F.N.B. Corporation

Good day, and welcome to the FNB Corporation First Quarter 2020 Quarterly Earnings 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. Please note this event is being recorded. I would now like to turn the conference over to Matt Lazaro. Please go ahead.

Thank you. Good morning, everyone, and welcome to our earnings call. This conference call of F&B Corporation 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 it and not as an alternative for our reported results prepared in accordance with GAAP. Reconciliations of GAAPs and 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 earnings release related presentation materials and our 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 April 30th, and the webcast link will be posted to the About Us, Investor Relations, and Shareholder Services section of our corporate website. I will now turn the call over to Vince DeLee, Chairman, President, and CEO.

Good morning, and welcome to our earnings call. On today's call, I'd like to address three key topics. First, I'll begin by providing an update on how we are navigating our business through the COVID-19 pandemic while supporting our employees, customers, communities, and shareholders. Secondly, I'd like to briefly comment on a few points about our first quarter financial performance. And finally, I'd like to revisit several key strategic initiatives and programs. Our company's existing pandemic preparedness plan and ongoing pandemic exercises enabled F&B to stay at the front of this escalating crisis. Dating back to 2018, our management team went through a pandemic simulation and collaborated with our business continuity team to develop a formal pandemic response plan. During this process, sustainability was thoroughly evaluated. and ultimately formed the foundation of the comprehensive plan currently in place. Additionally, our ongoing commitment to invest in our digital channels and technology played a critical role in our ability to provide convenient banking options for our customers who were not able to leave their homes. Our investments in technology also enabled us to build and establish an automated process Paycheck Protection Program in just one week's time. Our efforts resulted in approving and processing 75% of those applications in the first round of funding, representing $2.1 billion in loans. We anticipate processing the remaining applications during the second round of funding. As I mentioned, when Phase 1 of FMB's technology initiative called Clicks to Bricks began, We had previously introduced online appointment setting and were able to quickly make specialized COVID-19 content and offerings available in our solution centers. We tapped into the strength of our established communication channels for both customers and employees, keeping both audiences informed of any updates. Our employees' response to this crisis has been exceptional. Their professional, compassionate, positive, and resilient attitudes have been a bright light in helping each other, our customers, and our communities while navigating these unprecedented times. Protecting the health, safety, and financial well-being of our employees remains critical as we find ways to address any impact to their health or the health of their families. For example, FMV provided our team with up to 15 days paid leave and also expanded our existing paid caregiver leave program. Additionally, To assist with any possible financial hardships resulting from the coronavirus, FMB provided a special assistance payment to essential employees working on the frontline and in our operations areas who ensure that our customers continue to receive vital financial services. We also leveraged our IT infrastructure by making accommodations to give employees the ability to work remotely where appropriate. To date, we have approximately 2,200 colleagues working remotely which represents about half of our workforce and largely non-retail physicians. This capability also speaks to our investment in technology and IT infrastructure. As we focus on our communities, the FMB Foundation committed to provide $1 million in relief in response to COVID-19, benefiting food banks and providing essential medical supplies. Many of our employees began reaching out to our clients and our communities to provide support. that our Pittsburgh headquarters FMB's vendor management team has been using our vetting process to assist Allegheny County in quickly researching new vendors offering medical supplies and services to combat COVID-19. With respect to our retail branches, we have focused on drive up services and closed our lobbies, reverting to appointment only practices, which are supported by the appointment setting capability within our Clicks to Bricks platform. As you can imagine, the monumental commitment of our leadership team and employees to operate in this challenging environment required a sustained 24-7 effort. I'd like to commend our employees for the actions they've taken to execute and abide by our safety measures while continuing operations. With these key priorities and actions in place, let me pivot and comment briefly on our first quarter performance. Given all that's happened in a noisy quarter, our underlying core performance remains solid. Our philosophy is to maintain our approach to risk management through varying economic cycles and serve as the primary capital provider to our clients. While FMV, like many banks, will be subject to a difficult economic environment, this philosophy and the actions we have taken to strengthen our balance sheet and reduce risk should position FMV well as we move through the current crisis. Looking at the quarter's results, GAAP EPS at 14 cents included 15 cents of bottom line impact from significant items primarily related to COVID-19 and the adoption and implementation of CECL and the corresponding reserve bill under these macroeconomic conditions. Top line results were solid as revenue increased to more than 300 million driven by strong loan and deposit growth and positive results across our fee-based businesses. Average commercial loans grew $225 million, or 6%, as we saw activity pick up in late March, particularly in CNI, with growth of 17%. I'll note there was limited impact to average balances from anticipated liquidity draws. Compared to the first quarter of 2019, average deposits increased 5%, with growth in non-interest-bearing deposits of 7%, leading to an improved funding mix. The net interest margin expanded to 3.14%, supported by strong loan growth, a seven basis point improvement in total cost of funds, and higher accretion levels compared to the prior quarter. The fundamental trends in non-interest income were strong, with capital markets revenues of $11 million, setting another record in the first quarter. Insurance and mortgage banking income also had strong underlying performance. Due to the significant shift in the interest rate environment, our non-interest income includes $7.7 million of impairment on mortgage servicing rights. Excluding changes in MSR valuation, mortgage banking income totaled $6.7 million, up more than 50% from the first quarter of 2019, with significant pipelines moving forward. On a core basis, expenses remain stable compared to the fourth quarter, and disciplined expense management will continue to be a top priority as we move beyond this crisis. Vince and Gary will provide more detail on the implementation of CECL and additional details on the financials and their remarks. With that, I'll turn the call over to Gary.