Q3 2024 FNB Corp Earnings Call

Lisa Hajdu; Manager of Investor Relations; F.N.B Corporation

Vincent Delie; Chairman of the Board, President, Chief Executive Officer; F.N.B Corporation

Gary Lee Guerrieri; Chief Credit Officer; F.N.B Corporation

Vincent J. Calabrese; Chief Financial Officer; F.N.B. Corporation

Frank Schiraldi; Analyst; Piper Sandler & Co

Russell Gunther; Analyst; Stephens Inc

Timur Braziler; Analyst; Wells Fargo

Daniel Tamayo; Analyst; Raymond James & Associates

Kelly Motta; Analyst; Keefe Bruyette & Woods

Brian Martin; Analyst; Janney Montgomery Scott LLC

Manuel Navas; Analyst; D.A. Davidson

Operator

Good morning, and welcome to the F.N.B. Corporation third quarter 2024 earnings call. (Operator Instructions) 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.

Lisa Hajdu

Good morning, and welcome to our earnings call. This conference call of F.N.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 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 Friday, October 25, 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 Delie, Chairman, President and CEO.

Vincent Delie

Thank you. Welcome to our third quarter earnings call. Joining me today are Vince Calabrese, our Chief Financial Officer; and Gary Guerrieri, our Chief Credit Officer. F.N.B. reported third quarter operating net income available to common shareholders of $122 million or $0.34 per diluted common share after adjusting for $15 million of significant items impacting earnings.
The third quarter's results demonstrate our ability to produce quality loans and significant deposits throughout our footprint while maintaining stable non-interest bearing deposit balances at approximately $10 billion. We generated linked quarter revenue growth, strengthened our balance sheet with the record CET1 ratio of 10.4% drove shareholder value with tangible book value growth of 15% year-over-year and an operating return on average tangible common equity of 14%.
We are also particularly proud of our ability to gain market share in a number of MSAs across our footprint and achieved a number two traditional retail deposit share position in Pittsburgh despite competition from some of the nation's largest banks.
In this environment, it is important we continue to manage our capital and liquidity position. During the quarter, F.N.B. completed a $431 million indirect auto loan sale allowing us to remove lower-yielding assets from our balance sheet with minimal impact to forward earnings while improving capital and loan-to-deposit ratio. Vince Calabrese will provide the details about the sale during his remarks.
Total loans ended the quarter at nearly $33.7 billion, a 4.6% annualized linked quarter increase when excluding the loan sale. F.N.B's loan growth has once again exceeded the published H8 data as we continue to gain market share, which can be added to our business model and its emphasis on a diverse and attractive footprint, as well as ample capital and liquidity to support our clients.
Total deposits ended the quarter at $36.8 billion, an increase of 5.1% or $1.8 billion from the second quarter benefiting from new production that was generated through successful deposit initiatives as well as seasonal deposit inflows.
Our strong sequential deposit growth highlights the successful efforts of our commercial and business bankers to establish and deepen client relationships. We also have leveraged our digital and data analytics capabilities to effectively market and capture deposits from new and existing retail households through data-driven lead generation.
We made strides in consumer and small business deposits through our omnichannel flips to bricks environment, leveraging our diversified geographic branch footprint and a work winning eStore common app.
Our loan-to-deposit ratio improved significantly to 91.7%, a decrease of nearly 5 percentage points from the last quarter. This linked quarter change demonstrates our ability to execute strategies to manage the loan-to-deposit ratio when needed.
In the third quarter alone, F.N.B. generated nearly $1.8 billion of deposits completed a loan sale and supported $391 million of loan growth. We will continue to manage the loan-o-deposit ratio through our long-term strategy of being our customers' primary operating bank across both the consumer and commercial portfolios, aided by our advanced digital tools, Clicks-to-Bricks strategy and product bundling capabilities.
This quarter's total revenue growth of 2.3% was driven by an all-time high noninterest income of $90 million and stronger net interest income levels. We will further advance our strategy of diversifying revenue streams and leveraging ongoing investments, including a focus on expanding business lines in our Capital Markets segment.
Operating noninterest expense totaled $234 million, driven by higher salaries and benefits, partially associated with strategic hiring necessary to grow market share and our continued investment in our risk management infrastructure.
We strategically increased marketing expenses $2 million to support deposit initiatives that led to our robust deposit growth. Expense management remains a high priority. We expect fourth quarter expenses to be down sequentially.
Our ongoing expense management and growing diverse revenue streams led to a peer-leading efficiency ratio of 55.2% in the third quarter. Another area of ongoing focus is maintaining consistent and conservative underwriting guidelines, enabling us to continuously serve our customers.
Over the last decade, our credit team has built a comprehensive framework to effectively and proactively manage credit risk in concentration through various economic cycles. This long-standing approach to credit risk management continues to serve us well.
With that, I will now pass the call to Gary to review the overall credit performance. Gary?