FNB Corp (FNB) 2011 Q4 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to today's F.N.B. Corporation fourth-quarter 2011 earnings conference call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. As a reminder, today's conference is being recorded. And now I would like to turn the conference over to Cindy Christopher, Manager of Investor Relations for F.N.B. Corporation. Please go ahead.

Thank you. And good morning, everyone. Welcome to our fourth quarter of 2011 earnings call. This conference call of F.N.B. Corporation and the reports filed with the Securities and Exchange Commission often contain forward-looking statements. All forward-looking statements involve risk, uncertainties and contingencies that could cause F.N.B. Corporation's actual results to differ materially from historical or projected performance. Please refer to the forward-looking statement disclosure contained in our fourth quarter of 2011 earnings release and our reports and registration statements F.N.B. Corporation files with the Securities and Exchange Commission and available on our corporate website. F.N.B. Corporation undertakes no obligation to revise these forward-looking statements to reflect events or circumstances after the date of this call.

A replay of this call will be available until midnight on Tuesday, January 31, 2012 by dialing 877-870-5176 or 858-384-5517. The confirmation number is 8184850. Additionally, a transcript of this call and the webcast link will be posted to the Shareholder and Investor Relations section of our corporate website. It is now my pleasure to turn the call over to Mr. Steve Gurgovits, Chairman of the Board of Directors for F.N.B. Corporation. Steve?

Thank you, Cindy and good morning, everyone. It is a pleasure to welcome you to our fourth-quarter earnings call. Joining me today on the call are Vince Delie, CEO; Vince Calabrese, our CFO; and Gary Guerrieri, our Chief Credit Officer.

I will be highlighting F.N.B.'s fourth-quarter and full-year 2011 results and accomplishment. Gary will review our asset quality and Vince Calabrese will provide additional detail on our financial results along with some expectations for 2012. Vince Delie will then close with final comments before the Q&A session.

As you are aware, the Board has recently taken several significant organizational actions. The most important of which is naming Vince Delie to CEO. As part of the reorganization, I have been named Chairman, the position I held prior to returning as CEO three years ago, and Bill Campbell has been named Lead Director, a position he also held prior to my return.

I would like to take this opportunity to congratulate Vince on his election to Chief Executive Officer. Vince has been instrumental in F.N.B.'s success during the challenging past few years. He has consistently proven that he possesses the experience, leadership skills and strategic vision to successfully lead F.N.B. in the coming years.

I would also like to commend the Board of Directors and our succession committee for their diligent work during this process. We have a very strong team in place and we fully expect a seamless transition under Vince's leadership.

Next, I sincerely welcome Parkvale shareholders, employees and customers to F.N.B. As you know, the merger was effective January 1. We expect to complete the systems conversion on February 21, at which time customers will have full access to F.N.B.'s diverse suite of products.

Now turning to the fourth quarter, F.N.B.'s fourth-quarter results reflect the continuation of consistent positive performance from our key business drivers and provided a very strong finish to a successful year. We are pleased to deliver fourth-quarter earnings of $0.19 per diluted share, representing a 106 basis point return on average tangible assets. The quarter included successful loan growth, a stable net interest margin and asset quality results reflecting positive trends with improvement from already good levels.

Total loans grew 5.1% on a linked quarter annualized basis. This is the 10th consecutive quarter of organic growth for total loans and it is an accomplishment we are very proud of, especially given the challenging environment. The primary driver of our loan growth has been the Pennsylvania commercial portfolio and the fourth quarter was no exception with average loan growth of 6.8% annualized, the 11th consecutive quarter of growth for this portfolio.

We also generated solid 5% annualized growth in the consumer portfolios, driven by continued success in growing the home-equity-related product. We recognized an opportunity to improve our marketshare for these products, which, by the way, are originated in our branches in our local market and our team has done a fine job of executing this strategy.

Turning to deposits, linked quarter growth in lower cost transaction accounts and customer repurchase agreements continued in the fourth quarter. These average balances grew nearly 3% annualized through new account acquisition combined with customers maintaining higher average balances.

In all, 2011 was a year of significant achievements for F.N.B. and its shareholders. Earnings were $0.72 per diluted share when excluding merger costs representing a 22% increase over 2010 after adjusting for the $10 million pension credit in 2010. Organic loan and deposit growth was strong, the net interest margin was stable and credit quality results were very good.

Other accomplishments in 2011 include the CB&T acquisition, which we completed last January, followed by F.N.B.'s inclusion in the S&P 600, the capital raise completed in May and the Parkvale acquisition announcement in June, which, as I mentioned, closed on January 1 of 2012. We are very pleased to deliver these results and accomplishments for our shareholders as we remain focused on creating shareholder value. These efforts, along with a dividend of $0.48, delivered total shareholder return of 21% for 2011.

We often benchmark our performance to regional national peer groups, which basically consist of Mid-Atlantic and Midwest banks for the regional group and national banks with assets between $4 billion and $20 billion. On a relative basis, F.N.B.'s 21% total return for 2011 compares very favorably with the median total return for the regional peers, a negative 4% and for national peers, a negative 5%. We are thrilled to see these positive F.N.B. results following our strong total return of 53% for 2010.

Now I'll turn the call over to Gary for more detail on our asset quality.

Thank you, Steve and good morning, everyone. The fourth quarter was fairly solid from a credit quality standpoint with several of our key credit metrics continuing to move in a positive direction at an accelerated pace. Delinquency improved substantially during the quarter by 26 basis points to 2.31% while nonperforming loans plus OREO to total loans plus OREO was at a solid level of 2.05%, also reflecting a sizable improvement of 30 basis points. Both metrics reached their lowest level since the third quarter of 2008.

Net charge-offs for the quarter were 95 basis points annualized, of which 56 basis points were related to Florida, as we expected. We ended the full year at 58 basis points across all portfolios, a 19 basis point improvement over last year's performance with lower charge-off levels in all three portfolios compared to the prior year. As a result of the Florida reappraisal activity and corresponding write-downs during the quarter, our reserve position was reduced by 13 basis points to 1.47%.

Let's now take a closer look at the components of each portfolio. Representing 95% of F.N.B.'s total outstanding loans, the Pennsylvania portfolio continues to perform very well. Net charge-offs for the quarter were 30 basis points annualized, which remained in line with our full-year performance at a very good level of 29 basis points. Delinquency improved by 5 basis points on a linked quarter basis to 1.73% and non-performing loans plus OREO to total loans plus OREO improved by 8 basis points during the quarter to a very solid 1.13%. Both benefited from the lower level of non-accrual loans, which was driven by a $3 million payoff during the quarter on a non-performing commercial credit.

Moving next to Regency Finance, this $164 million loan book represents 2% of F.N.B.'s total loan portfolio with metrics that remained fairly consistent and at good levels for the quarter. Delinquency improved 4 basis points over the prior quarter to stand at 3.75% as a result of lower early-stage past-due accounts. Net charge-offs ticked up to 4.21% annualized for the quarter; though they still remain at historically good levels with net charge-offs for the year of only 3.79%.

Turning next to Florida, our land portfolio is down to $64 million, consisting of $45 million in loans and $19 million in OREO with the loan portion representing well under 1% of F.N.B.'s total loan portfolio. The total Florida loan portfolio was reduced by $22 million during the quarter, or nearly 13%, to end the year at $154 million. Included in this reduction were payoffs on two performing credits totaling $11.5 million, as well as the sale of a note for approximately $6 million related to a credit that we placed on non-accrual during the third quarter, successfully removing it from the books at our net position.

We are also very pleased to report that, subsequent to the end of the year, one of our larger projects was sold and paid in full, which will further reduce our exposure by $14 million in the first quarter of 2012.

As it relates to the reappraisal process in Florida, you will recall that approximately 60% of the Florida land-related appraisals were scheduled in the fourth quarter. We are pleased to report that this process has concluded and the values were in line with our expectations. The resulting write-downs reduced our reserve on this portfolio from 11.6% to 8.4% as we utilized previously established reserves as planned.

As another year concludes, our Pennsylvania and Regency portfolios have withstood the challenges of the current economic cycle with continued solid results that are tracking very consistent with our planned expectations, a reflection of our sound underwriting and prudent risk management practices.

In the Florida portfolio, we continue to show good progress with our strategy to reduce balances and are encouraged by the increased level of investor activity that we have been experiencing as banks have increased their lending activity in Florida.

As we reflect on the year, we are very pleased with the performance of our credit portfolios and our position at this point in the economic cycle. I would now like to turn the call over to Vince Calabrese, our Chief Financial Officer.

Thanks, Gary. Good morning, everyone. As Steve discussed, fourth-quarter results of $0.19 per diluted share reflect solid performance from our key drivers providing a strong finish to the year. I will focus my remarks this morning on guidance for 2012, some additional highlights of our fourth-quarter operating results.

First, a high-level overview of our expectations for 2012, which I will discuss in additional detail throughout my remarks. We entered 2012 well-positioned to build on the successes of 2011, and expect to achieve continued organic loan and deposit growth through marketshare gains. We expect the pressure on yields resulting from the flat rate environment to be largely offset by improvements in funding costs.

Fee income is forecasted to continue to see good organic growth and expense control will remain a key strategy for us. Credit quality is expected to perform well from continued improvements from our solid 2011 results. These positive expectations are based on the assumption of continued modest economic growth with a year-over-year increase in GDP expected in a range of 2% to 2.5%.

Regarding the Parkvale acquisition, first, let me say that total assets of $1.8 billion were added to the balance sheet with approximately $0.9 billion in loans and $1.5 billion in deposits. While these are prior to purchase accounting marks, which will be finalized by the end of the quarter, we expect the credit marks to be consistent with the $40 million figure disclosed when the deal was announced. Second, we continue to expect accretion, excluding merger costs in the 6% range for 2012. And merger costs are estimated to be $9 million.

Now turning to the balance sheet, fourth-quarter loan growth results reflect the continuation of a positive trend. Total average loans grew 5.1% annualized and we are pleased to see all portfolios experiencing growth. As Steve mentioned, strong linked quarter growth of 6.8% annualized in our Pennsylvania portfolio was again the primary driver with positive results seen across most of our regions, particularly our Pittsburgh region.

Additionally, we have achieved linked quarter organic consumer loan growth for the past seven quarters. Total average consumer loan balances increased 5% annualized in the fourth quarter, led by very solid growth of 7.1% in home equity average balances. An increased focus in the field to improve our marketshare for these products has been effective.

Looking at the other components of earning assets, average securities declined $91.7 million on a linked quarter basis, primarily reflecting our actions to better position the balance sheet by selling investments of $88 million and pre-paying Federal Home Loan Bank debt of $136 million. This transaction resulted in $3.4 million in gains on sale, which were offset by prepayment charges of $3.3 million, which is included in non-interest expense.

Additionally, balances invested on an overnight basis decreased $31.2 million to fund the continued strong loan growth. We are very pleased with the successful loan growth trends over the past 11 quarters. As we look ahead to 2012, we expect to continue this momentum and are forecasting organic growth in the mid-single digits with a total expected increase in the loan portfolio in the high teens after the addition of the Parkvale loan portfolio.

Looking at the securities portfolio, I commented that there was a reduction in the fourth quarter due to the deleveraging transaction. Looking forward, we plan to rebuild this portfolio and expect the portfolio as a percentage of total average assets to look more in line with where we have historically been, in the 18% to 19% range.

On the funding side, we remain focused on attracting transaction deposits and customer repos. Growth in these relationship-based accounts would support our net interest margin [and deep in] client relationships equal 2.8% annualized on an average basis with growth reflecting new account acquisition and higher average balances.

Given this focus on gathering new transaction accounts, there was a planned reduction in time deposits. Looking ahead to 2012, we are forecasting organic growth and transaction deposits and customer repos in the mid-single digits. We expect this growth will be partially offset by continued managed decline in time deposits netting to expected organic growth in total deposits and customer repos in the low single digits. We look for a total increase in deposits and customer repo balances in the high teens after the addition of the Parkvale acquired balances.

As reported, the margin was stable at 3.79%. As we have discussed in the past, managing to a stable margin is [net] of our key operating strategies and we have been successful maintaining the margin in the 3.77% to 3.81% range for the past seven quarters, an accomplishment given the current rate environment.

For 2012, we expect to see the margin reflect the flat rate environment and the addition of Parkvale. As expected, the Parkvale acquisition is forecasted to narrow the core F.N.B. margin by 10 to 12 basis points in 2012, which is consistent with our original model. We expect to minimize the impact of these items through continued improvements in our funding costs and deposit mix, as well as active balance sheet management.

With that said, we look for growth in net interest income in the mid-teens and a full-year margin in the mid-3.60s inclusive of Parkvale. With the assimilation of Parkvale, the first-quarter margin is expected to be in the low 3.70s. As with all of our acquisitions, we do expect to manage the margin of the acquired company to become more in line with our bank over the next few years.

Non-interest income results for the fourth quarter, excluding the gain on sale of securities of $3.5 million, reflect typical seasonality in many of our business lines, along with continued strong levels of swap fee revenue and increased gains on the sale of loans. The quarter included slightly lower service charge revenue, as well as lower insurance commissions and Wealth Management revenue on a linked quarter basis, all reflecting seasonal influences, as well as the affect of volatile market conditions on the Wealth Management revenue. Swap fee revenue included in other non-interest income remained strong given the level of commercial lending activity during the quarter with full-year results for swap revenue representing an historical high.

Improvements were also seen in gain on sale of residential mortgage loans due to the overall volume increase we experienced with the low rates spurring additional activity. For 2012, we expect to continue to grow fee revenue and are targeting an increase for non-interest income in the mid-teens reflecting strong growth for core F.N.B. in the mid-single digits combined with leveraging the Parkvale acquisition.

Turning to expenses in the fourth quarter, total non-interest expense, excluding the Federal Home Loan Bank pre-payment penalty of $393,000 in merger costs, increased $1.1 million, or 6.1% annualized due to lower OREO expense and other non-interest expense items partially offset by higher salaries and benefits costs. OREO expense declined as a result of fewer valuation adjustments and lower-than-planned tax assessments while higher salaries and benefits reflect an increase in incentive compensation resulting from higher profitability for the Company and higher performance-based awards.

Looking forward, we are expecting run rate non-interest expense to increase in the low single digits for core F.N.B. and in the low to mid-teens range inclusive of Parkvale. This is treating merger costs and the fourth-quarter 2011 Federal Home Loan Bank pre-payment penalty as a non-run rate item.

Additionally, we are committed to investing in our e-delivery strategy, significantly enhancing our delivery channels for online banking and mobile banking. This initiative is expected to add $1.5 million to 2012 expenses given the initial year of operation with revenue leverage gained in subsequent years. Expense control remains a key strategy for us and the costs associated with this initiative will be largely offset by other operating efficiencies. And we are targeting a full-year efficiency ratio in the high 50% level. We expect the first quarter to be approximately 60% as the beginning of the year involves resetting employee benefits such as payroll taxes and seasonally higher occupancy costs.

Switching over to credit quality, as Gary discussed, we remain very pleased with the results with metrics trending positively and within our expectations throughout 2011. Looking to 2012, we expect overall credit quality performance to remain very good. Pennsylvania and Regency portfolios are currently performing at already good levels and we look to see steady gradual improvement for these portfolios, combined with significant improvements in the Florida portfolio as we continue to focus on exposure reduction.

With this in mind, we are forecasting the provision for loan losses to be consistent with 2011, reflecting significant improvement in the Florida portfolio offset by an expected increase in the Pennsylvania portfolio to support the strong planned loan growth, which keep in mind includes Parkvale-related growth. We expect a meaningful reduction in net charge-offs driven by a 50% improvement in Florida-related charge-offs with continued very good consistent performance in Pennsylvania and Regency.

Lastly, the allowance to loans ratio, including the credit mark, is projected to increase slightly from year-end 2011 levels as a result of the Parkvale acquisition and related credit mark.

Next, let's discuss the effective tax rate for the fourth quarter and expectations for 2012. The fourth-quarter effective rate on a GAAP basis was in line with our normal run rate, while higher compared linked quarter given adjustments in the third quarter. As we look ahead into 2012, we expect an effective tax rate in the normal 27% to 28% range on a GAAP basis.

Lastly, looking at our capital position at year-end, these levels reflect the benefit of the capital raise completed in May, which, as of January 1, as Steve mentioned, has been deployed for the Parkvale acquisition. As a result, for 2012, we expect to continue to exceed well-capitalized thresholds with capital levels very close to those announced in June on a pro forma basis.

Now I would like to turn the call over to Vince Delie for his remarks.

Thank you, Vince. The fourth quarter was another positive quarter for F.N.B. and a strong finish for 2011. We continued to effectively execute our relationship-based model, which is first and foremost centered on the strength and experience of our bankers. We remain focused on gaining marketshare through new client acquisition and deepening existing client relationships.

The results of these efforts are apparent in the solid organic loan and transaction deposit growth we achieved throughout the year. The margin remained stable through the alignment of strategies in the field to generate quality loan growth and low cost deposits, combined with a very active ALCO process. Credit quality results were very good and trended positively throughout the year and we continued to focus on expense control.

As we look ahead to 2012, F.N.B. is well-positioned to see continued loan and deposit growth. We have substantial momentum built, our pipeline remains strong and we have a talented team delivering superior results in client satisfaction. This is evidenced by F.N.B.'s recent recognition as a recipient of six 2011 Greenwich Excellence Awards. The most notable of the six awards being overall satisfaction for small business banking at the national and Northeast regional level and overall satisfaction for middle-market banking at the Northeast regional level.

In line with a growth-oriented focus, we continue to make appropriate investments that will support sustainable growth, improve our competitive position and fulfill our clients' needs. As Vince mentioned, we are currently in the process of executing our e-delivery strategy, recently rolling out an integrated bill pay platform while preparing for the scheduled implementation of enhanced online banking and a new mobile banking app in the coming months. This investment will provide clients greater flexibility and further enhance our ability to attract new clients.

We look forward to successfully integrating Parkvale and benefiting from the opportunities our enhanced presence in the Pittsburgh market will provide, allowing us to leverage our success in the market. A positive lift to the overall economy from Marcellus Shale and Utica Shale should also continue in our footprint.

With that said, we are cognizant of the industrywide challenges present, particularly with the prolonged low rate environment. As Vince discussed, our strategy here will remain consistent and focused on generating quality loan growth and managing funding costs to grow net interest income.

Before questions, I would like to acknowledge Steve Gurgovits and the significant contributions he has made to F.N.B. Steve has fostered an F.N.B. culture centered on creating shareholder value, providing exceptional service to our clients, serving our communities and building excellent employee morale. It has been a privilege to work under his leadership. I look forward to continuing to work with him in his role as Chairman, as well as with the Board of Directors and the entire F.N.B. team as we remain committed to delivering exceptional performance and solid shareholder returns.

That concludes our remarks. And I would now like to turn the call over to the operator for questions.

(Operator Instructions). Jason O'Donnell, Boenning & Scattergood.

Good morning. Can you just give us a little more color on how the Marcellus Shale is impacting your business? I am wondering if there are certain counties or markets where you are seeing the greatest impact in at this point and if there are particular products on either side of the balance sheet that you think you are benefiting from this activity.

Well, I can give you a little bit of color and others have brought this question up before. We are seeing a broad impact based upon the activity in the capital that is flowing into the market. So essentially what is happening is we are seeing an overall lift in commercial lending opportunities because of the investment in the region. And we have seen a pickup in business with transportation companies, manufacturing companies, companies that do fabrication work for the drilling activity, pipe and tube manufacturers. So there has been an overall increase in that activity and that has really gone a long way to support the commercial loan growth that we have seen because the companies that operate in this region are getting a lift because of that activity.

We are also seeing opportunities on the Wealth Management side and from a depository standpoint because of the wealth that is being created through the execution of the land leases with the land owners. And obviously, given the price of natural gas, many of those wells are capped, so the royalty fees have not started flowing. That is expected in the future and should continue to provide that wealth effect to the consumers in the region. So a lot of activity, a good solid underpinning for the overall economy. You can see it in the economic statistics for the region and it has provided us with some good loan growth opportunities across the portfolio.

Okay, great. That's very helpful. Accounting for the -- just switching over to the Parkvale transaction. Can you just break out for us what you guys are projecting maybe, Vince, in the way of amortization expense in the first quarter?

For the intangible amortization expense?

That's right.

I mean it is part of the overall -- as I mentioned, the 6% accretion is kind of an all-in figure that will give you what the total impact is. I mean the accretion or the amortization going forward in the first quarter goes up by about $0.5 million from the fourth-quarter level, so like around $2.3 million, $2.4 million.

Okay, okay. And then can you just break out -- one more housekeeping and then I will step aside. Can you just break out how much of the OREO expense you recorded this quarter? There wasn't much of it, but how much of that is tied to maintenance expense versus valuation adjustments? I am just trying to get a handle on what kind of the core -- how we should be thinking about the core maintenance expense on OREO going forward?

Sure. Hang on a second. If I look at the total expenses, I mean it is probably about 60%, 70% of the core expenses. We didn't have much in the way of provision this quarter. So this quarter was a little lighter on the provision for OREO expense than normal. I would say if I look back at the last few quarters, the expense piece relative to the total -- yes, it is around $1 million a quarter.

Okay, great. Thanks a lot, guys.

Damon DelMonte, KBW Investments.

Hi, good morning, guys. How are you? Can you guys talk a little bit about your strategy for the consumer loan growth? You noted you had I think it was seven consecutive quarters of growth in that category. Could you talk a little bit about the ways you are attracting the home equity loans?

Sure. Actually, there are two things that we are doing. One is internally and one is externally. We have spent a lot of time and energy developing our sales management process, so we have an automated tracking system that we use to track performance in the branches, so there is a heightened sense of awareness about where they stand relative to plan and that is actually updated on a weekly, soon-to-be daily basis.

We have also run some promotions externally so that we are competitive with some other attractive offerings in the marketplace. And quite frankly, I think we are just picking up our share given how we have grown our marketshare over the last few years, particularly in the Pittsburgh market. So the amount of home equity volume that is coming about is really a result of us getting our fair share of the market and with having a very disciplined sales management process.

Okay. And as far as some of the characteristics of those loans that you are underwriting, could -- maybe Vince Calabrese could talk to this -- a little bit about the average FICO score and maybe the size of the loans that are coming (multiple speakers).

Actually, Gary probably could address that.

Damon, the FICOs are in the 720 to 730 range on average and naturally go north of that. But it is a very straightforward typical home equity financing in our marketplace. A lot of these home equities are first mortgages and are typical of our portfolio structure as it is today, reflects about 75% to 80% of F.N.B. firsts or F.N.B. seconds to our first mortgage position. So we are very well-positioned in that home equity portfolio.

These home equity loans are also originated by the branches in our marketplace.

All right. Okay, great. And then I guess probably for Vince Calabrese, regarding the little restructuring you did this quarter with the paying down of the borrowings, any more opportunity for that going forward?

Yes, we always look for those opportunities, Damon. I guess as we sit here right now, I don't envision any for the next couple of quarters. So with where rates were and our desire to manage the overall balance sheet, there was an opportunity for us to do that. So we did one last year. We are always looking. Our guys are always looking to see if there is an opportunity that the market gives us to do something like that. So we will keep being opportunistic, but nothing else planned right now.

Okay. And could you remind us what the maturity rate is for CDs over the next couple of quarters?

The average for 2012 as a whole is $300 million and the first couple quarters are more $350 million to $400 million and then it will come down some from there.

Okay. Great. If I have anything else, I will come back into the queue. Thank you.

Bob Ramsay, FBR.

Good morning, guys. You have talked in intro comments a lot about loan growth coming from taking marketshare. I was just wondering if you could maybe talk a little bit about what you are seeing just in terms of market loan growth and what your customers are saying in terms of loan demand for new loans rather than refi.

Are you speaking commercially?

I am speaking commercial, resi, to kind of across the board.

Okay, across the board. Let me address commercial lending activity. Quite frankly, we have seen a slight pickup in CapEx spend. So the smaller ticket capital expenditures are getting done and that is really -- we have had some decent performance in our leasing company because of that. We are still not seeing in this market large-scale capital investment. So your typical plant expansion where you would have a multimillion dollar borrowing isn't occurring. Our increased -- our increases are basically centered upon grabbing share. So we have spent a lot of time hiring some really good people. We have assembled a great team and we put a very disciplined sales management process in place on the commercial side of the bank as well. So we focus those people and incent them on new client acquisition.

The other aspect of this is line utilization, working capital lines. Still -- we are still seeing companies building cash. Our line utilization is still below 40%, which is a historical low point for us. So we would envision, as we move through the cycle and companies build inventory, there should be some continued growth.

The other thing I will mention commercially, we do believe, given our marketshare position across our footprint, there is a lot of upside. So there is a long runway and having the right people in the seats and having a very, very good sales management process provides us with an opportunity to sustain that growth in the range that Vince guided you and that for us is where our focus is.

From a consumer standpoint, we have really benefited from a much better delivery channel and with the Parkvale acquisition on the consumer side, we will have one of the best delivery channels in the greater Pittsburgh market. So we should continue to see improvement in our ability to originate small business and consumer loans. And as we've continued to add to the franchise, we have seen that accelerate. And again, the sales management process around the retail side of the bank is also very good.

Okay. And then as I think about earning asset growth, I know you all said loan growth on an organic basis should be in the mid-single digits and then did I understand you correctly that securities should be proportionately a little bit smaller going forward? So that probably means earning asset growth will be a little bit under that level, is that correct?

Well, security is right around -- we usually manage to about 18%, 19%, 20%, in that range. So we will manage to that range. So as the balance sheet grows, you will see that corresponding increase there. So the main driver is the loan growth, as you know, at the mid-single digit growth.

Okay. And is (multiple speakers) to earning assets, okay.

Yes, the earning asset growth would be a little bit muted because of that. We are not going to grow securities at that same percentage. Your observation is correct.

Okay, thank you, guys. That is helpful.

Mike Shafir, Sterne Agee.

Good morning, guys. I was just wondering could you remind us on the growth for 2012 in the non-interest expense and then also non-interest income line. I apologize if I missed that.

That is okay. So on the non-interest expense side, kind of core F.N.B. would be in the low single digits and then when you bring in Parkvale, it is low to mid-teens, excluding the merger costs. So the core underneath is still being managed to the low single digits. And then on the fee income side, I would say mid-single digits core F.N.B. and then mid-teens with Parkvale brought in.

Okay. And then for the first quarter, I believe you guys said the margin was going to come in in the high 3.60s.

No, mid-3.70s in the first quarter as we are kind of fully assimilating the Parkvale and there is some noise in the first quarter and then going forward, mid-3.60s for the full year is really what we talked about is what our expectation is with the full impact of Parkvale in there.

And then you said for the next couple quarters you are going to still have CDs coming off at around $350 million to $400 million for the first couple of quarters in terms of the repricing. What is the average cost of the stuff that is kind of rolling off?

The average cost of what is rolling off is around $125 million, $130 million on average. I mean it varies quarter to quarter, but the range is $100 million to $150 million for the first couple of quarters. (multiple speakers)

And then new CD money is coming on in the 65 basis point range?

Well, here -- it's easier -- let me just give you -- $350 million to $400 million is kind of the range for the first couple of quarters. We are picking up between 50 and 100 basis points depending on the price point there. So our CDs in total we originated in the fourth quarter are around 50 basis points.

Okay, thanks a lot, guys. I appreciate that detail.

(Operator Instructions). Frank Schiraldi, Sandler O'Neill.

Good morning. Most of my questions have actually been answered, but just one follow-up on the margin. So the mid-360s for the full year, that includes Parkvale and that also includes any -- I guess any discounts amortized back in due to Parkvale?

Yes, that is an all-in number.

And do you happen to know how much about would be amortized back in, discounts due solely to interest rates?

The accretion -- the overall accretion -- you mean just from the purchase accounting?

Exactly, yes.

I don't have that at the tip of my fingers, Frank. I mean the pro formas that we put out there when we did the S-4 would get us close. I don't have the breakout of that at my fingertips. That is something we can follow up on. I mean it is in the full number. Normal accretion with the new accounting won't be anything of significance, but just the normal interest rate marks I don't want to guess. So we can follow up with that point.

Sure, okay. And that is all I had. Thanks.

(Operator Instructions). And we have no further questions. At this time, I would like to turn the call over to Mr. Vince Delie for any additional or closing comments.

Well, I would like to thank everyone for participating in our call and for your interest in F.N.B. Corporation and with that, I would like to close out the call. I hope everybody has a great day. Thank you for participating.

That does conclude today's conference. Thank you for your participation.