What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-26 compared with 2023-02-24 · 277 added, 237 removed, 2299 unchanged (18% of the section changed)

36 unchanged sentences

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall

presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

6 unchanged sentences

As discussed in Note 1 to the consolidated financial statements, the ACL is based on management’s evaluation of the current estimate of lifetime credit losses at the balance sheet date.

Management makes the estimate using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts under the CECL methodology.

The ACL is composed of three components including quantitative reserves, including the economic forecast;

The ACL is composed of three components including quantitative reserves, including the impact of management's reasonable and supportable forecast of economic conditions;

asset specific reserves;

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Tax-exempt 28 27 29

Other 41 24 4

Total Interest Income 1,973 1,285 1,005

9 unchanged sentences

Service charges 82 86 74

Interchange and card transaction fees 52 51 48

Trust services 43 39 37

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Bank owned life insurance 12 12 15

Loss on debt extinguishment — — ( 17 )

Net securities gains (losses) ( 67 ) — —

Other 12 19 26

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57 ( 277 ) ( 57 )

Reclassification adjustment for losses included in net income, net of tax (benefit) expense of $( 15 ), $ 0 and $ 0

Derivative instruments:

26 unchanged sentences

Restricted stock compensation 19 19

Adoption of new accounting standards ( 50 ) — ( 50 )

Balance at December 31, 2021

8 unchanged sentences

Issuance of common stock — 1 ( 7 ) ( 6 )

Issuance of common stock – acquisitions 1 569 570

Repurchase of common stock ( 43 ) ( 43 )

2 unchanged sentences

107 4 4,696 1,370 ( 357 ) ( 167 ) 5,653

Comprehensive income (loss) 439 ( 295 ) 144

Comprehensive income 485 122 607

Dividends declared:

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Issuance of common stock — ( 22 ) ( 4 ) 16 ( 10 )

Issuance of common stock – acquisitions 1 569 570

Repurchase of common stock ( 36 ) ( 36 )

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Deferred tax expense (benefit) ( 6 ) 11 15

Net securities losses 67 — —

Loans originated for sale ( 1,114 ) ( 1,042 ) ( 2,034 )

18 unchanged sentences

Net cash received in business acquisitions — 188 —

Loans sold, not originated for sale — — 537

Net cash flows provided by (used in) investing activities ( 2,261 ) ( 3,055 ) ( 153 )

49 unchanged sentences

All significant intercompany balances and transactions have been eliminated.

Certain prior period amounts have been reclassified to the current period presentation.

Such reclassifications had no impact on our net income and stockholders' equity.

Events occurring subsequent to December 31, 2023 have been evaluated for potential recognition or disclosure in the Consolidated Financial Statements through the date of the filing of the Consolidated Financial Statements with the SEC.

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Actual results could materially differ from those estimates.

Material estimates that are particularly susceptible to significant changes include the ACL, fair value of financial instruments, goodwill and other intangible assets, income taxes and DTAs, and litigation reserves.

Material estimates that are particularly susceptible to significant changes include the ACL, fair value of financial instruments, goodwill and other intangible assets and income taxes and DTAs.

Adoption of New Accounting Standards

Current Expected Credit Losses.

On January 1, 2020, we adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which replaces the incurred credit loss impairment methodology with a methodology that reflects lifetime current expected credit losses (commonly referred to as CECL) for most financial assets measured at amortized cost, including loans, HTM debt securities, net investment in leases and certain off-balance sheet credit exposure.

We adopted CECL using the modified retrospective method for financial assets measured at amortized cost, net investments in leases and off-balance sheet credit exposures.

As a result, we recorded a reduction of $ 50.6 million in retained earnings as of January 1, 2020 for the cumulative effect of the adoption.

The transition adjustment was primarily driven by longer duration commercial and consumer real estate loans.

At the time of CECL adoption, we recorded a one-time cumulative-effect adjustment of $ 50.6 million as a reduction to Retained Earnings.

The ACL balance increased by $ 105 million and included a “gross-up" to purchase credit impaired (PCI) (PCD under CECL) loan balances and the ACL of $ 50 million.

Included in the CECL adoption impact was a Day 1 increase to our AULC of $ 10 million.

We used the prospective transition method for PCD financial assets that were previously classified as PCI and accounted for under ASC 310-30, including loans accounted for by analogy under ASC 310-30.

In accordance with the transition guidance, we did not reassess whether PCI assets met the criteria for PCD assets nor did we reassess whether modifications to individual acquired financial assets previously accounted for in pools were TDRs as of the date of adoption.

We discontinued the use of pools beyond transition accounting and account for these loans on an individual loan basis.

After transition, loans previously accounted for in pools are grouped with other loans with similar risk characteristics for purposes of estimating expected credit losses.

As a result, beginning in 2020 certain credit metrics and ratios which previously excluded PCI loans now include PCD loans.

On January 1, 2020, the amortized cost basis of the PCD assets was adjusted to reflect the addition of an ACL for $ 50.3 million.

The net noncredit discount, after the adjustment for the ACL, is accreted into interest income at the loan’s effective interest rate over the remaining contractual life.

We made an accounting policy election to write-off accrued interest receivable balances by reversing interest income in accordance with our non-accrual policies instead of measuring an ACL for accrued interest receivable for all classes of financing receivables and major security types.

We did not hold any securities at adoption for which OTTI had been recognized prior to January 1, 2020.

Reference Rate Reform.

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The adoption did not have a material impact on our consolidated financial position or results of operations.

Loans Effective January 1, 2023, we adopted the provisions of ASU 2022-02, Financial Instruments - Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures , which eliminated the accounting for troubled debt restructurings (TDRs) while expanding loan modification and vintage disclosure requirements.

The ASU has been applied prospectively.

The adoption did not result in a material impact to our Consolidated Financial Statements.

Under ASU 2022-02, the corporation is required to apply the loan refinancing and restructuring guidance to determine whether a modification results in a new loan or a continuation of an existing loan.

Modifications granted to borrowers experiencing financial difficulty may be in the form of an interest rate reduction, an other-than-insignificant payment delay, a term extension, principal forgiveness or a combination thereof (collectively referred to as Troubled Debt Modifications or TDMs).

Modifications that do not impact the contractual payment terms, such as covenant waivers, and insignificant payment deferrals are not included in the disclosures.

The Corporation uses various indicators to identify borrowers in financial difficulty.

Consumer loan borrowers that are delinquent and commercial loan borrowers that are rated substandard or worse are the primary criteria used to identify borrowers who are experiencing financial difficulty.

The presentation of our loan modification disclosures has been updated to reflect information on loan modifications given to borrowers experiencing financial difficulty and can be found within Note 6, Loans and Leases .

Additionally, our vintage disclosures have been updated to reflect gross charge-offs by year of origination.

Prior to the adoption of ASU 2022-02, the Corporation accounted for certain loan modifications and restructurings as TDRs.

In general, a modification or restructuring of a loan constituted a TDR if the Corporation granted a concession to a borrower experiencing financial difficulty.

Business Combinations

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Premiums and discounts on debt securities are generally amortized on the level-yield method without anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated.

Premiums on callable debt securities are amortized to their earliest call date.

Premiums on callable debt securities are amortized to

their earliest call date.

A debt security is placed on non-accrual when principal or interest becomes greater than 90 days delinquent.

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If as a result of this qualitative analysis we expect to get all of our principal back, then we conclude that the present value of expected cash flows equals or exceeds its amortized cost and no credit loss exists.

If it was determined a potential credit loss exists, we compare the present value of cash flows expected to be collected with our amortized cost basis.

If it was determined that a potential credit loss exists, we compare the present value of cash flows expected to be collected with our amortized cost basis.

The credit loss is recorded through the ACL and limited to the amount the fair value is less than the amortized cost basis.

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Foreign exchange derivatives are entered into to accommodate the needs of customers.

All derivative instruments are carried at fair value on the Consolidated Balance

Sheets as either an asset or liability.

All derivative instruments are carried at fair value on the Consolidated Balance Sheets as either an asset or liability.

Accounting for the changes in fair value of a derivative is dependent upon whether it has been designated in a formal, qualifying hedging relationship.

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Amortized cost primarily consists of the principal balances outstanding, deferred origination fees or costs and premiums or discounts on purchased loans.

Interest income on loans is computed over the term of the loans using the effective interest

Interest income on loans is computed over the term of the loans using the effective interest method.

Loan origination fees or costs, premiums or discounts are deferred and amortized over the term of the loan or loan commitment period as an adjustment to the related loan yield.

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Loans are charged-off against the ACL and recoveries of amounts previously charged-off are credited to the ACL when realized.

Troubled Debt Restructured Loans

Debt restructurings or loan modifications for a borrower occur in the normal course of business and do not necessarily constitute TDRs.

In general, the modification or restructuring of a debt constitutes a TDR, including reasonably expected TDR, if, for economic or legal reasons related to the borrower’s financial difficulties, we grant a concession to the borrower that we would not otherwise consider under current market conditions or once we have determined that a loan modification for a financially troubled borrower is the most appropriate strategy.

Additionally, a loan designated as a TDR does not necessarily result in the automatic placement of the loan on non-accrual status.

When the full collection of principal and interest is reasonably assured on a loan designated as a TDR and where the borrower would not otherwise meet the criteria for non-accrual status, we will continue to accrue interest on the loan.

TDR classification does not include short-term assistance to borrowers who are current at the time of a natural disaster or other extreme event (e.g.

floods, hurricanes and pandemics).

These borrowers are considered to not be experiencing financial difficulty at the time of modification, therefore not meeting the criteria for determining TDR status.

For modifications of leases related to the effects of the COVID-19 pandemic that do not result in a substantial increase in our rights as lessor or the obligations of the lessee, we elect to account for these lease concessions as though enforceable rights and obligations for those concessions existed in the original contracts.

We account for these concessions as if no changes were made to the lease contract.

Allowance for Credit Losses on Loans and Leases

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Quantitative Component

We use a non-discounted cash flow factor-based approach to estimate expected credit losses that include component probability of default (PD)/loss given default (LGD)/exposure at default (EAD) models as well as less complex estimation methods for smaller loan portfolios.

We use a non-discounted cash flow factor-based approach to estimate expected credit losses that include component probability of default (PD)/LGD/exposure at default (EAD) models as well as less complex estimation methods for smaller loan portfolios.

This component model is used to estimate the likelihood that a borrower will cease making payments as agreed.

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While our reserve methodologies strive to reflect all relevant risk factors, there continues to be uncertainty associated with, but not limited to, potential imprecision in the estimation process due to the inherent time lag of obtaining information and normal variations between estimates and actual outcomes.

We provide additional reserves that are designed to provide coverage for losses attributable to such risks.

We may adjust reserves to reflect such risks.

The ACL also includes factors that may not be directly measured in the determination of individual or collective reserves.

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Liability for Credit Losses on Unfunded Lending-Related Commitments

The AULC is management's estimate of credit losses inherent in our unfunded loan commitments, such as commercial and industrial revolving loan facilities, commercial real estate construction projects, letters of credit and home equity lines of credit, and is included in other liabilities on the Consolidated Balance Sheets.

The AULC is management's estimate of credit losses inherent in our unfunded loan commitments, such as commercial and industrial revolving loan facilities, commercial real estate construction projects and home equity lines of credit, and is included in other liabilities on the Consolidated Balance Sheets.

The AULC is estimated over the contractual period in which we are exposed to credit risk for obligations which are not unconditionally cancellable by us.

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We have purchased loans and leases, some of which have experienced more than insignificant credit deterioration since origination and have established criteria to assess whether a purchased financial asset, or group of assets, should be accounted for as PCD on the acquisition date.

The selection of which criteria to apply, or the addition of new criteria, to a specific acquisition will be based on the facts and circumstances at the time of review, as well as the availability of information supplied

by the acquiree.

Generally, more-than-insignificant deterioration in credit quality since origination would include risk ratings of special mention or below, inconsistency of loan payments, non-accrual status at the time of acquisition, or loans modified in a TDR, in bankruptcy or for regulatory purposes.

PCD loans are recorded at the amount paid.

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Certain of our lease agreements include variable rental payments based on a percentage of transactions and others include variable rental payments that periodically adjust to rates and charges stated in the agreements.

Variable costs, such as maintenance expenses,

property taxes, property insurance, transaction-based lease payments and index-based rate increases, are expensed as incurred.

Variable costs, such as maintenance expenses, property taxes, property insurance, transaction-based lease payments and index-based rate increases, are expensed as incurred.

Right-of-use assets are reviewed for impairment when events or circumstances indicate that the carrying amount may not be recoverable.

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No deposit services fees exist for long-term deposit products beyond early withdrawal penalties, which are earned on these products at the time of early termination.

Revenue from deposit services fees are reduced where we have a history of waived or reduced fees by customer request or due to a customer service issue, by historical experience, or another acceptable method in the same period as the related revenues.

Revenues from deposit services fees are reduced where we have a history of waived or reduced fees by customer request or due to a customer service issue, by historical experience, or another acceptable method in the same period as the related revenues.

Revenues from deposit services are reported in the Consolidated Statements of Income as service charges and in the Community Banking segment as non-interest income.

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The provision for federal and state income taxes is based on income reported on the Consolidated Financial Statements, rather than the amounts reported on the respective income tax returns.

DTAs and DTLs are computed using tax rates expected to apply to taxable income in the years in which those assets and liabilities are expected to be realized.

DTAs and DTLs are computed using tax rates expected to apply to taxable income in the years in which those assets and liabilities are

expected to be realized.

The effect on DTAs and DTLs resulting from a change in tax rates is recognized as income or expense in the period that the change in tax rates is enacted.

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We granted restricted stock unit awards with multiple conditions, both performance and market conditions.

These awards are accounted for by considering the market condition in the grant date fair value and recognizing compensation expense over the service period based on the grant date fair value and the probability that the performance condition will be met.

These awards are accounted for by considering the market condition in the grant date fair value and recognizing compensation expense over the

service period based on the grant date fair value and the probability that the performance condition will be met.

We account for forfeitures as they occur.

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Standard Description Financial Statements Impact

ASU 2023-09, Income Taxes:

Improvements to Income Tax Disclosures This Update requires public business entities to disclose additional categories of information about federal, state, and foreign income taxes in the tabular rate reconciliation table.

Additionally, entities must provide more details regarding reconciling items in some categories if the items are equal to or greater than a specified quantitative threshold.

This Update also requires all entities to annually disclose income taxes paid, net of refunds received, disaggregated by federal, state, and foreign taxes and further disaggregated by jurisdiction based on a specified quantitative threshold.

This Update is to be applied using a prospective method with an option to apply it retrospectively for each period presented and will be effective as of January 1, 2025.

Early adoption is permitted.

We are currently evaluating the effect this Update will have on our consolidated financial statements, the related disclosures and our processes, systems, and controls related to disclosures.

Segment Reporting

ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosure This Update requires all public entities to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required in annual disclosures.

This Update is to be applied using a retrospective method to all prior periods presented and will be effective for annual periods beginning on January 1, 2024, and interim periods beginning on January 1, 2025.

Early adoption is permitted.

We do not expect the adoption of this Update to materially impact our consolidated financial statements and we are currently evaluating the effect this Update will have on the related disclosures.

Standard Description Financial Statements Impact

Tax Equity Investments

ASU 2023-02, Investments – Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method This Update expands the use of the proportional amortization method of accounting, previously only allowable for LIHTC investments, to equity investments in other tax credit structures that meet certain criteria.

The Update also removed the specialized guidance for LIHTC investments that are not accounted for using the proportional amortization method or equity method and require that those investments are accounted for using Topic 321 regarding equity investments.

This Update is to be applied using either a modified retrospective or a retrospective method and will be effective as of January 1, 2024.

Early adoption of this Update is permitted.

We plan to adopt this Update on January 1, 2024.

The adoption of this Update is not expected to have a material impact on our consolidated financial statements.

Troubled Debt Restructuring and Charge-offs

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Troubled Debt Restructurings and Vintage Disclosures

This Update eliminates the recognition and measurement guidance on TDRs for creditors that have adopted ASC 326 and requires enhanced disclosures about loan modifications for borrowers experiencing financial difficulty.

This Update eliminates the recognition and measurement guidance on TDRs for creditors that have adopted ASC 326 and requires entities to apply loan refinancing and restructuring guidance to determine whether a modification results in a new loan or a continuation of an existing loan.

The Update requires enhanced disclosures for certain loan modifications by creditors when a borrower is experiencing financial difficulty if the modification includes principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, a term extension, or a combination of those modification types.

This Update also requires public business entities to present current-period gross write-offs by year of origination in their vintage disclosures.

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For the transition method related to TDRs, an entity has the option to apply a modified retrospective transition method.

Early adoption of this Update is permitted.

An entity is allowed to early adopt the amendments about TDRs and related disclosure enhancements separately from the amendments related to vintage disclosures.

We adopted this Update on January 1, 2023.

Adoption of this Update is not expected to have a material impact on our consolidated financial statements.

We adopted this Update on January 1, 2023, on a prospective basis for all amendments.

Adoption of this Update did not have a material impact on our consolidated financial statements.

MERGERS AND ACQUISITIONS

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Goodwill related to the Howard acquisition was recorded in the Community Banking business segment and is not deductible for income tax purposes as the acquisition was accounted for as a tax-free exchange for tax purposes.

We incurred merger expenses relating to the Howard acquisition of $ 31.0 million and $ 1.8 million for 2022 and 2021, respectively.

We incurred merger expenses relating to the Howard acquisition of $ 31.0 million in 2022.

We did not record any merger expenses relating to the Howard acquisition in 2023.

Purchased loans and leases that reflect a more-than-insignificant deterioration of credit from origination are considered PCD.

We consider various factors in connection with the identification of more-than-insignificant deterioration in credit, including but not limited to nonperforming status, delinquency, risk ratings, TDR classification, FICO scores and other qualitative factors that indicate deterioration in credit quality since origination.

We consider various factors in connection with the identification of more-than-insignificant deterioration in credit, including but not limited to nonperforming status, delinquency, risk ratings, loan modification classification, FICO scores and other qualitative factors that indicate deterioration in credit quality since origination.

For PCD loans and leases, the initial estimate of expected credit losses is recognized in the ACL on the date of acquisition using the same methodology as other loans and leases held-for-investment.

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This merger was accounted for in accordance with the acquisition method of accounting.

Preliminary fair values for all assets and liabilities are presented in Table 3.1.

Fair values for all assets and liabilities are presented in Table 3.1.

Determining the fair value of assets and liabilities is a complex process involving significant judgment regarding estimates and assumptions used to calculate fair values.

Accordingly, the initial accounting for the merger is not complete.

We continue to analyze the valuations assigned to the acquired assets and assumed liabilities.

Due to the complexity in valuing the loans and the significant amount of data inputs required, the valuation of the loans is not yet final.

In addition, we are reviewing third-party valuations on acquired premises and core deposit intangibles.

We are also assessing the valuation on loans, deferred taxes, deposits and debt.

We have completed the review of valuations for the acquired assets and liabilities.

Goodwill related to the Union acquisition was recorded in the Community Banking business segment and is not deductible for income tax purposes as the acquisition was accounted for as a tax-free exchange for tax purposes.

We incurred merger expenses relating to the Union acquisition of $ 14.3 million for 2022.

We incurred merger expenses relating to the Union acquisition of $ 2.2 million and $ 14.3 million for 2023 and 2022, respectively.

We recorded core deposit intangibles of $ 41 million which reflect the much higher cost of alternative funding given the higher interest rate environment at the time of acquisition.

Purchased loans and leases that reflect a more-than-insignificant deterioration of credit from origination are considered PCD.

We consider various factors in connection with the identification of more-than-insignificant deterioration in credit, including

but not limited to nonperforming status, delinquency, risk ratings, TDR classification, FICO scores and other qualitative factors that indicate deterioration in credit quality since origination.

We consider various factors in connection with the identification of more-than-insignificant deterioration in credit, including but not limited to non-performing status, delinquency, risk ratings, FICO scores and other qualitative factors that indicate deterioration in credit quality since origination.

For PCD loans and leases, the initial estimate of expected credit losses is recognized in the ACL on the date of acquisition using the same methodology as other loans and leases held-for-investment.

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Due to that integration, it is impracticable to disclose the revenue from the Union assets acquired and income before income taxes subsequent to the acquisition.

The following table summarizes the amounts recorded on the consolidated balance sheets as of the acquisition dates in conjunction with the Howard and Union acquisitions discussed above.

The following table summarizes the amounts recorded on the consolidated balance sheets as of the respective acquisition dates in conjunction with the Howard and Union acquisitions discussed above.

(in millions) Howard Union

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The amortized cost and fair value of AFS debt securities are presented in the table below.

There was no ACL in the AFS portfolio at December 31, 2022 and December 31, 2021.

There was no ACL associated with the AFS portfolio at December 31, 2023 and December 31, 2022.

Accrued interest receivable on AFS debt securities totaled $ 9.6 million and $ 8.9 million at December 31, 2023 and 2022, respectively, and is excluded from the estimate of credit losses and assessed separately in other assets in the Consolidated Balance Sheets.

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Total debt securities AFS $ 3,622 $ 1 $ ( 348 ) $ 3,275

The amortized cost and fair value of HTM debt securities are presented in the table below.

The amortized cost and fair value of HTM debt securities are presented in the following table.

The ACL for the HTM portfolio was $ 0.28 million and $ 0.23 million at December 31, 2023 and 2022, respectively.

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December 31, 2022

Treasury $ 1 $ — $ — $ 1

government agencies $ 1 $ — $ — $ 1

government-sponsored entities 52 — — 52

Residential mortgage-backed securities:

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and political subdivisions (municipals) 1,025 1 ( 107 ) 919

Other debt securities 12 — ( 1 ) 11

Total debt securities HTM $ 4,087 $ 3 $ ( 403 ) $ 3,687

During 2023, we sold $ 648.7 million of AFS securities resulting in a realized loss of $ 67.4 million as part of a proactive balance sheet management strategy.

We reinvested the proceeds of the AFS securities sold with an average yield of 1.08 % into securities with yields approximately 350 basis points higher and a similar duration and convexity profile.

There were no significant gross gains or gross losses realized on securities during the twelve months ended December 31, 2022 or 2021.

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We evaluated the AFS debt securities that were in an unrealized loss position at December 31, 2023.

Based on the credit ratings and implied government guarantee for these securities, we concluded the loss position is temporary and caused by the significant movement of interest rates during 2022 and does not reflect any expected credit losses.

Based on the credit ratings and implied government guarantee for these securities, we concluded the loss position is temporary and caused by the significant movement of interest rates since 2022 and does not reflect any expected credit losses.

We do not intend to sell these AFS debt securities and it is not more likely than not that we will be required to sell these securities before the recovery of their amortized cost basis.

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By using these components, we derive the expected credit loss on the HTM corporate bond portfolio.

We further refine the expected credit loss by factoring in economic forecast data using our bank-wide loan portfolio forecast adjustment as derived through our assessment of the Bank's loan portfolio as a proxy for our corporate bond portfolio.

For the years ending December 31, 2022 and 2021, we had no significant provision expense and no charge-offs or recoveries.

The ACL on the HTM portfolio was $ 0.23 million, consisting of $ 0.07 million relating to the municipal bond portfolio and $ 0.16 million relating to other debt securities, as of December 31, 2022 and $ 0.05 million relating to the municipal bond portfolio as of December 31, 2021.

We further refine the expected credit loss by factoring in economic forecast data using our bank-wide loan portfolio forecast adjustment as derived through our assessment of FNBPA's loan portfolio as a proxy for our corporate bond portfolio.

For the years ending December 31, 2023 and 2022, we had no significant provision expense and no charge-offs or recoveries for the securities portfolio.

The ACL on the HTM portfolio was $ 0.28 million, consisting of $ 0.06 million relating to the municipal bond portfolio and $ 0.22 million relating to other debt securities, as of December 31, 2023, and $ 0.07 million relating to the municipal bond portfolio and $ 0.16 million relating to other debt securities as of December 31, 2022.

The AFS securities portfolios did no t have an ACL at December 31, 2023 or 2022.

At December 31, 2022 and 2021, there were no securities that were past due or on non-accrual.

At December 31, 2023 and 2022, there were no securities that were past due or on non-accrual at either date.

OTHER SECURITIES

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Commercial leases 599 519

Other 110 114

Total commercial loans and leases 20,496 19,290

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Total loans and leases, net of unearned income $ 32,323 $ 30,255

The remaining accretable discount included in the amortized cost of acquired loans was $ 58.6 million and $ 30.0 million at December 31, 2022 and 2021, respectively, which includes $ 10.0 million and $ 30.9 million established for Howard and Union, respectively, at the time of acquisition.

The remaining accretable discount included in the amortized cost of acquired loans was $ 42.6 million and $ 58.6 million at December 31, 2023 and 2022, respectively, which included $ 10.0 million and $ 30.9 million established for Howard and Union, respectively, at the time of acquisition.

The loans and leases portfolio categories are comprised of the following types of loans, where in each case the LGD is dependent on the nature and value of the respective collateral:

• Commercial real estate includes both owner-occupied and non-owner-occupied loans secured by commercial properties where operational cash flows on owner-occupied properties or rents received by our borrowers from their tenant(s) on both a property and global basis are the primary default risk drivers, including rents paid by stand-alone business customers for owner-occupied properties;

• Commercial and industrial includes loans to businesses that are not secured by real estate where the borrower's leverage and cash flows from operations are the primary default risk drivers, except for PPP loans that are 100 % guaranteed by the SBA, which provides a reduced risk of loss to us on these loans.

PPP loans are included in the commercial and industrial category and comprise $ 25.7 million and $ 336.6 million of this category's outstanding balance at December 31, 2022 and 2021, respectively;

• Commercial real estate includes both owner-occupied and non-owner-occupied loans, including construction loans, secured by commercial properties where operational cash flows on owner-occupied properties or rents received by our borrowers from their tenant(s) on both a property and global basis are the primary default risk drivers, including rents paid by stand-alone business customers for owner-occupied properties;

• Commercial and industrial includes loans to businesses that are not secured by real estate where the borrower's leverage and cash flows from operations are the primary default risk drivers;

• Commercial leases consist of leases for new or used equipment where the borrower's cash flow from operations is the primary default risk driver;

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• Direct installment is comprised of fixed-rate, closed-end consumer loans for personal, family or household use, such as home equity loans and automobile loans where the primary default risk driver is the borrower's employment status and income;

• Residential mortgages consist of conventional and jumbo mortgage loans for 1-4 family properties where the primary default risk driver is the borrower's employment status and income;

• Residential mortgages consist of conventional and jumbo mortgage loans, including construction loans, for 1-4 family properties where the primary default risk driver is the borrower's employment status and income;

• Indirect installment is comprised of loans originated by approved third parties and underwritten by us, primarily automobile loans where the primary default risk driver is the borrower's employment status and income;

• Consumer lines of credit include home equity lines of credit and consumer lines of credit that are either unsecured or secured by collateral other than home equity where the primary default risk driver is the borrower's employment status and income.

In the fourth quarter 2023, we transferred $ 355 million of indirect automobile loans to the held-for-sale portfolio.

The sale completed in February 2024.

The loans and leases portfolio consists principally of loans to individuals and small- and medium-sized businesses within our primary market in seven states and the District of Columbia.

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Accordingly, we apply higher risk factors to Substandard and Doubtful credit categories.

The following tables summarize the designated loan rating category by loan class including term loans on an amortized cost basis by origination year:

The following table summarizes the designated loan rating category by loan class including term loans on an amortized cost basis by origination year and year-to-date gross charge-offs by originating year:

December 31, 2023 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total

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Total commercial real estate 1,523 2,226 2,401 1,598 1,295 3,012 250 12,305

Commercial real estate current period gross charge-offs 0.2 0.4 0.4 0.7 0.2 10.5 — 12.4

Commercial and Industrial:

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Total commercial and industrial 1,555 1,398 962 586 406 678 1,897 7,482

Commercial and industrial current period gross charge-offs 0.1 0.3 1.0 1.0 2.2 46.6 — 51.2

Commercial Leases:

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Total commercial leases 254 138 86 54 25 42 — 599

Commercial leases current period gross charge-offs — — — — — — — —

Other Commercial:

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Total other commercial 39 — — — — 8 63 110

Other commercial current period gross charge-offs — — — — — 4.5 — 4.5

Total commercial loans and leases 3,371 3,762 3,449 2,238 1,726 3,740 2,210 20,496

December 31, 2023 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total

(in millions)

Direct Installment:

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Total direct installment 340 713 784 393 137 374 — 2,741

Direct installment current period gross charge-offs — 0.2 0.1 0.1 — 0.2 — 0.6

Residential Mortgages:

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Total residential mortgages 1,424 1,692 1,521 802 346 854 1 6,640

Residential mortgages current period gross charge-offs — — — — — 0.7 — 0.7

Indirect Installment:

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Total indirect installment 313 395 246 102 43 50 — 1,149

Indirect installment current period gross charge-offs 0.4 4.3 3.7 0.6 0.3 1.4 — 10.7

Consumer Lines of Credit:

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Total consumer lines of credit 38 62 15 2 3 130 1,047 1,297

Consumer lines of credit current period gross charge-offs 0.1 — — — — 0.9 — 1.0

Total consumer loans 2,115 2,862 2,566 1,299 529 1,408 1,048 11,827

Total loans and leases $ 5,486 $ 6,624 $ 6,015 $ 3,537 $ 2,255 $ 5,148 $ 3,258 $ 32,323

Total charge-offs $ 0.8 $ 5.2 $ 5.2 $ 2.4 $ 2.7 $ 64.8 $ — $ 81.1

The following table summarizes the designated loan rating category by loan class including term loans on an amortized cost basis by origination year:

December 31, 2022 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total

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Non-performing loans and leases / total loans and leases 0.33 % 0.37 %

Non-performing assets + 90 days past due / total loans and leases + OREO

Non-performing assets plus 90 days or more past due / total loans and leases plus OREO

The carrying value of residential-secured consumer OREO held as a result of obtaining physical possession upon completion of a foreclosure or through completion of a deed in lieu of foreclosure amounted to $ 1.2 million at December 31, 2023 and $ 1.1 million at December 31, 2022.

The recorded investment of residential-secured consumer OREO for which formal foreclosure proceedings are in process at December 31, 2023 and 2022 totaled $ 9.4 million and $ 11.8 million, respectively.

During 2021, we extended the residential mortgage foreclosure moratorium beyond the requirements for government-backed loans, under the CARES Act, to all residential mortgage loan customers.

Approximately $ 54.8 million of commercial loans are collateral dependent at December 31, 2023.

Repayment is expected to be substantially through the operation or sale of the collateral on the loan.

Repayment is expected to be substantially made through the operation or sale of the collateral on the loan.

These loans are primarily secured by business assets or commercial real estate.

Troubled Debt Restructurings

TDRs are loans whose contractual terms have been modified in a manner that grants a concession to a borrower experiencing financial difficulties.

TDRs typically result from loss mitigation activities and could include the extension of a maturity date, interest rate reduction, principal forgiveness, deferral or decrease in payments for a period of time and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of collateral.

Following is a summary of the composition of total TDRs:

December 31 2022 2021

(in millions)

Accruing $ 63 $ 60

Non-accrual 24 32

Total TDRs $ 87 $ 92

TDRs that are accruing and performing include loans that met the criteria for non-accrual of interest prior to restructuring for which we can reasonably estimate the timing and amount of the expected cash flows on such loans and for which we expect to fully collect the new carrying value of the loans.

During 2022, we returned to accruing status $ 7.0 million in restructured residential mortgage loans that have consistently met their modified obligations for more than six months.

TDRs that are on non-accrual are not placed on accruing status until all delinquent principal and interest have been paid and the ultimate collectability of the remaining principal and interest is reasonably assured.

Some loan modifications classified as TDRs may not ultimately result in the full collection of principal and interest, as modified, and may result in potential incremental losses which are factored into the ACL.

Commercial loans over $ 1.0 million whose terms have been modified in a TDR are generally placed on non-accrual, individually analyzed and measured based on the fair value of the underlying collateral.

Our ACL includes specific reserves for commercial TDRs of $ 0 at December 31, 2022, compared to $ 1.5 million at December 31, 2021, and pooled reserves for individual loans of $ 1.1 million and $ 1.5 million for those same periods, respectively, based on loan segment LGD.

Upon default, the amount of the recorded investment in the TDR in excess of the fair value of the collateral, less estimated selling costs, is generally considered a confirmed loss and is charged-off against the ACL.

All other classes of loans whose terms have been modified in a TDR are pooled and measured based on the loan segment LGD.

Our ACL included pooled reserves for these classes of loans of $ 3.8 million for December 31, 2022 and $ 3.9 million for December 31, 2021.

Loan Modifications

During the period, there are loans whose contractual terms have been modified in a manner that grants a concession to a borrower experiencing financial difficulties.

These modifications typically result from loss mitigation activities and could include a term extension, interest rate reduction, principal forgiveness and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of collateral.

Accrued interest receivable on loan modifications totaled $ 0.41 million at December 31, 2023, and is excluded from the amortized cost of loan modifications in the tables that follow.

The following table shows the amortized cost basis at the end of the reporting period of the loans modified to borrowers experiencing financial difficulty, disaggregated by class of financing receivable, type of concession granted and the financial effect of the modifications made to borrowers experiencing financial difficulty:

(dollars in millions) Amortized Cost Basis % of Total Class of Financing Receivable Financial Effect

Twelve Months Ended December 31, 2023

Term Extension

Commercial real estate $ 21.5 0.17 % The modified loans had an average increase in term of 15 months, extending the maturity date.

Commercial and industrial 20.6 0.28 The modified loans had an average increase in term of 34 months, extending the maturity date.

Direct installment 1.7 0.06 The modified loans had an average increase in term of 90 months, extending the maturity date.

Residential mortgages 3.8 0.06 The modified loans had an average increase in term of 91 months, extending the maturity date.

Consumer lines of credit 0.5 0.04 The repayment on the loans modified was extended, lowering the monthly repayment.

Term Extension and Rate Reduction

Commercial and industrial 0.1 — The term was extended, with a weighted average yield reduction of 462 bps.

Direct installment 0.4 0.01 The modified loans had an average increase in term of 319 months, extending the maturity date.

Residential mortgages 0.8 0.01 The term was extended, with a weighted average yield reduction of 267 bps.

Consumer lines of credit 0.7 0.05 The term was extended, with a weighted average yield reduction of 266 bps.

Commercial real estate 8.3 0.07 The modified loans had an average increase in term of 6 months,

extending the maturity date.

Direct installment 0.1 — Multiple modifications were made with no material financial effect.

Residential mortgages 0.1 — Multiple modifications were made with no material financial effect.

Consumer lines of credit 0.6 0.05 Primarily changed to a payment schedule with a fixed rate reduction

Total Outstanding Modified $ 59.2

Some loan modifications may not ultimately result in the full collection of principal and interest, as modified, and may result in potential incremental losses which are factored into the ACL.

There were $ 0.1 million additional funds committed to borrowers whose loans were modified during 2023.

Commercial loans over $ 1.0 million whose terms have been modified may be placed on non-accrual, individually analyzed and measured based on the fair value of the underlying collateral.

Our ACL includes specific reserves for commercial loans modified.

There was $ 5.3 million and no specific reserve for commercial loans modified at December 31, 2023 and 2022, respectively, and pooled reserves for individual loans of $ 2.0 million and $ 1.1 million for those same periods, respectively, based on loan segment LGD.

Upon default, the amount of the recorded investment of the modified loan balance in excess of the fair value of the collateral, less estimated selling costs, is generally considered a confirmed loss and is charged-off against the ACL.

All other classes of loans whose terms have been modified are pooled and measured based on the loan segment LGD.

Our ACL included pooled reserves for these classes of loans of $ 3.8 million for both December 31, 2023 and 2022.

Upon default of an individual loan, our charge-off policy is followed for that class of loan.

Following is a summary of loans modified in a manner that grants a concession to a borrower experiencing financial difficulties, by class, for which there was a payment default, excluding loans that have been paid off and/or sold.

Default occurs when a loan is 90 days or more past due or in non-accrual and is within 12 months of restructuring.

Amortized cost basis of modified financing receivables that subsequently defaulted:

(in millions) Term Extension Term Extension and Rate Reduction Other Total Outstanding Modified

December 31, 2023

Commercial real estate $ 0.4 $ — $ 5.2 $ 5.6

Commercial and industrial 21.5 0.3 — 21.8

Total commercial loans and leases 21.9 0.3 5.2 27.4

Direct installment 0.1 — — 0.1

Residential mortgages 0.3 0.3 — 0.6

Consumer lines of credit 0.1 — — 0.1

Total consumer loans 0.5 0.3 — 0.8

Total $ 22.4 $ 0.6 $ 5.2 $ 28.2

We closely monitor the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table depicts the performance of loans that have been modified in the last 12 months:

Payment status - amortization cost basis:

(in millions) Current 30-89 Days Past Due 90+ Days Past Due

December 31, 2023

Commercial real estate $ 20.7 $ 9.1 $ —

Commercial and industrial 20.8 — —

Total commercial loans and leases 41.5 9.1 —

Direct installment 1.9 0.3 —

Residential mortgages 2.8 1.7 0.1

Consumer lines of credit 1.6 0.2 —

Total consumer loans 6.3 2.2 0.1

Total $ 47.8 $ 11.3 $ 0.1

Prior to the adoption of ASU 2022-02, below are the tables relating to the TDR disclosures as of December 31, 2022.

Following is a summary of TDR loans, by class, for loans that were modified during the periods indicated.

The items in the following table have been adjusted for loans that have been paid off and/or sold.

Year Ended December 31 2022

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Investment Post-

Investment Number

Contracts Pre-Modification

Investment Post-

Commercial real estate 12 $ 2 $ 2

Commercial and industrial 9 1 —

Other — — — 1 — —

Total commercial loans 21 3 2

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Contracts Recorded

Investment Number

Contracts Recorded

Commercial real estate 5 $ 1

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Residential mortgages 8 1

Consumer lines of credit — — 1 —

Total consumer loans 13 1

Total 20 $ 2 3 $ —

ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES

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Provisions for credit losses are charged to operations based on management’s periodic evaluation of the appropriate level of the ACL.

Included in Table 7.1 is the impact to the ACL from our CECL (ASC 326) adoption on January 1, 2020.

Following is a summary of changes in the ACL, by loan and lease class:

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Offs Provision

Losses Allowance for PCD Loans and Leases at Acquisition Balance at

Losses Balance at

Year Ended December 31, 2023

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Offs Provision

Losses Balance at

Losses Allowance for PCD Loans and Leases at Acquisition Balance at

Year Ended December 31, 2022

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Offs Provision

Losses ASC 326 Adoption Impact Initial Allowance on PCD Loans Balance at

Losses Balance at

Year Ended December 31, 2021

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Consumer portfolio ( 0.2 ) — —

ASC 326 adoption impact:

Commercial portfolio — — 8

Consumer portfolio — — 2

Balance at end of period $ 21.5 $ 21.4 $ 19.1

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For our ACL calculation at December 31, 2023, the macroeconomic variables that we utilized included, but were not limited to:

(i) the purchase only Housing Price Index, which declines 3.7 % over our R&S forecast period, (ii) a Commercial Real Estate Price Index, which declines 0.9 % over our R&S forecast period, (iii) S&P Volatility, which decreases 41.0 % in 2023 and 8.1 % in 2024 and (iv) bankruptcies, which increase steadily over the R&S forecast period but average below historical levels.

(i) the purchase only Housing Price Index, which increases 5.3 % over our R&S forecast period, (ii) a Commercial Real Estate Price Index, which increases 0.1 % over our R&S forecast period, (iii) S&P Volatility, which decreases 4.0 % in 2024 and 2.9 % in 2025 and (iv) personal and business bankruptcies, which increase steadily over the R&S forecast period but average below historical through the cycle period.

Macroeconomic variables that we utilized for our ACL calculation as of December 31, 2022 included, but were not limited to:

(i) the purchase only Housing Price Index, which reflected growth of 6.3 % over our R&S forecast period, (ii) a Commercial Real Estate Price Index, which reflected growth of 13.0 % over our R&S forecast period, (iii) S&P Volatility, which increases 15.2 % in 2022 and 1.9 % in 2023 and (iv) bankruptcies, which increase steadily over the R&S forecast period but average below historical levels.

The ACL on loans and leases of $ 401.7 million at December 31, 2022 increased $ 57.4 million, or 16.7 %, from December 31, 2021, primarily due to the Howard and Union acquisitions and the associated ACL attributable to the acquired loans and leases, significant loan growth and CECL-related model impacts from a forecasted macroeconomic slowdown and lower prepayment speed assumptions, partially offset by continued solid credit quality performance.

Our ending ACL coverage ratio was 1.33 % at December 31, 2022, compared to 1.38 % at December 31, 2021.

Total provision for credit losses for the year ended December 31, 2022 was $ 64.2 million and included $ 19.1 million and $ 9.4 million of initial provision for non-PCD loans associated with the Howard and Union acquisitions, respectively, compared to $ 0.6 million total provision for the year ended December 31, 2021.

The ACL on loans and leases of $ 405.6 million at December 31, 2023 increased $ 3.9 million, or 1.0 %, from December 31, 2022, primarily due to loan growth, offset by charge-off activity and improvements in classified and non-performing loans.

Our ending ACL coverage ratio at December 31, 2023 was 1.25 %, compared to 1.33 % at December 31, 2022.

Total provision for credit losses for the year ended December 31, 2023 was $ 71.8 million, compared to $ 64.2 million in 2022 which included $ 28.5 million of initial provision for non-PCD loans associated with the Howard and Union acquisitions.

Net charge-offs were $ 67.7 million during 2023, compared to $ 16.2 million during 2022.

We had an isolated $ 31.9 million commercial loan charge-off due to indications of alleged fraud and subsequent bankruptcy filings by our borrower and its primary supplier.

The AULC was $ 21.5 million at December 31, 2023 and included provision expense for unfunded loan commitments and letters of credit of $ 0.1 million for the year ended December 31, 2023.

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Fair value, end of period 71.8 68.6 46.0

We had no valuation allowance for MSRs as of December 31, 2022, compared to $ 2.5 million at December 31, 2021.

We had a $ 0.2 million valuation allowance for MSRs as of December 31, 2023 and no valuation allowance for MSRs as of December 31, 2022.

The fair value of MSRs is highly sensitive to changes in assumptions and is determined by estimating the present value of the asset’s future cash flows utilizing market-based prepayment rates, discount rates and other assumptions validated through comparison to trade information, industry surveys and the use of independent third-party valuations.

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-2.00% ( 21 ) ( 15 )

-3.00% ( 42 ) ( 29 )

The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance.

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(1) Recorded in other non-interest income on the Consolidated Statements of Income.

Following is a summary of the activity in SBA servicing rights:

Following is a summary of SBA servicing rights:

Year Ended December 31 2023 2022 2021

(in millions)

Balance at beginning of period $ 3 $ 3 $ 3

Additions — 1 1

Payoffs, curtailments and amortization ( 1 ) ( 1 ) ( 1 )

Balance at end of period $ 1 $ 2 $ 3

Fair value, beginning of period $ 3 $ 3 $ 3

Fair value, end of period 1 2 3

We had a valuation allowance for SBA servicing rights of $ 1.2 million as of December 31, 2023, compared to $ 1.6 million at December 31, 2022.

Following is a summary of key assumptions and the sensitivity of the SBA servicing rights to changes in these assumptions.

The declines in fair values were immaterial in the scenarios presented.

December 31 2022 2021

(dollars in millions)

Weighted average life (months) 42 42

Constant prepayment rate 15.2 % 14.8 %

Discount rate 19.9 12.1

Decline in fair value due to change in interest rates:

1% adverse change $ — $ ( 0.1 )

2% adverse change ( 0.1 ) ( 0.2 )

Decline in fair value due to change in constant prepayment rates:

10% adverse change ( 0.1 ) ( 0.1 )

20% adverse change ( 0.1 ) ( 0.2 )

PREMISES AND EQUIPMENT

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Balance at December 31, 2023 $ 2,446 $ 8 $ 23 $ 2,477

We recorded goodwill during 2022 as a result of the purchase accounting adjustments relating to the Howard and Union acquisitions described in Note 3, "Mergers and Acquisitions." There were no changes to goodwill during 2021.

There were no changes to goodwill during 2023.

We recorded goodwill during 2022 as a result of the purchase accounting adjustments relating to the Howard and Union acquisitions described in Note 3, "Mergers and Acquisitions."

The following table shows a summary of core deposit intangibles and customer renewal lists:

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At commencement, it is expected that these leases will add approximately $ 27.8 million in right-of-use assets and $ 33.0 million in other liabilities.

These operating leases are currently expected to commence in 2023 or 2024 with lease terms of up to 16 years.

These operating leases are currently expected to commence in 2024 and 2025 with lease terms of up to 20 years.

These operating leases include the lease, with a related party, of the future new FNB headquarters building in Pittsburgh, Pennsylvania.

During 2023, several floors of the FNB headquarters building have been made available to FNB for the purpose of constructing our office spaces, and we commenced the lease of those floors.

The related party operating lease is accounted for in a manner consistent with all other leases on the basis of the legally enforceable terms and conditions of the lease and the related party represents a VIE for which we are not the primary beneficiary.

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Unconsolidated VIEs

The following table provides a summary of the assets and liabilities included in our Consolidated Financial Statements, as well as the maximum exposure to losses, associated with our interests related to VIEs for which we hold an interest, but are not the primary beneficiary, at December 31, 2022 and 2021.

(in millions) Total Assets Total Liabilities Maximum Exposure to Loss

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We have certain wholly-owned trusts whose assets, liabilities, equity, income and expenses are not included within our Consolidated Financial Statements.

These trusts have been formed for the sole purpose of issuing TPS, from which the proceeds are then invested in our junior subordinated debentures, which are reflected in our Consolidated Balance Sheets as subordinated notes.

The TPS are the obligations of the trusts, and as such, are not consolidated within our Consolidated Financial Statements.

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Periodic cash payments and payments upon liquidation or redemption with respect to TPS are guaranteed by us to the extent of funds held by the trusts.

The guarantee ranks subordinate and junior in right of payment to all of our indebtedness to the same extent as the junior subordinated debt.

The guarantee ranks subordinate and junior in right of payment to all our indebtedness to the same extent as the junior subordinated debt.

The guarantee does not place a limitation on the amount of additional indebtedness that may be incurred by us.

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Other Investments

Other investments we also consider to be unconsolidated VIE’s include investments in SBIC's, Historic Tax Credit investments, New Market Tax Credit investments and other equity method investments.

Other investments we also consider to be unconsolidated VIEs include investments in SBIC's, Historic Tax Credit investments, New Market Tax Credit investments and other equity method investments.

Following is a summary of deposits:

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Federal Home Loan Bank advances 1,900 930

Federal funds purchased 260 —

Subordinated notes 113 125

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Securities are pledged to these customers in an amount at least equal to the outstanding balance.

We did no t have any short-term FHLB advances with overnight maturities as of December 31, 2022 or 2021.

At December 31, 2022, $ 0.9 billion, or 100.0 %, of the short-term FHLB advances were swapped to fixed rates with various maturities through 2024.

This compares to $ 1.0 billion, or 100.0 %, as of December 31, 2021.

During 2020, we terminated hedges related to $ 225.0 million of higher-rate short-term FHLB borrowings, which resulted in hedge termination costs of $ 8.9 million reported in other non-interest income on the Consolidated Statements of Income.

Of the total short-term FHLB advances, $ 450.0 million, or 23.7 %, had overnight maturities as of December 31, 2023.

We did no t have any short-term FHLB advances with overnight maturities as of December 31, 2022.

At December 31, 2023, $ 400.0 million, or 21.1 %, of the short-term FHLB advances were swapped to fixed rates with various maturities through 2024.

This compares to $ 930.0 million, or 100.0 %, as of December 31, 2022.

Federal funds purchased are overnight funds borrowed from other financial institutions.

Subordinated notes are unsecured and subordinated to our other indebtedness.

The short-term subordinated notes mature within one year .

The following represents weighted average interest rates on short-term borrowings:

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(in millions)

Federal Home Loan Bank advances $ 1,200 $ —

Senior notes 349 648

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Total long-term borrowings $ 1,971 $ 1,093

During the third quarter of 2022, we completed a debt offering in which we issued $ 350 million aggregate principal amount of 5.150 % fixed-rate senior notes due in 2025.

The net proceeds of the debt offering after deducting underwriting discounts and commissions and offering costs were $ 347.4 million.

These proceeds were used for general corporate purposes, which may include repayment of the $ 300 million in 2.200 % Senior Notes due February 2023, investments at the holding company level, capital to support the growth of FNBPA and refinancing of outstanding indebtedness.

During 2022, we assumed $ 25 million of other subordinated debt and $ 5 million of junior subordinated debt from the Howard acquisition and $ 31 million of other subordinated debt from the Union acquisition.

Those additions are reflected in the balances above and in the tables below.

Scheduled annual maturities for the long-term borrowings for the years following December 31, 2023 are as follows:

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Federal Home Loan Bank advances

Our banking affiliate has available credit with the FHLB of $ 9.8 billion, of which $ 930.0 million was utilized and included in short-term borrowings and $ 340.0 million was utilized for a letter of credit for pledging of public funds as of December 31, 2022.

These advances are secured by loans collateralized by residential mortgages, home equity lines of credit, commercial real estate and FHLB stock and are scheduled to mature in various amounts periodically during 2023.

There were no long-term FHLB borrowings during 2022, or as of December 31, 2022 or 2021.

Effective interest rates paid on the long-term advances held during the year ranged from 0.26 % to 0.29 % for the year ended December 31, 2021.

During 2020, we reduced higher-rate outstanding long-term FHLB borrowings by $ 490.0 million, which resulted in a loss on early debt extinguishment of $ 16.7 million reported in non-interest income on the Consolidated Statements of Income.

Our banking affiliate has available credit with the FHLB of $ 11.0 billion, of which $ 3.1 billion was utilized and included in short-term and long-term borrowings and $ 450.0 million was utilized for a letter of credit for pledging of public funds as of December 31, 2023.

These advances are secured by loans collateralized by residential mortgages, home equity lines of credit, commercial real estate and FHLB stock.

The short-term borrowings are scheduled to mature in various amounts periodically during 2024 while the long-term borrowings are scheduled to mature periodically through 2027, with the majority maturing in 2025.

Effective interest rates paid on the long-term FHLB advances held during 2023 ranged from 4.23 % to 4.88 %.

There were no long-term FHLB borrowings during 2022, or for the year ended December 31, 2022.

Subordinated notes

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Rate Rate Reset Factor

Statutory Trust II $ 22 $ 1 $ 22 6/15/2036 6.42 % LIBOR + 165 bps

Yadkin Valley Statutory Trust I 25 1 22 12/15/2037 6.09 % LIBOR + 132 bps

FNB Financial Services Capital Trust I 25 1 23 9/30/2035 6.19 % LIBOR + 146 bps

Patapsco Statutory Trust I 5 — 5 12/15/2035 6.25 % LIBOR + 148 bps

Statutory Trust II $ 22 $ 1 $ 22 6/15/2036 7.30 % SOFR + 165 bps

Yadkin Valley Statutory Trust I 25 1 23 12/15/2037 6.97 % SOFR + 132 bps

FNB Financial Services Capital Trust I 25 1 23 9/30/2035 7.05 % SOFR + 146 bps

Patapsco Statutory Trust I 5 — 5 12/15/2035 7.13 % SOFR + 148 bps

Total $ 77 $ 3 $ 73

The SOFR rate used for the rate reset factors in the above table is the Benchmark Replacement (three-month CME term SOFR plus a tenor spread adjustment of 26 basis points).

Senior and other subordinated debt

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Senior Notes:

2.200 % Senior Notes due February 24, 2023

$ 300 $ 298 $ 300 2/24/2023 2.200 %

5.150 % Senior Notes due August 25, 2025

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100 98 100 10/2/2025 4.875 %

7.625 % Subordinated Notes due August 12, 2023 (5)

38 46 29 8/12/2023 7.625 %

Fixed-To-Floating Rate Subordinated Notes due December 6, 2028 (2) (4)

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25 24 24 5/29/2030 5.000 %

6.000 % Fixed-To-Floating Rate Subordinated Note due May 15, 2028 (4) (5)

6 6 6 5/15/2028 6.000 %

Total other subordinated debt 270 266 267

Total $ 620 $ 613 $ 616

(1) Fixed-to-floating rate until February 14, 2024, at which time the floating rate will be three-month LIBOR plus 240 basis points, or an alternative rate that may replace LIBOR, as specified in the prospectus for this offering.

(2) Fixed-to-floating rate until December 6, 2023, at which time the floating rate will be three-month LIBOR plus 302 basis points, or an alternative rate that may replace LIBOR, as specified in the prospectus for this offering.

(3) Fixed-to-floating rate until May 29, 2025, at which time the floating rate will be three-month SOFR plus 464 basis points.

(4) Fixed-to-floating rate until May 15, 2023, at which time the floating rate will be three-month LIBOR plus 350 basis points, or an alternative rate that may replace LIBOR, as specified in the prospectus for this offering.

(1) Fixed rate until February 14, 2024, at which time it converts to a floating rate determined by the Benchmark Replacement (three-month CME term SOFR plus a tenor spread adjustment of 26 basis points) plus 240 basis points.

(2) Floating rate effective December 6, 2023, determined by the Benchmark Replacement (three-month CME term SOFR plus a tenor spread adjustment of 26 basis points) plus 302 basis points.

(3) Fixed until May 29, 2025, at which time it converts to a floating rate determined by the three-month SOFR plus 464 basis points.

(4) Assumed from an acquisition and adjusted to fair value at the time of acquisition.

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For the debt assumed from acquisitions, this is the fair value of the debt at the time of the acquisition.

Other Credit Availability

Our banking affiliate has additional unused other wholesale credit availability of $ 8.3 billion as of December 31, 2023.

Borrowing Activity

During the third quarter of 2022, we completed a debt offering in which we issued $ 350 million aggregate principal amount of 5.150 % fixed-rate senior notes due in 2025.

The net proceeds of the debt offering after deducting underwriting discounts and commissions and offering costs were $ 347.4 million.

These proceeds were used for general corporate purposes, which included the repayment of $ 300 million in 2.200 % Senior Notes that matured in February 2023, and may also include investments at the holding company level, capital to support the growth of FNBPA and refinancing of outstanding indebtedness.

During the second quarter of 2023, we called $ 6 million in other subordinated debt acquired from the Union acquisition and we repurchased and retired $ 15 million in other subordinated debt assumed in a previous acquisition.

Additionally, during the third quarter of 2023, $ 13.6 million in other subordinated debt assumed in a previous acquisition matured and we repurchased and retired $ 1 million in other subordinated debt acquired from the Howard acquisition.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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Total $ 14,282 $ 116 $ 328 $ 13,718 $ 96 $ 411

The change in the fair value of liabilities from December 31, 2021 is due to a significant increase in interest rates during 2022.

Certain derivative exchanges have enacted a rule change which in effect results in the legal characterization of variation margin payments for certain derivative contracts as settlement of the derivatives mark-to-market exposure and not collateral.

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We entered into interest rate derivative agreements to modify the interest rate characteristics of certain commercial loans and certain of our FHLB advances from variable rate to fixed rate in order to reduce the impact of changes in future cash flows due to market interest rate changes.

These agreements are designated as cash flow hedges, hedging the exposure to variability in expected future cash flows.

These agreements are designated as cash flow hedges, in the form of interest rate swaps and collars, hedging the exposure to variability in expected future cash flows.

The derivative’s gain or loss, including any ineffectiveness, is initially reported as a component of OCI and subsequently reclassified into earnings in the same line item associated with the forecasted transaction when the forecasted transaction affects earnings.

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Interest rate contracts $ ( 10 ) $ ( 39 ) $ 5 Interest income (expense) $ ( 24 ) $ ( 11 ) $ ( 18 )

Other income — — ( 9 )

The following table represents gains (losses) recognized in the Consolidated Statements of Income on cash flow hedging relationships:

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( 46 ) 22 ( 8 ) ( 3 ) 2 ( 20 )

Amount of gain (loss) reclassified

from AOCI into income as a result

that a forecasted transaction is no

longer probable of occurring — — — — — —

(1) For 2020, the amount of loss reclassified from AOCI into net income relating to interest income on loans and leases included an $ 8.9 million loss reflected in other non-interest income.

As of December 31, 2023, the maximum length of time over which forecasted interest cash flows are hedged is 2.3 years.

1 unchanged sentence

This amount could differ from amounts actually recognized due to changes in interest rates, hedge de-designations, and the addition of other hedges subsequent to December 31, 2023.

During the third quarter of 2020, we terminated $ 225.0 million of notional value of interest rate contracts - designated subject to master netting arrangements.

There were no components of derivative gains or losses excluded from the assessment of hedge effectiveness related to these cash flow hedges.

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We will make/receive payments under these agreements if a customer defaults on their obligation to perform under certain derivative swap contracts.

Risk participation agreements sold with notional amounts totaling $ 388.6 million as of December 31, 2022 have remaining terms ranging from two months to nineteen years .

Risk participation agreements sold with notional amounts totaling $ 506.5 million as of December 31, 2023 have remaining terms ranging from five months to seventeen years .

Under these agreements, our maximum exposure assuming a customer defaults on their obligation to perform under certain derivative swap contracts with third parties would be $ 0.1 million and $ 0.1 million at December 31, 2023 and 2022, respectively.

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Collateral, usually marketable securities and/or cash, is exchanged between FNB and our counterparties, and is generally subject to thresholds and transfer minimums.

For swap transactions that require central clearing, we post cash to our clearing agency.

For swap transactions that require central clearing, we post cash and securities to our clearing agency.

Collateral positions are settled or valued daily, and adjustments to amounts received and pledged by us are made as appropriate to maintain proper collateralization for these transactions.

Certain master netting agreements contain provisions that, if violated, could cause the counterparties to request immediate settlement or demand full collateralization under the derivative instrument.

If we had breached our agreements with our derivative counterparties we would be required to settle our obligations under the agreements at the termination value and would be required to pay an additional $ 0.1 million and $ 0.2 million as of December 31, 2022 and 2021, respectively, in excess of amounts previously posted as collateral with the respective counterparty.

If we had breached our agreements with our derivative counterparties we would be required to settle our obligations under the agreements at the termination value and would be required to pay no thing as of December 31, 2023 and an additional $ 0.1 million as of December 31, 2022, respectively, in excess of amounts previously posted as collateral with the respective counterparty.

The following table presents a reconciliation of the net amounts of derivative assets and derivative liabilities presented in the Consolidated Balance Sheets to the net amounts that would result in the event of offset:

1 unchanged sentence

Consolidated Balance Sheets

(in millions) Amount

(in millions) Net Amount

the Consolidated Balance

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Interest rate contracts:

Designated $ 1 $ — $ 1 $ —

Not designated 74 — 74 —

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Interest rate contracts:

Designated $ 1 $ — $ 1 $ —

Not designated $ 35 $ — $ 35 $ —

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Interest rate contracts:

Designated $ 1 $ — $ 1 $ —

Not designated $ 89 $ — $ 88 $ 1

2 unchanged sentences

Interest rate contracts:

Designated $ 1 $ — $ 1 $ —

Not designated 6 — 6 —

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However, on the basis of current knowledge and understanding, and advice of counsel, we do not believe that judgments, sanctions, settlement resolutions, regulatory actions, investigations, settlements or orders, if any, that have arisen or may arise from these matters (either individually or in the aggregate, after giving effect to applicable reserves and insurance coverage) will have a material adverse effect on our financial position or liquidity, although they could potentially have a material effect on net income in a given period.

In view of the inherent unpredictability of outcomes in litigation and governmental and regulatory matters, particularly where (i) the damages sought are indeterminate, (ii) the proceedings are in the early stages, or (iii) the matters involve novel legal theories or a large number of parties, as a matter of course, there is considerable uncertainty surrounding the timing or ultimate resolution of litigation and governmental and regulatory matters, including a possible eventual loss, fine, restitution, penalty,

business or adverse reputational impact, if any, associated with each such matter.

In accordance with applicable accounting guidance, we establish accruals for litigation and governmental and regulatory matters when those matters proceed to a stage where they present loss contingencies that are both probable and reasonably estimable.

In such cases, there may be a possible exposure to loss in excess of any amounts accrued.

We will continue to monitor such matters for developments that could affect the amount of the accrual, and will adjust the accrual amount as appropriate.

If the loss contingency in question is not both probable and reasonably estimable, we do not establish an accrual and the matter will continue to be monitored for any developments that would make the loss contingency both probable and reasonably estimable.

We will continue to monitor such matters, including ongoing reviews, examinations, and investigations by banking regulatory agencies and other government authorities, for developments that could affect the amount of the accrual, and will adjust the accrual amount as appropriate.

We believe that our accruals for legal proceedings are appropriate and, in the aggregate, are not material to our consolidated financial position, although future accruals could have a material effect on net income in a given period.

On February 5, 2024, we announced that Yadkin Bank and its successor by merger, FNBPA, reached a settlement with the DOJ and the State of North Carolina to resolve their fair lending concerns, which FNBPA disputes, related to the assessment of mortgage lending activities during a four year period in the Winston-Salem and Charlotte, North Carolina markets that began prior to Yadkin’s merger with FNBPA in March 2017.

Under the settlement, FNBPA has agreed to provide $ 11.75 million in mortgage loan subsidies over a five-year period which is an extension of its existing, previously announced commitment to underserved communities, including the Winston-Salem and Charlotte markets.

The settlement included no civil money penalties levied against FNBPA.

STOCK INCENTIVE PLANS

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We granted 1,438,195 and 1,266,821 restricted stock units during 2023 and 2022, respectively, including 293,296 and 297,508 performance-based restricted stock units during those same periods, respectively.

As of December 31, 2022, we had available up to 9,877,023 shares of common stock to issue under this Plan, including 7,397,956 shares registered during the second quarter of 2022.

We have shareholder approval under the Plan to issue up to 7,397,956 shares of common stock.

As of December 31, 2023, we had 5,530,262 remaining shares available for awards under the Plan.

The unvested restricted stock unit awards are eligible to receive cash dividends or dividend equivalents which are ultimately used to purchase additional shares of stock and are subject to forfeiture if the requisite service period is not completed or the specified performance criteria are not met.

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Acquired — — 60,300 9.41 — —

Net adjustment due to performance 575,264 9.58 527,975 10.79 47,290 13.00

Net adjustment 191,021 — 575,264 9.58 527,975 10.79

Vested ( 2,311,364 ) 7.03 ( 1,702,099 ) 10.57 ( 1,320,646 ) 12.07

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Fair value of units vested 18 21 16

As of December 31, 2022, there was $ 9.5 million of unrecognized compensation cost related to unvested restricted stock units including $ 0.5 million that is subject to accelerated vesting under the Plan’s immediate vesting upon retirement.

As of December 31, 2023, there was $ 10.4 million of unrecognized compensation cost related to unvested restricted stock units.

The components of the restricted stock units as of December 31, 2023 are as follows:

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Options outstanding and exercisable at end of year 103,690 9.97 138,381 9.32 167,327 8.83

The following table summarizes information about stock options outstanding at December 31, 2022:

Range of Exercise Prices Options

and Exercisable Weighted Average

Contractual Years Weighted Average

Exercise Price

$ 6.97 - $ 10.46

65,301 1.51 $ 7.76

$ 10.47 - $ 11.37

73,080 2.14 10.72

The stock options outstanding and exercisable at December 31, 2023 have exercise prices ranging from $ 8.24 to $ 11.37 and a weighted average remaining life of 0.84 years.

The intrinsic value of outstanding and exercisable stock options at December 31, 2023 was $ 0.4 million .

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The discount rate assumption at December 31, 2023 and 2022 was determined using a yield-curve based approach.

A yield curve was produced for a universe containing the majority of U.S.-issued Aa-graded corporate bonds, all of which were non-callable (or callable with make-whole provisions), and after excluding the 10 % of the bonds with the highest and lowest yields.

A yield curve was produced for a universe containing the majority of U.S.-issued Aa-graded corporate bonds, all of which were non-

callable (or callable with make-whole provisions), and after excluding the 10 % of the bonds with the highest and lowest yields.

The discount rate was developed as the level equivalent rate that would produce the same present value as that using spot rates aligned with the projected benefit payments.

The rates of increase in compensation levels only pertains to the non-qualified plan.

The net periodic pension cost and OCI for the Plans included the following components:

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Actuarial loss amortization 2 2 3

Total pension cost ( 7 ) ( 5 ) ( 4 )

Total pension cost (income) ( 2 ) ( 7 ) ( 5 )

Other changes in plan assets and benefit obligations recognized in other comprehensive loss (income):

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Total amount recognized in other comprehensive loss (income) ( 3 ) ( 4 ) ( 21 )

Total amount recognized in net periodic benefit cost (gain) and other comprehensive (loss) income $ ( 11 ) $ ( 26 ) $ 3

Total amount recognized in net periodic benefit cost (benefit) and other comprehensive loss (income) $ ( 5 ) $ ( 11 ) $ ( 26 )

The plans have an actuarial measurement date of December 31.

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Expected long-term rate of return on assets 6.75 6.75 6.75

The rates of increase in compensation levels only pertains to the non-qualified plan.

The expected long-term rate of return on plan assets has been established by considering historical and anticipated expected returns on the asset classes invested in by the pension trust and the allocation strategy currently in place among those classes.

The expected long-term rate of return on plan assets was reduced to 6.75 % effective January 1, 2021.

The change in plan assets reflects benefits paid from the qualified pension plans of $ 9.9 million for both 2022 and 2021.

We made contributions to the RIP of $ 5.0 million during 2020.

The change in plan assets reflects benefits paid from the qualified pension plans of $ 9.3 million and $ 9.9 million for 2023 and 2022, respectively.

We did no t make a contribution to the RIP in 2023, 2022 and 2021.

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companies 62 — — 62

International companies 1 — — 1

Other equity 1 — — 1

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Fixed income securities:

Treasury bonds — 3 — 3

government agencies — 32 — 32

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Effective tax rate 16.9 % 20.6 % 19.6 %

The effective tax rates in 2022, 2021 and 2020, respectively, were lower than the 21 % statutory federal tax rate primarily due to the tax benefits resulting from renewable energy investment and historic tax credits, tax-exempt income on investments and loans and income from BOLI.

For the years ended December 31, 2022, 2021 and 2020, we recognized net investment tax credits, under IRC section 48, of $ 0 , $ 0 and $ 8.3 million, respectively, using the flow-through method of accounting for income tax credits.

The effective tax rates in 2023, 2022 and 2021, respectively, were lower than the 21 % statutory federal tax rate primarily due to the tax benefits resulting from renewable energy investment, historic and new market tax credits, tax-exempt income on investments and loans and income from BOLI.

For the years ended December 31, 2023, 2022 and 2021, we recognized net investment tax credits, under Internal Revenue Code (IRC) section 48, of $ 23.7 million, $ 0 and $ 0 , respectively, using the flow-through method of accounting for income tax credits.

Deferred Income Taxes

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With limited exception, we are no longer subject to state income tax examinations for years prior to 2020.

We currently have one open state examination for the tax years 2017 to 2019 and do not expect any material adjustments.

We currently have one open state examination for the tax year 2018 and do not expect any material adjustments.

We also have outstanding refund requests on amended tax returns from an acquisition.

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Diluted $ 1.31 $ 1.22 $ 1.23

The following table shows the average shares excluded from the above calculation as their effect would have been anti-dilutive:

Year Ended December 31 2022 2021 2020

Average shares excluded from the diluted earnings per common share calculation — — 22,375

There were no anti-dilutive shares for the years ended December 31, 2023, 2022 and 2021.

REGULATORY MATTERS

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Residential mortgage loans held for sale that subsequently are not sold on the secondary market, are carried at fair value under the FVO and classified as Level 3.

SBA loans held for sale are carried under lower of cost or fair value, for which, periodically, it may be necessary to record non-recurring fair value adjustments.

SBA loans held for sale are carried at lower of cost or fair value, for which, periodically, it may be necessary to record non-recurring fair value adjustments.

Fair value for SBA loans held for sale, when recorded, is based on independent quoted market prices and is classified as Level 2.

Indirect installment loans held for sale are carried at lower of cost or fair value, for which, periodically, it may be necessary to record non-recurring fair value adjustments.

Fair value for indirect loans held for sale, when recorded, is based on the estimated sale price and classified as Level 3.

Collateral Dependent Loans

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Purchases, issuances, sales and settlements:

Purchases 2 — 2

Issuances — 6 6

Settlements — ( 1 ) ( 1 )

Transfers from Level 3 ( 1 ) — ( 1 )

Balance at end of period $ — $ 5 $ 5

2 unchanged sentences

Purchases, issuances, sales and settlements:

Issuances — 9 9

Purchases 2 — 2

Settlements ( 1 ) ( 9 ) ( 10 )

Transfers from Level 3 ( 1 ) — ( 1 )

Balance at end of period $ — $ — $ —

3 unchanged sentences

See the “Securities Available for Sale” discussion within this footnote for information relating to determining Level 3 fair values.

During 2022, we transferred $ 1.0 million in other debt securities out of the Level 3 hierarchy level into the Level 2 hierarchy level.

There were no transfers of assets or liabilities between the hierarchy levels during 2023.

During 2022, we transferred $ 1.0 million in other debt securities out of the Level 3 hierarchy level into the Level 2 hierarchy level.

From time to time, we measure certain assets at fair value on a non-recurring basis.

5 unchanged sentences

Collateral dependent loans $ — $ — $ 35 $ 35

Indirect installment loans held for sale — — 338 338

Other assets - MSRs — — 12 12

3 unchanged sentences

Collateral dependent loans $ — $ — $ 34 $ 34

Other assets - MSRs — — 10 10

Other assets - SBA servicing asset — — 2 2

1 unchanged sentence

The fair value amounts for collateral dependent loans and OREO in the table above were estimated at a date during the twelve months ended December 31, 2023 and 2022, respectively.

Consequently, the fair value information presented is not necessarily as of the period’s end.

Collateral dependent loans measured or re-measured at fair value on a non-recurring basis during 2022

had a carrying amount of $ 33.9 million which includes an allocated ACL of $ 11.6 million.

Consequently, the fair value information presented is not necessarily

as of the period’s end.

Collateral dependent loans measured or re-measured at fair value on a non-recurring basis during 2023 had a carrying amount of $ 35.0 million which includes an allocated ACL of $ 8.2 million.

The ACL includes a provision applicable to the current period fair value measurements of $ 49.3 million, which was included in provision for credit losses for 2023.

MSRs measured at fair value on a non-recurring basis had a carrying value of $ 0 , which included a valuation allowance of $ 0 , as of December 31, 2022.

The valuation allowance includes a recovery of $ 2.5 million included in earnings for 2022.

Indirect installment loans held for sale measured at fair value on a non-recurring basis during 2023 had a carrying amount of $ 338.3 million, which includes a valuation allowance of $ 16.7 million which was included in earnings for 2023.

MSRs measured at fair value on a non-recurring basis had a carrying value of $ 12.4 million, which included a valuation allowance of $ 0.2 million, as of December 31, 2023.

The valuation allowance includes a provision of $ 0.2 million included in earnings for 2023.

SBA servicing assets measured at fair value on a non-recurring basis had a carrying value of $ 1.4 million.

During 2022, the valuation allowance increased $ 0.4 million to $ 1.6 million as of December 31, 2022, up from $ 1.2 million at December 31, 2021, which is reflected in the year-to-date provision expense.

During 2023, the valuation allowance decreased $ 0.4 million to $ 1.2 million as of December 31, 2023, down from $ 1.6 million at December 31, 2022, which is reflected in the year-to-date provision expense.

OREO measured at fair value on a non-recurring basis during 2023 had a carrying amount of $ 2.0 million which included a valuation allowance of $ 0.3 million, as of December 31, 2023.

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See the “Derivative Financial Instruments” discussion included within this footnote .

The estimated fair value of demand deposits, savings accounts and certain money market deposits is the amount payable on demand at the reporting date because of the customers’ ability to withdraw funds immediately.

The estimated fair value of demand deposits, savings accounts and certain money market deposits is the carrying amount at the reporting date because of the customers’ ability to withdraw funds immediately.

While the deposits, given their nature, are not traded on an active market, they are payable on demand and offer floating market-based interest rates.

As a result, given the value associated with our base deposits is not permitted to be captured in this estimate of fair value, the fair values presented contain little to no estimation uncertainty and are consistent with other Level 1 instruments.

The fair value of fixed-maturity deposits is estimated by discounting future cash flows using rates currently offered for deposits of similar remaining maturities.

9 unchanged sentences

Many of the estimates presented herein are based upon the use of highly subjective information and assumptions and, accordingly, the results may not be precise.

Management believes that fair value estimates may not be comparable to other financial institutions due to the wide range of permitted valuation techniques and numerous estimates

which must be made.

Management believes that fair value estimates may not be comparable to other financial institutions due to the wide range of permitted valuation techniques and numerous estimates which must be made.

Further, because the disclosed fair value amounts were estimated as of the Balance Sheet date, the amounts actually realized or paid upon maturity or settlement of the various financial instruments could be significantly different.

60 unchanged sentences

Interest income 16 16 13

Other income 1 — —

Total Income 402 276 233

4 unchanged sentences

Income tax benefit 15 9 7

Equity in undistributed income (loss) of subsidiaries:

Equity in undistributed income of subsidiaries:

Bank 130 200 207

13 unchanged sentences

Payment for further investment in subsidiaries ( 9 ) 3 ( 12 )

Increase in premises and equipment ( 8 ) — —

Net cash received in business combinations — 9 —

13 unchanged sentences

Interest $ 48 $ 34 $ 25

SUBSEQUENT EVENT

On February 15, 2024, we redeemed all our Series E, 7.25 % Fixed Rate / Floating Rate Non-Cumulative Perpetual Preferred Stock in the amount of $ 110.9 million.

The preferred stock is no longer outstanding and dividends will no longer accrue on such securities.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data