Business context and reporting period
F.N.B. Corporation (NYSE: FNB) is a Pittsburgh-based bank holding company operating in seven states and Washington, D.C., through Community Banking, Wealth Management and Insurance businesses. This Form 10-K covers the fiscal year ended December 31, 2023; it is an annual report, not a standalone fourth-quarter earnings release. FNB reported $46.2 billion in assets, $32.3 billion in loans and leases, $34.7 billion in deposits, and 346 branches at year-end.
Key financial metrics
| Metric | 2023 | 2022 / change |
|---|---|---|
| Total revenue | $1.57 billion | Up 8.8% |
| Net interest income | $1.317 billion | $1.120 billion; up 17.6% |
| Net income available to common stockholders | $476.8 million; $1.31 diluted EPS | $431.1 million; $1.22 diluted EPS |
| Operating net income / diluted EPS (non-GAAP) | $568.6 million / $1.57 | $494.9 million / $1.40 |
| Net interest margin (FTE, non-GAAP) | 3.35% | 3.03% |
| Efficiency ratio (non-GAAP) | 51.2% | 52.1% |
| Cash flows | Operating +$423 million; investing -$2.261 billion; financing +$1.740 billion; cash decreased $98 million | Operating cash flow was $1.218 billion |
| Year-end borrowings | $4.477 billion | $2.465 billion |
| Capital and liquidity | CET1 10.04%; leverage 8.72%; parent cash $375.4 million; liquidity coverage ratio 2.0x; 13 months cash on hand | CET1 9.82%; parent cash $654.3 million; liquidity coverage ratio 1.7x |
Average loans grew 12.7% to $31.4 billion, while average deposits rose 1.7%. The year-end loan-to-deposit ratio increased to 93.1% from 87.0%. Approximately 78% of year-end deposits were FDIC-insured or collateralized. FNBPA was reported as well-capitalized. FNB paid $0.48 per common share in dividends during 2023.
Material changes versus 2022
- Higher rates and asset growth lifted net interest income, but deposit costs rose sharply: the cost of interest-bearing deposits increased to 2.13% from 0.49%. Average non-interest-bearing deposits declined 6.4%, while average time deposits increased 72.3% as customers shifted to higher-yielding products.
- Reported non-interest income fell 21.4% to $254.3 million, chiefly due to a $67.4 million pre-tax loss from selling $648.7 million of available-for-sale securities. Excluding that loss, non-GAAP operating non-interest income declined 0.6%.
- Non-interest expense increased 10.8% to $915.4 million; adjusted non-GAAP operating expense rose 11.9%. The $29.9 million FDIC special assessment was a significant item.
- Net charge-offs rose to $67.7 million, or 0.22% of average loans, from $16.2 million, or 0.06%. A $31.9 million commercial loan charge-off related to alleged fraud was a major contributor; excluding it, the company reported a non-GAAP charge-off ratio of 0.11%.
- Total assets rose 5.6% and year-end loans and leases rose 6.8%. Borrowings increased to $4.477 billion, including additional FHLB funding; deposits were nearly flat at year-end.
- Common equity increased, AOCI loss narrowed to $235 million from $357 million, and tangible book value per common share (non-GAAP) rose to $9.47 from $8.27.
Outlook, commentary, risks and unusual items
Management highlighted record 2023 operating diluted EPS of $1.57, record revenue of $1.6 billion, and balance-sheet actions intended to improve future earnings. FNB reinvested proceeds from securities sold at an average yield of 1.08% into securities yielding approximately 350 basis points more, with a similar duration and convexity profile. It transferred $355 million of indirect auto loans to held-for-sale, recorded a $16.7 million pre-tax valuation allowance, and completed the sale in February 2024; proceeds were used to repay borrowings. Management estimated the balance-sheet actions’ tangible-book-value earn-back period at less than one year. The filing provides no specific company earnings or revenue guidance.
The company cited the Federal Reserve’s rate outlook as suggesting possible rate reductions during 2024, while emphasizing that timing and extent were uncertain. Key exposures include interest-rate and deposit competition, possible deposit outflows, commercial real estate conditions, credit losses, and operational, cybersecurity and regulatory risks. Non-owner-occupied CRE included $8.7 billion of loans, of which 21.7% represented office space. Moody’s affirmed FNB ratings but changed its outlook to negative; S&P and Kroll outlooks were stable.
After year-end, FNBPA settled DOJ and North Carolina fair-lending allegations it disputes, concerning mortgage lending in Charlotte and Winston-Salem. The agreement requires $11.75 million in mortgage subsidies over five years, approximately $1.75 million for community initiatives, and three new branches in predominantly Black and Hispanic neighborhoods; it includes no civil money penalties. FNB also redeemed its $110.9 million Series E preferred stock on February 15, 2024. The independent auditor issued unqualified opinions on the financial statements and internal controls; management and the auditor reported effective internal control over financial reporting.
Most important facts for investors to verify
- Whether deposit mix, funding costs and the 93.1% loan-to-deposit ratio remain manageable as depositors continue to migrate to higher-yielding products.
- Credit performance and reserve adequacy after the isolated $31.9 million alleged-fraud charge-off; review CRE, office and construction exposures and subsequent loan trends.
- Whether the securities repositioning and auto-loan sale deliver the projected earnings benefits, and how the realized securities loss affects book value and returns.
- The cost and execution of the fair-lending settlement, including required subsidies, community spending, branch openings and compliance obligations.
- How the $29.9 million FDIC special assessment and any possible future assessment affect earnings, and whether liquidity and capital remain within policy and regulatory limits.
- Reconcile the non-GAAP operating results and ratios to GAAP results; the filing does not provide a clear standalone fourth-quarter income statement in the supplied text.