Given the decline in CRE and increase in residential mortgage, how does FNB view the future mix, especially if CRE picks up and resi mortgage seasonality declines?

Residential mortgage growth, particularly from physician loans, is not intended to drive NII primarily. The company sold a portfolio of originated mortgages. CRE growth is starting to pick up, with solid opportunities, and the overall loan pipeline is at a record high. Seasonal peaks for physician mortgages occur in Q2. “I think our goal is to try to drive growth across the portfolio, not to be reliant on one particular asset class.”

Can you size the impact of public funds deposit seasonality on the deposit growth outlook, and explain the expected abnormal seasonality in Q4 expenses?

Public funds seasonality typically brings in about $0.5 billion in deposits, a mix of categories. The Q4 expense reduction is partly due to the timing of tax credit sales, which are typically reflected in Q4. Other factors include reduced fraud losses, lower down payment assistance program costs, and fluctuating commission components. “The municipal business that we have is we're the primary operating bank for the municipalities. We don't just go out and accept deposits replaced plugged from one of the high-yielding money market options that they have.”

What is the updated quantitative impact of Basel III on capital, and how does FNB view its buyback appetite going forward, considering the strong Q2 buybacks and stable CET1?

Basel III is estimated to be an 80 to 100 basis point pickup to capital ratios, but final rules are needed for certainty. Buybacks remain attractive, with Q2 executed at an average price of $17.46, representing a good return. The company aims to hold CET1 around current levels (11.4%). “We think buybacks continue to be attractive here. We transacted them at around 1,750 on average in the quarter.”

FNB

F.N.B. (FNB) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Financials· Jul 17, 2026

Source: earnings call transcript

Executive summary

F.N.B. Corporation Q2 FY26 — Strong Profitability and Capital Generation

F.N.B. Corporation delivered strong Q2 FY26 results, marked by record revenues and robust capital generation, with EPS up 17% year-over-year. The company continues to leverage strategic investments in AI and data analytics to drive efficiency and revenue growth, while maintaining disciplined expense management. Despite a revised NII outlook reflecting deposit competition, FNB remains focused on deepening customer relationships and optimizing shareholder returns.

Highlights

EPS grew 17% year-over-year to $0.42.
Net income reached $149 million.
Total revenue hit a record $463 million.
Tangible book value per common share increased 10% year-over-year to $12.24.
Total cost of deposits decreased 3 basis points linked quarter and 21 basis points year-over-year.
Efficiency ratio improved to 53.7%, down over 100 basis points year-over-year.

Concerns

Net interest income guidance revised down to a range of $1.485 billion - $1.515 billion for full year 2026 due to heightened deposit competition.
CRE balances declined $129 million linked quarter due to payoffs.
Loan yields declined 4 basis points linked quarter due to lower 1-month SOFR and tighter spreads on new originations.
Outside services expenses increased 11.6% year-over-year due to higher third-party legal and consulting costs.

Guidance & targets

Category	Target	Timeline	Confidence
Period-end loans growth	mid-single digits medium materiality	Full Year 2026 · FY26	Medium
Period-end deposits growth	mid-single digits medium materiality	Full Year 2026 · FY26	Medium
Net interest income	$1.485 billion - $1.515 billion high materiality	Full Year 2026 · FY26	Medium
Net interest income	$375 million - $385 million medium materiality	Q3 · FY26	Medium
Noninterest income	$370 million - $390 million medium materiality	Full Year 2026 · FY26	Medium
Noninterest income	$93 million - $98 million medium materiality	Q3 · FY26	Medium
Noninterest expense	$1.01 billion - $1.02 billion medium materiality	Full Year 2026 · FY26	Medium
Noninterest expense	$255 million - $260 million medium materiality	Q3 · FY26	Medium
Operating leverage	strong positive medium materiality	Full Year 2026 · FY26	High
Provision for credit losses	$80 million - $95 million medium materiality	Full Year 2026 · FY26	Medium
Effective tax rate	21% - 22% low materiality	Full Year 2026 · FY26	Medium
Fee income as % of total revenue	approaching 25%, someday 30% medium materiality	Long term	Medium
Net interest margin trajectory	drifting up from this level very gradually medium materiality	Near term	Medium

FNB operating KPIs by quarter

FNB operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Change vs prior quarter
Return on tangible common equity (ROTCE)	13.2% Our capital ratios remained strong and continue to move favorably, all while producing a strong return on average tangible common equity of 13.2%. Source: earnings call transcript	14% FNB capital levels remained strong with TC at nearly 9% and with a solid return on average tangible common equity at 14%. Source: earnings call transcript	+0.8 pt
Net interest margin	3.25% First quarter's net interest margin was 3.25% and down 3 basis points sequentially as the timing of the Fed rate cut in December 2025 impacted NIM for the quarter. Source: earnings call transcript	3.25% While the second quarter's net interest margin of [ 3.25% ] was equal to last quarter's NIM and Net interest income increased more than 7% on a linked-quarter annualized basis. Source: earnings call transcript	0 pt
Efficiency ratio	56.1% The first quarter efficiency ratio remained solid at 56.1% down meaningfully from 58.5% a year ago, and we continue to manage our expense base in a disciplined manner. Source: earnings call transcript	53.7% Even with these increases, the second quarter efficiency ratio remains solid at 53.7%, down more than 100 basis points from the year ago quarter, and we continue to manage our expense base in a disciplined manner. Source: earnings call transcript	-2.4 pt
Common equity tier 1 ratio (CET1)	11.4% The 8% quarterly common dividend increase marks our first quarterly dividend increase since 2007 and reflects our strong financial performance and capital levels as evidenced by the TCE ratio of nearly 9% and the CET1 ratio of 11.4%. Source: earnings call transcript	11.4% Stepped up repurchase pace and our recent quarterly common dividend increase reflects our strong financial performance and capital levels as evidenced by the TCE ratio of nearly 9% and a stable CET1 ratio of 11.4% in the quarter. Source: earnings call transcript	0 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline	Details
Insight 360	launch	by the end of the year

Risks & headwinds

Heightened deposit competition full year basis

heightened deposit competition within the industry

Mitigation:Strategic pricing, leveraging data analytics, focus on primary operating bank relationships.

Lower 1-month SOFR Q2 FY26

9 basis points decline from peak to trough during the quarter

Mitigation:Expectation for SOFR to bounce back in Q3.

Tighter spreads on new loan originations Q2 FY26

tighter spreads on new originations

Mitigation:Focus on holistic relationships and ancillary business to achieve target returns.

CRE payoffs Q2 FY26; another quarter of that, the third quarter and then expect that to dissipate some as you get into the fourth quarter

CRE balances continued to be impacted by payoffs as expected and were down $129 million linked quarter

Mitigation:Building CRE pipeline, focus on desired asset classes.

Geopolitical and economic volatility ongoing

highly uncertain macroeconomic geopolitical environments; work in Iran that could throw us into a weird situation with oil prices rising

Mitigation:Consistent underwriting, strong credit risk curriculum, focus on less volatile industries and asset classes.

Basel III Endgame reproposal potentially January 1 of next year

80 to 100 basis point kind of pickup to the capital ratios

Mitigation:Will re-evaluate capital allocation once final rules are known.

Q&A highlights

What drove the NII guidance reduction, particularly regarding deposit competition and loan spreads, and are deposit costs nearing a bottom?

The NII reduction was due to lower 1-month SOFR impacting adjustable-rate loans, tighter spreads on new originations, and heightened deposit competition. Despite competition, interest-bearing deposit costs declined 4 bps. SOFR is expected to bounce back in Q3, and municipal deposit seasonality will help. CRE payoffs are expected to dissipate after Q3.

“The competitive environment for deposits is there for everybody. We still had an ability to produce our interest-bearing deposit costs by 4 basis points. So that was an accomplishment given the kind of the environment that we were in during the quarter.”

asked by Daniel Tamayo · answered by Vincent J. Calabrese

2 min read 6 chapters

Detailed narrative

Digital and AI Investments

F.N.B. is making significant investments in data analytics and AI, leveraging proprietary tools like eStore and a common application for enhanced customer insights. The new AI-enabled customer aggregation and insight tool, Insight 360, is slated for launch by year-end with ongoing enhancements.

This initiative aims to optimize banking relationships, improve product penetration, and drive better outcomes from a cost of deposit perspective, while maintaining a top-quartile efficiency ratio.

Deposit Strategy and Pricing

The company's strategic use of data analytics has contributed to a 3 basis point linked-quarter decrease in the total cost of deposits, and a 21 basis point decrease year-over-year. FNB focuses on being the primary operating bank for its clients, utilizing free balances and compensating balances to manage deposit costs effectively.

Despite a competitive environment, FNB was one of the few banks to report a lower cost of deposits quarter-over-quarter, highlighting its pricing discipline.

Loan Portfolio Dynamics

Period-end loans increased 7.5% on an annualized linked-quarter basis, primarily driven by commercial and industrial (C&I), consumer lending, and seasonal residential mortgage production. While commercial real estate (CRE) balances declined by $129 million linked-quarter due to payoffs, the overall loan pipeline is at a record level.

Strong activity is anticipated in C&I and CRE fundings in the second half of the year, offsetting seasonal declines in residential mortgages.

Capital Management and Shareholder Returns

F.N.B. repurchased $47 million of common stock in Q2, bringing the first-half total to over $80 million, a 300% increase from the prior year. With over $250 million in share repurchase authorization remaining, the company maintains robust capital levels, including a TCE ratio of nearly 9% and a stable CET1 ratio of 11.4%.

Management emphasizes judicious capital deployment to optimize shareholder returns, including continued buybacks and dividend increases.

Fee Income Diversification and Growth

The company is actively diversifying its fee income streams, with capital markets income increasing 16% to $8 million and wealth management revenues up 8% to $22 million year-over-year. New businesses like investment banking and public finance are beginning to contribute, and optimism remains for derivatives, merchant services, and foreign exchange.

FNB aims for fee income to approach 25% and eventually 30% of total revenue, driven by these expanding business units and efficient resource allocation.

Credit Quality and Outlook

Asset quality metrics showed improvement, with delinquency and non-performing loans (NPL) decreasing 3 basis points linked-quarter to 71 and 31 basis points, respectively. Net charge-offs remained solid at 19 basis points. The company maintains qualitative overlays for potential supply chain impacts and tariff uncertainty, expressing confidence in its diversified customer base and consistent underwriting to navigate economic cycles.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.