Piper Sandler affirmed its Overweight rating on shares of F.N.B. Corporation (NYSE:NYSE:FNB), alongside maintaining a $17.00 price target. The firm's analysis followed F.N.B. Corporation's third-quarter 2024 earnings report, which revealed earnings per share (EPS) of $0.30. The earnings included certain non-recurring items: an $11.6 million loss from the sale of a performing auto loan portfolio and a $3.7 million software impairment. Adjusting for these items, core earnings were estimated at $0.34 per share, narrowly missing both the firm's and consensus estimates by one cent.
The slight miss was attributed to an increase in expenses and provisioning, each impacting earnings by one cent. However, this was partially balanced by stronger-than-anticipated revenues. One of the notable achievements for the quarter was the approximately 5% linked-quarter unannualized growth in deposits.
This growth contributed to a reduction in the loan-to-deposit (LTD) ratio, which decreased from 96% to 92%. The lower LTD ratio is seen as providing F.N.B. Corporation with increased balance sheet flexibility as it enters a period expected to bring heightened loan growth.
Piper Sandler expressed a positive outlook on F.N.B. Corporation's potential to secure a significant portion of the forecasted loan growth. The firm anticipates that F.N.B. will continue to increase its market share within its core markets. Additionally, Piper Sandler highlighted F.N.B. Corporation's credit function, which it described as best in class.
The continuation of the Overweight rating is also supported by the firm's view that F.N.B. Corporation's shares are trading at a discount compared to its similarly sized peers. This valuation gap, along with the expected positive performance in loan growth and market share, underpins the rationale for the analyst's rating reiteration.
In other recent news, F.N.B. Corporation reported operating earnings per share (EPS) of $0.34, just below the consensus estimate of $0.35. The company's core pre-provision net revenue (PPNR) of $181.8 million also fell slightly short of expectations. Despite these results, the firm's net interest margin defense was better than anticipated, providing some defense against potential negative revisions. However, elevated non-interest expenses have led to lowered EPS estimates for the years 2025 and 2026 by Stephens.
F.N.B. Corporation reported an operating net income of $122 million for the third quarter of 2024, with total loans increasing by 4.6% to $33.7 billion and total deposits rising by 5.1% to $36.8 billion. A record non-interest income of $90 million was also reported. The company expects mid-single-digit growth in loans and deposits for 2024 and projects non-interest income between $310 million and $320 million for the fourth quarter.
During the earnings call, the management expressed openness to mergers and acquisitions, focusing on smaller, accretive deals.
InvestingPro Insights
F.N.B. Corporation's recent performance and future outlook can be further illuminated by several key metrics from InvestingPro. The company's P/E ratio of 13.43 suggests a relatively modest valuation, which aligns with Piper Sandler's assessment that FNB shares are trading at a discount compared to peers. This valuation perspective is reinforced by the price-to-book ratio of 0.84, indicating that the stock is trading below its book value.
InvestingPro Tips highlight that F.N.B. Corporation has maintained dividend payments for 50 consecutive years, demonstrating a strong commitment to shareholder returns. This is particularly noteworthy given the current dividend yield of 3.28%, which may be attractive to income-focused investors. Additionally, the company's profitability over the last twelve months supports the analyst's positive outlook on its financial health.
It's worth noting that InvestingPro offers 6 additional tips for FNB, providing a more comprehensive analysis for investors seeking deeper insights. These tips, along with real-time metrics, can be valuable for investors looking to make informed decisions about F.N.B. Corporation's stock.
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