F.N.B. Corporation Reports Second Quarter 2017 Earnings

PRESS RELEASE

July 20, 2017 - PITTSBURGH, PA

F.N.B. CORPORATION REPORTS SECOND QUARTER 2017 EARNINGS
Company Achieves Record Revenue and Record Net Income

F.N.B. Corporation (NYSE:FNB) reported earnings for the second quarter of 2017 with net income available to common stockholders of $72.4 million, or $0.22 per diluted common share. Comparatively, first quarter of 2017 reported net income available to common stockholders totaled $21.0 million, or $0.09 per diluted common share, and second quarter of 2016 reported net income available to common stockholders totaled $39.3 million, or $0.19 per diluted common share.

Excluding the after-tax impact of merger-related expenses of approximately $0.9 million, second quarter operating net income per diluted common share was $0.23.  Comparatively, excluding the after-tax impact of $35.1 million of merger-related expenses and $1.7 million of merger-related net securities gains, first quarter operating net income per diluted common share was $0.23, and excluding the after-tax impact of $6.9 million of merger-related expenses, second quarter of 2016 operating net income per diluted common share was $0.22.

"FNB delivered solid performance, achieving record revenue and record net income, as well as an improved efficiency ratio," said Vincent J. Delie, Jr., President, and Chief Executive Officer. "We are particularly pleased with the early successes in our new markets and continue to be excited about the potential growth opportunities from the expanded footprint.  Across the company, our results reflect success in executing on our key strategic objectives designed to deliver long-term sustainable value for our shareholders.”

Second Quarter 2017 Highlights
(All comparisons refer to the first quarter of 2017, except as noted)

• Organic growth in total average loans was $305 million, or 6.1% annualized, with average commercial loan growth of $129 million or 4.1% annualized, and average consumer loan growth of $173 million or 9.5% annualized (including residential mortgage, direct and indirect installment, and home-equity related products).
• On an organic basis, average total deposits increased $60 million or 1.1% annualized, including an increase in non-interest bearing deposits of $106 million, somewhat offset by a decrease in time deposits, led by a planned decline in higher-cost brokered time deposits. 
• The net interest margin (FTE) (non-GAAP) increased 7 bps to 3.42% from 3.35%, and included 3 basis points of purchase accounting accretion and cash recoveries, compared to 7 basis points in the first quarter.
• Non-interest income increased $11.0 million or 19.9%, reflecting broad-based improvements in fee-related services and expanded opportunities from the Yadkin acquisition.
• The efficiency ratio on an operating basis (non-GAAP) was 54.3%, compared to 57.2% in the prior quarter and 55.4% in the year-ago quarter.
• Annualized originated net charge-offs were 0.38% of total average originated loans, compared to 0.25% annualized in the first quarter of 2017 and 0.35% annualized in the year-ago quarter.

The tangible common equity to tangible assets ratio (non-GAAP) was 6.83% at June 30, 2017, compared to 6.80% at March 31, 2017. The tangible book value per common share (non-GAAP) was $6.00 at June 30, 2017, an increase of $0.14 from March 31, 2017.

Non-GAAP measures referenced in this release are used by management to measure performance in operating the business that management believes enhances investors' ability to better understand the underlying business performance and trends related to core business activities. Reconciliations of GAAP to non-GAAP operating measures to the most directly comparable GAAP financial measures are included in the tables at the end of this release.  Organic growth refers to growth excluding the benefit of initial balances from acquisitions.

Quarterly Results Summary		2Q17				1Q17				2Q16
Reported results
Net income available to common stockholders (millions)		$	72.4			$	21.0			$	39.3
Net income per diluted common share		$	0.22			$	0.09			$	0.19
Book value per common share (period-end)		$	13.26			$	13.16			$	11.61
Operating results (non-GAAP)
Operating net income available to common stockholders (millions)		$	73.3			$	54.4			$	46.1
Operating net income per diluted common share		$	0.23			$	0.23			$	0.22
Tangible common equity to tangible assets (period-end)		6.83		%		6.80		%		6.68		%
Tangible book value per common share (period-end)		$	6.00			$	5.86			$	6.40
Average Diluted Common Shares Outstanding (in 000's)		324,868				239,262				211,675
Significant items influencing earnings1 (millions)
Pre-tax merger-related expenses		$	(1.4	)		$	(52.7	)		$	(10.6	)
After-tax impact of merger-related expenses		$	(0.9	)		$	(35.1	)		$	(6.9	)
Pre-tax merger-related net securities gains		$	—			$	2.6			$	—
After-tax impact of net merger-related securities gains		$	—			$	1.7			$	—
(1) Favorable (unfavorable) impact on earnings

Second Quarter 2017 Results – Comparison to Prior Quarter

Net interest income totaled $218.4 million, increasing $45.7 million or 26.4%. The net interest margin (FTE) (non-GAAP) increased 7 basis points to 3.42% and included $0.5 million of purchase accounting accretion and $1.1 million of cash recoveries, compared to $3.0 million of purchase accounting accretion and $0.3 million of cash recoveries in the first quarter.  Total average earning assets increased $4.9 billion or 22.9%, mostly due to the acquired Yadkin balances, as well as organic loan growth of $305 million and a $627 million increase in the securities portfolio, with the increase in average securities commensurate with the larger combined balance sheet.

Average loans totaled $20.4 billion and increased $4.2 billion, or 25.8%, reflecting the acquired Yadkin balances and organic loan growth in the commercial and consumer portfolios. Average organic commercial loan growth totaled $129 million or 4.1% annualized, led by strong origination volume toward the end of the quarter in the Maryland and Cleveland regions. Average organic consumer loan growth was $173 million, or 9.5% annualized, reflecting our expanded footprint, new dealer relationships for indirect auto loans and continued growth in the residential mortgage portfolio.

Average deposits totaled $21.2 billion and increased $4.0 billion, or 23.5%, primarily reflecting the acquired Yadkin deposits.  Organic growth in average noninterest bearing deposits and money market balances was mostly offset by planned declines in higher-cost brokered time deposits.

Non-interest expense totaled $163.7 million, decreasing $23.8 million and including $1.4 million of merger-related expenses. Excluding merger-related expenses, non-interest expense would have increased $27.5 million primarily related to the expanded operations from Yadkin. The efficiency ratio (non-GAAP) was 54.3%, compared to 57.2%.

Credit quality results remained at satisfactory levels. The ratio of non-performing loans and OREO to total loans and OREO increased 1 basis point to 0.78%. For the originated portfolio, the ratio of non-performing loans and OREO to total loans and OREO decreased 4 basis points to 1.08%. Total originated delinquency, defined as total past due and non-accrual originated loans as a percentage of total originated loans, increased 5 basis points to 0.99%, compared to 0.94% at March 31, 2017.

Net charge-offs totaled $11.8 million, or 0.23% annualized of total average loans, compared to $8.1 million, or 0.20% annualized in the first quarter of 2017, and $10.1 million, or 0.28% annualized in the second quarter of 2016. For the originated portfolio, net charge-offs were $12.7 million, or 0.38% annualized of total average originated loans, compared to $7.9 million or 0.25% annualized in the first quarter of 2017, and $9.9 million, or 0.35% annualized in the second quarter of 2016. The ratio of the allowance for loan losses to total loans and leases increased 1 basis point from March 31, 2017, to 0.81% at June 30, 2017. For the originated portfolio, the allowance for loan losses to total originated loans was 1.15%, compared to 1.19% at March 31, 2017, which reflects strong organic loan growth and favorable credit performance in certain portfolios. The total provision for loan losses was $16.8 million, compared to $10.9 million in the prior quarter, and $16.6 million in the year-ago quarter.

June 30, 2017 Year-To-Date Results – Comparison to Prior Year-To-Date Period

Net interest income totaled $391.2 million, increasing $96.4 million, or 32.7%, reflecting average earning asset growth of $6.0 billion, or 34.1%, and including $3.6 million of purchase accounting accretion and $1.5 million of cash recoveries, compared to $2.6 million of purchase accounting accretion and $3.3 million of cash recoveries in the first six months of 2016. The net interest margin (FTE) (non-GAAP) declined 2 basis points to 3.39% and included 4 basis points of purchase accounting accretion and cash recoveries in the first six months of 2017, compared to 7 basis points in the first six months of 2016.

Average loans totaled $18.3 billion, an increase of $4.5 billion, or 32.6%, due to the benefit from continued organic loan growth and acquired balances. Organic growth in total average loans equaled $874 million, or 6.1%. Total average organic consumer loan growth of $616 million, or 10.8%, was led by strong growth in residential mortgage and indirect auto loans. Organic growth in average commercial loans totaled $263 million, or 3.1%. Organic commercial loan growth compared to the year-ago period was somewhat offset by prepayment activity in the total commercial loan portfolio experienced in the second half of 2016.  Average deposits totaled $19.2 billion and increased $4.2 billion, or 28.3%, due to the benefit of acquired balances and average organic growth of $294 million or 1.9%. On an organic basis, average total transaction deposits increased $479 million or 3.7%. Total loans as a percentage of total deposits were 97.5% at June 30, 2017.

Non-interest income totaled $121.2 million, increasing $23.7 million or 24.4%. Non-interest income reflects the benefit of the Yadkin acquisition and continued expansion of our fee-based businesses of capital markets, wealth management, mortgage banking and insurance for our existing and acquired customer base.

Non-interest expense totaled $351.3 million, increasing $85.0 million, or 31.9%. The first six months of 2017 included merger-related expenses of $54.1 million, compared to $35.5 million. Excluding merger-related expenses, total adjusted non-interest expense increased $66.4 million, or 28.8%, with the increase primarily attributable to the expanded operations from recent acquisitions. The efficiency ratio (non-GAAP) was 55.5%, compared to 55.9%.

Credit quality results remained at satisfactory levels. For the originated portfolio, non-performing loans and OREO to total loans and OREO decreased 7 basis points to 1.08%, compared to 1.15%. Total originated delinquency was 0.99% at June 30, 2017, a 3 basis point decrease from June 30, 2016.

Net charge-offs for the first six months of 2017 totaled $20.0 million, or 0.22% annualized of total average loans, compared to 0.23% annualized. Net originated charge-offs were 0.31% annualized of total average originated loans, compared to 0.28% annualized. For the originated portfolio, the allowance for loan losses to total originated loans decreased 11 basis points to 1.15%, compared to 1.26% at June 30, 2016, reflecting strong organic loan growth and favorable credit performance in certain portfolios. The ratio of the allowance for loan losses to total loans decreased 25 basis points to 0.81%, primarily attributable to additional loan balances from acquisitions that were initially recorded at fair value without a corresponding allowance for loan losses in accordance with accounting for business combinations. The total provision for loan losses was $27.6 million, compared to $28.4 million in the prior period.

Non-GAAP Financial Measures and Key Performance Indicators

We use non-GAAP financial measures, such as operating net income available to common stockholders, operating net income, operating earnings per diluted common share, return on average tangible common equity, return on average tangible assets, tangible book value per common share, the ratio of tangible common equity to tangible assets, efficiency ratio, and net interest margin to provide information useful to investors in understanding our operating performance and trends, and to facilitate comparisons with the performance of our peers. Management uses these measures internally to assess and better understand our underlying business performance and trends related to core business activities. The non-GAAP financial measures and key performance indicators we use may differ from the non-GAAP financial measures and key performance indicators other financial institutions use to measure their performance and trends.

Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP. In the event of such a disclosure or release, the Securities and Exchange Commission’s (SEC) Regulation G requires: (i) the presentation of the most directly comparable financial measure calculated and presented in accordance with GAAP and (ii) a reconciliation of the differences between the non-GAAP financial measure presented and the most directly comparable financial measure calculated and presented in accordance with GAAP. Reconciliations of GAAP to non-GAAP operating measures to the most directly comparable GAAP financial measures are included in the tables at the end of this release.

Management believes merger-related expenses are not organic costs attendant to operations and facilities. These charges principally represent expenses to satisfy contractual obligations of the acquired entity without any useful benefit to us, to convert and consolidate the entity's records, systems, and data onto our platforms and professional fees related to the transaction. These costs are specific to each individual transaction and may vary significantly based on the size and complexity of the transaction.

For the calculation of net interest margin and the efficiency ratio, net interest income amounts are reflected on a fully taxable equivalent (FTE) basis which adjusts for the tax benefit of income on certain tax-exempt loans and investments using the federal statutory tax rate of 35.0% for each period presented. We use these measures to provide an economic view believed to be the preferred industry measurement for these items and provides relevant comparison between taxable and non-taxable amounts.

Cautionary Statement Regarding Forward-Looking Information

A number of statements (i) in this earnings release, (ii) in our presentations, and (iii) in our responses to questions on our conference call discussing our quarterly results and transactions, strategies and plans may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including our expectations relative to business and financial metrics, the execution of the Yadkin transaction, our outlook regarding revenues, expenses, earnings, liquidity, asset quality and statements regarding the impact of technology enhancements and customer and business process improvements.

All forward-looking statements speak only as of the date they are made and are based on information available at that time. F.N.B. assumes no obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

Such forward-looking statements may be expressed in a variety of ways, including the use of future and present tense language expressing expectations or predictions of future financial or business performance or conditions based on current performance and trends.  Forward-looking statements are typically identified by words such as “believe,” “plan,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “will,” “should,” “project,” “goal,” and other similar words and expressions. These forward-looking statements involve certain risks and uncertainties. In addition to factors previously disclosed in F.N.B.’s reports filed with the SEC, the following factors among others, could cause actual results to differ materially from forward-looking statements or historical performance: changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; potential difficulties encountered in expanding into a new and remote geographic market; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business and technology initiatives; competitive conditions; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions and divestitures; economic conditions; and the impact, extent and timing of technological changes, capital management activities, and other actions of the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System and legislative and regulatory actions and reforms.

The forward-looking statements contained in (i) in this earning release, (ii) in our presentations, and (iii) in our responses to questions on our conference call and other “forward-looking statements” contained in other public statements of F.N.B. which make reference to the cautionary factors described in this earnings release are based upon reasonable current beliefs and expectations and are subject to significant risks and uncertainties (some of which are beyond F.N.B.’s control or influence). Actual results may differ materially from those expressed or implied as a result of these risks and uncertainties, including but not limited to, the risk factors and other uncertainties described in F.N.B.’s Annual Report Form 10-K for the year ended December 31, 2016, our first quarter 2017 Form 10-Q (including the risk factors and risk management discussions) and F.N.B.’s other subsequent filings with the SEC.  Our forward-looking statements may also be subject to other risks and uncertainties, including those we discuss elsewhere in this earnings release or other SEC filings or on our corporate website at https://www.fnb-online.com/about-us/investor-relations-shareholder-services. We have included our web address as an inactive textual reference only.  Information on our website is not part of this earnings release. All forward-looking statements in this earnings release or in the presentation made in connection herewith (including responses to questions) speak only to July 20, 2017, and F.N.B. undertakes no obligation to update any such forward-looking statements to reflect events, occurrences or circumstances after that date or to reflect the occurrence of unanticipated events.

Conference Call

The Company's President and Chief Executive Officer, Vincent J. Delie, Jr., Chief Financial Officer, Vincent J. Calabrese, Jr., and Chief Credit Officer, Gary L. Guerrieri, will host a conference call to discuss the Company's financial results on Thursday, July 20, 2017, at 10:30 AM ET.

Participants are encouraged to pre-register for the conference call at http://dpregister.com/10108931.  Callers who pre-register will be provided a conference passcode and unique PIN to gain immediate access to the call and bypass the live operator. Participants may pre-register at any time, including up to and after the call start time.

Dial-in Access: The conference call may be accessed by dialing (844) 802-2440 or (412) 317-5133 for international callers. Participants should ask to be joined into the F.N.B. Corporation call.

Webcast Access: The audio-only call and related presentation materials may be accessed via webcast through the "Shareholder and Investor Relations" section of the Corporation's website at www.fnbcorporation.com. Access to the live webcast will begin approximately 30 minutes prior to the start of the call.

Presentation Materials: Presentation slides and the earnings release will also be available on the Corporation's website on the "About Us" section of our corporate website at www.fnbcorporation.com.

A replay of the call will be available shortly after the completion of the call until midnight ET on Thursday, July 27, 2017. The replay can be accessed by dialing (877) 344-7529 or (412) 317-0088 for international callers; the conference replay access code is 10108931. Following the call, the related presentation materials will be posted to the "Shareholder and Investor Relations" section of F.N.B. Corporation's website at www.fnbcorporation.com.

About F.N.B. Corporation

F.N.B. Corporation (NYSE:FNB), headquartered in Pittsburgh, Pennsylvania, is a diversified financial services company operating in eight states. FNB holds a significant retail deposit market share in attractive markets including: Pittsburgh, Pennsylvania; Baltimore, Maryland; Cleveland, Ohio; and Charlotte, Raleigh, Durham and the Piedmont Triad (Winston-Salem, Greensboro and High Point) in North Carolina. The Company has total assets of $31 billion, and more than 400 banking offices throughout Pennsylvania, Ohio, Maryland, West Virginia, North Carolina and South Carolina. The Company also operates Regency Finance Company, which has more than 75 consumer finance offices in Pennsylvania, Ohio, Kentucky and Tennessee.

FNB provides a full range of commercial banking, consumer banking and wealth management solutions through its subsidiary network which is led by its largest affiliate, First National Bank of Pennsylvania, founded in 1864. Commercial banking solutions include corporate banking, small business banking, investment real estate financing, international banking, business credit, capital markets and lease financing. The consumer banking segment provides a full line of consumer banking products and services, including deposit products, mortgage lending, consumer lending and a complete suite of mobile and online banking services. FNB's wealth management services include asset management, private banking and insurance.

The common stock of F.N.B. Corporation trades on the New York Stock Exchange under the symbol "FNB" and is included in Standard & Poor's MidCap 400 Index with the Global Industry Classification Standard (GICS) Regional Banks Sub-Industry Index. Customers, shareholders and investors can learn more about this regional financial institution by visiting the F.N.B. Corporation website at www.fnbcorporation.com.

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