Casey Hare

Casey Hare inquired about the expected trend of the cumulative interest-bearing deposit beta as the Federal Reserve continues to cut rates, the comparison of new money yields to maturing fixed-rate assets, and the company's capital management strategy regarding M&A.

Answer

Curt Myers, CEO and Chairman, stated that the company aims to maintain or slightly increase the cumulative interest-bearing deposit beta around the 30% level. He also noted that new loan originations during the quarter were approximately 6.48%. Regarding M&A, Curt Myers reiterated the strategy of targeting $1 billion to $5 billion community banks for market penetration in their five-state market, confirming it remains an active strategy with continued opportunities.

Casey Hare inquired about the expected trend of the cumulative interest-bearing deposit beta as the Federal Reserve continues to cut rates. She also asked for color on new money yields compared to the 5.08% coupon on assets maturing in the next year, and sought an update on the company's capital management strategy, specifically regarding M&A activity and why no deals have materialized despite an active market.

Answer

Curt Myers, CEO and Chairman, indicated that the company aims to maintain or slightly increase the cumulative interest-bearing deposit beta around the 30% level. He stated that new loan originations during the quarter were approximately 6.48%. Regarding M&A, Myers reiterated the strategy of targeting $1 billion to $5 billion community banks for market penetration in their five-state region, emphasizing that it remains an active strategy and the company is positioned to pursue opportunities.

Casey Hare from Autonomous Research asked about the trajectory of F.N.B.'s interest-bearing deposit beta, specifically its movement from 40% down to 35% cumulatively, and where it might settle through the cycle. He also questioned the go-forward capital management strategy given the record 11% CET1 ratio, including thoughts on buybacks, dividends, and potential M&A. Finally, he sought expectations for the upcoming investor day, particularly regarding profitability targets.

Answer

CFO Vincent J. Calabrese stated that F.N.B. anticipates a mid-30s terminal down beta for deposits, with year-end figures depending on potential Fed cuts. Chairman, President, and CEO Vincent J. Delie reiterated the focus on internal execution over M&A, while Calabrese highlighted the strong capital position (11% CET1, sub-30% dividend payout) for opportunistic buybacks and ongoing dividend discussions. Delie explained the investor day's purpose is to showcase F.N.B.'s technology, new building, and team depth, emphasizing the tangible aspects of their AI-driven e-store platform and operational efficiency.

Casey Hare inquired about the post-deal capital ratio targets, specifically whether the strategy of maintaining higher capital would persist or adjust given the combined entity's asset size exceeding $100 billion. He also asked about the current terms and economics of new hires, and the potential for expansion into Texas markets, considering the M&A activity there.

Answer

CFO Harold Carpenter stated that capital strategies would be directed by the new leadership post-close, with no additional plans beyond supporting loan growth, and mentioned potential buyback programs if growth targets are not met. CEO Terry Turner acknowledged a more competitive hiring landscape impacting pricing but emphasized that the strong profit leverage of experienced relationship managers mitigates this, and while Texas markets are attractive, the Southeast remains a primary focus due to unique market share vulnerability, though consolidation could create future Texas opportunities.