F.N.B. set to play offense in North Carolina

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Executives at F.N.B. Corp. are optimistic about early efforts to retain lenders and borrowers from its most recent acquisition.

The Pittsburgh company bought Yadkin Financial in Raleigh, N.C., in March for $1.5 billion. Looking back at the first full quarter since the deal’s closing, executives at the $31 billion-asset F.N.B. expressed confidence that they can start winning clients from other institutions in North Carolina.

“It’s like landing a 737 on an aircraft carrier in the North Sea,” Vincent Delie Jr., the company’s president and CEO, said of the moving parts associated with closing a big acquisition. “I think we’ve successfully landed and we’re going to go on the offensive. I’m looking forward to the next few quarters.”

F.N.B. gained nearly 100 branches and $7.5 billion in assets from the deal. While Scott Custer, Yadkin’s CEO, quickly departed to become president of Live Oak Bank in Wilmington, N.C., Delie said “very few” bankers have left. (He acknowledged that F.N.B. did lose one team in the mortgage banking group.)

Retention has been “much, much better” than in previous acquisitions, Delie told analysts during a Thursday conference call to discuss quarterly earnings. He half-joked that North Carolina’s warmer weather could entice F.N.B. workers in the Northeast to request transfers when winter sets in before discussing opportunities to recruit lenders from other institutions.

“We’ve had quite a few inquiries about opportunities in other markets from folks at other banks,” Delie said. “I think we’re in a good position to bring in folks if we need to.”

F.N.B., meanwhile, reported stronger quarterly earnings — profit rose 80% from a year earlier to $74.4 million — that included Yadkin and organic growth.

Net interest income increased by 42% to $218.4 million. Total loans rose by 41% to $20.5 billion, while the net interest margin was relatively flat at 3.42%. F.N.B.’s portfolios for commercial real estate, commercial leases, mortgages and consumer lines of credit all had large increases.

Noninterest income rose by 29% to $66 million. Delie touted fee income from capital markets, which rose by 21%, as a big opportunity in the Carolinas. Mortgage banking income also improved.

F.N.B.’s noninterest expenses increased by 26% to $163.7 million. The company only had $1.4 million in merger-related expenses in the second quarter.

The efficiency ratio was to 54.3%, representing a modest improvement from 55.5% in mid-2016.

F.N.B., a serial acquirer in recent years, is not looking to line up the next deal, Delie said during Thursday’s call. Rather, the company is focused on integrating Yadkin and working on several technology initiatives, including an expansion of its digital banking platform.

“I think for the time being we're focused on driving growth in transaction deposits [and] continuing to gain market share in North Carolina and South Carolina,” Delie said in response to an analyst’s question about pursuing more deals.

“Everything has gone very well but we still have work to do,” he added. “The digital build out is on everyone's agenda. … Data analytics is a hot topic and we're continuing to build out the team to drive smart decisions for cross-sell. Even credit monitoring and stress testing requires those capabilities, so that tends to be the focus.”

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