A month has gone by since the last earnings report for F.N.B. (
FNB Quick Quote FNB - Free Report) . Shares have added about 2.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is F.N.B. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
F.N.B. Corp Q4 Earnings Meet Estimates, Costs Decline Y/Y
F.N.B. Corp’s fourth-quarter 2021 adjusted earnings per share of 30 cents met the Zacks Consensus Estimate. The bottom line reflects a rise of 7.1% from the prior-year quarter.
Results were primarily aided by a rise in fee income, lower expenses and provision benefits. However, a fall in net interest income (NII) was the undermining factor. Results excluded certain significant items. Including those, net income available to common stockholders was $96.5 million, growing 37.5% from the year-ago quarter. For 2021, adjusted earnings per share of $1.24 surpassed the Zacks Consensus Estimate of $1.22. The bottom line jumped 29.2% from 2020. Net income available to common stockholders (GAAP basis) was $396.6 million, growing 42.7% from the previous year. Revenues & Expenses Decline
Quarterly net revenues were $302.3 million, down marginally year over year.
NII was $223.3 million, down 4.7% year over year. Growth in average earning assets was offset by the repricing impact on earning asset yields from lower interest rates, mitigated by the improved funding mix, with reductions in higher-cost borrowings, and the cost of interest-bearing deposits. The net interest margin (FTE basis) (non-GAAP) contracted 32 basis points (bps) to 2.55%. Non-interest income was $79 million, up 15.5% from the prior-year quarter. The improvement was due to strong contributions from capital markets and wealth management, as well as higher service charges reflecting increased customer activity, partially offset by lower contributions from mortgage banking, given the strong levels in the fourth quarter of 2020. Non-interest expenses were down 8.9% year over year to $181.6 million. Credit Quality Improves
Net charge-offs were 0.02% of average loans, down 39 bps year over year. Given the improvement in credit trends, F.N.B. Corp’s provision for credit losses was a benefit of $2.4 million against provision expenses of $17.6 million in the prior-year quarter. The ratio of non-performing loans, 90 days past due, and other real estate owned (OREO) to total loans and OREO declined 36 bps year over year to 0.41%.
Capital & Profitability Ratios Improve
As of Dec 31, 2021, common equity Tier 1 (CET1) ratio was 9.9%, up from 9.8% at the Dec 31, 2020 level. Leverage ratio was 7.99%, up from 7.83%.
At the end of the fourth quarter, return on average assets was 0.99%, up from 0.77% as of Dec 31, 2020. As of Dec 31, 2021, return on average tangible equity was 14.53%, up from 11.49%. Outlook First-Quarter 2022
Management expects NII (excluding PPP contribution) to be in the range of $226-$230 million. Non-interest income is anticipated to be in the high $70-$80 million range, given the diversified nature of non-interest income revenue streams.
Adjusted non-interest expenses are expected to be $190-$195 million, subject to production related salaries and benefits. Full-Year 2022 (assumes two rate hikes in June and September)
The company expects spot loans (excluding paycheck protection program or PPP and including Howard Bancorp deal) to witness low double-digit to low-teen growth. Total spot deposits (including Howard Bancorp deal, and deposit run-off from the PPP program and stimulus) to record mid-to-high single digit growth.
NII is projected to be between $965 million and $1,005 million. Non-interest income is expected to be in the range of $320-$340 million. Non-interest expenses (operating basis) are expected to be $760-$780 million. Provision expenses to be $20-$40 million, excluding Day 2 CECL provision in low $20 million range in the first quarter 2022. Effective tax rate is expected to be 17.5-18.5%. How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
Currently, F.N.B. has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, F.N.B. has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.