An increase in operational and income-tax expenses contributed to F.N.B. Corp. reporting Tuesday a 5% decrease in fourth-quarter net income to $93.2 million.
F.N.B., based in Pittsburgh, expanded into the Carolinas in March 2017 following its $1.4 billion acquisition of Yadkin Financial Corp., initially based in Elkin before moving to Raleigh.
The Yadkin deal, the largest in the history of F.N.B., gave the bank its first presence in North Carolina with 98 branches, including four in Forsyth County and 33 in the Triad and Northwest N.C.
F.N.B. reported $20.4 million in income-tax expenses in the quarter, compared with $17.4 million in the third quarter and $15.6 million a year ago. Overall, F.N.B. has benefited from the federal corporate tax-rate cut from 35% to 21%, which went into effect Jan. 1, 2018.
Loan revenue rose 0.9% to $218.9 million. The provision for loan losses dropped 50.4% to $7.5 million. The provision is a key financial factor, given it directly affects a bank’s bottom line.
Fee revenue climbed 8.2% to $74 million. Service charges, by far F.N.B.’s largest fee revenue source, dropped 10.9% to $28.8 million.
Mortgage revenue jumped 131% to $10.4 million, reflecting recent decreases in mortgage interest rates. Some national and super-regional banks have put less emphasis on mortgage lending in recent quarters, in part reflecting increased competition from online mortgage lenders.
Non-interest expenses were up 4.5% to $177.4 million.
Nonperforming assets were at $129 million on Dec. 31, compared with $119 million on Sept. 30 and $135 million on Dec. 31, 2018.
“The company generated positive operating leverage while setting new records for total revenue, non-interest income and net income,” Vincent Delie Jr., the bank’s chairman, president and chief executive, said in a statement.
“Our teams had great success driving loan and deposit growth while maintaining our disciplined approach to risk management.”
F.N.B. holds a Top 10 retail deposit share in six major metropolitan markets with populations greater than 1 million with the additions of the Triad, Triangle and Charlotte to Pittsburgh, Baltimore and Cleveland.
Analyst Brian Martin of Janney Montgomery Scott LLC said Tuesday that F.N.B. benefited from “significantly lower-than-expected credit costs, which more than offset slightly higher expenses. Revenues were generally in line.”
Martin said the bank had “steady loan growth, aided by 8% growth in commercial and industrial sector, double-digit annualized growth in deposits driven by strength in core deposits, solid fee income, good cost controls and strong credit quality.”
In July, Martin said F.N.B. is facing headwinds as it tries to expand its market share in the Carolinas and the metro D.C. area.
Martin warned that “failure to execute on its plan could place increased pressure on the company’s right to remain independent.”
“In our view, F.N.B.’s attractive footprint in diverse geographic markets has considerable franchise value, which would garner significant interest from potential partners.”
On Tuesday, Martin said that "we believe F.N.B. will benefit from recent disruption from merger and acquisitions across some of its newer markets, which supports our positive growth outlook.
"Further, the company’s geographic diversification should allow for growth without sacrificing credit, a key differentiator relative to other banks."
Delie said Tuesday that “we are well-positioned to benefit from our geographic expansion, as well as investments in technology and infrastructure, as these initiatives will help us continue to grow revenue by adding new clients and deepening our customer relationships.”
Source: F.N.B. Corp.