F.n.b. Corporation · NYSE:FNB
F.n.b — Q1 2020 Earnings Presentation
37 slides from F.n.b's earnings presentation, Apr 23, 2020
Slide 1: 2020 First Quarter Earnings and COVID-19 Response Presentation
2020 First Quarter Earnings and COVID-19 Response Presentation April 30, 2020 1
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation and statements by the Company’s management contains “forward-looking statements” as that phrase is defined in the Private Securities Litigation Reform Act of 1995. Forward looking statements can be identified by words such as “anticipated,” “expects,” “in
Slide 3: Non-GAAP Information
Non-GAAP Information This presentation contains references to financial measures that are not defined in generally accepted accounting principles (“GAAP”). Such non-GAAP financial measures should not be considered in isolation or as a substitute for the most directly comparable or other financial me
Slide 4: Howard's Investment Value Thesis
Howard’s Investment Value Thesis • Commercially focused bank, operating in demographically attractive region, leveraging both scale and market positon as largest locally owned bank and 3rd largest state headquartered bank in a consolidating industry • Continued linked quarter growth in the SME comme
Slide 5: Howard's Investment Value Thesis (continued)
Howard’s Investment Value Thesis (continued) H • Significant participation (797 loans and $185 million) in the PPP program, will have significant fee upside impact but has also driven customers of larger out of state banks to open relationships. Participation level twice deposit market share. • Conc
Slide 6: COVID-19 Response
COVID-19 Response 410-750-0020 ROUTING #:055003434 HOWA RD INVESTOR RELATIONS | LOCATIONS | CONTACTUS | ABOUTUS BUSINESS PERSONAL BANKING WITH US We care about Coronavirus Resource Center HOWARD BANCORP
Slide 7: COVID-19: Our Financial State of Readiness
COVID-19: Our Financial State of Readiness As the reality of COVID-19 evolving into a pandemic became evident in February, we evaluated our state of readiness from the perspective of a position of strength… • Our earnings outlook was improving and we were seeing momentum in the execution of our stra
Slide 8: Strong Capital Position
Strong Capital Position • At March 31, 2020, regulatory capital ratios exceed all well-capitalized standards • Tier 1 leverage decreased to 9.10% in the 1st quarter from 9.55% in 4th quarter 2019 • $7.0 million stock repurchase program completed on February 24, 2020; a total of 392,565 shares repurc
Slide 9: Liquidity Position
Liquidity Position Available liquidity at March 31, 2020 consisted of the following: ($ in millions) Total cash and cash equivalents $ 196 Unpledged available-for-sale securties 152 Federal Home Loan Bank ("FHLB") borrowing availability 122 Federal Reserve ("FRB") discount window borrowing availabil
Slide 10: COVID-19 Response: Protecting Our Employees
COVID-19 Response: Protecting Our Employees Publicly and proactively communicated employee and customer health and safety as first response to Covid 19 challenge : • Augmented deep cleaning procedures in place at all branch locations and back offices. • Provided sanitizer, masks and gloves to branch
Slide 11: Strengthening our Communities
Strengthening our Communities Donations/Pledges since February totaling $104,000 • Innovation Works • Maryland Food Bank • Enoch Pratt Free Library • Cristo Ray Jesuit High School • Johns Hopkins Hospital • Anne Arundel Medical Center • University Maryland Upper Chesapeake • Purchased face shields f
Slide 12: Serving our Customers
Serving our Customers • Added a webpage with additional resources, relief program details • Digital banking tools emphasized and reinforced to ensure no conflict between safety and service levels • Sign up procedures for online commercial banking re designed to facilitate first time access • 12 of 1
Slide 13: Supporting our Customers
Supporting our Customers • Immediately granting loan- IO / P&I modifications, primarily in the form of payment deferrals, to qualifying customers • Suspended all foreclosure actions • Waived certain service charges and fees • Participation in the first round of the PPP program exceeded 2X deposit ma
Slide 14: SBA Paycheck Protection Program
SBA Paycheck Protection Program • Our focus has been on existing Howard Bank customers • We began accepting applications on April 3 • First loans were funded on April 15 • We supported our customers in the initial $349 billion program: • Applications received – 856 / total loans approved - 797 • Tot
Slide 15: Loan Portfolio Composition
Loan Portfolio Composition • Our loan portfolio includes 68.5% of commercial loans consistent with successful differentiated positioning as the largest locally headquartered bank in the Greater Baltimore market. 15
Slide 16: Credit Line Utilization
Credit Line Utilization There has been no significant fluctuation in either line usage or available Commercial and HELOC lines since12/31/19. Unused Lines and Unfunded Commitments ($ in millions) 12/31/2019 1/31/2020 2/29/2020 3/31/2020 4/24/2020 Commercial Lines $ 193 $ 189 $ 187 $ 177 $ 186 Constr
Slide 17: Credit Culture / Underwriting Standards
Credit Culture / Underwriting Standards • Strong credit culture built off experienced, credit-trained loan officers charged with generation of quality assets • Credit bench is deep and tenured with several members > 20 years of experience with institutions such as PNC, M&T, Mercantile, Wells Fargo,
Slide 18: Improving Asset Quality
Improving Asset Quality NPA’s / Total Assets (%) (1) NCO’s / Average Loans (2) • Actively managing acquired portfolio NPA’s • Experienced credit and asset workout teams • Credit team continually evaluates the portfolio (1) NPAs include NPLs plus OREO. NPLs include nonaccruals and troubled debt restr
Slide 19: Loan Modifications for Borrowers
Loan Modifications for Borrowers Our loan modifications to qualified borrowers have consisted primarily of interest-only and P&I deferrals, generally for periods of 2-3 months but for as long as 6 months. Balances modified in the following tables are in millions: As of March 31, 2020 As of April 24,
Slide 20: Potential Highly Impacted Loan Sectors
Potential Highly Impacted Loan Sectors The following table presents the industry segments within our loan portfolio that may be most highly impacted by COVID-19 (loans balances are at March 31, 2020; loan modification and SBA PPP balances are as of April 24, 2020; $ in millions): As % of As % of Bal
Slide 21: Rationale for Our Increase in the Allowance
Rationale for Our Increase in the Allowance Allowance / Loans (%) Allowance / NPL’s (%) (1) (1) NPL’s include nonaccruals and troubled debt restructurings. • Rapid and widespread business interruptions and shutdowns as well as sharp increase in unemployment • The rolling average loss rate used in ou
Slide 22: Stress Test / Loss Absorption Capacity
Stress Test / Loss Absorption Capacity A capital / ALLL stress test for the Bank was performed by a third party in June 2019. This stress test used a cumulative 9-quarter “Severe Adverse Case” loan loss rate of 3.9%. In order to add further stress, we: • Assumed a 20% higher loss rate. • Assumed our
Slide 23: NIM Trends
NIM Trends • Our change in funding mix led to a decrease in interest expense which more than offset the reduction in interest income from Q4 ‘19 to Q1 ‘20 • Mix of fixed rate loan assets provides protection against declining rate environment as does rising percentage of low cost transaction deposits
Slide 24: Earnings Snapshot
Earnings Snapshot REPORTED NET INCOME AND EPS ($ in thousands) Q1 2020 Q4 2019 Q1 2019 Vs. Prior Qtr Vs. Prior Yr Net interest income $ 17,525 $ 17,267 $ 17,474 $ 258 $ 51 Noninterest income 3,366 5,625 4,535 (2,259) (1,169) Total revenue 20,891 22,892 22,009 (2,001) (1,118) Noninterest expense 14,5
Slide 25: Profitability Measures
Profitability Measures Reported ($ in thousands) Q1 2020 Q4 2019 Q1 2019 Vs. Prior Qtr Vs. Prior Yr Pre-provision net revenue ("PPNR")(1) $ 6,332 $ 8,530 $ 7,152 $ (2,198) $ (820) Net income $ 3,343 $ 5,900 $ 4,256 $ (2,557) $ (913) EPS - diluted $ 0.18 $ 0.31 $ 0.22 $ (0.13) $ (0.05) Efficiency rat
Slide 26: Balance Sheet Comments
Balance Sheet Comments • Cash and equivalents increased during the quarter by $86.0 million to $196.0 million at end of Q1 ’20 • Available-for-sale securities increased during the quarter by $62.4 million or 26.3%, to $299.8 million; funded by incremental FHLB advances • We continue to increase our
Slide 27: Mortgage Banking Update
Mortgage Banking Update • We substantially completed the previously announced exit of our mortgage banking activities during the first quarter • All loans in the mortgage pipeline have been processed and funded • Remaining loans held for sale at March 31, 2020 ($3.8 million) to be sold in April • No
Slide 28: Reiterating Our Value Proposition
Reiterating Our Value Proposition • Original unique positioning further strengthened by marketplace reaction to PPP program process and performance • Building on tangible growth and funding strengths exhibited earlier in the quarter • Well-prepared and positioned for once in a century exogenous shoc
Slide 29: APPENDIX
APPENDIX HOWARD BANCORP
Slide 30: Quarterly Financial Performance
Quarterly Financial Performance Howard Bancorp, Inc. and Subsidiary Selected Financial Data (in thousands except per share data) THREE MONTHS ENDED March 31, December 31, March 31, 2020 2019 2019 Vs Q4 Vs Q1 Income Statement Data: Interest income $ 22,226 $ 22,550 $ 22,784 $ (324) $ (558) Interest e
Slide 31: Quarterly Financial Performance (continued)
Quarterly Financial Performance (continued) Howard Bancorp, Inc. and Subsidiary Selected Financial Data (in thousands except per share data) THREE MONTHS ENDED March 31, December 31, March 31, 2020 2019 2019 Vs Q4 Vs Q1 Selected Performance Ratios: Return on average assets (2) 0.57 % 1.02 % 0.78 % (
Slide 32: Earning Asset Yields
Earning Asset Yields Howard Bancorp, Inc. and Subsidiary Average Balances, Yields, and Rates (in thousands) Three Months Ended March 31, 2020 Three Months Ended December 31, 2019 Three Months Ended March 31, 2019 Average Income / Yield / Average Income / Yield / Average Income / Yield / Change Chang
Slide 33: Funding Rates and NIM
Funding Rates and NIM Howard Bancorp, Inc. and Subsidiary Average Balances, Yields, and Rates (in thousands) Three Months Ended March 31, 2020 Three Months Ended December 31, 2019 Three Months Ended March 31, 2019 Average Income / Yield / Average Income / Yield / Average Income / Yield / Change Chan
Slide 34: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Howard Bancorp, Inc. and Subsidiary GAAP TO NON-GAAP RECONCILIATION (in thousands except per share data) FOR THE THREE MONTHS ENDED March 31, December 31, March 31, Prior Qtr Prior Yr 2020 2019 2019 $/% $/% CORE NET INCOME AND EPS: Net income (GAAP) $ 3,343 $ 5,900 $
Slide 35: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Howard Bancorp, Inc. and Subsidiary GAAP TO NON-GAAP RECONCILIATION (in thousands except per share data) FOR THE THREE MONTHS ENDED March 31, December 31, March 31, Prior Qtr Prior Yr 2020 2019 2019 $/% $/% EFFICIENCY RATIO: Net interest income (GAAP) $ 17,525 $ 17,26
Slide 36: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Howard Bancorp, Inc. and Subsidiary GAAP TO NON-GAAP RECONCILIATION (in thousands except per share data) FOR THE THREE MONTHS ENDED March 31, December 31, March 31, Prior Qtr Prior Yr 2020 2019 2019 $/% $/% RETURN ON AVERAGE ASSETS: Net income (GAAP) $ 3,343 $ 5,900 $
Slide 37: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Howard Bancorp, Inc. and Subsidiary GAAP TO NON-GAAP RECONCILIATION (in thousands except per share data) FOR THE THREE MONTHS ENDED March 31, December 31, March 31, Prior Qtr Prior Yr 2020 2019 2019 $/% $/% RETURN ON AVERAGE COMMON EQUITY: Net income (GAAP) $ 3,343 $