shift into this lower rate environment, another thing that’s going to happen is you’re going to see we’re principally a purchase money originator. Historically, we’ve had much, much higher gain on sale activity in a lower rate environment.

If we can get there with a more normal yield curve and lower rates, we’re going to see a significant pickup in fee income from the mortgage bank as well. Hopefully, that all lines up and we continue to see an expansion in the non-interest income bucket here. Our fee-based businesses are poised to grow. Wealth has grown historically, you know, 9% to 10%. We’ve only scratched the surface from a wealth perspective because we really haven’t fully built out the wealth capabilities across our new geography. The Mid-Atlantic, the DC market still needs—we need to hire people and build that out. In the Carolinas, we have people, but there’s an opportunity to add more because of the number of opportunities there.

I’m very optimistic about our ability to continue to sustain that growth in that fee income bucket and shift our dependence away from just being a spread bank, right? Fee income is north of 20%, right? I mean, as non-interest income increases, hopefully, that fee income outpaces it and we’re able to have a larger portion of our revenue contributed by those high-returning businesses. Anyway, that’s the strategy. I think we’re in a really good place, and I think we’ve proven over time that we can execute.

Vince Calabrese, Chief Financial Officer, F.N.B.: Yeah, and there’s a couple of key points on that slide 17 just for reference. You know, we mentioned that we’ve either started from scratch or expanded from very small 10 business lines that are now, you know, multimillion-dollar revenue generators. That diversification is really important. The newest stuff that we’ve added that Vince mentioned, the public finance and the investment banking, really allows us to serve our clients through their whole life cycle. This has been a strategic plan that we probably started, I don’t know, 12 years ago in adding these other capabilities. Now that we have that, really, there’s no reason for our clients to go to another bank or have to go to another bank for those services. We can take them all the way through.

That’s great color, guys. Thanks for taking my question.

Vince Delie, Chairman, President, and CEO, F.N.B.: Yeah, come to the investor day. You’ll see more.

I’ll be there.

Okay, good.

Conference Operator: Thank you. Our next question today comes from David Smith at True Securities. Please go ahead.

Morning. In the past, you’ve spoken about your balance sheet being short-term asset-sensitive, medium-term neutral, long-term liability sensitive. As we think about the ongoing Fed cut cycle, what should we be on the lookout for in terms of the timing of how your NI will be reacting right now?

Vince Calabrese, Chief Financial Officer, F.N.B.: Yeah, I mean, we’re essentially neutral right now. I mean, if you were around 1% or so, for a 100 basis point move at June 30, we’ll probably be a little bit closer to neutral. Historically, we’ve managed to neutral. That’s really what we’ve managed to as we’ve gone through these periods, you know, from a profitability standpoint. You know, we’re more asset-sensitive to kind of benefit from what was happening with the yield curve. The goal moving forward would really be to stay neutral-ish, I would say, and then benefit net interest income by growing loans and deposits. We have a lot of levers. If you look at what’s kind of driving the net interest income performance that we’ve seen this quarter and we’ve raised to guide again. The new loan originations are coming on 50 basis points above the portfolio rate.

Cash flows from securities we’re reinvesting 147 basis points above the roll-off rate. That’s positive. We have fixed-rate loans that are, we’re originating, you know, in total, loans we’re putting on the books in the 630s. We’re originating loans there above the maturing rate. That’s all helping on that side. We have the chunk of the loans that will adjust as SOFR adjusts, and that’s kind of part of what we have to manage through. On the deposit side, we’ve kind of had a dual mandate for our team of growing deposits while really optimizing the cost side. I think we’ve done a nice job bringing the cost down. Again, like I commented earlier, we’re very active in the tactics and strategies we’re deploying to continue to bring those rates down.

With the Fed moving and there’s been plenty of cover with other banks too that have been doing the same thing, we’ve been able to start to bring rates down on slugs of the deposit portfolio and really have not had any negative customer reaction to that.

Thank you. When you compare the 75% of the markets where you grew your deposit market share to the minority where you didn’t, are there any lessons you can learn about what’s working in those markets that you can apply to the ones where you’re not growing share right now?

Vince Delie, Chairman, President, and CEO, F.N.B.: Yeah, when you look at the FDIC data, the areas that we’re not growing share are all over the board. It could be a circumstance where there’s a large player that controls a significant portion of the MSA, and we only have one or two branches there. The growth that we’re going to experience isn’t going to move the needle there, right? It depends on the MSA. I think lessons learned, I think we gain more from focusing on the 75% where we grew. I think the 25%, when you drill into it, the vast majority of those markets are not markets where we’re going to meaningfully change our position without significant investment.

We’re focusing on the markets where we’re down, and we do have a big investment, and we need to drill in and figure out why we haven’t grown like we have in the markets where we’ve had chief success. There aren’t very many of those. That’s the good news. We continuously look at it. I’ve listened to Alan Mulally’s book on tape, and one of the things he did was he sat down with all of his executives, and they had to present to him. We do the same exact thing here. I’ve just told our folks, when you’re in a market that’s not performing, you have to tell us that you’re in a market that’s not performing and what you’re going to do to fix it. We’re very keenly focused on it. We have quarterly and monthly meetings.

Vince Calabrese, Chief Financial Officer, F.N.B.: Daily scorecards.

Vince Delie, Chairman, President, and CEO, F.N.B.: Daily scorecards, with automation. With AI now, it’s going to be mind-blowing because we have daily scorecards with all these metrics, and we’re tracking performance daily. We can layer on top of that an analysis, right, through open AI architecture. Instead of me calling Alfred and asking him questions about where the retail bank’s performing, I could just go in and queue it up myself. That’s going to be a game changer for us and for the leaders in the field who are trying to drive performance.

Vince Calabrese, Chief Financial Officer, F.N.B.: You can call Alfred.

Vince Delie, Chairman, President, and CEO, F.N.B.: I can call Alfred. I can call him and say, "What’s going on? Barry’s gone." I’ve worn him out after 15 years, so a new person here. That’s how it works. That’s how you keep driving results.

Thank you.

Yep. Thanks.

Conference Operator: Thank you. Our next question today comes from Brian Martin at Janney.

Vince Calabrese, Chief Financial Officer, F.N.B.: Thank you for calling us, Janney Montgomery Scott. We will be with you shortly. Please continue to hold.

Conference Operator: It appears their line is on hold. At this time, I’m going to move on, and I will turn the call over for final remarks to Vincent J. Delie. Vincent J. Delie, please go ahead, sir.

Vince Delie, Chairman, President, and CEO, F.N.B.: Thank you very much for the questions and giving us an opportunity to present to you. I’m just very pleased with our people. I think we’ve gone through a number of challenging periods. We’ve had headwinds like you couldn’t believe. The performance of this company has been outstanding, and it’s outstanding because of the people that work here. Thank you to our employees. Take care, everybody.

Conference Operator: Thank you. This concludes today’s conference. We thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day.

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