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We are incorporated under the laws of the Commonwealth of Pennsylvania, and through our subsidiaries, we have been in business since 1864.
−Removed: Our headquarters is located at 12 Federal Street, Pittsburgh, Pennsylvania 15212.
+Added: Our headquarters is located at 626 Washington Place, Pittsburgh, Pennsylvania 15219.
As a diversified financial services holding company, FNB, through our subsidiaries, provides a full range of financial services, principally to consumers, corporations, governments and small- to medium-sized businesses in our market areas through our subsidiary network, which is led by our largest subsidiary, FNBPA.
Our business strategy focuses primarily on providing quality, consumer- and commercial-based financial services adapted to the needs of each of the markets we serve.
−Removed: We seek to maintain our community orientation by providing local management with certain autonomy in decision making, enabling them to respond to customer requests more quickly and to concentrate on transactions within their market areas.
−Removed: We seek to preserve some decision making at a local level, however, we have centralized legal, loan review, credit underwriting, accounting, investment, audit, loan operations, deposit operations and data processing functions.
+Added: We seek to maintain our community orientation by providing local management with certain autonomy in decision making, enabling them to respond to customer requests more quickly and to concentrate on efficiently delivering products and services within their market areas.
+Added: However, we have centralized operations, support and risk functions (e.g.
+Added: loan operations, treasury and enterprise risk management).
The centralization of these processes enables us to maintain consistent quality of these functions and to achieve certain economies of scale.
As of December 31, 2024, we have three reportable business segments:
−Removed: Community Banking, Wealth Management and Insurance, with the remaining operations described in Other .
+Added: Community Banking, Wealth Management and Insurance.
+Added: Our remaining operations are described in Other .
As of December 31, 2024, we have 349 Community Banking branches in Pennsylvania, Ohio, Maryland, West Virginia, North Carolina, South Carolina, Washington, D.C.
and Virginia.
−Removed: As of December 31, 2023, we had total assets of $46 billion, loans of $32 billion and deposits of $35 billion.
+Added: As of December 31, 2024, we had total assets of nearly $49 billion, loans of $34 billion and deposits of $37 billion.
See Item 7, MD&A, and Item 8, “Financial Statements and Supplementary Data,” of this Report.
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Such GAAP reconciliations may be in materials for the applicable presentations, in materials for prior presentations or in our annual, quarterly or current reports.
+Added: Information on our website is not incorporated by reference into this document and should not be considered part of this Report.
Securities and Exchange Commission Reports and Corporate Governance Information
We are subject to the informational requirements of the Securities Exchange Act of 1934 (Exchange Act) and, in accordance with the Exchange Act, we file annual, quarterly and current reports, proxy statements, and other information with the SEC.
−Removed: Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available on the "About Us" portion of our website under the heading Investor Information (accessible by clicking on the SEC Filings link) as soon as reasonably
−Removed: practicable after we electronically file such reports with, or furnish them to, the SEC and at the SEC’s website, www.sec.gov.
−Removed: Notwithstanding the foregoing, the information contained on our website as referenced in this paragraph is not incorporated by reference into this Annual Report on Form 10-K.
−Removed: Also, under the "About Us" portion of our website under the heading Investors you may click on Corporate Governance to view the following:
+Added: The SEC maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other
+Added: information regarding issuers that file electronically with the SEC.
+Added: Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are also available on the "About Us" portion of our website under the heading Investor Information (accessible by clicking on the SEC Filings link) as soon as reasonably practicable after we electronically file such reports with, or furnish them to, the SEC and at the SEC’s website, www.sec.gov.
+Added: Also, under the "About Us" portion of our website under the heading "Investor Information" you can click on Corporate Governance to view the following:
(i) our Code of Conduct and Code of Ethics;
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(iii) the charter of each active committee of our Board of Directors;
−Removed: and (iv) our Policy With Respect to Related Persons Transactions.
+Added: and (iv) our Policy With Respect to Related Person Transactions.
We also intend to disclose any amendments to our Code of Conduct and waivers of our Code of Conduct required to be disclosed by the rules of the SEC and the NYSE on the Investor Information portion of our website.
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Corporation, Attention:
−Removed: Office of the Corporate Secretary, 12 Federal Street, 5 th Floor, Pittsburgh, Pennsylvania, 15212.
−Removed: Our registered investment adviser subsidiary is subject to the Investment Advisers Act of 1940 and related rules and regulations promulgated by the SEC.
−Removed: Our investment adviser subsidiary is also subject to additional regulation by states or local jurisdictions.
−Removed: The SEC has active enforcement functions that oversee investment advisers and can bring actions that result in fines, restitution, a limitation on permitted activities, disqualification to continue to conduct certain activities and an inability to rely on certain favorable exemptions.
−Removed: Certain types of infractions and violations also can affect our ability to expeditiously issue new securities into the capital markets.
+Added: Office of the Corporate Secretary, 626 Washington Place, Pittsburgh, Pennsylvania, 15219.
Business Segments
In addition to the following information relating to our business segments, more detailed information is contained in Note 24, “Business Segments” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report.
−Removed: As of December 31, 2023, FNB had three business segments, with the largest being the Community Banking segment consisting of a regional community bank.
+Added: As of December 31, 2024, we had three reportable business segments, with the largest being the Community Banking segment which consists of a regional bank serving seven states and the District of Columbia.
The Wealth Management segment consists of a federally chartered trust company, a registered investment advisor and a subsidiary that offers broker-dealer services through a third-party networking arrangement with a non-affiliated licensed broker-dealer entity.
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Commercial loans are generally made to established businesses within the geographic market areas served by the Community Banking segment.
−Removed: The Community Banking segment maintains formal policies which establish underwriting standards and processes.
+Added: The Community Banking segment maintains formal policies that establish underwriting standards and processes.
Our commercial loan policy requires, among other things, that commercial loans be underwritten to document the borrower’s financial capacity to support the cash flow required to repay the loan.
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Specific information requirements vary based on loan type, risk profile and secondary investor requirements, where applicable.
−Removed: No material portion of the loans or deposits of the Community Banking segment has been obtained from a single customer or small group of customers, and the loss of any one customer’s loans or deposits or a small group of customers’ loans or deposits by the Community Banking segment would not have a material adverse effect on the Community Banking segment specifically or on FNB generally.
+Added: No material portion of the loans or deposits of the Community Banking segment has been obtained from a single customer or small group of customers, and the loss of any one customer’s loans or deposits or a small group of customers’ loans or deposits by the Community Banking segment would not have a material adverse effect on the Community Banking segment specifically
+Added: or on FNB generally.
The substantial majority of the loans and deposits have been generated within the geographic market areas in which the Community Banking segment operates.
Wealth Management
−Removed: Our Wealth Management segment delivers wealth management services to individuals, corporations and retirement funds, as well as existing customers of the Community Banking segment, located primarily within our geographic markets.
+Added: Our Wealth Management segment delivers wealth management services to individuals, corporations and retirement funds, including existing customers of the Community Banking segment, located primarily within our geographic markets.
Our Wealth Management operations are conducted through three subsidiaries of FNBPA.
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No material portion of the business of the Wealth Management segment has been obtained from a single customer or small group of customers, and the loss of any one customer’s business or the business of a small group of customers by the Wealth Management segment would not have a material adverse effect on the Wealth Management segment specifically or on FNB generally.
+Added: Our registered investment adviser subsidiary is subject to the Investment Advisers Act of 1940 and related rules and regulations promulgated by the SEC.
+Added: Our investment adviser subsidiary is also subject to additional regulation by states and local jurisdictions.
+Added: The SEC has active enforcement functions that oversee investment advisers and can bring actions that result in fines, restitution, a limitation on permitted activities, disqualification to continue to conduct certain activities and an inability to rely on certain favorable exemptions.
+Added: Certain types of infractions and violations also can affect our ability to expeditiously issue new securities into the capital markets.
Our Insurance segment operates principally through FNIA, which is a subsidiary of FNB.
FNIA is a full-service insurance brokerage agency offering numerous lines of commercial and personal insurance through major carriers to businesses and individuals primarily within FNB’s geographic markets.
−Removed: The goal of FNIA is to grow revenue through cross-selling to existing clients of the Community Banking segment and to gain new clients through its own channels.
+Added: The goals of FNIA are to grow revenue through cross-selling to existing clients of the Community Banking segment and to gain new clients through its own channels.
Our Insurance segment also includes a reinsurance subsidiary, Penn-Ohio.
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We also operate other non-banking subsidiaries which are not considered to be reportable segments of FNB.
−Removed: Capital Corporation, LLC (FNBCC) was formed as a merchant banking subsidiary to offer mezzanine financing options for small- to medium-sized businesses that need financial assistance beyond the parameters of typical commercial bank lending products.
+Added: Capital Corporation, LLC is a merchant banking subsidiary offering mezzanine financing options for small- to medium-sized businesses that need financial assistance beyond the parameters of typical commercial bank lending products.
Waubank Securities LLC is a limited broker-dealer subsidiary which passively participates in corporate and municipal underwritings.
−Removed: We have four companies that issued TPS to third-party investors:
+Added: In addition, we have four companies that issued TPS to third-party investors:
Statutory Trust II, Yadkin Valley Statutory Trust I, FNB Financial Services Capital Trust I and Patapsco Statutory Trust I, the last three of which were assumed in acquisitions.
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The proceeds received from these subordinated note issuances are a general funding source for FNB.
−Removed: Certain financial information concerning these subsidiaries, along with the parent company and intercompany eliminations, are included in the “Parent and Other” category in Note 25, “Business Segments” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report.
−Removed: Recent Events
−Removed: FNBPA, in both its own capacity and as successor by merger to Yadkin Bank, has entered into an agreement with the DOJ and the State of North Carolina to resolve their fair lending allegations related to their assessment of mortgage lending activities in the Winston-Salem and Charlotte, NC, markets that began prior to Yadkin’s merger with FNBPA in March 2017.
−Removed: The DOJ investigation encompassed both mortgage lending activity by Yadkin prior to the acquisition and FNBPA in the early years following its entry into the North Carolina markets.
−Removed: Although FNBPA denies the DOJ’s allegations, FNBPA cooperated fully to reach a settlement agreement in this inherited matter as a good faith effort to avoid prolonged litigation.
−Removed: Pursuant to the settlement agreement, FNBPA will provide $11.75 million in mortgage loan subsidies over a five-year period, leveraging its previously announced commitment to underserved communities across the footprint, including those located in the Charlotte and Winston-Salem markets.
−Removed: FNBPA has also agreed to spend approximately $1.75 million over the five-year period on community partnerships, advertising, community outreach and consumer education.
−Removed: FNBPA has also agreed to open three new branch offices in predominantly Black and Hispanic neighborhoods, with two in Charlotte and one in Winston Salem, North Carolina.
−Removed: FNBPA believes the terms of the settlement agreement are consistent with it’s broad focus on promoting equity and economic prosperity in the markets that it serves.
−Removed: The settlement does not include any civil money penalties against FNBPA.
+Added: Certain financial information concerning these subsidiaries, along with the parent company and intercompany eliminations, are
+Added: included in the “Parent and Other” category in Note 24, “Business Segments” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report.
Market Area and Competition
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The most direct competition for deposits comes from commercial banks, savings banks and credit unions.
−Removed: Competition for deposits also comes from non-depository competitors such as financial technology companies, mutual funds, securities and brokerage firms and insurance companies.
+Added: Competition for deposits also comes from non-depository competitors such as financial technology companies, mutual funds, securities and brokerage firms, government financial investments and insurance companies.
In providing wealth and asset management services, as well as insurance brokerage services, our subsidiaries compete with many other financial services firms, brokerage firms, mutual fund complexes, investment management firms, trust and fiduciary service providers and insurance agencies.
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Technology is not only important with respect to the delivery of financial services, risk management, regulatory compliance and security of customer information, but also in processing information.
−Removed: FNB and each of our subsidiaries must continually make technological investments to remain competitive in the financial services industry.
+Added: FNB and each of our subsidiaries continually make technological investments to remain competitive in the financial services industry.
FNBPA has executed several initiatives that have integrated and streamlined its physical branch and e-delivery channels, including a growing fleet of ATMs with video TellerChat capabilities.
Our flagship digital technology is eStore®, our proprietary online, mobile and in-branch platform where customers can shop and apply for deposit and loan products, access financial education and schedule appointments.
−Removed: FNBPA has enhanced eStore with our one-of-a-kind, universal eStore Common Application, which customers will be able to use to apply for almost all of our products and services simultaneously.
+Added: FNBPA has enhanced eStore with our one-of-a-kind, universal eStore Common Application, which customers can use to apply for almost all of our products and services simultaneously.
These select examples, coupled with our investment in data science and analytics, contribute to our ability to efficiently grow and expand customer relationships.
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FNB’s leadership team has made long-standing investments in a competitive compensation and benefits program that promotes work-life balance, financial and mental health, and overall well-being.
−Removed: The comprehensive package includes robust development resources that encourage advancement and increased representation at all levels of the Company, furthering our strategic focus on building and sustaining a diverse workforce.
+Added: The comprehensive package includes robust development resources that encourage advancement and increased representation at all levels of the Company, furthering our strategic focus on building and sustaining a strong workforce.
Through our comprehensive approach, we have created an inclusive environment that fosters collaboration, innovation and a passion to win, all of which translate to strong performance and a rewarding employee experience.
−Removed: Our superior culture is evidenced by more than 60 workplace awards we have received from respected third-party organizations since 2020.
−Removed: In 2023, highlights again included national, regional and industry-specific recognition from Energage, an independent research firm, based entirely on feedback from our own team.
−Removed: As part of its award program, Energage highlighted FNB’s cultural excellence in categories such as innovation, leadership, work-life flexibility, DEI practices, compensation and benefits, professional development, and employee appreciation and well-being.
−Removed: Additionally, our commitment to providing an inclusive, employee-centric workplace was further reinforced by various national media outlets, including appearances on Newsweek’s lists of America’s Greatest Workplaces for Diversity, LGBTQ+, Veterans and Parents and Families.
−Removed: FNB has also repeatedly been named to JUST Capital’s prestigious annual list of companies that demonstrate just business behavior based on our performance in categories that matter most to the American public and is, in part, an assessment of our employee practices relative to benefits, income inequality, racial equity and employee opportunity.
+Added: In 2024, we received more than 80 awards recognizing our financial performance, outstanding culture, community commitments, leadership and innovative technology, including national, regional and industry-specific recognition from Energage, an independent research firm, based entirely on feedback from our own team.
+Added: As part of its award program, Energage highlighted FNB’s cultural excellence in categories such as innovation, leadership, work-life flexibility, compensation and benefits, professional development, and employee appreciation and well-being.
+Added: Additionally, our commitment to providing an inclusive, employee-centric workplace was further celebrated by various national media outlets, including an appearance on Newsweek’s lists of America’s Greatest Workplaces for Diversity, LGBTQ+, Veterans and Parents and Families.
+Added: FNB has also repeatedly been named to JUST Capital’s prestigious annual list of companies that demonstrate just business behavior based on our performance in categories that matter most to the American public and is, in part, an assessment of our employee practices relative to benefits, income inequality and employee opportunity.
As of December 31, 2024, FNB and our subsidiaries had 4,104 full-time and 176 part-time employees.
−Removed: We are committed to building a diverse and inclusive workforce and have found great success cultivating and fostering mutually beneficial partnerships with job and recruiting centers, colleges and universities, including historically black colleges and universities, diverse student groups within universities, and diversity-focused organizations that help us to identify and attract top candidates.
−Removed: All members of our talent acquisition team hold the designation of Certified Diversity Recruiter, and our leaders participate in events hosted by these partners to further our brand as an employer of choice.
−Removed: We use internally created digital marketing developed algorithms and data tools to increase job posting visibility within diverse job boards.
−Removed: We have committed to creating a strong and growing internship program to funnel high potential talent into our Development Programs within FNB to help with career growth and build succession and are devoted to following the Fair Hiring Practices Act and Fair Chance Act.
+Added: We are committed to identifying and attracting the best qualified job candidates by cultivating and fostering mutually beneficial partnerships with job and recruiting centers, colleges and universities and other organizations.
+Added: We use internally created digital marketing developed algorithms and data tools to increase job posting visibility within a broad range of job boards.
+Added: We have committed to creating a strong and growing internship program to funnel high potential talent into our Development Programs within FNB to help with career growth.
+Added: We continue to build succession and are devoted to following the Fair Hiring Practices Act and Fair Chance Act.
Employee Development.
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In addition, we offer tuition reimbursement for employees seeking post-secondary education, including college and graduate school.
−Removed: We have a Manager of Diversity and Inclusion with over 20 years of professional experience who works directly with FNB’s Diversity Council and together they are collectively engaged in proactive-leadership, strategies, and initiatives to promote diversity, equity and inclusion in our culture that supports our mission to build a workforce in which all employees can learn, grow and prosper.
−Removed: Our Manager of Diversity and Inclusion and the Diversity Council work with our leadership to support both corporate and employee initiatives promoting an inclusive culture and a workplace environment that attracts, retains and develops the best talent from a broad spectrum to create a diverse, highly productive workforce throughout our organization.
−Removed: The membership composition of the Diversity Council reflects the diversity within our organization.
−Removed: In addition, the membership represents every region in the organization, and various lines of business and position levels.
We regularly seek feedback from our employees and in 2024 participated in several regional Top Workplace surveys.
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Our compensation philosophy is to maintain a program that supports our mission and values.
−Removed: The compensation program is a management tool that, when aligned with an effective communication plan, is designed to support, reinforce, and align our values, business strategy, operational and financial needs with our strategic goals.
−Removed: We believe that compensation programs, through competitive base salary, short-term incentive plans, and long-term incentive plans, are essential for encouraging the behavior to set performance expectations, improving service quality and productivity, and recognizing contributions to our success, while also avoiding incentivizing undue risk to our financial condition.
+Added: The compensation program is a management tool that, when aligned with an effective communication plan, is designed to support, reinforce, and align our values, business strategy, and operational and financial needs with our strategic goals.
+Added: We believe that compensation programs, through competitive base salary, short-term incentive plans, and long-term incentive plans, are essential for setting performance expectations, improving service quality and productivity, and recognizing contributions to our success, while also avoiding incentivizing undue risk to our financial condition.
Our executive compensation program is overseen by the Compensation Committee of our Board of Directors, in collaboration with a leading independent compensation advisory firm.
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We strive to maintain sound financial practices and governance processes through a commitment to ethical behavior, a solid reputation and a firm record of compliance and stability that these strengths create, both within our Corporation and for our customers.
−Removed: Employees complete quarterly and annual training, including regulatory and compliance requirements and ethical standards, to maintain and increase knowledge of standards required of the financial services industry.
+Added: Employees complete quarterly and annual training, including regarding regulatory and compliance requirements and ethical standards, to maintain and increase knowledge of standards required of the financial services industry.
Additionally, we provide employees various avenues to confidentially and anonymously report perceived unethical behavior without repercussions to them, such as FNB’s Ethics Hotline.
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We demonstrate this commitment to each group through varying initiatives and procedures to ensure that employees and customers alike leave our spaces as safely as they came.
−Removed: We provide our employees detailed information and training explaining the safety features, evacuation and emergency procedures process.
−Removed: The development of a new state of the art headquarters building will ensure that employee safety is met in a facility that is fully ADA compliant, has full security access controls and will more closely manage and monitor guests and visitors entering our space.
−Removed: As a response to the health and safety risks exposed during the COVID-19 outbreak our new headquarters building will also feature HVAC systems that are specifically designed to mitigate risks from airborne pathogens using state of the art filtration, Air Handling and Ionization indoor air systems.
+Added: We provide our employees detailed information and training explaining the safety features of our locations, evacuation routes and emergency procedures processes.
+Added: The recent opening of our new state of the art headquarters building prioritizes employee safety in a facility that is fully ADA compliant, has full security access controls and closely manages and monitors guests and visitors entering our space.
+Added: As a response to the health and safety risks exposed during the COVID-19 outbreak our new headquarters building features HVAC systems that are specifically designed to mitigate risks from airborne pathogens using state of the art filtration, Air Handling and Ionization indoor air systems.
+Added: The new headquarters was certified Leadership in Energy and Environmental Design (LEED) Gold by the U.S.
+Added: Green Building Council.
+Added: LEED, the world’s most widely used green building rating system, provides a framework for energy-efficient, sustainable design, construction and operations.
+Added: Projects achieve certification by following prerequisites and earning credits related to green building, with the aim to protect resources and enhance individual human health and community quality of life, among other goals.
+Added: Information About Our Executive Officers
+Added: The name, age and principal occupation for each of our executive officers as of January 31, 2025 are set forth below:
+Added: Name Age Principal Occupation
+Added: 60 Chairman, President and Chief Executive Officer
+Added: Calabrese, Jr.
+Added: 62 Chief Financial Officer
+Added: Guerrieri 64 Chief Credit Officer
+Added: Mitchell, II 67 Chief Wholesale Banking Officer
+Added: Robinson 61 Chief Consumer Banking Officer
+Added: Orie 66 Chief Legal Officer and Corporate Secretary
+Added: Dutey 51 Corporate Controller and Principal Accounting Officer
+Added: There are no family relationships among any of our executive officers or directors, and there is no arrangement or understanding between any of the above executive officers and any other person pursuant to which he was selected as an officer.
+Added: The executive officers are elected by our Board of Directors, subject in certain cases to the terms of an employment agreement between the officer and us.
Government Supervision and Regulation
−Removed: The following summary sets forth certain material elements of the regulatory framework applicable to FNB, FNBPA and our subsidiaries and affiliates.
−Removed: The financial services industry is subject to extensive regulatory oversight and, in particular, bank holding companies, banks and their affiliates (depending upon charter and business activities) are subject to supervision, regulation and examination by the FRB, OCC, FDIC, CFPB, SEC, FINRA and various state regulatory agencies.
−Removed: The statutory and regulatory framework that governs FNB and our affiliates is generally intended to protect depositors and customers, the federal DIF, the U.S.
−Removed: banking and financial system, and financial markets as a whole;
−Removed: however, this framework is not specifically for the protection of stockholders.
−Removed: Significant elements of the laws and regulations applicable to FNB and our affiliates are described in this section.
+Added: The following summary sets forth certain material elements of the regulatory framework applicable to FNB, FNBPA and our other subsidiaries and affiliates.
To the extent that the following information describes statutory and regulatory provisions or governmental policies, such descriptions are qualified in their entirety by reference to the full text of the statutes, regulations and policies referenced herein.
−Removed: In addition, certain of FNB’s public disclosure, internal control environment, risk and capital management and corporate governance principles are subject to SOX, the Dodd-Frank Act, as modified by the 2018 Economic Growth Act, and related regulations and rules of the SEC under the Securities Act of 1933, as amended, and the Exchange Act.
+Added: The financial services industry is subject to extensive regulatory oversight and, in particular, bank holding companies, banks and their affiliates (depending upon charter and business activities) are subject to supervision, regulation and examination by the FRB, OCC, FDIC, CFPB, SEC, FINRA and various state regulatory agencies.
Also, FNB is subject to the rules of the NYSE for listed companies.
+Added: The statutory and regulatory framework that governs FNB and our affiliates is generally intended to protect depositors and customers, the federal DIF, the U.S.
+Added: banking and financial system, and financial markets as a whole, rather than our shareholders.
Political, economic, and industry events and other factors may influence changes to the banking laws, regulations and policies by the U.S.
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Any change in the statutes, regulations or regulatory policies applicable to us, including changes in their interpretation, expectations or implementation, could have a material effect on our business or organization.
+Added: (See discussion under Risk Factors - caption “We could be adversely affected by changes in the law, especially changes in the regulation of the banking industry”).
+Added: To this end, based on the recent issuance of certain executive orders by the President of the United States, it may not be clear for a period of time as to what the priorities of the three prudential banking agencies, the OCC, FRB and FDIC, may be with respect to their respective supervisory and enforcement matters for banks and bank holding companies.
+Added: An executive order requires independent agencies, including the FRB and FDIC to submit to the White House Office of Management and Budget (OMB) major orders proposed by these agencies.
+Added: OMB would also write "performance standards and management objectives" to the heads of independent agencies, review and adjust their budgets, including the FRB (excluding its monetary policy) and FDIC.
+Added: As a result, it may take longer for the prudential banking agencies to establish their supervisory and enforcement priorities and develop and adopt new rules and regulations.
+Added: Another executive order requires agency heads to determine whether ongoing enforcement of any regulations identified in their regulatory review is compliant with law and policy of the Trump Administration.
+Added: This executive order also provides that to preserve resources and ensure lawful enforcement, agency heads, in consultation with the Director of the OMB, shall, on a case-by-case basis and as appropriate and consistent with applicable law, then direct the termination of all such enforcement proceedings that do not comply with the Constitution, laws, or the policy of the Trump Administration.
Both the scope of the laws and regulations, as well as expectations regarding risk management, and the intensity of the supervision to which we are subject have increased in recent years in response to the financial crisis, as well as other factors such as technological and market changes.
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Many of these changes have occurred as a result of the enactment of the Dodd-Frank Act and adoption of implementing regulations, most of which are now in place.
−Removed: The OCC regulations implemented under the Economic Growth Act raised the minimum asset threshold for covered banks to conduct stress tests from $10 billion to $250 billion.
−Removed: This resulted in FNB and FNBPA no longer being subject to Dodd-Frank Act stress testing requirements, however we continue to voluntarily perform capital stress testing consistent with the safety and soundness expectations of our banking regulators.
−Removed: The Economic Growth Act also enacted several important changes in some compliance areas, for which the banking agencies have issued guidance documents and implementing regulations, including:
−Removed: • Prohibiting the federal banking regulators from imposing higher capital standards on high volatility commercial real estate exposures (HVCRE) unless they are for acquisition, development or construction (ADC) loans, and clarifying ADC status;
−Removed: • Requiring the federal banking regulators to amend the LCR Rule such that all qualifying investment-grade, liquid and readily-marketable municipal securities are treated as level 2B liquid assets, making them more attractive investment alternatives;
−Removed: • Exempting from appraisal requirements certain transactions involving real property in rural areas and valued at less than $400,000;
−Removed: • Directing the CFPB to provide guidance on the applicability of the TILA-RESPA Integrated Disclosure rule to mortgage assumption transactions and construction-to-permanent home loans, as well as the extent to which lenders can rely on model disclosures that do not reflect recent regulatory changes.
−Removed: (See discussion under Risk Factors - caption “We could be adversely affected by changes in the law, especially changes in the regulation of the banking industry”).
FNB is a legal entity separate and distinct from our subsidiaries.
FNB is regulated as a bank holding company under the BHC Act, as amended, which generally restricts bank holding companies from engaging in business activities other than the business of banking and certain closely related activities.
−Removed: FNB elected to become a financial holding company under the BHC Act and, as such, may engage in a broader range of financial and related activities than a bank holding company.
−Removed: The ability to elect and maintain status as a financial holding company is subject to certain conditions.
−Removed: As a financial holding company and a bank holding company, FNB is regulated under the BHC Act, as amended, and is subject to regulation, inspection, examination and supervision by the FRB.
−Removed: Under the BHC Act, the FRB is the “umbrella” regulator of a financial holding company.
−Removed: In addition, a financial holding company’s operating entities, including its subsidiary broker-dealers, investment managers, investment advisory companies, insurance companies and banks, as applicable, are subject to the jurisdiction of various federal and state “functional” regulators and self-regulatory organizations, such as FINRA.
+Added: FNB elected to become a financial holding company under the BHC Act and, as such, may engage in a broader range of financial and related activities.
+Added: The ability to elect and maintain status as a financial holding company is subject to certain conditions, including that a bank holding company be “well-capitalized” and “well-managed.” As a bank holding company, FNB is subject to regulation, inspection, examination and supervision by the FRB, which is the “umbrella” regulator of a bank holding company’s consolidated operations.
+Added: In addition, a bank holding company’s operating entities, including its subsidiary broker-dealers, investment managers, investment advisory companies, insurance companies and banks, as applicable, are subject to the jurisdiction of various federal and state “functional” regulators and self-regulatory organizations, such as FINRA.
Our subsidiary bank, FNBPA, and FNBPA’s subsidiary trust company, FNTC, are organized as national banking associations, which are subject to regulation, supervision and examination by the OCC, which is a bureau of the UST.
FNBPA is also subject to certain regulatory requirements of the CFPB, the FDIC, the FRB and other federal and state regulatory agencies, including but not limited to, requirements to maintain reserves against deposits, capital requirements, limitations regarding dividends, restrictions on the types and amounts of loans that may be granted and the interest that may be charged on loans, affiliate transactions, CRA, consumer compliance and anti-discrimination laws and unfair, deceptive or abusive acts and practices prohibitions, monitoring obligations under the federal bank secrecy act and anti-money laundering requirements, limitations on the types of investments that may be made, cybersecurity and consumer privacy requirements, activities that may be engaged in and types of services that may be offered.
−Removed: In addition to supervision, regulation and enforcement of federal banking laws, and regulations by the federal bank regulatory agencies, FNB and our subsidiaries are subject to various other laws and regulations and supervision and examination by other regulatory agencies, all of which directly or indirectly affect the operations and management of FNB and our ability to make distributions to our stockholders.
−Removed: If we fail to comply with these or other applicable laws and regulations, we may be subject to civil monetary penalties, imposition of cease and desist orders or other written directives, removal of management and, in certain cases, criminal penalties imposed by our regulators.
−Removed: Pursuant to the GLB Act, bank holding companies such as FNB that have qualified as financial holding companies because they are “well-capitalized” and “well managed” have broad authority to engage in activities that are financial in nature or incidental to such financial activity, including insurance underwriting and brokerage, merchant banking, securities underwriting, dealing and market-making;
−Removed: and such additional activities as the FRB in consultation with the Secretary of the UST determines to be financial in nature, incidental thereto or complementary to a financial activity.
−Removed: As a result of the GLB Act, a bank holding company may engage in those activities directly or through subsidiaries by qualifying as a “financial holding company.” As a financial holding company, FNB may engage directly or indirectly in activities considered financial in nature, either de novo or by acquisition, provided that FNB continues such status and gives the FRB after-the-fact notice of the new activities.
−Removed: The GLB Act also permits national banks, such as FNBPA, to engage in activities considered financial in nature through a financial
−Removed: subsidiary, subject to certain conditions and limitations and with the approval of the OCC (see discussion under the caption “Financial Holding Company Status and Activities” ).
−Removed: As a regulated financial holding company, FNB’s relationships and good standing with our regulators are of fundamental importance to the continuation and growth of our businesses.
+Added: We and our subsidiaries are subject to examination by various federal and state regulators, which involves periodic examinations and supervisory inquiries, the results of which are not publicly available and can impact the conduct and growth of our businesses.
+Added: These examinations consider not only safety and soundness principles, but also compliance with applicable laws and regulations.
+Added: As a regulated banking organization, FNB’s relationships and good standing with our regulators are of fundamental importance to the continuation and growth of our businesses.
The FRB, OCC, FDIC, CFPB and SEC have broad enforcement powers and authority to approve, deny or refuse to act upon applications or notices of FNB or our subsidiaries to open new or close existing offices, conduct new activities, acquire or divest businesses or assets or reconfigure existing operations.
−Removed: In addition, FNB, FNBPA, FNTC and other affiliates are subject to examination by various federal and state regulators, which involves periodic examinations and supervisory inquiries, the results of which are not publicly available and can impact the conduct and growth of our businesses.
−Removed: These examinations consider not only safety and soundness principles, but also compliance with applicable laws and regulations, including anti-money laundering requirements, loan quality and administration, capital levels, asset quality and risk management ability and performance, earnings, liquidity, consumer compliance, anti-discrimination laws, unfair, deceptive or abusive acts and practices prohibitions, community reinvestment, cybersecurity and consumer privacy requirements, and various other factors.
−Removed: The federal banking regulators' interagency Guidelines for Establishing Standards for Safety and Soundness set forth compliance considerations and guidance with respect to the following operations of banking organizations:
−Removed: (1) internal controls and information systems;
−Removed: (2) internal audit systems;
−Removed: (3) loan documentation;
−Removed: (4) credit underwriting;
−Removed: (5) interest rate exposure;
−Removed: (6) asset growth;
−Removed: (7) executive compensation, fees and benefits;
−Removed: (8) asset quality;
−Removed: and (9) earnings.
−Removed: Significant adverse safety and soundness findings or violations of laws or regulations by any of FNB’s federal bank regulators could potentially result in the imposition of significant fines, penalties, reimbursements, enforcement actions and compliance plans as well as limitations and prohibitions on the activities and growth of FNB and our subsidiaries.
−Removed: There are numerous laws, regulations and rules governing the activities of financial institutions - including non-bank financial institutions, such as financial technology companies and marketplace lenders, which provide products and services comparable to banking organizations, including - financial holding companies and bank holding companies.
−Removed: The following discussion is general in nature and seeks to highlight some of the more significant of these regulatory requirements, but does not purport to be complete or to describe all of the laws and regulations that apply to us and our subsidiaries.
−Removed: Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
−Removed: The Dodd-Frank Act continues to have a broad impact on the financial services industry by imposing significant regulatory and compliance requirements including, among other things:
−Removed: • enhanced authority over troubled and failing banks and their holding companies;
−Removed: • increased capital and liquidity requirements;
−Removed: • increased regulatory examination fees;
−Removed: • increased assessments banks must pay the FDIC for federal deposit insurance;
−Removed: • specific provisions designed to improve supervision and oversight of bank safety and soundness and consumer practices, by imposing restrictions and limitations on the scope and type of banking and financial activities.
−Removed: In addition, the Dodd-Frank Act established a new framework for systemic risk oversight within the financial system that is enforced by new and existing federal regulatory agencies and authorities, including the FSOC, FRB, OCC, FDIC and CFPB.
−Removed: The following description briefly summarizes certain impacts of the Dodd-Frank Act on the operations and activities, both currently and prospectively, of FNB, FNBPA, and our subsidiaries and affiliates.
+Added: Unsatisfactory examination ratings, capital ratios below well-capitalized levels, and regulatory concerns regarding management, controls, assets, operations or other factors can all potentially result in the loss of financial holding company status, practical limitations on the ability of a bank or bank (or financial) holding company to engage in new activities, grow, acquire new businesses, repurchase its stock or pay dividends or continue to conduct existing activities.
+Added: In addition, if we or our subsidiaries fail to comply with applicable laws and regulations, we may be subject to civil monetary penalties, imposition of cease and desist orders or other written directives, removal of management and, in certain cases, criminal penalties imposed by our regulators.
+Added: The following discussion highlights some of the more significant regulatory requirements that govern our operations, but does not purport to be complete or to describe all of the laws and regulations that apply to us and our subsidiaries.
+Added: Capital Adequacy Requirements
+Added: The FRB, the OCC, and the FDIC have adopted risk-based and leverage capital requirements that apply to banks and bank holding companies.
+Added: In general, subject to certain exceptions as discussed further below, minimum capital standards established under the agencies’ risk-based capital regulations include a CET1 capital to risk-weighted assets ratio of 4.5 percent, a Tier 1 capital to risk-weighted assets ratio of 6.0 percent, a total capital to risk-weighted assets ratio of 8.0 percent, and a leverage ratio of Tier 1 capital to adjusted average total assets of 4.0 percent.
+Added: In determining the amount of risk-weighted assets for purposes of calculating risk-based capital ratios, all assets, including certain off-balance sheet assets (for example, recourse obligations, direct credit substitutes and residual interests) are multiplied by a risk-weight factor assigned by the regulations based on the risks believed inherent in the type of asset.
+Added: Higher levels of capital are required for asset categories believed to present greater risk.
+Added: CET1 capital is generally defined as common shareholders’ equity and retained earnings.
+Added: Tier 1 capital is generally defined as CET1 and additional Tier 1 capital, which includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries.
+Added: Total capital is defined as Tier 1 capital and Tier
+Added: 2 capital, which is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt.
+Added: Also included in Tier 2 capital is the allowance for loan losses limited to a maximum of 1.25 percent of risk-weighted assets.
+Added: Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations.
+Added: In addition to establishing the minimum regulatory capital requirements, the capital regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a capital conservation buffer consisting of 2.5% of CET1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.
+Added: In assessing an institution’s capital adequacy, the OCC takes into consideration not only these numeric factors, but qualitative factors as well, and has the authority to establish higher capital requirements for individual institutions where deemed necessary.
+Added: Management believes that as of December 31, 2024, FNB and FNBPA meet all capital adequacy requirements including the capital conservation buffer.
+Added: In August 2020, the federal banking agencies issued a final rule providing banking institutions that had adopted the CECL accounting standard in the 2020 calendar year with the option to delay for two years the estimated impact of CECL on regulatory capital, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided during the initial two-year delay (i.e., a five-year transition in total).
+Added: In connection with its adoption of CECL on January 1, 2020, FNB elected to utilize the five-year CECL transition, which concluded as of December 31, 2024.
+Added: Prompt Corrective Action
+Added: FDICIA, among other things, classifies IDIs into five capital categories (well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) and requires the respective federal regulatory agencies to implement systems for “prompt corrective action” for IDIs that do not meet minimum capital requirements within such categories.
+Added: FDICIA imposes progressively more restrictive constraints on operations, management and capital distributions, depending on the category in which an institution is classified.
+Added: Failure to meet the capital guidelines could also subject a banking institution to capital-raising requirements, restrictions on its business and a variety of enforcement remedies, including the termination of deposit insurance by the FDIC, and in certain circumstances the appointment of a conservator or receiver.
+Added: An “undercapitalized” bank must develop a capital restoration plan and its parent holding company must guarantee that bank’s compliance with the plan.
+Added: The liability of the parent holding company under any such guarantee is limited to the lesser of 5% of the bank’s assets at the time it became “undercapitalized” or the amount needed to comply with the plan.
+Added: Furthermore, in the event of the bankruptcy of the parent holding company, the obligation under such guarantee would take priority over the parent’s general unsecured creditors.
+Added: In addition, FDICIA requires the various regulatory agencies to prescribe certain non-capital standards for safety and soundness relating generally to operations and management, asset quality and executive compensation and permits regulatory action against an IDI that does not meet such standards.
+Added: The various regulatory agencies have adopted substantially similar regulations that define the five capital categories identified by FDICIA, using the CET1, Tier 1 risk-based capital, total risk-based capital, and leverage capital ratios as the relevant capital measures.
+Added: Under the regulations, a “well-capitalized” institution must have a CET1 risk-based capital ratio of at least 6.5%, a Tier 1 risk-based capital ratio of at least 8.0%, a total risk-based capital ratio of at least 10.0% and a leverage ratio of at least 5.0% and not be subject to a capital directive order.
+Added: Under these guidelines, FNBPA was considered well-capitalized as of December 31, 2024.
+Added: Dividend Restrictions
+Added: Our primary source of funds for cash distributions to our shareholders, and funds used to pay principal and interest on our indebtedness, is dividends received from FNBPA.
+Added: FNBPA is subject to federal laws and regulations governing its ability to pay dividends to FNB, including requirements to maintain capital above regulatory minimums.
+Added: Under federal law, the amount of dividends that a national bank, such as FNBPA, may pay in a calendar year is generally limited to the amount of its net income for the current year combined with its retained net income for the two preceding years.
+Added: In addition to dividends from FNBPA, other sources of parent company liquidity for FNB include cash, short-term investments and issuance of debt instruments, as well as dividends and loan repayments from other subsidiaries.
+Added: In addition, the ability of FNB and FNBPA to pay dividends may be affected by the various minimum capital requirements and prompt corrective action standards previously described in the “Capital Adequacy Requirements” and “Prompt Corrective
+Added: Action” discussions herein.
+Added: Additionally, the right of FNB, our shareholders and our creditors to participate in any distribution of the assets or earnings of our subsidiaries is further subject to the prior claims of creditors of the respective subsidiaries.
+Added: Expansion and Acquisitions
+Added: The BHC Act requires a bank or financial holding company to obtain the prior approval of the FRB before:
+Added: • the company may acquire direct or indirect ownership or control of any voting shares of any bank, if after such acquisition the bank holding company will directly or indirectly own or control more than 5% of any class of voting securities of the institution;
+Added: • any of the company’s subsidiaries, other than a bank, may acquire all or substantially all of the assets of any bank;
+Added: • the company may merge or consolidate with any other bank or financial holding company.
+Added: The BHC Act further requires the FRB to consider the competitive impact of the transaction, the financial and managerial resources and future prospects of the bank holding companies and banks concerned and the convenience and needs of the community to be served, including the applicant’s record of performance under the CRA.
+Added: The FRB is also required to take into account in evaluating such a transaction the effectiveness of the parties in combating money laundering activities.
+Added: Provisions of the FDI Act known as the Bank Merger Act impose similar approval standards for an IDI to merge with another IDI.
+Added: On September 17, 2024, the OCC finalized a new Policy Statement Regarding Statutory Factors Under the Bank Merger Act (the Policy Statement), which outlines factors that the OCC will consider when evaluating a proposed bank merger transaction.
+Added: Under the Policy Statement, the OCC is unlikely to find that the statutory factors under the Bank Merger Act are consistent with approval if, among other things, the acquirer has open or pending enforcement actions unless the applicant has adequately addressed or remediated the underlying supervisory concerns.
+Added: Additionally, the Policy Statement provides that an application that is more likely to be approved expeditiously generally features a number of indicators, including that the resulting institution will have total assets of less than $50 billion.
+Added: Also on September 17, 2024, the DOJ withdrew its 1995 Bank Merger Guidelines and announced that it will instead evaluate the competitive impact of bank mergers using its 2023 Merger Guidelines that the DOJ applies to mergers in all industries.
+Added: Compared to the 1995 Bank Merger Guidelines, the 2023 Merger Guidelines set forth more stringent concentration limits and add several largely qualitative bases on which the DOJ may challenge a merger.
+Added: While the effect of these changes for particular transactions remains unclear, both the Policy Statement and the change in the DOJ’s bank merger antitrust policy may make it more difficult and/or costly for us to obtain regulatory approval for an acquisition or may otherwise result in more onerous conditions to obtain approval for an acquisition.
+Added: The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (Interstate Banking Act) generally permits bank holding companies to acquire banks in any state and preempts all state laws restricting the ownership by a holding company of banks in more than one state.
+Added: A bank is subject to any state requirement that the bank has been organized and operating in for a minimum period of time and the requirement that the bank holding company, after the proposed transaction, controls no more than 10% of the total amount of deposits of IDIs in the U.S.
+Added: and no more than 30% or such lesser or greater amount set by the state law of such deposits in that state.
+Added: The Interstate Banking Act also permits:
+Added: • a bank to merge with an out-of-state bank and convert any offices into branches of the resulting bank;
+Added: • a bank to acquire branches from an out-of-state bank;
+Added: • a bank to establish and operate de novo interstate branches whenever the host state permits de novo branching of its own state-chartered banks.
+Added: Bank and financial holding companies and banks seeking to engage in mergers authorized by the Interstate Banking Act must be at least adequately capitalized as of the date that the application is filed, and the resulting institution must be well-capitalized and well-managed upon consummation of the transaction.
+Added: Pursuant to the Dodd-Frank Act, national and state-chartered banks may open an initial branch in a state other than its home state (e.g., a host state) by establishing a de novo branch at any location in such host state at which a bank chartered in such host state could establish a branch.
+Added: Applications by a national bank to establish such branches must be filed with the OCC.
+Added: The Change in Bank Control Act prohibits a person, entity or group of persons or entities acting in concert, from acquiring “control” of a bank holding company or bank unless the FRB has been given prior notice and has not objected to the transaction.
+Added: Under current FRB regulations, the acquisition of 10% or more (but less than 25%) of the voting stock of a
+Added: corporation would, under the circumstances set forth in the regulations, create a rebuttable presumption of acquisition of control of the corporation.
+Added: Financial Holding Company Status and Activities
+Added: Under the BHC Act, an eligible bank holding company may elect to be a “financial holding company” and thereafter may engage in a range of activities that are financial in nature and that are not otherwise permissible for banks and bank holding companies.
+Added: FNB is a financial holding company under the BHC Act.
+Added: For a bank holding company to be eligible to elect financial holding company status and to engage in additional activities and investments under such authority, all of its subsidiary U.S.
+Added: depository institutions must be “well-capitalized” and “well-managed” and must have received a “Satisfactory” or better rating on its most recent CRA review.
+Added: If, after becoming a financial holding company, the company’s subsidiary depository institutions fail to remain “well-capitalized” and “well-managed,” the company must enter into an agreement with the FRB to comply with all applicable capital and management requirements.
+Added: If the company does not return to compliance within 180 days, the FRB may order the company to divest its subsidiary banks or the company may discontinue or divest investments in companies engaged in activities permissible only for a bank holding company that has elected to be treated as a financial holding company.
+Added: Source of Strength
+Added: According to the Dodd-Frank Act and FRB policy, a financial or bank holding company is expected to act as a source of financial strength to each of its subsidiary banks and to commit resources to support each such subsidiary.
+Added: This support may be required at times when the parent holding company may not be able to provide such support.
+Added: Consistent with the “source of strength” policy, the FRB has stated that, as a matter of prudent banking, a bank or financial holding company generally should not maintain a rate of cash dividends unless its net income has been sufficient to fully fund the dividends and the prospective rate of earnings retention appears to be consistent with our capital needs, asset quality and overall financial condition.
+Added: Dodd-Frank Act
Deposit Insurance.
−Removed: The Dodd-Frank Act established a $250,000 deposit insurance limit for insured deposits.
−Removed: Amendments to the FDI Act also revised the assessment base against which an IDI’s deposit insurance premiums paid to the FDIC’s DIF are calculated.
−Removed: Under the amendments, the FDIC assessment base is no longer the institution’s deposit base, but rather its average consolidated total assets less its average tangible equity.
−Removed: The Dodd-Frank Act requires a phase-in of the minimum designated reserve ratio for the DIF, increasing it from 1.15% to 1.35% of the estimated amount of total insured deposits which was achieved as of the third quarter of 2018.
−Removed: FDIC regulations provide that, among other things, upon reaching the minimum, surcharges on IDIs with total consolidated assets of $10 billion or more cease.
−Removed: The last quarterly surcharge was reflected in FNBPA’s December 2018 assessment invoice.
−Removed: FNBPA’s assessment invoices have not included a quarterly surcharge since that time.
+Added: The FDI Act requires FNBPA to pay deposit insurance assessments.
+Added: The FDIC assessment base against which an IDI’s deposit insurance premiums paid to the FDIC’s DIF are calculated as the IDI’s average consolidated total assets less its average tangible equity.
+Added: Various other regulatory factors included in an FDIC assessment scorecard also affect an IDI’s assessment rate.
+Added: Deposit insurance assessments are also affected by the minimum reserve ratio with respect to the DIF.
+Added: The Dodd-Frank Act increased the DIF’s minimum reserve ratio to 1.35% of the estimated amount of total insured deposits.
In addition, the Dodd-Frank Act eliminated the requirement for the FDIC to pay dividends to depository institutions when the reserve ratio exceeds certain thresholds.
1 unchanged sentence
The FDIC has set the target designated reserve ratio at 2% since 2010.
−Removed: Assessment rates, which
−Removed: declined for all banks when the reserve ratio first surpassed 1.15% in the third quarter of 2016, increased for all insurance depository institutions by 2 basis points in the first quarter of 2023.
+Added: Assessment rates, which declined for all banks when the reserve ratio first surpassed 1.15% in the third quarter of 2016, increased for all insurance depository institutions by 2 basis points in the first quarter of 2023.
The increase in assessment rate schedules is intended to increase the likelihood that the reserve ratio of the DIF reaches the statutory minimum of 1.35 % by the statutory deadline of September 30, 2028.
Assessment rates will remain in effect unless and until the reserve ratio meets or exceeds 2%.
+Added: The reserve ratio was 1.28% as of December 31, 2024.
In addition, the Tax Cuts and Jobs Act of 2017 (TCJA) disallows the deduction of FDIC deposit insurance premium payments for banking organizations with total consolidated assets of $50 billion or more.
1 unchanged sentence
The FDIC issued a final rule in November 2023 to implement a special assessment on banks with over $5 billion in total assets to recover the loss to the DIF associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank during the first quarter of 2023.
−Removed: The special assessment rate is 13.44 basis points and will be paid over eight quarters beginning in June 2024.
−Removed: Our total assessment accrued and expensed during 2023 totaled $29.9 million.
+Added: The special assessment rate was 13.44 basis points and will be paid over eight initial quarters beginning in June 2024.
+Added: FNBPA recognized the entire initial special assessment expense of $29.9 million in the fourth quarter of 2023.
The special assessment is not considered an FDIC premium under the TCJA and therefore is tax deductible for federal income tax purposes.
−Removed: After eight quarters, there is a possibility for the FDIC to impose a one-time shortfall special assessment if the amount collected by the special assessment does not meet the final loss amounts of Silicon Valley Bank and Signature Bank after the termination of the receiverships.
+Added: The FDIC retained the ability to extend the special assessment collection period or impose a one-time shortfall special assessment if the amount collected by the special assessment does not meet the final loss
+Added: amounts of Silicon Valley Bank and Signature Bank after the termination of the receiverships.
+Added: During 2024, the FDIC revised its loss estimate and projected that the special assessment would be collected for an additional two quarters beyond its initial eight-quarter collection period.
+Added: As a result, FNBPA recognized an additional special assessment charge of $5.2 million in 2024.
Brokered Deposits .
1 unchanged sentence
In addition, IDIs that are less than well-capitalized are subject to restrictions on the interest rates that they may pay on deposits.
−Removed: The characterization of deposits as “brokered” may result in the imposition of higher deposit assessments on such deposits.
−Removed: As mandated by the Economic Growth Act, the FDIC adopted a final rule in February 2019 to include a limited exception for reciprocal deposits for IDIs that are well-managed and well-capitalized (or adequately capitalized and have obtained a waiver from the FDIC, as mentioned above).
−Removed: Under the limited exception, qualified IDIs, like FNBPA, are able to exclude from treatment as “brokered” deposits up to $5 billion or 20% of the institution’s total liabilities in reciprocal deposits (which is defined as deposits received by a financial institution through a deposit placement network with the same maturity (if any) in the same aggregate amount as deposits placed by the institution in other network member banks).
−Removed: On December 15, 2020, the FDIC issued a final rule amending its brokered deposit regulations.
−Removed: The rule sought to clarify and modernize the FDIC's regulatory framework for brokered deposits.
−Removed: Notable aspects of the rule include:
−Removed: (i) defining the operative prongs of the definition of a “deposit broker;” (ii) the identification of a number of business relationships in which the agent or nominee is automatically not deemed to be a "deposit broker" because their "primary purpose" is not the placement of funds with depository institutions;
−Removed: (iii) the establishment of a more transparent application process for entities that seek to rely upon the "primary purpose" exception, but do not qualify for one of the identified business relationships to which the exception is automatically applicable;
−Removed: and (iv) the clarification that third parties that have an exclusive deposit-placement arrangement with one IDI are not considered a "deposit broker." The final rule took effect on April 1, 2021, and full compliance was required by January 1, 2022.
−Removed: Interest on Demand Deposits.
−Removed: Under the Dodd-Frank Act, depository institutions are permitted to pay interest on demand deposits.
−Removed: In accordance therewith, we pay interest on certain classes of commercial demand deposits.
+Added: The characterization of deposits as “brokered” may result in the imposition of higher deposit insurance assessments on such deposits.
+Added: FDIC regulations and guidance define the term “deposit broker” and related terms.
+Added: For example, FDIC regulations implementing the Economic Growth, Regulatory Relief and Consumer Protection Act include a limited exception to status as brokered deposits for reciprocal deposits for IDIs that are well-managed and well-capitalized (or adequately capitalized and have obtained a waiver from the FDIC, as mentioned above).
+Added: Under the limited exception, qualified IDIs are able to exclude from treatment as “brokered” deposits up to $5 billion or 20% of the institution’s total liabilities in reciprocal deposits (which is defined as deposits received by a financial institution through a deposit placement network with the same maturity (if any) in the same aggregate amount as deposits placed by the institution in other network member banks).
+Added: Transactions with Affiliates.
+Added: Pursuant to Sections 23A and 23B of the Federal Reserve Act, as implemented by Regulation W, banks are subject to restrictions that limit certain types of transactions between banks and their affiliates.
+Added: In general, banks are subject to quantitative and qualitative limits on extensions of credit, purchases of assets and certain other transactions involving affiliates.
+Added: Also, transactions between banks and their non-bank affiliates are required to be on arm's-length terms and consistent with safe and sound banking practices.
+Added: Transactions with Insiders.
+Added: Banks are subject to restrictions that limit their lending to insiders.
+Added: The Dodd-Frank Act also places restrictions on certain asset sales to and from an insider of an IDI, including requirements that such sales be on market terms and, in certain circumstances, receive the approval of the IDI’s board of directors.
+Added: Lending Limits.
+Added: Federal banking law limits a national bank’s ability to extend credit to one person or group of related persons to an amount that does not exceed certain thresholds.
Volcker Rule.
−Removed: Section 619 of the Dodd-Frank Act (known as the Volcker Rule) prohibits IDIs and their holding companies from engaging in proprietary trading, except under limited circumstances, and prohibits them from owning equity interests in excess of 3% of Tier 1 capital in private equity and hedge funds.
−Removed: The Volcker Rule regulations prohibit banking entities from (1) engaging in short-term proprietary trading for their own accounts, and (2) having certain ownership interests in and relationships with hedge funds or private equity funds, which are referred to as “covered funds.” The Volcker Rule regulations are intended to provide greater clarity with respect to both the extent of those primary prohibitions and of the related exemptions and exclusions.
−Removed: The Volcker Rule regulations also require each regulated entity to establish an internal compliance program that is consistent with the extent to which it engages in activities covered by the Volcker Rule, which must include (for the largest entities) making regular reports about those activities to the entity’s regulators.
−Removed: Effective January 1, 2020, the Volcker Rule regulations were amended to specify that compliance requirements are based on the amount of assets and liabilities that an IDI trades.
−Removed: IDIs with significant trading activities (i.e., those with $20 billion or more in trading assets and liabilities) have heightened compliance obligations.
−Removed: Compliance with the revised Volcker Rule regulations was required on January 1, 2021.
−Removed: In July 2020, the OCC amended the Volcker Rule regulations to streamline the “covered funds” portion addressing the treatment of certain foreign funds, and permitting banking entities to offer financial services and engage in other permissible activities that do not raise concerns that the Volcker Rule was intended to address.
−Removed: Principally, this amendment permits banks to engage in certain low-risk fund activities that do not present the risks that the Volcker Rule was intended to address.
−Removed: The Consumer Financial Protection Bureau.
−Removed: The CFPB’s responsibility is to establish, implement and enforce laws, rules and regulations under certain federal consumer financial laws, as defined by the Dodd-Frank Act and interpreted by the CFPB, with respect to the conduct of both bank and non-bank providers of certain consumer financial products and services.
−Removed: The CFPB has rulemaking and enforcement authority under many of the statutes that govern products and services banks offer to consumers.
−Removed: The CFPB has authority to prevent unfair, deceptive or abusive acts and practices in connection with the offering of consumer financial products and services.
−Removed: In 2022, and continuing into 2023, the CFPB has taken an increasingly aggressive approach and expanded its reach and has made it clear that the CFPB is interpreting its statutory authorities broadly to expand the CFPB's ability to pursue violations of the consumer financial and fair lending laws in consumer financial markets, including issuing guidance indicating certain bank overdraft and mortgage lending practices constitute violations of the Unfair, Deceptive or Abusive Acts or Practices statute.
−Removed: In addition, the Dodd-Frank Act permits states to adopt consumer protection regulations that are more stringent than the regulations promulgated by the CFPB, and state attorneys general have the authority to enforce consumer protection rules that the CFPB adopts against state-chartered institutions and against, with respect to certain non-preempted laws, national banks.
−Removed: Compliance with any such new regulation or other precedent established by the CFPB and/or states could reduce our revenue, increase our cost of operations and compliance, and limit, prevent, or make more costly, our ability to expand into certain products and services.
−Removed: Over the past several years, the CFPB has been active in bringing enforcement actions against banks and non-bank financial institutions to enforce federal consumer financial laws.
−Removed: Other federal financial regulatory agencies, including the OCC, as well as state attorneys general and state banking agencies and other state financial regulators also have been increasingly active in this area with respect to institutions over which they have jurisdiction.
−Removed: We have incurred and may in the future incur additional costs in complying with these requirements.
+Added: Section 619 of the Dodd-Frank Act (known as the Volcker Rule) generally prohibits, subject to certain exceptions, IDIs and their affiliates from engaging in proprietary trading or having certain ownership interests in and relationships with hedge funds or private equity funds, which are referred to as “covered funds.” The Volcker Rule’s implementing regulations also require certain regulated entities to establish an internal compliance program that is consistent with the extent to which those entities engage in activities covered by the Volcker Rule.
Debit Card Interchange Fees .
4 unchanged sentences
The maximum permissible interchange fee for a $50 debit card transaction would be 17.7 cents under the proposal, down from 24.5 cents under the current rule.
−Removed: The FRB is also proposing that the interchange rate cap will be automatically updated every two years based on the data collected from issuers.
−Removed: Transactions with Affiliates.
−Removed: Pursuant to Sections 23A and 23B of the Federal Reserve Act, as implemented by Regulation W, banks are subject to restrictions that limit certain types of transactions between banks and their non-bank affiliates.
−Removed: In general, banks are subject to quantitative and qualitative limits on extensions of credit, purchases of assets and certain other transactions involving non-bank affiliates.
−Removed: Also, transactions between banks and their non-bank affiliates are required to be on arm's-length terms and consistent with safe and sound banking practices.
−Removed: The Dodd-Frank Act enhances the requirements for certain transactions with affiliates under Sections 23A and 23B of the Federal Reserve Act, including an expansion of the definition of “covered transactions” to include the borrowing or lending of securities or derivative transactions, and an increase in the amount of time for which collateral requirements regarding covered transactions must be maintained.
−Removed: In addition, the provisions of the Volcker Rule apply similar restrictions on transactions between a bank and any “covered fund” that the bank advises or sponsors.
−Removed: Transactions with Insiders.
−Removed: The Dodd-Frank Act expands insider transaction limitations through the strengthening of loan restrictions to insiders and extending the types of transactions subject to the various requirements to include derivative transactions, repurchase agreements, reverse repurchase agreements and securities lending and borrowing transactions.
−Removed: The Dodd-Frank Act also places restrictions on certain asset sales to and from an insider of an IDI, including requirements that such sales be on market terms and, in certain circumstances, receive the approval of the IDI’s board of directors.
−Removed: Enhanced Lending Limits.
−Removed: Federal banking law limits a national bank’s ability to extend credit to one person or group of related persons to an amount that does not exceed certain thresholds.
−Removed: Among other things, the Dodd-Frank Act expanded the scope of these restrictions to include credit exposure arising from derivative transactions, repurchase agreements and securities lending and borrowing transactions.
−Removed: The changes resulting from the Dodd-Frank Act continue to impact our profitability, including limitations on fee income opportunities, increased compliance costs, imposition of more stringent capital, liquidity and leverage requirements that affect our business.
−Removed: We cannot predict what effect any newly implemented, presently contemplated or future changes in the laws or regulations or their interpretations may have on us.
−Removed: Capital and Operational Requirements
−Removed: The FRB, OCC and FDIC issued substantially similar risk-based and leverage capital guidelines applicable to U.S.
−Removed: banking organizations.
−Removed: In addition, these regulatory agencies may from time to time require that a banking organization maintain capital above the minimum levels, due to its financial condition or actual or anticipated growth.
−Removed: FNB, like other bank holding companies, is required to maintain CET1, tier 1 and total capital (the sum of tier 1 and tier 2 capital) equal to at least 7.00%, 8.50% and 10.50%, respectively, of our total risk-weighted assets (including various off-balance sheet items).
−Removed: The risk-based capital standards are designed to make regulatory capital requirements more sensitive to differences in credit and market risk profiles among banks and financial holding companies, to account for off-balance sheet exposure, and to minimize disincentives for holding liquid assets.
−Removed: Assets and off-balance sheet items are assigned to broad risk categories, each with appropriate weights.
−Removed: The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance sheet items.
−Removed: At December 31, 2023, our CET1, tier 1 and total capital ratios under these guidelines were 10.04%, 10.33% and 12.16%, respectively.
−Removed: At December 31, 2023, we had $298.4 million of capital securities and subordinated debt that qualified as tier 2 capital.
−Removed: In addition, the FRB has established minimum leverage ratio guidelines for bank holding companies.
−Removed: These guidelines currently provide for a minimum ratio of tier 1 capital to average total assets, less goodwill and certain other intangible assets (the leverage ratio), of 4.0% for bank holding companies that meet certain specified criteria, including the highest regulatory rating.
−Removed: The guidelines also provide that bank holding companies, depending on the types, quality and quantity of risk associated with its activities (e.g., acquisitions, internal growth), will be expected to maintain strong capital positions above the minimum supervisory levels without significant reliance on intangible assets.
−Removed: Our leverage ratio at December 31, 2023 was 8.72%.
−Removed: Increased Capital Standards and Enhanced Supervision
−Removed: The Dodd-Frank Act’s regulatory capital requirements are intended to ensure that financial institutions hold sufficient capital to absorb losses during future periods of financial distress and requires the federal banking agencies to establish minimum leverage and risk-based capital requirements on a consolidated basis for IDIs, their holding companies and non-bank financial companies that have been determined to be systemically important by the FSOC.
−Removed: Basel III Capital Rules
−Removed: The FRB, the OCC, and the FDIC have adopted risk-based capital regulations implementing certain provisions of the Dodd-Frank Act and the Basel III framework.
−Removed: These regulations were initially implemented in 2013 to strengthen the components of regulatory capital, increase risk-based capital requirements, and to make selected changes to the calculation of risk-weighted assets.
−Removed: In general, subject to certain exceptions as discussed further below, minimum capital standards established under the risk-based capital regulations include a CET1 capital to risk-weighted assets ratio of 4.5 percent, a Tier 1 capital to risk-weighted assets ratio of 6.0 percent, a total capital to risk-weighted assets ratio of 8.0 percent, and a Tier 1 capital to adjusted average total assets leverage ratio of 4.0 percent.
−Removed: In determining the amount of risk-weighted assets for purposes of calculating risk-based capital ratios, all assets, including certain off-balance sheet assets (for example, recourse obligations, direct credit substitutes and residual interests) are multiplied by a risk-weight factor assigned by the regulations based on the risks believed inherent in the type of asset.
−Removed: Higher levels of capital are required for asset categories believed to present greater risk.
−Removed: CET1 capital is generally defined as common shareholders’ equity and retained earnings.
−Removed: Tier 1 capital is generally defined as CET1 and additional Tier 1 capital.
−Removed: Additional Tier 1 capital includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries.
−Removed: Total capital includes Tier 1 capital (CET1 capital plus additional Tier 1 capital) and Tier 2 capital.
−Removed: Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt.
−Removed: Also included in Tier 2 capital is the allowance for loan losses limited to a maximum of 1.25 percent of risk-weighted assets.
−Removed: Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations.
−Removed: In assessing an institution’s capital adequacy, the OCC takes into consideration not only these numeric factors, but qualitative factors as well, and has the authority to establish higher capital requirements for individual institutions where deemed necessary.
−Removed: In addition to establishing the minimum regulatory capital requirements, the capital regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a capital conservation buffer consisting of 2.5% of CET1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.
−Removed: Through subsequent rulemaking, the federal banking agencies provided certain forms of relief to banking organizations that are not subject to the capital rules’ advanced approaches, such as FNB.
−Removed: For instance, non-advanced approaches institutions, such as FNB and FNBPA, are subject to a more simple regulatory capital treatment for MSAs, certain DTAs arising from temporary differences, investments in the capital of unconsolidated financial institutions and requirements for the amount of capital issued by a consolidated subsidiary of a banking organization and held by third parties (sometimes referred to as a minority interest) that is includable in regulatory capital.
−Removed: In addition, certain general requirements of the capital regulations have been eliminated in respect of non-advanced approaches institutions, including:
−Removed: (i) the 10% CET1 capital deduction threshold that applies individually to MSAs, temporary difference DTAs, and significant investments in the capital of unconsolidated financial institutions in the form of common stock;
−Removed: (ii) the aggregate 15% CET1 capital deduction threshold that subsequently applies on a collective basis across such items;
−Removed: (iii) the 10% CET1 capital deduction threshold for non-significant investments in the capital of unconsolidated financial institutions;
−Removed: and (iv) the deduction treatment for significant investments in the capital of unconsolidated financial institutions not in the form of common stock.
−Removed: Accordingly, banking organizations not subject to the advanced approaches capital rule may deduct from CET1 capital any amount of MSAs, temporary difference DTAs, and investments in the capital of unconsolidated financial institutions that individually exceeds 25% of CET1 capital.
−Removed: Management believes that as of December 31, 2023, FNB and FNBPA meet all capital adequacy requirements under Basel III.
−Removed: The Basel Committee on Banking Supervision published the last version of the Basel III accord in 2017, generally referred to as “Basel IV.” The Basel Committee stated that a key objective of the revisions incorporated into the framework is to reduce excessive variability of risk-weighted assets, which will be accomplished by enhancing the robustness and risk sensitivity of the standardized approaches for credit risk and operational risk, which will facilitate the comparability of banks’ capital ratios;
−Removed: constraining the use of internally modeled approaches;
−Removed: and complementing the risk-weighted capital ratio with a finalized leverage ratio and a revised and robust capital floor.
−Removed: Leadership of the FRB, OCC, and FDIC, who are tasked with implementing Basel IV, supported the revisions.
−Removed: Although it is uncertain at this time, we anticipate some, if not all, of the Basel IV accord may be incorporated into the regulatory capital requirements framework applicable to FNB and FNBPA.
−Removed: In August 2020, the federal banking agencies issued a final rule providing banking institutions that had adopted the CECL accounting standard in the 2020 calendar year with the option to delay for two years the estimated impact of CECL on regulatory capital, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided during the initial two-year delay (i.e., a five-year transition in total).
−Removed: In connection with its adoption of CECL on January 1, 2020, FNB elected to utilize the five-year CECL transition.
−Removed: In addition, the federal banking agencies continue to review bank capital requirements in light of the finalization of the Basel III framework by the Basel Committee on Banking Supervision.
−Removed: No proposals for any of the components of finalizing the Basel III framework has yet been published by the agencies.
−Removed: On September 9, 2022, the U.S.
−Removed: banking agencies issued a press release reaffirming “their commitment to implementing enhanced regulatory capital requirements that align with the final set of ‘Basel III’ standards” and stating that they “are currently developing a joint proposed rule for issuance as soon as possible.”
−Removed: Stress Testing
−Removed: As part of the regulatory relief provided by the Economic Growth Act, the asset threshold requiring IDIs to conduct and report to their primary federal bank regulators annual company-run stress tests was raised from $10 billion to $250 billion in total consolidated assets and makes the requirement “periodic” rather than annual.
−Removed: The Economic Growth Act also provided that bank holding companies under $100 billion in assets were no longer subject to stress testing requirements and provided the FRB with discretion to subject bank holding companies with more than $100 billion in total assets to enhanced supervision.
−Removed: Notwithstanding these amendments, the federal banking agencies indicated through interagency bank regulatory guidance that the capital planning and risk management practices of institutions with total assets less than $100 billion would continue to be reviewed through the regular supervisory process.
−Removed: We continue to monitor and stress test our capital consistent with the safety and soundness expectations of our banking regulators.
−Removed: Prompt Corrective Action
−Removed: FDICIA, among other things, classifies IDIs into five capital categories (well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) and requires the respective federal regulatory
−Removed: agencies to implement systems for “prompt corrective action” for IDIs that do not meet minimum capital requirements within such categories.
−Removed: FDICIA imposes progressively more restrictive constraints on operations, management and capital distributions, depending on the category in which an institution is classified.
−Removed: Failure to meet the capital guidelines could also subject a banking institution to capital-raising requirements, restrictions on its business and a variety of enforcement remedies, including the termination of deposit insurance by the FDIC, and in certain circumstances the appointment of a conservator or receiver.
−Removed: An “undercapitalized” bank must develop a capital restoration plan and its parent holding company must guarantee that bank’s compliance with the plan.
−Removed: The liability of the parent holding company under any such guarantee is limited to the lesser of 5% of the bank’s assets at the time it became “undercapitalized” or the amount needed to comply with the plan.
−Removed: Furthermore, in the event of the bankruptcy of the parent holding company, the obligation under such guarantee would take priority over the parent’s general unsecured creditors.
−Removed: In addition, FDICIA requires the various regulatory agencies to prescribe certain non-capital standards for safety and soundness relating generally to operations and management, asset quality and executive compensation and permits regulatory action against an IDI that does not meet such standards.
−Removed: The various regulatory agencies have adopted substantially similar regulations that define the five capital categories identified by FDICIA, using the total risk-based capital, tier 1 risk-based capital, CET1 and leverage capital ratios as the relevant capital measures.
−Removed: Such regulations establish various degrees of corrective action to be taken when an institution is considered undercapitalized.
−Removed: Under the regulations, a “well-capitalized” institution must have a CET1 risk-based capital ratio of at least 6.5%, a tier 1 risk-based capital ratio of at least 8.0%, a total risk-based capital ratio of at least 10.0% and a leverage ratio of at least 5.0% and not be subject to a capital directive order.
−Removed: Under these guidelines, FNBPA was considered well-capitalized as of December 31, 2023.
−Removed: When determining the adequacy of an IDI’s capital, federal regulators must also take into consideration (a) concentrations of credit risk;
−Removed: (b) interest rate risk (when the interest rate sensitivity of an institution’s assets does not match the sensitivity of its liabilities or its off-balance sheet position) and (c) risks from non-traditional activities, as well as an institution’s ability to manage those risks.
−Removed: This evaluation is made as part of the IDI’s regular safety and soundness examination.
−Removed: In addition, any IDI with significant trading activity, must incorporate a measure for market risk in their regulatory capital calculations.
+Added: The FRB has also proposed that the interchange rate cap will be automatically updated every two years based on the data collected from issuers.
+Added: Resolution Planning
+Added: On June 20, 2024, the FDIC released a final rule that requires covered IDIs to develop and submit detailed plans demonstrating how they could be resolved in an orderly and timely manner in the event of receivership.
+Added: IDIs with total assets of $100 billion or more are required to submit full resolution plans, and IDIs with total assets of $50 billion or more, but less than $100 billion are required to submit more limited informational filings.
+Added: Under the final rule, if the FDIC deemed a resolution plan or informational filing not credible and the IDI failed to resubmit a credible plan, the IDI could become subject to an enforcement action.
+Added: FNBPA currently has total consolidated assets of less than $50 billion and is not currently subject to the final rule.
+Added: However, by imposing additional costs on IDIs with $50 billion or more in total consolidated assets, the final rule reduces the benefits of growth beyond that size for a bank that has less than $50 billion in total consolidated assets, such as FNBPA.
Community Reinvestment Act and Fair Lending
−Removed: The CRA requires depository institutions to assist in meeting the credit needs of their market areas consistent with safe and sound banking practices.
−Removed: Under the CRA, each depository institution is required to help meet the credit needs of its market areas by, among other things, providing credit to and investments in low- and moderate-income individuals and communities.
−Removed: Depository institutions are periodically examined for compliance with the CRA and are assigned ratings.
+Added: The CRA requires depository institutions to assist in meeting the credit needs of their entire market areas consistent with safe and sound banking practices.
+Added: Under the CRA, each depository institution is periodically evaluated and rated on its performance meeting the credit needs of its market areas by, among other things, providing credit to and investments in low- and moderate-income individuals and communities.
+Added: An institution’s CRA rating can be reduced if the reviewing agency finds evidence of discriminatory or other illegal credit practices.
In order for a financial holding company to commence any new activity permitted by the BHC Act, or to acquire any company engaged in any new activity permitted by the BHC Act, each IDI subsidiary of the financial holding company must have received a rating of at least “Satisfactory” in its most recent examination under the CRA.
−Removed: In its most recent CRA examination, FNBPA received an “outstanding” rating.
Furthermore, federal banking regulators take into account CRA ratings when considering acquisitions of control and new activities.
−Removed: FNB is one of fewer than 10 percent of banks to receive the highest possible CRA rating.
−Removed: The "outstanding" CRA rating reaffirms our success in fulfilling our strategic and cultural commitment to supporting traditionally underserved communities.
−Removed: Fair lending laws prohibit discrimination in the provision of banking services, and the enforcement of these laws has been an increasing focus for the CFPB, HUD, and other regulators.
−Removed: Fair lending laws include the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act, which outlaw discrimination in credit and residential real estate transactions on the basis of prohibited factors including, among others, race, color, national origin, gender, and religion.
+Added: In its most recent CRA examination, FNBPA received an “Outstanding” rating.
+Added: On October 24, 2023, the federal banking agencies issued a joint final rule that makes extensive amendments to the regulations that implement the CRA.
+Added: The agencies’ stated goal in issuing the Final Rule was to “strengthen and modernize” the CRA regulations.
+Added: Under the new requirements, FNB would be subject to new performance tests that could make it difficult to achieve a “Satisfactory” or “Outstanding” rating.
+Added: The final rule also would establish new standardized metrics and quantitative standards for evaluating banks’ CRA performance under various performance tests.
+Added: The new requirements would include an extensive overhaul of the current data collection, calculations and reporting under the existing CRA rule and would require additional costs to come into compliance.
+Added: Industry organizations have challenged the final rule in court, and on March 29, 2024, the U.S.
+Added: District Court for the Northern District of Texas granted an injunction and stay of the final rule.
+Added: The final outcome of such challenge is uncertain.
+Added: Fair lending laws prohibit discrimination in the provision of banking services, and the enforcement of these laws has been an increasing focus for the OCC, DOJ, CFPB, HUD, and other regulators.
+Added: Fair lending laws include the ECOA and the Fair Housing Act, which outlaw discrimination in credit and residential real estate transactions on the basis of prohibited factors including, among others, race, color, national origin, gender, and religion.
A lender may be liable for policies that result in a disparate treatment of or have a disparate impact on a protected class of applicants or borrowers.
−Removed: Moreover, in 2022, the CFPB issued an advisory opinion and amended its examination procedures to assert that the ECOA applies to all phases of the loan cycle and asserted its authority to determine that violations of the fair lending laws may also constitute a violation of the Unfair, Deceptive or Abusive Acts or Practices Acts.
If a pattern or practice of lending discrimination is alleged by a regulator, then that agency may refer the matter to the DOJ for investigation.
−Removed: The DOJ and CFPB have a Memorandum of Understanding under which the agencies have agreed to share information, coordinate investigations and have generally committed to strengthen their coordination efforts.
−Removed: The current Presidential Administration has indicated a focus on prioritizing enforcement of the federal anti-discrimination laws, and as a result, the CFPB may adopt more strict anti-discrimination enforcement policies in the area of fair lending, loan servicing, collections and other consumer-related areas.
−Removed: In October 2021, the DOJ announced an initiative to combat redlining through utilization of its fair lending prosecutorial authority and has announced the settlement of a number of bank investigations concerning redlining and other violations of the fair lending laws, including a February 5, 2024 announcement that Yadkin Bank (Yadkin) and its successor by merger, FNBPA, reached a settlement with the DOJ and the State of North Carolina to resolve their fair lending allegations related to the assessment of mortgage lending activities during a five-year period in the Winston-Salem and Charlotte, North Carolina majority Black and
−Removed: Hispanic census tracts (MBHCTs) that began prior to Yadkin’s merger with the FNBPA in March 2017.
−Removed: FNBPA is required to have a fair lending program that is of sufficient scope to monitor fair lending and that appropriately remediates issues which were identified during the DOJ investigation as well as add additional branches, increase marketing and mortgage and home equity loan subsidies in these MBHCTs.
−Removed: On May 5, 2022, the federal banking agencies issued a joint notice of proposed rulemaking to revise the regulations implementing the CRA.
−Removed: Under the proposed rule, the agencies would evaluate bank performance across the varied activities they conduct and the communities in which they operate, and tailor CRA evaluations and data collection based on bank size and type.
−Removed: Further, the agencies would also emphasize smaller value loans and investments that may have a greater impact on and be more responsive to the needs of low- and moderate-income (LMI) persons and would update CRA assessment areas to include activities associated with online and mobile banking, branchless banking, and hybrid models.
−Removed: In addition, the proposed rule would establish a metrics-based approach to CRA evaluations of retail lending and community development financing activities, including through the establishment of public benchmarks, and would clarify eligible CRA activities, such as affordable housing, that are focused on LMI, underserved and rural communities.
−Removed: The prospects and timing for the adoption by the agencies of a final rule are not certain at this time.
+Added: In October 2021, the DOJ announced an initiative to combat redlining through utilization of its fair lending prosecutorial authority and has announced the settlement of a number of bank investigations concerning redlining and other violations of the fair lending laws, including a February 5, 2024 announcement that Yadkin Bank (Yadkin) and its successor by merger, FNBPA, reached a settlement with the DOJ and the State of North Carolina to resolve their fair lending allegations related to the assessment of mortgage lending activities during a five-year period in the Winston-Salem and Charlotte, North Carolina majority Black and Hispanic census tracts (MBHCTs) that began prior to Yadkin’s merger with FNBPA in March 2017.
+Added: The DOJ investigation encompassed mortgage lending activity by both Yadkin prior to the acquisition and FNBPA in the early years following its entry into the North Carolina markets.
+Added: Although FNBPA denies the DOJ’s allegations, FNBPA cooperated fully to reach a settlement agreement in this inherited matter as a good faith effort to avoid prolonged litigation.
+Added: FNBPA is required to have a fair lending program that is of sufficient scope to monitor fair lending and that appropriately remediates issues which were identified during the DOJ investigation as well as add additional branches and increase marketing and mortgage and home equity loan subsidies in these MBHCTs.
+Added: Specifically, pursuant to the settlement agreement, FNBPA will invest a minimum of $11.75 million in a mortgage loan subsidy fund over a five-year period, leveraging its previously announced commitment to underserved communities across its footprint, including those located in the Charlotte and Winston-Salem markets.
+Added: FNBPA has also agreed to spend approximately $1.75 million over the five-year period on community partnerships, advertising, community outreach and consumer education.
+Added: FNBPA has also agreed to open three new branch offices in predominantly Black and Hispanic neighborhoods, with two in Charlotte and one in Winston Salem, North Carolina.
+Added: FNBPA believes the terms of the settlement agreement are consistent with its broad focus on promoting equity and economic prosperity in the markets that it serves.
+Added: The settlement does not include any civil money penalties against FNBPA.
+Added: Consumer Protection Statutes and Regulations
+Added: FNBPA is subject to various federal consumer protection laws and regulations including the TILA, Truth in Savings Act, ECOA, Fair Housing Act, Real Estate Settlement Procedures Act, Fair Debt Collection Practices Act, Fair Credit Reporting Act, Electronic Fund Transfer Act and Home Mortgage Disclosure Act, and regulations and guidance promulgated thereunder by the CFPB and the federal banking agencies, as well as certain state consumer protection requirements.
+Added: Among other things, these laws and regulations:
+Added: • require banks to disclose credit terms in meaningful and consistent ways;
+Added: • prohibit discrimination against an applicant in any consumer or business credit transaction;
+Added: • prohibit discrimination in housing-related lending activities;
+Added: • require banks to collect and report applicant and borrower data regarding loans for home purchases or improvement projects;
+Added: • require lenders to provide borrowers with more detailed information regarding the nature and cost of real estate settlements;
+Added: • prohibit certain lending practices and limit escrow account amounts with respect to real estate transactions;
+Added: • prescribe possible penalties for violations of the requirements of consumer protection statutes and regulations;
+Added: • require prescribed consumer disclosures and the adoption of error resolution procedures and other consumer protection protocols with respect to electronic fund transfers;
+Added: • prohibit unfair, deceptive or abusive acts and practices in connection with consumer loans, the collection of debt, and the provision of other consumer financial products and services, including identifying risks associated with certain overdraft practices.
+Added: We have incurred and may in the future incur additional costs in complying with the above-identified consumer requirements.
+Added: In addition, there is continued uncertainty about the CFPB’s priorities and how they will change under the Trump Administration.
+Added: For example, in February 2025, the Acting Director of the CFPB instructed agency staff to pause most activity, including supervision and enforcement.
+Added: While it is presently unclear when and to what extent the CFPB will resume its activities, other governmental authorities, including state attorneys general or banking regulators, may seek to increase their regulation, supervision, and enforcement of providers of consumer financial products and services in response to changes at the CFPB.
+Added: Moreover, changes at the CFPB may lead to federal legislative efforts to alter the framework for consumer financial services regulation.
Financial Privacy
5 unchanged sentences
These guidelines, along with related regulatory materials, increasingly focus on risk management, processes related to information technology and operational resiliency, and the use of third parties in the provision of financial services.
−Removed: In October 2016, the federal banking agencies issued an advance notice of proposed rulemaking on enhanced cybersecurity risk-management and resilience standards that would apply to large and interconnected banking organizations and to services provided by third parties to these firms.
−Removed: These enhanced standards would apply only to depository institutions and depository institution holding companies with total consolidated assets of $50 billion or more;
−Removed: however, it is possible that, if these enhanced standards are implemented, the OCC will consider them in connection with the examination and supervision of banks below the $50 billion threshold.
−Removed: The federal banking agencies have not yet taken further action on these proposed standards.
−Removed: The OCC, however, as part of its bank supervision operational plan has prioritized review of national bank’s information security, data protection and third-party risk management, including the extent to which national banks are positioned to assess the evolving cyber-threat environment and maintain resilient defenses against such threats.
−Removed: On November 23, 2021, the federal financial regulatory agencies published a final rule that will impose upon banking organizations and their non-affiliated service providers new notification requirements for significant cybersecurity incidents.
−Removed: Specifically, the final rule requires banking organizations to notify their primary federal regulator as soon as possible and no later than 36 hours after the discovery of a "computer security incident" that rises to the level of a "notification incident" within the meaning attributed to those terms by the final rule.
−Removed: Banks' non-affiliated service providers are required under the final rule to notify any affected bank to or on behalf of which the service provider provides services "as soon as possible" after determining that it has experienced an incident that materially disrupts or degrades, or is reasonably likely to materially disrupt or degrade, covered services provided to such bank for as much as four hours.
−Removed: The final rule took effect on April 1, 2022, and banks and their non-affiliated service providers had to be in compliance with the requirements of the rule by May 1, 2022.
−Removed: Further, in 2022, the enactment of the Strengthening American Cybersecurity Act (SACA), and the SEC proposed rules to enhance disclosures regarding cybersecurity risk management strategy, governance and incident reporting are designed to standardize cybersecurity processes and disclosure requirements.
−Removed: SACA requires critical infrastructure companies, such as financial institutions, to report "significant cyber-incidents" and all ransom payments to the U.S.
+Added: The OCC as part of its bank supervision operational plan has prioritized review of national banks' information security, data protection and third-party risk management, including the extent to which national banks are positioned to assess the evolving cyber-threat environment and maintain resilient defenses against such threats.
+Added: Under a November 2021 interagency rule, banking organizations are required to notify their primary federal regulator as soon as possible and no later than 36 hours after the discovery of a "computer security incident" that rises to the level of a "notification incident" within the meaning attributed to those terms.
+Added: Banks' non-affiliated service providers are required to notify any affected bank to or on behalf of which the service provider provides services "as soon as possible" after determining that it has experienced an incident that materially disrupts or degrades, or is reasonably likely to materially disrupt or degrade, covered services provided to such bank for as much as four hours.
+Added: The Strengthening American Cybersecurity Act of 2022 (SACA) requires enhanced disclosures regarding cybersecurity risk management strategy, governance and incident reporting, with the aim of standardizing cybersecurity processes and disclosure requirements.
+Added: SACA requires critical infrastructure companies, such as financial institutions, to report "substantial cyber-incidents" and all ransom payments to the U.S.
Department of Homeland Security's Cybersecurity and Infrastructure Security Agency (CISA).
−Removed: The definition of a "covered cyber-incident" will be determined by CISA rulemaking, but the Act provides that, at a minimum, an incident must be reported if it:
−Removed: (1) causes a "substantial loss of confidentiality, integrity or availability" of information or a "serious impact on the safety and resiliency of
−Removed: operational systems and processes";
−Removed: (2) causes a "disruption of business or industrial operations, including due to a denial of service attack, ransomware attack or exploitation of a zero day vulnerability";
+Added: The definition of a "covered cyber-incident" will be determined by CISA rulemaking, but SACA provides that, at a minimum, an incident must be reported if it:
+Added: (1) leads to "substantial loss of confidentiality, integrity, or availability" of an
+Added: information system or network or a "serious impact on the safety and resiliency of operational systems and processes";
+Added: (2) causes a "disruption of business or industrial operations, including due to a denial of service attack, ransomware attack, or exploitation of a zero day vulnerability" against an information system or network, or an operational technology system or process;
or (3) involves "unauthorized access or disruption of business or industrial operations" due to a "compromise of a cloud service provider, managed service provider, or other third-party data hosting provider or by a supply chain compromise".
−Removed: In July 2023, the SEC adopted a final rule requiring mandatory annual disclosures of companies’ cybersecurity risk management policies, including board oversight of cybersecurity risks, as well as mandatory reporting of material cybersecurity incidents.
+Added: In addition, in July 2023, the SEC issued a final rule that requires disclosure of material cybersecurity incidents, as well as cybersecurity risk management, strategy and governance.
Anti-Money Laundering Initiatives and the USA PATRIOT Act
2 unchanged sentences
anti-money laundering laws and regulations by imposing significant new compliance and due diligence obligations, creating new crimes and penalties and expanding the extra-territorial jurisdiction of the U.S.
−Removed: The UST has issued a number of regulations that apply various requirements of the USA PATRIOT Act to financial institutions such as FNBPA.
+Added: The UST and federal banking agencies have issued a number of regulations that apply various requirements of the USA PATRIOT Act to financial institutions such as FNBPA.
These regulations require financial institutions to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identity of their customers.
10 unchanged sentences
and (v) expanded duties and powers of FinCEN.
−Removed: Many of the amendments require the UST and FinCEN to promulgate rules.
−Removed: On September 29, 2022, FinCEN issued a final regulation implementing the beneficial owner information (BOI) reporting requirements.
−Removed: On December 22, 2023, FinCEN published a final rule that establishes standards for financial institutions and government entities to access BOI reported to FinCEN.
Office of Foreign Assets Control Regulation
has instituted economic sanctions which affect transactions with designated foreign countries, nationals and others.
−Removed: These are typically known as the “OFAC rules” because they are administered by the UST Office of Foreign Assets Control (OFAC).
+Added: These are sometimes known as the “OFAC rules” because they are administered by the UST Office of Foreign Assets Control (OFAC).
The OFAC-administered sanctions target countries in various ways.
6 unchanged sentences
Failure to comply with these sanctions could have serious legal and reputational consequences.
−Removed: Consumer Protection Statutes and Regulations
−Removed: In addition to the consumer regulations promulgated by the FRB, OCC and state agencies, and the regulations issued by the CFPB pursuant to its authority under the Dodd-Frank Act, FNBPA is subject to various federal consumer protection statutes including the TILA, Truth in Savings Act, Equal Credit Opportunity Act (ECOA), Fair Housing Act, RESPA, Fair Debt Collection Practices Act, Fair Credit Reporting Act, Electronic Fund Transfer Act and Home Mortgage Disclosure Act, CRA and regulations and guidance promulgated thereunder by the CFPB and the federal banking agencies.
−Removed: Among other things, these laws and regulations:
−Removed: • require banks to disclose credit terms in meaningful and consistent ways;
−Removed: • prohibit discrimination against an applicant in any consumer or business credit transaction;
−Removed: • prohibit discrimination in housing-related lending activities;
−Removed: • require banks to collect and report applicant and borrower data regarding loans for home purchases or improvement projects;
−Removed: • require lenders to provide borrowers with more detailed information regarding the nature and cost of real estate settlements;
−Removed: • prohibit certain lending practices and limit escrow account amounts with respect to real estate transactions;
−Removed: • prescribe possible penalties for violations of the requirements of consumer protection statutes and regulations;
−Removed: • require prescribed consumer disclosures and the adoption of error resolution procedures and other consumer protection protocols with respect to electronic fund transfers;
−Removed: • prohibit unfair, deceptive or abusive acts and practices in connection with consumer loans, the collection of debt, and the provision of other consumer financial products and services.
−Removed: In April 2023, the OCC issued final guidance on Overdraft Protection Programs.
−Removed: This guidance addresses certain practices that may result in heightened risk exposure, including the risk of violating section 5 of the FTC Act (Section 5), which prohibits unfair or deceptive acts or practices,4 and Section 1036 of the Consumer Financial Protection Act of 2010, which prohibits unfair, deceptive, or abusive acts or practices.
−Removed: These practices include assessing overdraft fees on debit card transactions that are authorized when a consumer’s available account balance is positive but later post to the account when the available balance is negative, also referred to as “authorize positive, settle negative” (APSN) and assessing an additional fee each time a third party resubmits the same transaction for payment after a bank returns the transaction for non-sufficient funds (NSF) (referred to as “representment fees”).
−Removed: The guidance also describes certain practices that may help to manage risks associated with overdraft protection programs, including assisting consumers in avoiding unduly high costs in relation to the face value of the item being presented, the amount of their regular deposits, and their average account balances and implementing fees and practices that bear a reasonable relationship to the risks and costs of providing overdraft protection program services.
−Removed: We have incurred and may in the future incur additional costs in complying with the above-identified consumer requirements.
−Removed: Pursuant to the Dodd-Frank Act, the FDIC has backup enforcement authority over a bank holding company, such as FNB, if the conduct or threatened conduct (including any acts or omissions) of such holding company poses a risk to the DIF, although such authority may not be used if the holding company is in generally sound condition and does not pose a foreseeable and material risk to the DIF.
−Removed: The Dodd-Frank Act may have a material impact on FNB and FNBPA's operations, particularly through increased compliance costs resulting from evolving future consumer and fair lending regulations.
−Removed: Community Reinvestment Act
−Removed: Federal Regulators issued a joint final rule that makes extensive amendments to the regulations that implement the CRA.
−Removed: The agencies’ stated goal in issuing the Final Rule is to “strengthen and modernize” the CRA regulations, which have not been significantly revised in nearly three decades.
−Removed: Under the new requirements, FNB would be subject to new performance tests that would make it difficult to achieve a “Satisfactory” or “Outstanding” rating.
−Removed: The Final Rule also establishes new standardized metrics and quantitative standards for evaluating banks’ CRA performance under various performance tests.
−Removed: The new requirements will be an extensive overhaul of the current data collection, calculations and reporting under the existing CRA rule and would require additional costs to come into compliance.
−Removed: Most of the Final Rule’s requirements will be effective beginning January 1, 2026.
−Removed: Additional requirements, including new data reporting requirements, will be applicable on January 1, 2027.
−Removed: Dividend Restrictions
−Removed: Our primary source of funds for cash distributions to our stockholders, and funds used to pay principal and interest on our indebtedness, is dividends received from FNBPA.
−Removed: FNBPA is subject to federal laws and regulations governing its ability to pay dividends to FNB, including requirements to maintain capital above regulatory minimums.
−Removed: Under federal law, the amount of dividends that a national bank, such as FNBPA, may pay in a calendar year is dependent on the amount of its net income for the current year combined with its retained net income for the two preceding years.
−Removed: The OCC has the authority to prohibit the payment of dividends by a national bank on the basis that paying dividends that deplete a bank's capital base to an inadequate level would be an unsafe and unsound banking practice and that banking organizations should generally pay dividends only out of current operating earnings.
−Removed: In addition to dividends from FNBPA, other sources of parent company liquidity for FNB include cash, short-term investments and issuance of debt instruments, as well as dividends and loan repayments from other subsidiaries.
−Removed: In addition, the ability of FNB and FNBPA to pay dividends may be affected by the various minimum capital requirements previously described in the “Capital and Operational Requirements,” “Basel III Capital Rules” and “Stress Testing” discussions herein, and the capital and non-capital standards established under FDICIA, as described above.
−Removed: The right of FNB, our stockholders and our creditors to participate in any distribution of the assets or earnings of our subsidiaries is further subject to the prior claims of creditors of the respective subsidiaries.
−Removed: Source of Strength
−Removed: According to the Dodd-Frank Act and FRB policy, a financial or bank holding company is expected to act as a source of financial strength to each of its subsidiary banks and to commit resources to support each such subsidiary.
−Removed: Consistent with the “source of strength” policy, the FRB has stated that, as a matter of prudent banking, a bank or financial holding company generally should not maintain a rate of cash dividends unless its net income has been sufficient to fully fund the dividends and the prospective rate of earnings retention appears to be consistent with our capital needs, asset quality and overall financial condition.
−Removed: This support may be required at times when the parent holding company may not be able to provide such support.
−Removed: In addition, if FNBPA was no longer “well-capitalized” and “well-managed” within the meaning of the BHC Act and FRB rules (which take into consideration capital ratios, examination ratings and other factors), the expedited processing of certain types of FRB applications would not be available to us.
−Removed: Moreover, examination ratings of “3” or lower, “unsatisfactory” ratings, capital ratios below well-capitalized levels, regulatory concerns regarding management, controls, assets, operations or other factors can all potentially result in the loss of financial holding company status, practical limitations on the ability of a bank or bank (or financial) holding company to engage in new activities, grow, acquire new businesses, repurchase its stock or pay dividends or continue to conduct existing activities.
−Removed: Financial Holding Company Status and Activities
−Removed: Under the BHC Act, an eligible bank holding company may elect to be a “financial holding company” and thereafter may engage in a range of activities that are financial in nature and that were not previously permissible for banks and bank holding companies.
−Removed: FNB is a financial holding company under the BHC Act.
−Removed: The financial holding company may engage directly or through a subsidiary in certain statutorily authorized activities (subject to certain restrictions and limitations imposed by the Dodd-Frank Act).
−Removed: A financial holding company may also engage in any activity that has been determined by rule or order to be financial in nature, incidental to such financial activity, or (with prior FRB approval) complementary to a financial activity and that does not pose substantial risk to the safety and soundness of an institution or to the financial system generally.
−Removed: In addition to these activities, a financial holding company may engage in those activities permissible for a bank holding company that has not elected to be treated as a financial holding company.
−Removed: For a bank holding company to be eligible for financial holding company status, all of its subsidiary U.S.
−Removed: depository institutions must be “well-capitalized” and “well-managed.” The FRB generally must deny expanded authority to any bank holding company with a subsidiary IDI that received less than a satisfactory rating on its most recent CRA review as of the time it submits its request for financial holding company status.
−Removed: If, after becoming a financial holding company and undertaking activities not permissible for a bank holding company under the BHC Act, the company fails to continue to meet any of the requirements for financial holding company status, the company must enter into an agreement with the FRB to comply with all applicable capital and management requirements.
−Removed: If the company does not return to compliance within 180 days, the FRB may order the company to divest its subsidiary banks or the company may discontinue or divest investments in companies engaged in activities permissible only for a bank holding company that has elected to be treated as a financial holding company.
−Removed: Activities and Acquisitions
−Removed: The BHC Act requires a bank or financial holding company to obtain the prior approval of the FRB before:
−Removed: • the company may acquire direct or indirect ownership or control of any voting shares of any bank or savings and loan association, if after such acquisition the bank holding company will directly or indirectly own or control more than 5% of any class of voting securities of the institution;
−Removed: • any of the company’s subsidiaries, other than a bank, may acquire all or substantially all of the assets of any bank or savings and loan association;
−Removed: • the company may merge or consolidate with any other bank or financial holding company.
−Removed: The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (Interstate Banking Act) generally permits bank holding companies to acquire banks in any state and preempts all state laws restricting the ownership by a holding company of
−Removed: banks in more than one state.
−Removed: A bank is subject to any state requirement that the bank has been organized and operating in for a minimum period of time and the requirement that the bank holding company, after the proposed transaction, controls no more than 10% of the total amount of deposits of IDIs in the U.S.
−Removed: and no more than 30% or such lesser or greater amount set by the state law of such deposits in that state.
−Removed: The Interstate Banking Act also permits:
−Removed: • a bank to merge with an out-of-state bank and convert any offices into branches of the resulting bank;
−Removed: • a bank to acquire branches from an out-of-state bank;
−Removed: • a bank to establish and operate de novo interstate branches whenever the host state permits de novo branching of its own state-chartered banks.
−Removed: Bank and financial holding companies and banks seeking to engage in mergers authorized by the Interstate Banking Act must be at least adequately capitalized as of the date that the application is filed, and the resulting institution must be well-capitalized and well-managed upon consummation of the transaction.
−Removed: Pursuant to the Dodd-Frank Act, national and state-chartered banks may open an initial branch in a state other than its home state (e.g., a host state) by establishing a de novo branch at any location in such host state at which a bank chartered in such host state could establish a branch.
−Removed: Applications to establish such branches must still be filed with the OCC.
−Removed: The Change in Bank Control Act prohibits a person, entity or group of persons or entities acting in concert, from acquiring “control” of a bank holding company or bank unless the FRB has been given prior notice and has not objected to the transaction.
−Removed: Under current FRB regulations, the acquisition of 10% or more (but less than 25%) of the voting stock of a corporation would, under the circumstances set forth in the regulations, create a rebuttable presumption of acquisition of control of the corporation.
−Removed: Effective September 30, 2020, the FRB finalized a rule to codify and simplify its interpretations regarding regulatory presumptions of control for the purpose of the BHC Act and, on March 31, 2021, the FRB published interpretive guidance regarding the rule and related regulatory control matters.
−Removed: The amended control rule thus far has had, and will likely continue to have, a meaningful impact on control determinations related to investments in banks and bank holding companies and investments by bank holding companies in non-bank companies.
Incentive Compensation
−Removed: Guidelines adopted by the federal banking agencies pursuant to the FDI Act prohibit excessive compensation as an unsafe and unsound practice.
−Removed: The federal banking agencies also jointly adopted the Guidance on Sound Incentive Compensation Policies intended to ensure that banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking.
−Removed: This guidance, which covers all employees that have the ability to expose the organization to material amounts of risk, either individually or as part of a group, is based upon the key principles that a banking organization’s incentive compensation arrangements should (i) provide employee incentives that appropriately balance risk in a manner that does not encourage employees to expose their organizations to imprudent risk, (ii) be compatible with effective controls and risk management, and (iii) be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors.
−Removed: Monitoring methods and processes used by a banking organization should be commensurate with the size and complexity of the organization and its use of incentive compensation.
−Removed: Any deficiencies in the compensation practices of FNB or its subsidiaries and affiliates could lead to supervisory or enforcement action.
−Removed: Section 956 of the Dodd-Frank Act requires the federal banking agencies and the SEC to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at specified regulated entities, such as FNB, having at least $1 billion in total assets that encourage inappropriate risk-taking by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits or that could lead to material financial loss to the entity.
+Added: The Dodd-Frank Act requires the federal bank regulators and the SEC to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at specified regulated entities, including us and FNBPA, having at least $1 billion in total assets that encourage inappropriate risks by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits or that could lead to material financial loss to the entity.
In addition, these regulators must establish regulations or guidelines requiring enhanced disclosure to regulators of incentive-based compensation arrangements.
−Removed: In October 2022, the SEC adopted a final regulation implementing the incentive-based recovery (or "clawback") provisions of the Dodd-Frank Act.
−Removed: The final regulation directed stock exchanges to require listed companies to implement clawback policies to recover incentive-based compensation paid to current or former executive officers in the event of material non-compliance with any financial reporting requirement under the securities laws, even if there was no misconduct or failure of oversight on the part of an individual executive officer, and to disclose their clawback policies and their actions under those policies.
+Added: In June 2010, the FRB and FDIC issued comprehensive final guidance on incentive compensation policies intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking.
+Added: This guidance, which covers all employees that have the ability to materially affect the risk profile of an organization, either individually or as part of a group, is based upon the key principles
+Added: that a banking organization’s incentive compensation arrangements should (i) provide incentives that appropriately balance risk and financial results in a manner that does not encourage employees to expose their organizations to imprudent risk, (ii) be compatible with effective controls and risk management, and (iii) be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors.
+Added: During the second quarter of 2016, the U.S.
+Added: financial regulators, including the FRB and the SEC, proposed revised rules on incentive-based payment arrangements at specified regulated entities having at least $1 billion in total assets.
+Added: In May 2024, certain of these U.S.
+Added: financial regulators re-proposed the same regulatory text with a request for public comment on alternative approaches to certain regulatory provisions under consideration by the regulators.
+Added: These proposed rules have not been finalized.
+Added: The FRB will review, as part of the regular, risk-focused examination process, the incentive compensation arrangements of banking organizations, such as us, that are not “large, complex banking organizations.” These reviews will be tailored to each organization based on the scope and complexity of the organization’s activities and the prevalence of incentive compensation arrangements.
+Added: The findings of the supervisory initiatives will be included in reports of examination.
+Added: Deficiencies will be incorporated into the organization’s supervisory ratings, which can affect the organization’s ability to make acquisitions and take other actions.
+Added: Enforcement actions may be taken against a banking organization if its incentive compensation arrangements or related risk management control or governance processes pose a risk to the organization’s safety and soundness and the organization is not taking prompt and effective measures to correct the deficiencies.
+Added: In October 2023, the NYSE adopted a rule as required by the SEC’s 2022 rulemaking that requires listed companies to adopt policies mandating the recovery or “clawback” of excess incentive-based compensation earned by a current or former executive officer during the three fiscal years preceding a required accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
+Added: The excess compensation would be based on the amount the executive officer would have received had the incentive-based compensation been determined using the restated financials.
We timely adopted an executive compensation clawback policy in order to comply with this regulation and the listing standards of the NYSE, and a copy of the policy is filed as an exhibit to this Annual Report.
−Removed: Incentive compensation and sales practices, particularly in connection with certain products and services that are viewed as high-risk from a supervisory perspective, such as cross-selling and overdraft services, continue to be priority issues on the examination and supervision
−Removed: agendas of the CFPB and the federal banking agencies.
−Removed: The scope and content of the U.S.
−Removed: banking regulators' policies on executive compensation may continue to evolve.
−Removed: Securities and Exchange Commission
−Removed: FNBIA is registered with the SEC as an investment advisor and, therefore, is subject to the requirements of the Investment Advisers Act of 1940 and other applicable SEC regulations.
−Removed: The principal purpose of the regulations applicable to investment advisors is the protection of investment advisory clients and the securities markets, rather than the protection of creditors and stockholders of investment advisors.
−Removed: The regulations applicable to investment advisors cover all aspects of the investment advisory business, including limitations on the ability of investment advisors to charge performance-based or non-refundable fees to clients, record-keeping, operating, marketing and reporting requirements, disclosure requirements, limitations on principal transactions between an advisor or its affiliates and advisory clients, as well as other anti-fraud prohibitions.
−Removed: FNBIA also may be subject to certain state securities laws and regulations.
−Removed: Additional legislation, changes in or new rules promulgated by the SEC and other federal and state regulatory authorities and self-regulatory organizations or changes in the interpretation or enforcement of existing laws and rules, may directly affect the method of operation and profitability of FNBIA.
−Removed: The profitability of FNBIA could also be affected by rules and regulations that impact the business and financial communities in general, including changes to the laws governing taxation, antitrust regulation, homeland security and electronic commerce.
−Removed: Under various provisions of the federal and state securities laws, including in particular those applicable to broker-dealers, investment advisors and registered investment companies and their service providers, a determination by a court or regulatory agency that certain violations have occurred at a company or its affiliates can result in a limitation of permitted activities and disqualification to continue to conduct certain activities.
−Removed: FNBIA also may be required to conduct its business in a manner that complies with rules and regulations promulgated by the U.S.
−Removed: Department of Labor (DOL) under the ERISA, among others.
−Removed: The principal purpose of these regulations is the protection of clients and ERISA plan and individual retirement account assets and beneficiaries, rather than the protection of stockholders and creditors.
−Removed: Significantly, in June 2018, the U.S.
−Removed: Fifth Circuit Court of Appeals vacated the DOL's "fiduciary rule" and related prohibited transaction exemptions.
−Removed: However, on June 29, 2020, the DOL released a proposed prohibited transaction class exemption and associated guidance, intended as the “fiduciary rule[s]” replacement.
−Removed: Under the proposal, investment advice fiduciaries to IRAs and ERISA plans (and similar tax-favored accounts) are permitted to receive variable compensation and other transaction-based fees in connection with providing investment advice as a fiduciary.
−Removed: Also, investment advice fiduciaries are permitted under the proposal to engage in certain principal transactions, without violating the prohibited transaction rules of ERISA and the IRS Code.
−Removed: Further, the proposal called for fiduciary status to be determined under the longstanding five-part test and, unlike the “fiduciary rule,” the regulatory definition of "fiduciary" is not expanded.
−Removed: DOL finalized the proposed exemption in December 2020 and FNBPA and FNTC subsequently conformed their business practices to comply therewith, including applicable DOL transition guidance, to the extent applicable.
−Removed: Separately, in 2019 the SEC adopted Regulation Best Interest, which, among other things, established a new standard of conduct for a broker-dealer to act in the best interest of a retail consumer when making a recommendation of any securities transaction or investment strategy involving securities to such consumer.
−Removed: The new rule by the SEC requires us to review and possibly modify our compliance activities, which is causing us to incur additional costs.
−Removed: In addition, state laws that impose a fiduciary duty also may require monitoring, as well as require that we undertake additional compliance measures.
+Added: Investment Advisers Act
+Added: FNBIA is a registered investment adviser under the Investment Advisers Act of 1940 (the Investment Advisers Act) and as such is supervised by the SEC.
+Added: The Investment Advisers Act imposes numerous obligations on registered investment advisers, including record-keeping, operational and marketing requirements, disclosure obligations and prohibitions on fraudulent activities.
+Added: The SEC is authorized to institute proceedings and impose sanctions for violations of the Investment Advisers Act, ranging from fines and censure to termination of an investment adviser’s registration.
+Added: Investment advisers also are subject to certain state securities laws and regulations.
+Added: Noncompliance with the Investment Advisers Act or other federal and state securities laws and regulations could result in investigations, sanctions, disgorgement, fines and reputation damage.
+Added: Standard of Care
+Added: Pursuant to the Dodd-Frank Act, the SEC adopted a package of rule-makings and interpretations related to the provision of advice by broker-dealers and investment advisers, including Regulation Best Interest and Form CRS.
+Added: Among other things, Regulation Best Interest requires a broker-dealer to act in the best interest of a retail client when making a recommendation to that client of any securities transaction or investment strategy involving securities.
+Added: Form CRS requires that broker-dealers and investment advisers provide retail investors with a brief summary document containing simple, easy-to-understand information about the nature of the relationship between the parties.
+Added: Our implementation of these regulations resulted in the review and modification of certain of our policies and procedures and associated supervisory and compliance controls, as well as the implementation of additional client disclosures, which included us providing related education and training to financial advisors.
+Added: Various states have also proposed, or adopted, laws and regulations seeking to impose new standards of conduct on broker-dealers that may differ from the SEC's regulations, which may lead to additional implementation costs.
+Added: In April 2024, the Department of Labor (DOL) issued a final rule significantly expanding the definition of “investment advice fiduciary” under ERISA, as amended.
+Added: In related rulemakings, the DOL also finalized amendments to several class prohibited transaction exemptions (PTE), which exempt certain compensation arrangements that would otherwise be prohibited.
+Added: In July 2024, two federal district courts separately issued nationwide stays of the effective date of the final rule and PTE amendments pending consideration of the merits.
+Added: We are monitoring the legal activity while continuing to evaluate the impact these new rules could have on our business.
+Added: If the rules become effective as promulgated, we expect compliance will require us to alter certain of our business practices and impose additional costs.
Insurance Agencies
7 unchanged sentences
Representatives of the Arizona Department of Insurance periodically determine whether Penn-Ohio has maintained required reserves, established adequate deposits under a reinsurance agreement and complied with reporting requirements under the applicable Arizona statutes.
−Removed: Other Laws and Regulations Pertaining to Banks and Financial Services Companies
−Removed: FNB, FNBPA and our subsidiaries and affiliates are also subject to a variety of other laws and regulations in addition to those already discussed herein with respect to the operation of our businesses, including but not limited to Expedited Funds Availability (and its implementing Regulation CC), Reserve Requirements (and its implementing Regulation D), Margin Stock Loans (and its implementing Regulation U), Right To Financial Privacy Act, Flood Disaster Protection Act, Homeowners Protection Act, Servicemembers Civil Relief Act, Telephone Consumer Protection Act, CAN-SPAM Act, Children’s Online Privacy Protection Act, and the John Warner National Defense Authorization Act.
−Removed: In addition, SOX addresses, among other issues, corporate governance, auditing and accounting, executive compensation, and enhanced and timely disclosure of corporate information.
−Removed: As directed by SOX, our Chief Executive Officer and Chief Financial Officer are required to certify that our quarterly and annual reports do not contain any untrue statement of a material fact.
−Removed: The rules adopted by the SEC under SOX have several requirements, including having these officers certify that:
−Removed: they are responsible for establishing, maintaining and regularly evaluating the effectiveness of our internal control over financial reporting;
−Removed: they have made certain disclosures to our auditors and the audit committee of the Board of Directors about our internal control over financial reporting;
−Removed: and they have included information in our quarterly and annual reports about their evaluation and whether there have been changes in our internal control over financial reporting or in other factors that could materially affect internal control over financial reporting.
−Removed: Climate-Related Risk Management and Regulation
−Removed: In recent years the federal banking agencies have increased their focus on climate-related risks impacting the operations of banks, the communities they serve and the broader financial system.
−Removed: Accordingly, the agencies have begun to enhance their supervisory expectations regarding the climate risk management practices of larger banking organizations, including by encouraging such banks to:
−Removed: ensure that management of climate-related risk exposures has been incorporated into existing governance structures;
−Removed: evaluate the potential impact of climate-related risks on the bank’s financial condition, operations and business objectives as part of its strategic planning process;
−Removed: account for the effects of climate change in stress testing scenarios and systemic risk assessments;
−Removed: revise expectations for credit portfolio concentrations based on climate-related factors;
−Removed: consider investments in climate-related initiatives and lending to communities disproportionately impacted by the effects of climate change;
−Removed: evaluate the impact of climate change on the bank’s borrowers and consider possible changes to underwriting criteria to account for climate-related risks to mortgaged properties;
−Removed: incorporate climate-related financial risk into the bank’s internal reporting, monitoring and escalation processes;
−Removed: and prepare for the transition risks to the bank associated with the adjustment to a low-carbon economy and related changes in laws, regulations, governmental policies, technology, and consumer behavior and expectations.
−Removed: On October 21, 2021, the FSOC published a report identifying climate-related financial risks as an “emerging threat” to financial stability.
−Removed: On December 16, 2021, the OCC issued proposed principles for climate-related financial risk management for national banks with more than $100 billion in total assets.
−Removed: Further, on March 30, 2022 and December 2, 2022, respectively, the FDIC and the FRB issued their own proposed principles for climate risk management, which are applicable to larger banking organizations.
−Removed: Although these risk management principles, if adopted as proposed, would not apply to FNBPA directly based upon our current size, the OCC has indicated that all banks, regardless of their size, may have material exposures to climate-related financial and other risks that require prudent management.
−Removed: The federal banking agencies, either independently or on an interagency basis, are expected to adopt a more formal climate risk management framework for larger banking organizations.
−Removed: In October 2023, the OCC issued its Risk Management:
−Removed: Principles for Climate-Related Financial Risk Management for Large Financial Institutions governing financial institutions with consolidated assets over $100 billion.
−Removed: These risk management principles are deemed safety and soundness concerns and are designed to provide guidance to large financial institutions regarding climate risk considerations relative to physical risks and transition risks associated with climate change.
−Removed: It is anticipated that the OCC will consider climate risk elements related to these principles in their supervisory oversight of financial institutions with less than $100 billion in assets.
−Removed: Also, the FRB announced on September 29, 2022 that six of the largest U.S.
−Removed: banking organizations will participate in a climate scenario analysis pilot program in order to assess the resilience of such organizations under various hypothetical scenarios involving physical and transition climate-related risks on specific residential and commercial real estate in their portfolios for the purpose of using scenarios on current policies and policies targeting zero emissions by 2050.
−Removed: The FRB states the overriding purpose of the pilot climate risk assessment study is to deepen the understanding of climate risk management practices and advance the development of the capacity to better identify, measure, monitor and manage climate-related risks.
−Removed: The SEC has issued a proposed rule that, if adopted, would require public companies to provide detailed reporting of climate-related risks (material risks and strategic implications), green-house gas emissions and net-zero transition plans (targets pertaining to planned reductions).
−Removed: As climate-related supervisory guidance is formalized, and relevant risk areas and corresponding control expectations are further refined, we may be required to expend
−Removed: significant capital and incur compliance, operating, maintenance and remediation costs in order to conform to such requirements.
−Removed: In addition, states are considering taking similar actions on climate-related financial risks, including certain states in which we operate.
−Removed: For example, in January 2022, North Carolina Governor Roy Cooper issued Executive Order No.
−Removed: 246, which establishes science-based goals of a 50% reduction in greenhouse gas emissions by 2030 and net-zero emissions by 2050 and affirmed the state’s commitment to climate action and environmental justice.
−Removed: Additionally, in June 2022, Maryland’s Climate Solutions Now Act of 2022 went into effect.
−Removed: The Act requires the state to reduce statewide greenhouse gas emissions by, among other things, developing energy efficiency and emissions reduction requirements for certain buildings.
−Removed: Under the Act, Maryland targets a net zero goal by 2045 for greenhouse gas emissions.
−Removed: In July 2022, District of Columbia policymakers approved two bills aimed at decarbonization through reduction of greenhouse gases and setting decarbonization targets for the District’s homes and buildings.
−Removed: Maryland Attorney General Brian E.
−Removed: Frosh and District of Columbia Attorney General Karl A.
−Removed: Racine also both joined a coalition of 19 attorneys general in supporting the SEC’s Proposed Rules for The Enhancement and Standardization of the Climate-Related Disclosure for Investors.
−Removed: State and local climate-related legislative and regulatory initiatives may require us to expend capital to conform to applicable requirements.
−Removed: Digital Asset Regulation
−Removed: On January 3, 2023, the federal banking agencies issued additional guidance in the form of a joint statement addressing digital asset-related risks to banking organizations.
−Removed: That statement noted the recent volatility and exposure of vulnerabilities in the digital asset sector and indicated that the agencies are continuing to assess whether or how the digital asset-related activities of banking organizations can be conducted in a safe and sound manner and in compliance with all applicable laws and regulations.
−Removed: The statement stressed that each agency has developed, and expects banking organizations to follow, supervisory processes for evaluating proposed and existing digital asset activities.
−Removed: We do not invest in digital assets or so-called cryptocurrencies.
−Removed: Governmental Policies
+Added: Heightened Standards for Risk Management Governance
+Added: The OCC’s Heightened Standards establish guidelines for the governance and risk management practices of OCC-regulated institutions with total consolidated assets of $50 billion or greater.
+Added: These Heightened Standards require covered banks to establish and adhere to a written governance framework in order to manage and control their risk-taking activities, provide standards for covered banks’ boards of directors to oversee the risk governance framework, and describe the appropriate risk management roles and responsibilities of front line units, independent risk management, and internal audit functions.
+Added: FNBPA currently has total consolidated assets of $48.4 billion and is currently preparing to meet the requirements of Heightened Standards.
+Added: Establishing this framework comes with additional costs on OCC-regulated institutions with $50 billion or more in total consolidated assets.
+Added: Monetary Policy
The operations of FNB and our subsidiaries are affected not only by general economic conditions, but also by the policies of various regulatory authorities and the current Presidential Administration.
1 unchanged sentence
These policies have a significant influence on overall growth and distribution of loans, investments and deposits and affect interest rates charged on loans or paid for deposits.
−Removed: In fact, in the midst of rising inflation and pressure to raise interest rates, in its FOMC policy statement issued on January 26, 2022, the FRB strongly signaled that it would soon be time to raise the target range for the Federal funds rate, and the FOMC has since increased the target Federal funds rate eleven times during 2022 and 2023 to a range of 5.25% to 5.50% as of December 31, 2023.
−Removed: The FOMC signaled that current FRB direction is to begin lowering rates at some point during 2024 as inflation returns to more normalized levels.
+Added: Throughout 2022 and 2023, the FRB raised the target range for the federal funds rate in an effort to curb inflation.
+Added: From September 2024 to December 2024, the FOMC lowered the target range for the federal funds rate by 100 basis points to a range of 4.25% to 4.50%.
FRB monetary policies have had a significant effect on the operating results of all financial institutions in the past and may continue to do so in the future.
5 unchanged sentences
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.