Welcome to the FNB Corporation's Second Quarter 2015 Earnings Conference Call. [Operator Instructions]. I would now like to turn over the conference over to Matthew Lazzaro, Investor Relations. Mr. Lazzaro, please go ahead.

Thank you. Good morning everyone and welcome to our earnings call. This conference call of F.N.B. Corporation and the reports it files with the Securities and Exchange Commission often contain forward-looking statements. Please refer to the forward-looking statement disclosure contained in our earnings release, related presentation materials, in our reports and registration statements filed with the Securities and Exchange Commission and available on our corporate website. A replay of this call will be available until April 30 and a transcript and the webcast link will be posted to the Shareholder and Investor Relations section of our corporate website. I will now turn the call over to Vince Delie, President and Chief Executive Officer.

Good morning and welcome to our quarterly earnings call. Joining me today are Vince Calabrese, our Chief Financial Officer and Gary Guerrieri, our Chief Credit Officer. I will provide highlights from the quarter and cover some strategic developments since our last call. Gary will review asset quality and Vince will provide further detail on our financial result and an update on our guidance for the rest of the year. Vince will then open the call up for any question. We’re very pleased with the quarter's results that again reflect double digit EPS expansion compared to the year ago quarter. Operating net income available to common shareholders was a record 38.4 million and produced $0.22 per diluted share. This translates into a 107 basis point return on average tangible assets and a 15% return on average tangible common equity. The second quarter was marked by positive operating leverage, solid organic loan and deposit growth and positive asset quality results. The quarter's record high total revenue of a 165 million revenue marked the 10th consecutive quarter of total revenue growth. We are extremely proud of this accomplishment and the team's ability to grow total revenue despite a continued low interest rate environment and the loss of interchange revenue that became effective beginning July 2013. During the first half of 2015 we began to realize the increased benefit from the investments made in our fee based business units with particular focus on trust and brokerage, mortgage banking and capital markets. We invested in these businesses to bolster and diversify our fee income sources in the face of new regulatory constraints on consumer banking fees and changing client behaviors. These investments have strengthened our overall revenue mix with fee income making up 24% of total revenue in the quarter. Our bankers continue to build…

Thank you, Vince and good morning everyone. The second quarter of 2015 marked another solid quarter performance as our credit quality results for the period were stable to slightly improved and remain at consistently good levels. Our performance for the quarter was marked by overall lower delinquency, stable NPL and OREO levels and a consistently good net charge off level of 22 basis points annualized on a GAAP basis. I will now cover these topics with you in a little more detail as I first highlight the performance of our originated book of business followed by some commentary on our acquired portfolio. Looking first at our originated portfolio, the level of NPLs and OREO at 108 million improved by three basis points to end-June at 1.05%. Delinquency also remained at a solid level and was flat on a linked quarter basis at 86 basis points. Net charge-offs totaled 5.8 million or 23 basis points annualized which is slightly better than our targeted levels for the period and remains in-line with our performance over the last several quarters. The originated provision at 8.7 million exceeded net charge-offs and covered loan growth for the quarter resulting in an ending originated reserve position at 1.21%. Overall we remain very pleased with the continued solid and consistent performance of our core book of business. Now shifting to our acquired portfolio, we ended the quarter with outstanding loans at just under 1.4 billion. Our performance for the period was highlighted by reduced delinquency levels and the resolution and exit of sub-performing credits. Total required delinquency was down nearly $5 million on a linked quarter basis ending June at 51 million with the improvement attributable to reduced levels within the 90 plus category. This favorable movement is reflective of the actions and effort put forth by our experienced team to proactively manage and resolve these underperforming credits. Our acquired provision for the quarter was minimal at a $121,000 resulting in an ending reserve of 6.9 million. In summary our second quarter results for both our originated and acquired portfolios were stable and consistent and the solid performance of our overall loan book continues to be the key driver of our high quality earning stream. We continue to reap the benefits of the ongoing investments we have made to maintain a robust holistic credit framework from which our teams can administer our core philosophies of diligently approving, monitoring and managing credit across our entire footprint. Furthermore this positive performance would not be possible without the strength and depth of our lending credit and workout teams across the organization. I will now turn the call over to Vince Calabrese, our Chief Financial Officer for his remarks.

Thanks, Gary and good morning everyone. Today I will discuss the second quarter's operating performance and reaffirm our guidance for the reminder of the year. Looking now at our results for the second quarter, total average organic loan growth was a solid 249 million or 8.8% annualized on a linked quarter basis due to growth in both the commercial and consumer portfolios. This loan growth comes despite increased competition as FNB continues to benefit from an increased number of prospects in our metro markets of Pittsburg, Cleveland and Baltimore as well as solid results in our Pennsylvania community markets. As you may recall from prior calls and as Gary mentioned earlier, expansion into these metro markets has enabled us to deliver sustainable, high quality loan growth while maintaining our underwriting standards. On a linked quarter basis average commercial growth totaled a 151 million or 9.6% annualized. The linked quarter growth in the consumer portfolio totaled 93 million led by organic growth in mortgage and indirect auto loans. Average growth in indirect auto loans was 30 million and continues to be a solid business for us across our footprint. On a linked quarter basis organic growth and total average deposits and customer repos totaled 217 million led by strong DDA growth and higher average savings balances. The growth in DDA balances of a 140 million were 21.2% annualized was due to solid organic growth and seasonally higher business account balances. Total growth in transaction deposits and customer repos total 229 million or 9.4% annualized. Additionally we launched a new premium sweep deposit product in June that provides FNB with more favorable treatment for FDIC insurance premiums relative to customer repos. At the end of the quarter our funding position continued to strengthen as 79% of total deposits and customer repos were…

[Operator Instructions]. And the first question comes from Casey Haire with Jefferies.

I guess I will start off on the loan growth front, decent quarter here. Just wondering how the pipeline is shaping up number one. Number two, how much -- if you can quantify how much came from out of Pennsylvania in your expansion markets and then three C&I, kind of decelerated that -- this is I think your weakest linked quarter in the last six months just curious what's causing that as an increased competition, or are people refi away, just some color there. Thank you.

Okay, first of all on the pipeline, overall the pipeline is fairly consistent with the same period last year. So we range anywhere from a 1.7 billion to a 1.9 billion during this period. There are some seasonality in the pipeline but we’re pretty satisfied with where we sit at the end of June from a pipeline perspective. So it's up there with some of the highest levels we have seen. Secondly, we had a very strong quarter in production from the community group. So we actually had some good growth in some of the more rural areas so there were some good performance and the pipeline, the mix in the pipeline shifted slightly so about 2/3rds of that pipeline versus three quarters in the prior quarter are coming from the metro markets. So it's not because the pipeline has shrunk it's because the shift there has been shift in demand. In terms of C&I lending, this is a very competitive environment. There are credits that were marginally, that we had told you before that we exited so you have some of that going on. There are more aggressive lenders out there who are willing to take out some of the C&I credits that we’re not necessarily worried about losing. Secondly we have had a number of larger credits where other capital sources were sourced and we have had pay-offs in those areas where the high yield market or other types of avenues have opened for these guys and they have paid down their exposures. So that’s basically what made up the slower growth there. I would say if you looked at the pipeline we still have about the same amount of opportunities in the C&I when you look at the relative dispersion of the pipeline.

But I would just add, Casey, just to clarify, if you look at the data sheets that we have in the press release. I mean the C&I piece on average balance basis was 2.9% unannualized so close to 12% if we annualize it and on a spot basis it's 2.3 or 9.5% on an annualized basis on a spot basis. So the C&I growth is still pretty good quarter to quarter.

Just switching to expenses, it came a little bit higher than I guess I expected but you guys are still tracking very nicely towards that mid-year guide. You did call out a couple of the drivers. I was just wondering you know in the back half of the year, can we see some leverage in some of these items maybe the variable comp, OREO or marketing. Just wondering what the back half expense run-rate looks like versus the second quarter run-rate.

Yes I would say just to comment on the expense guidance from April again that we were reaffirming was mid-single digit year-over-year growth. On the OREO side that increase is really all related to one acquired property that we took an impairment charge on so it's not significant but not something I expect to happen next quarter second half of the year. I mean OREO things tend to be lumpy so the second quarter had a little bit of a inflation in there just from that one item. I would say overall the efficiency ratio we just under 50% - 55.99% this quarter so we continue to make good progress as far as generating positive operating leverage and we would look to continue that, I mean that’s a big focus for us, our ability to grow revenue and manage the expenses is key, it's a key focus and it will continue to be recently consolidated an additional five branches we mentioned so there is some benefit that will happen there and the incentive comp is as you, at this time of the year as you go forward you see accruals there, I mean that’s a function of how we’re doing kind of relative to our plan. So I would say there is still opportunity for positive operating leverage, it's what we’re focusing on as we go forward.

Thank you. And the next question comes from Preeti Dixit with JPMorgan.

Vince, with the Bank of America balances coming on in September, how should we think about how you plan to deploy the liquidity near term maybe securities or and what you would be adding in terms of new yield.

Yes we would be I mean in short term we would be just paying off borrowings and then we would use those funds to fund the loan growth that we expect to encourage to go forward. So the exact utilization will be kind in that direction and we haven't firmed up exactly what we’re going to do yet but directionally that’s what we would end up doing. It's a nice source of deposits with the metro markets that we have and at some point the economy really starts to lift off the loan grow should even accelerate more and having that deposit source of funding will be important as we go forward.

Yes I would also add that in terms of modeling this, there is a significant amount of opportunity for us from a lending perspective particularly commercial in the Lancaster market. We didn’t have a presence there before. We have people on the periphery. We feel pretty good about our ability to deploy the liquidity in higher yielding loan growth.

And then just I think to the loan yield what were new money loan yields this quarter, how that compare to the prior quarter maybe some color there?

Sure. If I look at the new loan yields for this quarter, we were around 360 but 10 basis points higher than first quarter levels and if you look at it kind of relative to loans that we’re rolling off, we’re rolling off around four, so losing about 40 basis points kind of net based on the [indiscernible] for the quarter but the loan yields differential that was about 50 basis points last quarter so the increased loan yield of 10 basis points reduces that kind of net number and with our interest bearing liabilities really being flat at 41 basis points that they have been for the last on average last six quarters. This is what causes the slight margin compression that you saw this quarter but it's moving in the right direction with yields 10 basis points higher than last quarter.

Is that improvement because of mix shift in the portfolio in terms of what's originating or you’re actually seeing maybe competitor pressure here a bit?

I think it depends on the asset class, I mean in different segments you’re seeing different levels of competition. So in certain portfolios we have seen a little bit of margin expansion in others, it's still competitive, so it's kind of all over the board.

I don’t think it's lessened.

I don’t think it's less competitive. I would say it depends on where the volumes come from in the quarter. So that has a slight impact -- the mix of loans that we’re originating.

And then Vince, the TCE ratio sitting at 6.9% here as the growth running kind of upper single digit on an annualized basis, can you talk about how comfortable you’re taking that TCE ratio lower than if asset growth continues [indiscernible] how you’re thinking about capital strategy here?

Sure. We have talked about TCE ratio being comfortable in a range from 6.5 to 7, obviously that ratio gets affected by rates moving up and down, it's a little higher at the end of the first quarter because rates had come down and it's 693 here. So that range of 6.5 to 7 we’re comfortable operating in with the earnings that we’re generating and retaining, there is a plenty of capital to support the organic loan growth that we’re guiding to. So very comfortable where we’re, we did the stress testing results that were published and very comfortable with the impact of the stress test on all of our capital ratios and the projected minimums that we would have kind of worse case numbers throughout the nine quarters or above as I said in my remarks above the minimums and above the well-capitalized. So very comfortable with where the capital stack is right now.

[Operator Instructions]. And we have a question from Frank Schiraldi with Sandler O'Neill.

This is actually Rob [indiscernible] filling for Frank. Just wanted to ask quickly on the average non-interest bearing DDA growth, I mentioned there was some seasonally higher business account balances, I was just wondering if you quantify how much of the growth was seasonal and then if there were any specific geographies where you saw that, I think you mentioned it was related to just new business accounts. I was wondering if there is any specific geographies you could highlight?

Yes I mean it was pretty much across the board and there is some seasonality in the DDA growth particularly in the municipal segment. Truthfully it's pretty scattered. So we’re seeing some good opportunities roll-in, in Pittsburg we still have a pretty decent headwind or tailwind I should say in Pittsburg helping us with the deposit growth, I think, given the scale that we have now it's become a little easier for our team to obtain the deposit balances. I think in the other markets Cleveland and in particular we have done pretty well, Baltimore has grown well and we have also seen some good deposit growth out of some of the Central Pennsylvania markets that we’re in. So it's been pretty good for us.

Thank you. And the next question comes from Brian Martin with FIG Partners.

Can you just give a little color on some of the NIM [ph] outlook, I know you gave kind of reaffirm things, but just as far as kind of, maybe the rate of change I guess, are you sensing the rate of change and the declines is beginning to narrowing kind of maybe just the inflection point of when you start to see a margins stabilize and actually increase kind of just as it pertains your expectations for rate increase other than delayed. But how you guys, what your budget is as far as rate increases and how it impacts the margin?

Sure. What rates where they are remaining at these levels as I commented on, we’re still looking for say couple of basis points of compression each of the next two quarters within that forecast we have a first move from the Fed in September. I mean I believe the Fed really wants to do something here and our forecasts called one in September and one in December so you get the Fed funds of 75 by the end of the year. I think that the inflection point if you get those two moves, the margin still goes down a little bit in the fourth quarter and then if we start to get on that path going forward then as you move into next year. I mean we are not giving guidance for next year but you’re pretty close to bottoming here anyway at a couple of basis points a quarter. So that’s kind of what we had locked in there as far as the kind of rate forecast and as I mentioned earlier the across the interest bearing liability it's just flat line at 41 basis point. So I think that as all of us will look forward to rate start and move up, but I would say we’re pretty close to that inflection point.

And just from an asset sensitivity standpoint, what percentage of loan book is variable rate today?

From an asset sensitivity standpoint 42% of our loans are tied to LIBOR or prime and then overall it's 58% that are adjustable variable but the key item there is that 42%.

Okay. And just maybe I know accretion can be a little lumpy but just kind of an annual basis I guess is the similar level of what you’re seeing now I guess no reason to think a whole lot of different, the second half of the year?

Yes we talk about the guidance I gave last quarter which still hold, we used to talk about 0.5 million to 7.50 million a quarter is kind of what I would call normal accretion, it's probably more like a $1 million and if we have some resolutions it's a little bit higher, it does move quarter to quarter but kind of that million a quarter is kind of what I would consider the core level there.

And maybe just an obvious answer, but just any change in the dialogue on M&A or just kind of how you guys are thinking about that?

We kind of say the same thing every quarter I guess it would be the same answer. I don’t expect that’s a change our strategy. I mean we are active--

I guess I was just wondering if there has been more activity if you’re seeing more activity from potential sellers as far as coming across [indiscernible] as opposed to change in the strategy I guess you guys have been consistent on that?

I think it's been maybe in the beginning of the year it's a little slow for one reason or another, but the pace of transactions that are around there I think has been pretty steady. So we haven't seen a change in the pace.

Thank you. As there are no more questions in the present time, I would like to turn the call back over to management for any closing comments.

Yes I would like to thank everybody for calling in. I know this is a busy time of the year for you guys, busy time in the quarter particularly given all the announcements, earning announcements that are out there, so I appreciate you participating in our call and as I’ve said in my prepared comments we’re very excited about how we’re positioned, we think that we have a great opportunity moving forward and our team is executing as expected. So thank you for calling in and have a great day. Take care.

Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.