F.N.B. Corporation

Good morning and welcome to the FNB second quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal 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 Lisa Hajdu, Manager of Investor Relations. Please go ahead.

Thank you. Good morning and welcome to our earnings call. This conference call of FMB 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, and not as an alternative for, 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 Thursday, July 27th, 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 Dilley, Chairman, President, and CEO.

Thank you, and welcome to our second quarter earnings. Joining me today are Vince Calabrese, our Chief Financial Officer, and Gary Guerrero, our Chief Credit Officer. FMB reported second quarter net income available to common stockholders of $140.4 million, or $0.39 for diluted common share, on an operating and reported basis. This brings the total year-to-date operating earnings per share to $0.79, a 39% increase over the same period in 2022. Operating pre-provision net revenue increased 51% year-to-date, resulting in an improvement in the efficiency ratio to 50% and an increase in operating return on tangible common equity to 19.1%. Average total loans increased 2.1% linked quarter to over $31 billion. Commercial loan balances benefited from solid production, primarily in the Pittsburgh, Harrisburg, and North and South Carolina markets. Average deposits totaled over $34 billion, a 1.3% decrease from the first quarter, largely due to seasonal deposit outflows caused by tax-related payments and the impact of the inflationary macroeconomic environment on our clients. Despite the acceleration of deposit competition caused by the recent banking disruption, the mix of non-interest-bearing deposits to total deposits at June 31 remained relatively stable at 32%. The loan-to-deposit ratio was 92.7% at quarter end. Our strong deposit mix was a result of a focus on fostering relationships with our customers and serving as their primary bank. Over the past several years, we've enhanced our product suite and digital capabilities, grown our exceptional team of bankers, and strategically expanded our market presence to offer best-in-class experiences for our customers that build convenience, trust, and a stable deposit base. For example, we recently launched the Common Account application in our award-winning Eastwood, where we intend to be the first bank to offer a single, universal application for the majority of our products and services. enabling customers with the ability to apply for multiple products simultaneously. Utilizing advanced technology, including artificial intelligence and machine learning, the eStore Common App delivers a more efficient and secure application process with sophisticated data capabilities to offer customized product recommendations that cater to specific customer needs. By pre-filling numerous fields, the Common Application minimizes customer keystrokes and significantly reduces the amount of time needed to complete an application for multiple products. The first phase of the common application, which we launched last month, includes all consumer loan products. Consumer deposit products will be added by the end of 2023, and business products will follow shortly after in the first half of 2024. The streamlined process has led to an increase of over 170% in online applications for the month of June, compared to a year ago, and we expect this number to continue to increase as we actively promote the capability. Outside of digital, we have continued to invest in our fee-based services offering. We are now expanding our award-winning treasury management platform with strategic priorities to drive organic growth, increase revenue, and generate low-cost deposits. This quarter alone, clients of our new integrated payable solutions product executed nearly $1 billion of payments while simultaneously benefiting from check outsourcing and reduced fraud risk. We've also leveraged integrated payables to continue to grow our commercial card revenue, which has a 19% compounded annual growth rate over the past three years and continues to expand through deeper penetration with commercial and small business clients. These investments in our comprehensive set of products and services continue to help FMV grow non-interest-bearing deposit accounts and further diversify our fee-based income streams, providing customers with high-value services. FMV continues to steadily increase market share. This quarter's 12% spot loan growth year-over-year has been achieved while adhering to our consistent and conservative underwriting guidance. Risk management remains an integral part of our culture. I will now turn the call over to Gary to comment in more detail on our asset quality and credit risk. Gary?