What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-26 · 375 added, 425 removed, 812 unchanged (50% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MD&A represents an overview of and highlights material changes to our financial condition and consolidated results of operations.

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) represents an overview of and highlights material changes to our financial condition and consolidated results of operations.

This MD&A should be read in conjunction with the Consolidated Financial Statements and Notes presented in Item 8 of this Report.

1 unchanged sentence

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Report may contain statements regarding our outlook for earnings, revenues, expenses, tax rates, capital and liquidity levels and ratios, asset quality levels, financial position and other matters regarding or affecting our current or future business and operations.

These statements can be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward‑looking statements involve various assumptions, risks and uncertainties which can change over time.

Actual results or future events may be different from those anticipated in our forward-looking statements and may not align with historical performance and events.

As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance upon such statements.

Forward-looking statements are typically identified by words such as "believe," "plan," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "will," "should," "project," "goal," and other similar words and expressions.

We do not assume any duty to update forward-looking statements, except as required by federal securities laws.

Our forward-looking statements are subject to the following principal risks and uncertainties:

• Our business, financial results and balance sheet values are affected by business, economic and political circumstances, including, but not limited to:

(i) developments with respect to the U.S.

and global financial markets;

(ii) supervision, regulation, enforcement and other actions by several governmental agencies, including the FRB, FDIC, FSOC, DOJ, CFPB, UST, OCC and HUD, state attorney generals and other governmental agencies whose actions may affect, among other things, our consumer and mortgage lending and deposit practices, capital structure, investment practices, dividend policy, annual FDIC insurance premium assessment and growth, money supply, market interest rates or otherwise affect business activities of the financial services industry;

(iii) a slowing of the U.S.

economy in general and regional and local economies within our market area;

(iv) inflation concerns;

(v) the impacts of tariffs or other trade policies of the U.S.

or its global trading partners;

and (vi) the sociopolitical environment in the U.S.

• Business and operating results are affected by our ability to identify and effectively manage risks inherent in our businesses, including, where appropriate, through effective use of systems and controls, third-party insurance, derivatives, and capital management techniques, and to meet evolving regulatory capital and liquidity standards.

• Competition can have an impact on customer acquisition, growth and retention, and on credit spreads, deposit gathering and product pricing, which can affect market share, loans, deposits and revenues.

Our ability to anticipate, react quickly and continue to respond to technological changes and significant adverse industry and economic events can also impact our ability to respond to customer needs and meet competitive demands.

• Business and operating results can also be affected by difficult to predict uncertainties, such as widespread natural and other disasters, wars, pandemics, including post-pandemic return to normalcy, global events and geopolitical instability, including the Ukraine-Russia conflict, and the emerging military conflict in Israel and Gaza, shortages of labor, supply chain disruptions and shipping delays, terrorist activities, system failures, security breaches, significant political events, cyber-attacks, international hostilities or other extraordinary events which are beyond our control and may significantly impact the U.S.

or global economy and financial markets generally, or us or our counterparties, customers or third-party vendors specifically.

• Legal, regulatory and accounting developments could have an impact on our ability to operate and grow our businesses, financial condition, results of operations, competitive position, and reputation.

Reputational impacts could affect matters such as business generation and retention, liquidity, funding, and the ability to attract and retain talent.

These developments could include:

◦ Policies and priorities of the current U.S.

presidential administration, including legislative and regulatory reforms, more aggressive approaches to supervisory or enforcement priorities with consumer and antidiscrimination lending laws by the federal banking regulatory agencies and the DOJ, changes affecting oversight of the financial services industry, regulatory obligations or restrictions, consumer protection, taxes,

employee benefits, compensation practices, pension, bankruptcy and other industry aspects, and changes in accounting policies and principles.

◦ Ability to continue to attract, develop and retain key talent.

◦ Changes to regulations or accounting standards governing bank capital requirements, loan loss reserves and liquidity standards.

◦ Changes in monetary and fiscal policies, including interest rate policies and strategies of the FOMC.

◦ Unfavorable resolution of legal proceedings or other claims and regulatory and other governmental investigations or inquiries.

These matters may result in monetary judgments or settlements, enforcement actions or other remedies, including fines, penalties, restitution or alterations in our business practices, including financial and other types of commitments, and in additional expenses and collateral costs, and may cause reputational harm to FNB.

◦ Results of the regulatory examination and supervision process, including our failure to satisfy requirements imposed by the federal bank regulatory agencies or other governmental agencies.

◦ Business and operating results are affected by our ability to effectively identify and manage risks inherent in our businesses, including, where appropriate, through effective use of policies, processes, systems and controls, third-party insurance, derivatives, and capital and liquidity management techniques.

◦ The impact on our financial condition, results of operations, financial disclosures and future business strategies related to the impact on the ACL due to changes in forecasted macroeconomic conditions as a result of applying the “current expected credit loss” accounting standard, or CECL.

◦ A failure or disruption in or breach of our operational or security systems or infrastructure, or those of third parties, including as a result of cyber-attacks or campaigns.

◦ Increased funding costs and market volatility due to market illiquidity and competition for funding.

This Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward‑looking statements are those that do not relate to historical facts and that are based on current assumptions, beliefs, estimates, expectations and projections, many of which, by their nature, are inherently uncertain and beyond our control.

Forward-looking statements may relate to various matters, including our financial condition, results of operations, plans, objectives, future performance, business or industry, and usually can be identified by the use of forward-looking words, such as “anticipates,” “assumes,” “believes,” “can,” “continues,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “likely,” “may,” “might,” “objective,” “plans,” “potential,” “projects,” “remains,” “should,” “target,” “trend,” “will,” “would,” or similar words or expressions or variations thereof, and the negative thereof, but these terms are not the exclusive means of identifying such statements.

You should not place undue reliance on forward-looking statements, as they are subject to risks and uncertainties, including, but not limited to, those described below.

When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements we may make.

There are various important factors that could cause future results to differ materially from historical performance and any forward-looking statements.

Factors that might cause such differences, include, but are not limited to:

• the credit risk associated with the substantial amount of commercial loans and leases in our loan portfolio;

• the volatility of the mortgage banking business;

• changes in market interest rates and the unpredictability of monetary, tax and other policies of government agencies;

• the impact of changes in interest rates on the value of our securities portfolios;

• changes in our ability to obtain liquidity as and when needed to fund our obligations as they come due, including as a result of adverse changes to our credit ratings;

• the risk associated with uninsured deposit account balances;

• regulatory limits on our ability to receive dividends from our subsidiaries and pay dividends to our shareholders;

• our ability to recruit and retain qualified banking professionals;

• the financial soundness of other financial institutions and the impact of volatility in the banking sector on us;

• changes and instability in economic conditions and financial markets, in the regions in which we operate or otherwise, including a contraction of economic activity;

• our ability to continue to invest in technological improvements as they become appropriate or necessary;

• any interruption in or breach in security of our information systems, or other cybersecurity risks;

• risks associated with reliance on third-party vendors;

• risks associated with the use of models, estimations and assumptions in our business;

• the effects of adverse weather events and public health emergencies;

• the risks associated with acquiring other banks and financial services business, including integration into our existing operations;

• the extensive federal and state regulation, supervision and examination governing almost every aspect of our operations, and potential expenses associated with complying with such regulations;

• our ability to comply with the consent orders entered into by FNBPA with the DOJ and the North Carolina State Department of Justice, and related costs and potential reputational harm;

• changes in federal, state or local tax rules and regulations or interpretations, or accounting policies, standards and interpretations;

• the effects of climate change and related legislative and regulatory initiatives;

• any reputation, credit, interest rate, market, operational, litigation, legal, liquidity, regulatory and compliance risk resulting from developments related to any of the risks discussed above.

We caution that the risks identified here are not exhaustive of the types of risks that may adversely impact us and actual results may differ materially from those expressed or implied as a result of these risks and uncertainties, including, but not limited to, the risk factors and other uncertainties described under Item 1A.

Risk Factors and the Risk Management sections in this Annual Report on Form 10-K (including the MD&A section), our subsequent 2024 Quarterly Reports on Form 10-Q (including the risk factors and risk management discussions) and our other subsequent filings with the SEC, which are available on our corporate website at https://www.fnb-online.com/about-us/investor-information/reports-and-filings or the SEC's website at www.sec.gov.

We have included our web address as an inactive textual reference only.

Information on our website is not part of our SEC filings.

Risk Factors and elsewhere in this Report.

You should treat forward-looking statements as speaking only as of the date they are made and based only on information then actually known to us.

We do not undertake, and specifically disclaim any obligation, to update or revise any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

24 unchanged sentences

The Provision for Credit Losses section in the Results of Operations includes a discussion of the factors affecting changes in the ACL during the current period.

See Note 1, “Summary of Significant Accounting Policies” and Note 6, “Loans and Leases” in the Notes to Consolidated Financial Statements for further information on the ACL.

See Note 1, “Summary of Significant Accounting Policies,” Note 5, “Loans and Leases” and

Note 6, “Allowance for Credit Losses on Loans and Leases” in the Notes to Consolidated Financial Statements for further information on the ACL.

Fair Value of Financial Instruments

16 unchanged sentences

The value of goodwill and other identifiable intangibles is dependent upon our ability to provide high quality, cost-effective services in the face of competition.

As such, these values are supported ultimately by revenue that is driven by the volume of

business transacted.

As such, these values are supported ultimately by revenue that is driven by the volume of business transacted.

A decline in earnings as a result of a lack of growth or our inability to deliver cost-effective services over sustained periods can lead to impairment in value, which could result in additional expense and adversely impact earnings in future periods.

31 unchanged sentences

USE OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE INDICATORS

To supplement our Consolidated Financial Statements presented in accordance with GAAP, we use certain non-GAAP financial measures, such as operating net income available to common stockholders, operating earnings per diluted common share, return on average tangible common equity, operating return on average tangible common equity, return on average tangible assets, tangible book value per common share, the ratio of tangible equity to tangible assets, the ratio of tangible common equity to tangible assets, net loan charge-offs, excluding an isolated commercial loan charge-off due to alleged fraud to total average loans and leases, operating non-interest income, operating non-interest expense, efficiency ratio and net interest margin (FTE) to provide information useful to investors in understanding our operating performance and trends, and to facilitate comparisons with the performance of our peers.

To supplement our Consolidated Financial Statements presented in accordance with GAAP, we use certain non-GAAP financial measures, such as operating net income available to common shareholders, operating earnings per diluted common share, return on average tangible common equity, operating return on average tangible common equity, return on average tangible assets, tangible book value per common share, the ratio of tangible common equity to tangible assets, operating non-interest income, operating non-interest expense, efficiency ratio and net interest margin (FTE) to provide information useful to investors in understanding our operating performance and trends, and to facilitate comparisons with the performance of our peers.

Management uses these measures internally to assess and better understand our underlying business performance and trends related to core business activities.

1 unchanged sentence

These non-GAAP financial measures should be viewed as supplemental in nature, and not as a substitute for, or superior to, our reported results prepared in accordance with GAAP.

When non-GAAP financial measures are disclosed, the SEC's Regulation G requires:

(i) the presentation of the most directly comparable financial measure calculated and presented in accordance with GAAP and (ii) a reconciliation of the differences between the non-GAAP financial measure presented and the most directly comparable financial measure calculated and presented in accordance with GAAP.

Reconciliations of non-GAAP operating measures to the most directly comparable GAAP financial measures are included later in this report under the heading “Reconciliations of Non-GAAP Financial Measures and Key Performance Indicators to GAAP”.

Management believes items such as merger expenses, FDIC special assessment, realized loss on securities restructuring, valuation allowance on auto loans held-for-sale, initial provision for non-PCD loans acquired and branch consolidation costs are not organic to run our operations and facilities.

Management believes certain items (e.g.

merger expenses, FDIC special assessment and realized loss on investment securities restructuring) are not organic to running our operations and facilities.

These items are considered significant items impacting earnings as they are deemed to be outside of ordinary banking activities.

17 unchanged sentences

FINANCIAL SUMMARY

For the full year of 2023, net income available to common stockholders was $476.8 million, or $1.31 per diluted common share.

Comparatively, full-year 2022 net income available to common stockholders totaled $431.1 million, or $1.22 per diluted common share.

On an operating basis, full-year 2023 earnings per diluted common share (non-GAAP) was $1.57, excluding $116.2 million (pre-tax) of significant items impacting earnings.

Operating earnings per diluted common share (non-GAAP) for the full year of 2022 was $1.40, excluding $80.8 million (pre-tax) of significant items impacting earnings.

The beginning of 2023 started with the banking industry disruption caused by the Silicon Valley Bank and Signature Bank failures.

We were well-positioned to meet the needs of our customers and communities through those challenges given our strategic focus to maintain a diversified and granular deposit base, conservative and prudent balance sheet management for the long-term, and sound risk management policies and governance as we achieved full year operating earnings per diluted common share (non-GAAP) totaling a record $1.57, record revenue of $1.6 billion and tangible book value per common share (non-GAAP) growth of $1.20, or 14.5%, year-over-year, to an all-time high of $9.47.

Total average deposits grew $568.3 million, or 1.7%, and we ended the year with approximately 78% of total deposits insured by the FDIC or collateralized.

As part of our strategy to optimize the balance sheet and improve future earnings, in the fourth quarter of 2023, we completed the sale of $648.7 million of AFS investment securities and transferred $355 million of indirect auto loans to held-for-sale as part of our ongoing proactive balance sheet management strategy.

The sale of AFS investment securities resulted in a realized loss (pre-tax) of $67.4 million.

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

The transfer of the indirect auto loans to held-for-sale resulted in a negative valuation allowance impact of $16.7 million (pre-tax) recognized in other non-interest expense due primarily to changes in interest rates from time of origination.

The sale of these loans closed in February 2024 with the proceeds used to repay borrowings that have a similar yield to the sold loans.

The transfer to held-for-sale benefited the loan-to-deposit ratio by approximately 100 basis points.

The cumulative impact of these balance sheet actions has a tangible book value earn back period of less than one year, versus an earn-back period of five years for a stock buyback, an alternative use of capital, and significantly higher earnings accretion from the repositioned investment securities yields.

We also announced the February 2024 redemption of all $110 million of Series E preferred stock.

For 2024, net income available to common shareholders was $459.3 million, or $1.27 per diluted common share.

Comparatively, net income available to common shareholders for 2023 totaled $476.8 million, or $1.31 per diluted common share.

On an operating basis, 2024 earnings per diluted common share (non-GAAP) was $1.39, excluding $0.12 per diluted common share (non-GAAP) of significant items impacting earnings.

Operating earnings per diluted common share (non-GAAP) for 2023 was $1.57, excluding $0.26 per diluted common share of significant items impacting earnings.

We achieved solid corporate performance in 2024 by, among other things, exceeding peer performance on loan growth, deposit growth, and deposit cost management amidst an uncertain interest rate environment.

We achieved new milestones and set new records, notably in the areas of non-interest income, capital, and deposit market share.

Additionally, in 2024, we grew to nearly $49 billion in total assets and achieved a record market capitalization ending the year at $5.3 billion.

For 2024, tangible book value per share (non-GAAP) grew 11% year-over-year, to a record $10.49 and operating return on average tangible common equity (non-GAAP) equaled 14.5%.

We also achieved full-year non-interest income of $316 million and record full-year operating non-interest income (non-GAAP) of $350 million, demonstrating the impact of our diversified business model and robust suite of products and services.

We further strengthened our liquidity and capital position improving the loan-to-deposit ratio over 500 basis points from the peak in 2024 through strong deposit gathering initiatives and achieved higher capital ratios with a record CET1 ratio of 10.6%, and a tangible common equity to tangible assets (non-GAAP) ratio of 8.2%.

We benefited from our geographic footprint, investments in technology, strong balance sheet and high caliber front-line bankers to generate year-over-year loan growth of 5.0% and robust deposit growth of 6.9%.

Our credit metrics ended the year at solid levels in a changing economic environment with total delinquencies at 0.83% and net charge-offs at 0.19% for the full year 2024.

Income Statement Highlights (2024 compared to 2023)

• Record total revenue of $1.6 billion, an increase of $127.5 million, or 8.8%, led to net income available to common stockholders of $476.8 million, an increase of $45.7 million, or 10.6%, and operating net income available to common stockholders (non-GAAP) of $568.6 million, an increase of $73.7 million, or 14.9%.

• Earnings per diluted common share was $1.31, compared to $1.22, an increase of 7.4%.

• Operating earnings per diluted common share (non-GAAP) was $1.57, compared to $1.40, an increase of 12.1%.

• Net interest income was $1.3 billion, compared to $1.1 billion, up 17.6%, primarily due to the benefit of growth in earning assets, the impact from the higher interest rate environment and deposit growth accompanied by prudent management of deposit betas.

• Net interest margin (FTE) (non-GAAP) increased 32 basis points to 3.35% from 3.03%.

The FOMC raised the target federal funds rate by a total of 100 basis points in 2023.

The yield on earning assets (non-GAAP) increased 153 basis points to 5.00%, primarily reflecting higher yields on loans, investment securities and interest-bearing deposits

with banks due to the impact of the higher interest rate environment.

The cost of funds increased 127 basis points to 1.73% due to the costs of interest-bearing deposits increasing 164 basis points to 2.13%, short-term borrowings increasing 203 basis points and long-term debt increasing 110 basis points primarily from the August 2022 offering of $350 million in senior notes, partially offset by the maturity of $300 million in 2.20% fixed-rate senior notes in February of 2023.

• The provision for credit losses totaled $71.8 million, compared to $64.2 million which included $28.5 million of initial provision for non-PCD loans associated with the Howard and Union acquisitions in 2022.

The provision for credit losses for 2023 was primarily due to loan growth, the previously disclosed $31.9 million isolated commercial loan that was charged off in the third quarter of 2023 due to alleged fraud and other charge-off activity.

• Non-interest income was $254.3 million, decreasing $69.2 million, or 21.4%, compared to $323.6 million, primarily due to a $67.4 million realized loss (pre-tax) on investment securities restructuring.

On an operating basis (non-GAAP), non-interest income totaled $321.7 million, when adjusting for the investment securities restructuring and decreases in service charges, capital markets income and other non-interest income, partially offset by an increase in wealth management revenues, interchange and card transaction fees and dividends on non-marketable equity securities.

• Total revenue of $1.6 billion, an increase of $26.0 million, or 1.7%.

Total revenue on an operating basis was essentially flat (down 0.5%) as net interest income was impacted by lags in interest rate resets for interest bearing deposits compared to interest rate resets on loans related to the FOMC’s interest rate cuts.

During the fourth quarter of 2024, the FOMC lowered the target federal funds rate by a total of 50 basis points, bringing the full-year decrease to 100 basis points.

• Net interest income was $1.3 billion, down 2.7%, primarily due to higher interest-bearing deposit costs from continued balance growth in higher yielding deposit products and the impact of the FOMC's interest rate cuts in 2024.

• Net interest margin (FTE) (non-GAAP) decreased 26 basis points to 3.09% from 3.35%.

The yield on earning assets (non-GAAP) increased 42 basis points to 5.42%.

However, the cost of funds increased 72 basis points to 2.45% with the costs of interest-bearing deposits increasing 83 basis points to 2.96%, short-term borrowings increasing 105 basis points and long-term debt increasing 24 basis points.

• The provision for credit losses totaled $79.8 million, compared to $71.8 million.

The provision for credit losses increase for 2024 was primarily due to loan growth and net charge-off activity.

The provision for credit losses increase for 2023 was primarily due to loan growth, the previously disclosed $31.9 million isolated commercial loan that was charged off in the third quarter of 2023 due to alleged fraud, and other charge-off activity.

• Non-interest income was $316.4 million, increasing $62.1 million, or 24.4%, compared to $254.3 million, primarily due to increases in service charges, wealth management, mortgage banking operations, dividends on non-marketable equity securities and other non-interest income, partially offset by decreases in interchange and card transaction fees, insurance commissions and fees and capital markets income.

Additionally, we recognized a $34.0 million realized loss (pre-tax) on an investment securities restructuring in 2024 compared to a $67.4 million realized loss (pre-tax) on an investment securities restructuring in 2023.

On an operating basis (non-GAAP), non-interest income totaled a record $350.4 million, compared to $321.7 million.

• Non-interest expense was $961.3 million, compared to $915.4 million.

Excluding significant items totaling $48.8 million in 2023 and $52.3 million in 2022, operating non-interest expense (non-GAAP) increased $92.5 million, or 11.9%.

Salaries and employee benefits increased $35.4 million, or 8.3%, due to normal merit increases, production-related commissions and the addition of the acquired Union expense base.

Occupancy and equipment increased $17.2 million, or 11.9%, primarily from technology-related investments.

• FDIC insurance expense of $60.8 million included a $29.9 million FDIC special assessment.

The special assessment was considered a significant item impacting earnings as it reflected replenishment of the FDIC's DIF associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank.

Excluding significant items, operating non-interest expense (non-GAAP) increased $75.7 million, or 8.7%.

Salaries and employee benefits increased $42.4 million, or 9.2%, due to normal annual merit increases, higher production-related commissions given the strong non-interest income activity, strategic hiring associated with our focus to grow market share and continued investments in our risk management infrastructure, and elevated employer-paid healthcare costs.

Outside services increased $12.3 million, or 14.6%, due to higher volume-related technology and third-party costs.

Occupancy and equipment increased $15.0 million, or 9.3%, primarily from technology-related investments and the move to the new Pittsburgh headquarters.

• Earnings per diluted common share was $1.27, compared to $1.31, a decrease of 3.1%.

• Operating earnings per diluted common share (non-GAAP) was $1.39, compared to $1.57, a decrease of 11.5%.

• The efficiency ratio (non-GAAP) remained at a favorable level of 55.6%, compared to 51.2%.

• In the fourth quarter of 2024, we recognized renewable energy investment tax credits of $28.4 million as a benefit to income taxes from a solar project financing transaction.

A related non-credit valuation impairment of $10.4 million (pre-tax) was recognized on the financing receivable in other non-interest expense.

• Income tax expense decreased $8.4 million, or 8.5%.

The effective tax rate was 16.9%, compared to 20.6%, primarily due to renewable energy investment tax credits recognized in 2023 as part of a solar project financing transaction originated by our commercial leasing business.

• Return on average tangible common equity ratio (non-GAAP) was 15.5%, compared to 15.3%.

Balance Sheet Highlights (period-end balances, 2023 compared to 2022, unless otherwise indicated)

• Total assets were $46.2 billion, compared to $43.7 billion, an increase of $2.4 billion, or 5.6%, primarily from organic growth in loans.

• Average loans totaled $31.4 billion, an increase of $3.5 billion, or 12.7%, due to healthy organic growth across our footprint, as well as adding the Union loans to portfolio balances.

Growth in average commercial loans totaled $1.9 billion, or 10.7%, including growth of $1.0 billion, or 9.3%, in commercial real estate and $793.7 million, or 12.2%, in commercial and industrial loans.

Growth in total average consumer loans totaled $1.6 billion, or 16.5%, and was due to an increase in residential mortgage loans of $1.4 billion, or 31.3%, indirect installment loans of $134.8 million, or 9.8%, and direct home equity installment loans of $68.6 million, or 2.6%.

• Total average investment securities were $7.2 billion, compared to $7.1 billion, an increase of $14.1 million, or 0.2%.

• Total average deposits grew $568.3 million, or 1.7%, led by an increase in average time deposits of $2.2 billion, or 72.3%, offset by declines of $739.2 million, or 6.4% in non-interest-bearing deposits, $655.3 million, or 4.4%, in interest-bearing demand deposits and $209.4 million, or 5.3%, in savings deposits.

The increase in average time deposits offset the decline in other deposit categories as customers continue to migrate deposit balances into higher-yielding deposit products.

• The ratio of loans to deposits was 93.1%, compared to 87.0%, as loan growth outpaced deposit growth on a year-over-year basis.

• The ratio of non-performing loans plus OREO to total loans and lease plus OREO decreased 5 basis points to 0.34%.

Total delinquency decreased 1 basis point to 0.70%, compared to 0.71%.

Both measures continue to remain at historically low levels.

The effective tax rate was 16.3%, compared to 16.9%, primarily due to renewable energy investment tax credits recognized in 2024 and 2023 as part of solar project financing transactions originated by our commercial leasing business.

Balance Sheet Highlights (2024 compared to 2023, unless otherwise indicated)

• Total assets were $48.6 billion, compared to $46.2 billion, an increase of $2.5 billion, or 5.3%, primarily from organic growth in loans of $1.6 billion and increased cash and cash equivalents of $0.8 billion.

• During 2024, we sold $231.4 million of AFS securities as part of a proactive balance sheet management strategy.

We reinvested the proceeds from the sale of these AFS securities with an average yield of 1.41% into securities yielding 4.78% with a similar duration and convexity profile.

• Period-end total loans and leases increased $1.6 billion, or 5.0%.

Consumer loans increased $949.0 million, or 8.0%, even with a $431 million indirect auto loan sale that closed in September 2024, and commercial loans and leases increased $667.2 million, or 3.3%.

Our loan growth was driven by the continued success of our strategy to grow high-quality loans and deepen customer relationships across our diverse geographic footprint.

• Period-end total deposits increased $2.4 billion, or 6.9%, driven by an increase of $1.9 billion in interest-bearing demand deposits and $1.3 billion in shorter-term time deposits more than offsetting the decline in non-interest-bearing demand deposits of $461.3 million and savings deposits of $286.7 million as customers continued to opt for higher-yielding deposit products given the interest rate environment.

• The mix of non-interest-bearing demand deposits to total deposits equaled 26% at December 31, 2024, compared to 29% at the prior year end, reflecting the strong interest-bearing deposit growth and fairly stable non-interest-bearing demand deposit balances.

• The ratio of loans to deposits was 91.5%, compared to 93.1%, as deposit growth outpaced loan growth on a year-over-year basis.

• In December 2024, we issued $500 million aggregate principal amount of fixed rate / floating rate senior notes maturing in December 2030.

The senior notes bear interest at 5.722% per annum until December 11, 2029.

Starting on December 11, 2029, the senior notes will bear interest at a floating rate per annum equal to compounded SOFR plus 1.93%.

The new debt will be used for general corporate purposes and serve as a replacement for $450 million of senior and subordinated note maturities occurring in 2025.

• The ratio of non-performing loans plus OREO to total loans and leases plus OREO increased 14 basis points to 0.48%.

Total delinquency increased 13 basis points to 0.83%, compared to 0.70%.

Overall, asset quality metrics continue to remain at solid levels.

Net charge-offs totaled $62.7 million, or 0.19% of total average loans, compared to $67.7 million, or 0.22%.

Excluding the previously mentioned charge-off, net charge-offs would have been $35.9 million, or 0.11% of total average loans (non-GAAP), remaining at historically low levels.

• The dividend payout ratio for 2023 was 36.5%, compared to 39.5%.

• During 2023, we repurchased nearly 3.1 million shares of our common stock at a weighted average share price of $11.61 for $36.5 million.

There currently is $139.1 million of the authorized amount remaining for future repurchase activity.

• The ratio of the ACL to total loans and leases was 1.25%, compared to 1.33%, reflecting net loan growth and charge-off activity.

• The ACL on loans and leases totaled $423 million at December 31, 2024, compared to $406 million with the increase reflecting net loan growth.

• Tangible book value per common share (non-GAAP) of $9.47 increased 14.5% from year-end 2022.

AOCI reduced the tangible book value per common share (non-GAAP) by $0.65 as of December 31, 2023, compared to $0.99 at the end of 2022, primarily due to the impact of higher interest rates on the fair value of AFS securities.

• The CET1 regulatory capital ratio was 10.04%, benefiting from retained earnings growth, compared to 9.82%.

The ratio of the ACL to total loans and leases was stable at 1.25%.

• On February 15, 2024, we redeemed all our outstanding Series E Perpetual Preferred Stock and paid the final preferred dividend of $2.0 million on the redemption date.

The excess of the redemption value over the carrying value on the Series E Perpetual Preferred Stock of $4.0 million was considered a significant item impacting earnings.

• The dividend payout ratio for 2024 was 38.0%, compared to 36.5%.

• Book value per common share of $17.52 increased 5.8%, and tangible book value per common share (non-GAAP) of $10.49 increased $1.02, or 10.8%.

AOCI reduced the tangible book value per common share (non-GAAP) by $0.47 as of December 31, 2024, compared to $0.65 at the end of 2023, primarily due to the impact of higher interest rates on the fair value of AFS securities, partially offset by the 2024 securities repositioning.

• The CET1 regulatory risk-based capital ratio was 10.58% at December 31, 2024, benefiting from retained earnings growth, compared to 10.04% at December 31, 2023.

Year-to-Date Results Summary 2024 2023

Reported results

Net income available to common stockholders (millions) $ 476.8 $ 431.1

Net income available to common shareholders (millions) $ 459.3 $ 476.8

Net income per diluted common share 1.27 1.31

Book value per common share (period-end) 16.56 15.39

Book value per common share 17.52 16.56

Operating results (non-GAAP)

Operating net income available to common stockholders (millions) $ 568.6 $ 494.9

Operating net income available to common shareholders (millions) $ 505.2 $ 568.6

Operating net income per diluted common share 1.39 1.57

1 unchanged sentence

Significant items impacting earnings (1) (millions)

Preferred dividend equivalent at redemption $ (4.0) $ —

Pre-tax merger-related expenses — (2.2)

After-tax impact of merger-related expenses — (1.8)

Pre-tax provision expense related to acquisitions — (28.5)

After-tax impact of provision expense related to acquisitions — (22.5)

Pre-tax branch consolidation costs (1.2) —

2 unchanged sentences

After-tax impact of FDIC assessment (4.1) (23.7)

Pre-tax loss on securities restructuring (67.4) —

After-tax loss on securities restructuring (53.2) —

Pre-tax valuation allowance on auto loans held-for-sale (16.7) —

After-tax valuation allowance on auto loans held-for-sale (13.2) —

Total significant items pre-tax $ (116.2) $ (80.8)

Pre-tax realized loss on investment securities restructuring (34.0) (67.4)

After-tax impact of realized loss on investment securities restructuring (26.8) (53.2)

Pre-tax software impairment (3.7) —

After-tax impact of software impairment (2.9) —

Pre-tax loss related to indirect auto loan sales (9.0) (16.7)

After-tax impact of loss related to indirect auto loan sales (7.1) (13.2)

Total significant items after-tax $ (45.8) $ (91.9)

1 unchanged sentence

Common equity tier 1 10.58 % 10.04 %

Tangible common equity to tangible assets (period-end) (non-GAAP) 7.79 7.24

Tangible book value per common share (period-end) (non-GAAP) $ 9.47 $ 8.27

Tangible common equity to tangible assets (non-GAAP) 8.18 7.79

Tangible book value per common share (non-GAAP) $ 10.49 $ 9.47

(1) Favorable (unfavorable) impact on earnings

Industry Developments

BANKING INDUSTRY DISRUPTION

During the second week of March 2023, Silicon Valley Bank failed and was taken over by federal regulators.

The size of the bank, being over $200 billion in assets, made it the second largest U.S.

bank to ever fail.

Subsequently, that week, Signature Bank with assets over $100 billion, was also closed by federal regulators.

On May 1, 2023, it was announced that First Republic Bank was another bank closed by federal regulators.

While these failures were idiosyncratic in nature, these events called into question the stability of the entire banking sector and sparked customer fears of potential loss of deposit balances exceeding the FDIC's $250,000 insurance limit.

While the high-profile bank failures had a diminishing effect on public confidence of the banking system, the federal government took mitigating action.

To strengthen public confidence, the federal government announced that all depositors of Silicon Valley Bank and Signature Bank would be protected with any losses to the DIF recovered by a special assessment on banks.

We recognized the special assessment of $29.9 million in non-interest expense in the fourth quarter of 2023.

In addition to those actions, the FRB made available additional funding to eligible depository institutions to help assure banks the ability to meet the needs of all their depositors.

This action bolstered the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy.

The additional funding was made available through the creation of a new Bank Term Funding Program (BTFP), offering loans of up to one year in length to banks, savings associations, credit unions and other eligible depository institutions pledging U.S.

Treasuries, agency debt and mortgage-backed securities and other qualifying assets as collateral.

These assets are valued at par.

The BTFP is an additional source of liquidity against high-quality securities, eliminating an institution's need to quickly sell those securities in times of stress.

Advances can be requested under the BTFP until March 11, 2024.

As of December 31, 2023, we have not participated in this program.

Additionally, our total deposit balances have remained stable as a result of our granular deposit base with our average customer deposit account balance at approximately $30,000 (below the peer median) and our median consumer deposit account balance at approximately $5,600 as of December 31, 2023.

FDIC-insured or collateralized deposits represented approximately 78% of our total deposits at December 31, 2023, which was higher than our peer median (based on peer data as of September 30, 2023) and we had ample liquidity to fund up to an estimated 146% of our uninsured and non-collateralized deposits.

RESULTS OF OPERATIONS

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Net income available to common stockholders was $476.8 million or $1.31 per diluted common share, compared to net income available to common stockholders of $431.1 million or $1.22 per diluted common share.

Operating earnings per diluted common share (non-GAAP) was $1.57 compared to $1.40.

The results for 2023 included net interest income of $1.3 billion, a 17.6% increase, driven by strong earning asset growth and a higher interest rate environment, provision for credit losses of $71.8 million, including $31.9 million in provision for the previously disclosed commercial loan fully charged-off during the third quarter of 2023 due to alleged fraud, the sale of $648.7 million in AFS investment securities resulting in a realized loss (pre-tax) of $67.4 million, $29.9 million of FDIC special assessment expense, a negative valuation allowance of $16.7 million (pre-tax) on auto loans held-for-sale and $2.2 million of merger-related expenses.

In comparison, the results for 2022 included provision for credit losses of $64.2 million including $28.5 million of initial provision for non-PCD loans associated with the Howard and Union acquisitions, the impact of $7.0 million of branch consolidation expenses and $45.3 million of merger-related expenses.

Net income available to common shareholders was $459.3 million or $1.27 per diluted common share, compared to net income available to common shareholders of $476.8 million or $1.31 per diluted common share.

Operating net income available to common shareholders (non-GAAP) was $505.2 million, or $1.39 per diluted common share (non-GAAP), compared to operating net income available to common shareholders (non-GAAP) of $568.6 million, or $1.57 per diluted common share (non-GAAP).

The results for 2024 included net interest income of $1.3 billion, a 2.7% decrease, with the decline driven by the FOMC’s rate cuts, record non-interest income of $350.4 million on an operating basis (non-GAAP), provision for credit losses of $79.8 million with stable asset quality, and non-interest expenses of $942.3 million on an operating basis (non-GAAP), an increase of $75.7 million or 8.7%, driven primarily by higher salaries and employee benefits expense.

During 2024, significant items impacting earnings of $45.8 million (see Table 1) were recognized.

In comparison, the 2023 results included net interest income of $1.3 billion, provision for credit losses of $71.8 million, including $31.9 million in provision for the previously disclosed commercial loan fully charged-off during the third quarter of 2023 due to alleged fraud, non-interest income of $321.7 million on an operating basis benefiting from our diversified business model and related revenue generation, and operating non-interest expenses (non-GAAP) of $866.6 million.

During 2023, significant items impacting earnings of $91.9 million (see Table 1) were recognized.

The major categories of the Consolidated Statements of Income and their respective impact to the increase (decrease) in net income are presented in the following table:

December 31 $

(in thousands, except per share data) 2023 2022

(dollars in thousands, except per share data) 2024 2023

Net interest income $ 1,280,443 $ 1,316,504 $ (36,061) (2.7) %

5 unchanged sentences

Preferred stock dividends 6,005 8,041 (2,036) (25.3)

Net income available to common stockholders $ 476,810 $ 431,068 $ 45,742 10.6 %

Net income available to common shareholders $ 459,327 $ 476,810 $ (17,483) (3.7) %

Earnings per common share – Basic $ 1.27 $ 1.32 $ (0.05) (3.8) %

12 unchanged sentences

Common equity to assets 12.96 12.88

Tangible equity to tangible assets (1)

Tangible common equity to tangible assets (1)

11 unchanged sentences

Expense Yield/

Interest-earning assets:

Interest-bearing deposits with banks $ 1,016,253 $ 42,894 4.22 % $ 1,053,176 $ 40,860 3.88 % $ 2,174,415 $ 24,005 1.10 %

14 unchanged sentences

Total assets $ 46,812,567 $ 44,609,603 $ 41,954,708

Interest-bearing liabilities:

Interest-bearing demand $ 15,204,358 416,860 2.74 $ 14,296,571 283,914 1.99 $ 14,951,905 78,599 0.53

5 unchanged sentences

Total interest-bearing liabilities 29,798,725 971,707 3.26 27,001,470 656,147 2.43 24,196,187 165,174 0.68

Non-interest-bearing demand 10,900,280 11,639,499 10,090,117

Non-interest-bearing demand deposits 9,897,298 10,900,280 11,639,499

Total deposits and borrowings 39,696,023 2.45 37,901,750 1.73 35,835,686 0.46

1 unchanged sentence

Total liabilities 40,680,221 38,758,521 36,478,865

Stockholders’ equity 5,851,082 5,475,843 5,033,188

Total liabilities and stockholders’ equity $ 44,609,603 $ 41,954,708 $ 38,603,092

Shareholders’ equity 6,132,346 5,851,082 5,475,843

Total liabilities and shareholders’ equity $ 46,812,567 $ 44,609,603 $ 41,954,708

Net interest-earning assets $ 11,967,953 $ 12,707,733 $ 13,134,617

12 unchanged sentences

Net Interest Income

Net interest income on an FTE basis (non-GAAP) of $1.3 billion increased $197.8 million, or 17.5%, from $1.1 billion as the higher interest rate environment benefited earning asset yields given the asset sensitive positioning of the balance sheet and higher yields on new loan originations, which was partially offset by the higher cost of interest-bearing deposits given that customer preferences are migrating toward higher yielding deposit products and the current competitive banking industry.

Average interest-earning assets of $39.7 billion increased $2.4 billion, or 6.4%, primarily driven by an increase of $3.5 billion in average loans and leases which included organic loan origination activity and acquired Union loans offset by a decline in interest-bearing deposits with banks.

Average interest-bearing liabilities of $27.0 billion increased $2.8 billion, or 11.6%, driven by an increase of $1.3 billion in average interest-bearing deposits which included organic growth in new and existing customer relationships and acquired Union deposits, and an increase in average borrowings of $1.5 billion.

Our net interest margin FTE (non-GAAP) was 3.35%, compared to 3.03%, as the yield on earning assets increased 153 basis points to 5.00%, reflecting variable-rate loans that repriced upwards in 2023, as well as higher yields on new loan originations, investment securities and interest-bearing deposits with banks due to the impact of the higher interest rate environment.

The total cost of funds increased 127 basis points to 1.73%, primarily due to a 164 basis point increase in interest-bearing deposit costs.

The rates paid on short-term and long-term borrowings increased 203 and 110 basis points, respectively, due to the higher interest rate environment.

Additionally, average non-interest-bearing deposits decreased $739.2 million, or 6.4% as customers shifted balances into higher yielding deposit products.

Net interest income on an FTE basis (non-GAAP) of $1.3 billion decreased $36.7 million, or 2.8%.

These decreases were primarily due to higher interest-bearing deposit costs from balance growth in higher yielding deposit products, the FOMC cutting the federal funds target rate by 100 basis points during 2024 and higher total average borrowings, partially offset by growth in earning assets and higher earning asset yields.

Average interest-earning assets of $41.8 billion increased $2.1 billion, or 5.2%, primarily driven by an increase of $1.9 billion in average loans and leases, which included organic loan origination activity and an indirect auto loan sale.

Average interest-bearing liabilities of $29.8 billion increased $2.8 billion, or 10.4%, driven by an increase of $2.2 billion in average interest-bearing deposits, which included organic growth in new and existing customer relationships, and an increase in average borrowings of $0.6 billion.

Net interest margin FTE (non-GAAP) was 3.09% compared to 3.35%.

The yield on earning assets increased 42 basis points to 5.42%, reflecting variable-rate loans that repriced upwards in 2024, as well as higher yields on new loan originations, investment securities and interest-bearing deposits with banks due to the impact of the higher interest rate environment.

The total cost of funds increased 72 basis points to 2.45%, primarily due to an 83 basis point increase in interest-bearing deposit costs.

The rates paid on short-term and long-term borrowings increased 105 and 24 basis points, respectively, due to the higher interest rate environment throughout much of 2024.

Additionally, average non-interest-bearing demand deposits decreased $1.0 billion, or 9.2%, as customers shifted balances into higher yielding deposit products.

The following table provides certain information regarding changes in net interest income on an FTE basis (non-GAAP) attributable to changes in the average volumes and yields earned on interest-earning assets and the average volume and rates paid for interest-bearing liabilities for the periods indicated:

22 unchanged sentences

We believe this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts.

Interest income on an FTE basis (non-GAAP) of $2.0 billion for 2023, increased $688.8 million or 53.1% from 2022, resulting from the interest rate increases by the FOMC and an increase in interest-earning assets of $2.4 billion.

The increase in earning assets was primarily driven by a $3.5 billion, or 12.7%, increase in average loans, partially offset by a decrease of $1.1 billion, or 51.6%, in average interest-bearing deposits with banks.

Growth in total average commercial loans included $1.0 billion, or 9.3%, in commercial real estate loans and an increase of $793.7 million, or 12.2%, in commercial and industrial loans driven by a combination of organic loan origination activity led by the Cleveland, Pittsburgh and South Carolina markets as well as

adding the acquired Union loans.

Average consumer loans increased $1.6 billion, or 16.5%, with an increase in residential mortgage loans of $1.4 billion, or 31.3%, reflecting adjustable-rate mortgages held in portfolio on the balance sheet and the continued success of the Physicians First mortgage program, which is a program that provides a bundled suite of specialized products to meet the personal and professional needs of physicians, dentists, veterinarians and other healthcare professionals.

Additionally, indirect installment loans increased $134.8 million, or 9.8%, and direct home equity installment loans increased $68.6 million, or 2.6%, driven by organic loan origination activity throughout 2023.

Additionally, the net increase in investment securities interest income was a result of replacing maturing securities with higher yielding securities, as the average total securities portfolio yield increased 48 basis points.

Interest income on an FTE basis (non-GAAP) of $2.3 billion for 2024, increased $278.8 million, or 14.0%, from 2023, resulting from the higher interest rate environment for much of 2024 until the FOMC began cutting the federal funds target rate by 100 basis points between September 2024 and December 2024 and an increase in interest-earning assets of $2.1 billion.

The increase in earning assets was primarily driven by a $1.9 billion, or 6.2%, increase in average loans and $65.6 million, or 0.9%, increase in average securities, partially offset by a decrease of $36.9 million, or 3.5%, in average interest-bearing deposits with banks.

Growth in total average commercial loans included $867.0 million, or 7.4%, in commercial real estate loans and an increase of $189.3 million, or 2.6%, in commercial and industrial loans driven by a combination of organic loan origination

activity led by the Cleveland, Pittsburgh and South Carolina markets and fundings on previously originated commercial real estate projects.

Average consumer loans increased $808.6 million, or 7.0%, with an increase in residential mortgage loans of $1.3 billion, or 22.4%, reflecting adjustable-rate mortgages held in portfolio on the balance sheet and the continued success of the Physicians First mortgage program, which is a program that provides a bundled suite of specialized products to meet the personal and professional needs of physicians, dentists, veterinarians and other healthcare professionals.

This growth was partially offset by a decrease in indirect installment loans of $511.0 million, or 33.7%, reflecting the auto loan sales that closed in the first and third quarters of 2024.

Also, the net increase in investment securities interest income was primarily the result of balance sheet repositioning actions, as the average total securities portfolio yield increased 60 basis points.

Interest expense of $971.7 million for 2024 increased $315.6 million, or 48.1%, from 2023 primarily due to the higher interest rate environment and an increase in average interest-bearing deposits.

The growth in average deposits reflected solid organic growth in new and existing customer relationships and the additions from the Union acquisition.

Average interest-bearing deposits increased $1.3 billion, or 6.0%, which reflects the benefit of solid organic growth in customer relationships and the acquired Union deposits.

Average time deposits increased $2.2 billion, or 72.3%, as customer preferences had shifted given interest rate increases.

Average short-term borrowings increased $648.4 million, or 45.4%, primarily due to an increase in short-term FHLB borrowings of $629.2 million.

Average long-term borrowings increased $849.4 million, or 101.6%, primarily due to an increase of $857.0 million in long-term FHLB borrowings, as we have maintained additional liquidity following the banking industry disruption in early 2023.

Additionally, senior debt decreased $29.8 million resulting from the issuance of $350 million in 5.150% fixed-rate senior notes during August 2022, partially offset by the maturity of $300 million in 2.20% fixed-rate senior notes in February 2023.

The growth in average deposits reflected solid organic growth in new and existing customer relationships resulting from numerous deposit gathering initiatives.

Average interest-bearing deposits increased $2.2 billion, or 9.5%, which reflected the benefit of solid organic growth in customer relationships.

Average time deposits increased $1.8 billion, or 33.9%, as customers continued to migrate balances into higher-yielding products.

Average long-term borrowings increased $607.0 million, or 36.0%, primarily due to an increase of $638.2 million in long-term FHLB borrowings.

Additionally, during the fourth quarter of 2024, we issued $500 million aggregate principal amount of senior notes due in 2030.

The rate paid on interest-bearing liabilities increased 83 basis points to 3.26% for 2024, compared to 2023, as the cost of interest-bearing deposits increased 83 basis points from 2.13% to 2.96%.

These increases were primarily due to increased deposit competition and market trends resulting from the interest rate actions taken by the FOMC and the industry disruption in early 2023, combined with the issuance of senior debt in August 2022, partially offset by the maturity in February of 2023.

Provision for Credit Losses

Provision for credit losses is determined based on management’s estimates of the appropriate level of ACL needed to absorb probable life-of-loan losses in the loan and lease portfolio, after giving consideration to charge-offs and recoveries for the period.

Provision for credit losses is determined based on management’s estimates of the appropriate level of ACL needed to absorb expected life-of-loan losses in the loan and lease portfolio, after giving consideration to charge-offs and recoveries for the period.

The following table presents information regarding the provision for credit loss expense and net charge-offs for the years 2022 through 2024:

9 unchanged sentences

Provision for credit losses of $79.8 million during 2024 increased $8.0 million from 2023.

The provision for credit losses in 2022 included $28.5 million of initial provision for non-PCD loans associated with the Howard and Union acquisitions.

The 2023 provision for credit losses was primarily due to loan growth, normal charge-off activity and $31.9 million in provision for the previously disclosed commercial loan that was fully charged-off during the third quarter of 2023 due to alleged fraud.

The provision for credit losses in 2024 was primarily due to loan growth and charge-off activity, while the provision for credit losses in 2023 was primarily due to loan growth, CECL-related model impacts from forecasted macroeconomic conditions and charge-off activity, including a $31.9 million isolated commercial loan that was charged-off due to alleged fraud.

Our non-performing loan coverage position remains strong at 265%.

Net charge-offs of $67.7 million for 2023 increased $51.6 million from 2022.

Excluding the previously mentioned charge-off, net charge-offs would have been $35.9 million, or 0.11% of total average loans (non-GAAP), remaining at historically low levels.

The ACL was $405.6 million, an increase of $3.9 million, with the ratio of the ACL to total loans and leases decreasing 8 basis points to 1.25%, reflecting strong loan growth and the

previously mentioned charge-off activity.

For 2024, net charge-offs were $62.7 million, or 0.19% of total average loans, compared to 2023 net charge-offs of $67.8 million, or 0.22% of total average loans.

The ACL was $422.8 million as of December 31, 2024, an increase of $17.2 million from December 31, 2023, with the ratio of the ACL to total loans and leases remaining stable at 1.25%.

For additional information relating to the allowance and provision for credit losses, refer to the Allowance for Credit Losses section of this MD&A.

12 unchanged sentences

Bank owned life insurance 16,741 11,945 4,796 40.2 11,942 3 —

Net securities gains (losses) (67,432) 48 (67,480) n/m 193 (145) (75.1)

Net securities gains (losses) (34,011) (67,432) 33,421 n/m 48 (67,480) n/m

Other 15,514 12,790 2,724 21.3 18,970 (6,180) (32.6)

1 unchanged sentence

n/m - not meaningful

Total non-interest income of $254.3 million for 2023 decreased $69.2 million, or 21.4%, from $323.6 million in 2022.

Excluding significant items totaling $67.4 million in 2023, operating non-interest income (non-GAAP) decreased $1.9 million, or 0.6%.

The 2023 compared to 2022 variances in significant individual non-interest income items are further explained in the following paragraphs.

Service charges of $81.9 million decreased $5.0 million, or 5.8%, from $86.9 million, with strong treasury management services and higher customer activity largely offsetting the impact of overdraft practice changes that we implemented in the first quarter of 2023.

Trust services of $42.5 million increased $3.5 million, or 8.9%, from the same period of 2022, primarily driven by strong organic revenue production, as well as the market value of assets under management increasing $789.8 million, or 10.1%, to $8.6 billion at December 31, 2023 given overall market conditions.

Insurance commissions and fees of $23.1 million decreased $1.1 million, or 4.7%, from $24.3 million, with the reduction primarily driven by lower title insurance fees resulting from slowing mortgage demand in the current interest rate environment.

Securities commissions and fees of $27.7 million increased $4.0 million, or 16.9%, from $23.7 million, due to increased annuity sales activity, as the increasing interest rate environment provided attractive annuity rates, combined with revenue contributions across the geographic footprint, most notably in the Pittsburgh and Carolina regions.

Capital markets income of $27.1 million decreased $8.2 million, or 23.2%, from $35.3 million, reflecting increased contributions from international banking and debt capital markets offset by decreases in swap fees and syndications as commercial customer transactions have slowed in this macroeconomic environment.

Mortgage banking operations income of $20.7 million increased slightly by 0.2%, from $20.6 million.

During 2023, we sold $1.0 billion of originated residential mortgage loans, a decrease of 10.9% compared to $1.1 billion for 2022.

Rate volatility compressed gain on sale margins which were mostly offset by growing mortgage held for sale pipelines.

Full year mortgage originations increased 4.4% from 2022.

Net servicing income increased $3.5 million, or 60.6%, due to low prepayment speeds with rising rates and a larger servicing book.

An impairment charge increased $2.7 million in 2023 from 2022.

Dividends on non-marketable equity securities of $21.3 million increased $9.3 million, or 77.9%, from $12.0 million, reflecting higher FHLB dividends due to additional borrowings and an increase in the average dividend rate.

We had net securities losses of $67.4 million primarily due to the sale of $648.7 million of AFS securities in the fourth quarter of 2023 as part of a balance sheet optimization strategy.

Other non-interest income was $12.8 million and $19.0 million for 2023 and 2022, respectively, due to other miscellaneous income fluctuations and from the decline in Small Business Investment Company (SBIC) funds income, reflecting normal fluctuations based on the performance of the underlying portfolio companies.

Total non-interest income increased $62.1 million, or 24.4%.

Excluding significant items totaling $34.0 million in 2024 and $67.4 million in 2023, operating non-interest income (non-GAAP) increased $28.7 million, or 8.9%, to a record level.

The variances in significant individual non-interest income items between 2024 and 2023 are explained in the following paragraphs.

Service charges increased $9.1 million, or 11.1%, with strong treasury management activity and higher consumer transaction volumes.

Wealth management revenues increased $6.4 million, or 9.1%, as trust income and securities commissions and fees increased 7.3% and 11.8%, respectively, through continued strong contributions across the geographic footprint.

Additionally, the market value of assets under management increased $0.9 billion, or 10.3%, to $9.5 billion at December 31, 2024 given overall market conditions and customer acquisition activity.

While capital markets income decreased $2.9 million, or 10.6%, reflecting lower commercial customer transaction activity, results continue to reflect solid broad-based contributions from syndications, debt capital markets customer swap activity and international banking.

Mortgage banking operations income increased $6.7 million, or 32.3%, driven by improved gain on sale from strong production volumes.

During 2024, we sold $1.4 billion of originated residential mortgage loans, an increase of 37.7% compared to $1.0 billion for 2023.

Dividends on non-marketable equity securities increased $3.8 million, or 17.8%, reflecting higher FHLB dividends primarily due to additional borrowings combined with a higher dividend rate.

BOLI increased $4.8 million, or 40.2%, reflecting higher life insurance claims.

Net securities losses were $34.0 million in 2024 compared to $67.4 million in 2023, due to sales of AFS securities totaling $231.4 million in the fourth quarter of 2024 and $648.7 million in the fourth quarter of 2023 as part of balance sheet restructuring activities.

These realized losses were significant items impacting earnings.

The following table presents non-interest income excluding significant items impacting earnings:

2 unchanged sentences

Significant items:

Loss on securities restructuring 67,354 —

Realized loss on investment securities restructuring 33,980 67,354 (33,374)

Total non-interest income, excluding significant items (1)

7 unchanged sentences

Equipment 97,607 90,818 6,789 7.5 76,261 14,557 19.1

Amortization of intangibles 20,116 13,868 6,248 45.1 12,117 1,751 14.5

Outside services 96,173 83,885 12,288 14.6 72,961 10,924 15.0

2 unchanged sentences

Bank shares and franchise taxes 13,596 13,609 (13) (0.1) 13,954 (345) (2.5)

Merger-related 2,215 45,259 (43,044) (95.1) 1,764 43,495 2,466

Other 108,461 116,514 (8,053) (6.9) 132,704 (16,190) (12.2)

Total non-interest expense $ 961,339 $ 915,436 $ 45,903 5.0 % $ 826,392 $ 89,044 10.8 %

Total non-interest expense of $915.4 million for 2023 increased $89.0 million, or 10.8%, from $826.4 million in 2022.

Total non-interest expense increased $45.9 million, or 5.0%.

Excluding significant items totaling $19.1 million in 2024 and $48.8 million in 2023, operating non-interest expense (non-GAAP) increased $75.7 million, or 8.7%.

The 2023 compared to 2022 variances in significant individual non-interest expense items are further explained in the following paragraphs.

Salaries and employee benefits of $461.7 million increased $35.4 million, or 8.3%, from $426.2 million, related to normal merit increases, production-related commissions and the addition of the acquired Union expense base.

The variances in significant individual non-interest expense items between 2024 and 2023 are explained in the following paragraphs.

Salaries and employee benefits increased $42.4 million, or 9.2%, primarily related to normal annual merit increases, higher production-related commissions given the strong non-interest income activity, strategic hiring associated with our focus to grow market share and continued investments in our risk management infrastructure, and elevated employer-paid healthcare costs.

Our total full-time equivalent employees were 4,192 and 4,123 at December 31, 2024 and 2023, respectively.

Equipment expense of $161.6 million increased $17.2 million, or 11.9%, from $144.5 million, primarily from continued technology-related investments, the acquired Union expense base and the impact of the inflationary macroeconomic environment.

Amortization of intangibles of $20.1 million increased $6.2 million, or 45.1%, from the same period of 2022, primarily due to additional core deposit intangibles added as a result of our Union acquisition in December 2022.

Outside services increased $10.9 million, or 15.0%, with higher volume-related technology and third-party costs, including the impact of the inflationary macroeconomic environment.

FDIC insurance expense of $60.8 million increased $40.4 million, or 197.9%, primarily due to a $29.9 million FDIC special assessment to replenish the FDIC's DIF associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank, as well as the previously announced FDIC assessment rate increase which was effective in the first quarter of 2023.

We recorded $2.2 million in merger-related costs in 2023 related to the Union acquisition compared to $45.3 million related to the Howard and Union acquisitions in 2022.

Other non-interest expense was $94.2 million and $73.6 million for 2023 and 2022, respectively, with the increase primarily driven by a $16.7 million valuation allowance on auto loans held-for-sale in 2023, resulting from changes in interest rates from time of origination in conjunction with our balance sheet optimization strategy.

We had $2.8 million in branch consolidation costs in 2022 in other non-interest expense.

Net occupancy and equipment expense increased $15.0 million, or 9.3%, primarily from continued technology-related investments, the move to the new Pittsburgh headquarters and a $3.7 million software impairment.

Outside services increased $12.3 million, or 14.6%, with higher volume-related technology and third-party costs associated with ongoing investments in our enterprise risk management framework and digital banking capabilities.

Marketing expense increased $3.6 million, or 20.6%, primarily due to the opportunistic timing of marketing campaigns related to our successful deposit initiatives.

FDIC insurance expense decreased $19.4 million, or 31.8%.

We paid $5.2 million in 2024 and $29.9 million in 2023 in FDIC special assessments to replenish the FDIC's DIF associated with protecting uninsured depositors following the failed banks in early 2023, partially offset by an increase in our regular FDIC insurance assessment due to loan growth and balance sheet mix changes.

Other non-interest expense was $108.5 million and $116.5 million for 2024 and 2023, respectively.

Excluding the non-interest expense significant items impacting earnings in Table 10 below, other non-interest expense was $99.5 million, a $1.9 million, or 1.9%, increase from 2023.

The following table presents non-interest expense excluding significant items impacting earnings:

(dollars in thousands) 2023 2022 Change Change

(dollars in thousands) 2024 2023 $

Total non-interest expense, as reported $ 961,339 $ 915,436 $ 45,903 5.0 %

3 unchanged sentences

FDIC special assessment (5,212) (29,938) 24,726

Valuation allowance on auto loans held-for-sale (16,687) — (16,687)

Software impairment (3,690) — (3,690)

Loss related to indirect auto loan sales (8,969) (16,687) 7,718

Total non-interest expense, excluding significant items (1)

7 unchanged sentences

Our income tax expense for 2024 decreased $8.4 million, or 8.5%, from 2023.

The effective tax rate was 16.9% for 2023, compared to 20.6% for 2022, primarily due to the recording of renewable energy investment tax credits in 2023, offset slightly by higher pre-tax earnings in 2023.

The effective tax rate was 16.3% for 2024, compared to 16.9% for 2023, primarily due to the recording of higher levels of renewable energy investment tax credits and lower pre-tax earnings in 2024.

Effective tax rates are lower than the 21% federal statutory rate due to the tax benefits resulting from tax credits, tax-exempt income on investments and loans and income from BOLI.

12 unchanged sentences

Total Assets $ 48,625 $ 46,158 $ 2,467 5.3 %

Liabilities and Stockholders’ Equity

Liabilities and Shareholders’ Equity

Deposits $ 37,107 $ 34,711 $ 2,396 6.9 %

2 unchanged sentences

Total Liabilities 42,323 40,108 2,215 5.5

Stockholders’ Equity 6,050 5,653 397 7.0

Total Liabilities and Stockholders’ Equity $ 46,158 $ 43,725 $ 2,433 5.6 %

The increase in both assets and liabilities is primarily due to strong organic loan and borrowings growth.

Shareholders’ Equity 6,302 6,050 252 4.2

Total Liabilities and Shareholders’ Equity $ 48,625 $ 46,158 $ 2,467 5.3 %

The increase in both assets and liabilities is primarily due to solid organic loan growth and robust deposit growth.

Lending Activity

7 unchanged sentences

and Charleston, South Carolina.

Loans held for sale declined $270 million, or 55.3%, from December 31, 2023 due primarily to the sale of $332 million of indirect auto loans that closed in the first quarter of 2024.

Following is a summary of loans and leases:

December 31 2024 2023 $

(in millions)

(dollars in millions)

Commercial real estate $ 12,705 $ 12,305 $ 400 3.3 %

9 unchanged sentences

Total loans and leases $ 33,939 $ 32,323 $ 1,616 5.0 %

Total loans and leases increased $2.1 billion, or 6.8%, to $32.3 billion at December 31, 2023, compared to $30.3 billion at December 31, 2022, reflecting a commercial loans and leases increase of $1.2 billion or 6.3%, and an increase in consumer loans of $861.5 million or 7.9%.

Total loans and leases increased $1.6 billion, or 5.0%, to $33.9 billion at December 31, 2024, compared to $32.3 billion at December 31, 2023, reflecting an increase in consumer loans of $949.0 million, or 8.0%, and commercial loans and leases increased $667.2 million or 3.3%.

Our organic loan growth in 2024 was driven by the continued success of our strategy to grow high-quality loans and deepen customer relationships across our diverse geographic footprint.

As of December 31, 2023, 29.0% of the commercial real estate loans were owner-occupied, while the remaining 71.0% were non-owner-occupied, compared to 30.2% and 69.8%, respectively, as of December 31, 2022.

As of December 31, 2023 and 2022, we had commercial construction loans of $2.1 billion and $1.7 billion at each respective date, representing 6.6% and 5.7% of total loans and leases, respectively.

As of both December 31, 2024 and 2023, 29.0% of the commercial real estate loans were owner-occupied, while the remaining 71.0% were non-owner-occupied.

As of December 31, 2024 and 2023, we had commercial construction loans of $2.4 billion and $2.1 billion, respectively, representing 7.2% and 6.6% of total loans and leases, respectively.

Additionally, as of December 31, 2024 and 2023, we had residential construction loans of $277.0 million and $360.6 million, respectively, representing 0.8% and 1.1% of total loans and leases, respectively.

Our commercial real estate portfolio included $8.7 billion of non-owner occupied loans, of which 21.7% represented office space.

Our top 25 non-owner occupied commercial real estate loans averaged approximately $31 million per exposure although the office space was comprised of mid-sized offices located outside of metropolitan business districts with 40% of the office portfolio averaging less than $5 million per exposure.

Our commercial real estate portfolio included $9.0 billion of non-owner occupied loans, of which 18.7% represented office loans.

Our top 25 non-owner occupied commercial real estate loans averaged approximately $22 million per exposure with the office component comprised of mid-sized offices primarily located outside of central business districts with 43% of the office portfolio averaging less than $5 million per exposure.

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

4 unchanged sentences

As of December 31, 2024 and 2023, there were no concentrations of loans relating to any industry in excess of 10% of total loans.

The decrease in indirect installment loans is primarily due to the transfer of $355 million of indirect auto loans to held-for-sale in December 2023.

The transfer resulted in a negative valuation allowance of $16.7 million (pre-tax) recognized in other non-interest expense due primarily to changes in interest rates from time of origination.

The sale of these loans closed in the first quarter of 2024 with the proceeds used to repay borrowings that have a similar yield to the sold loans.

The decrease in indirect installment loans is primarily due to the sale of $431 million of indirect auto loans that closed in the third quarter of 2024.

Additional information relating to originated loans and loans acquired in business combinations is provided in Note 27, “Mergers and Acquisitions” and Note 5, “Loans and Leases” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report.

26 unchanged sentences

Non-accrual loans may not be restored to accrual status until all delinquent principal and interest have been paid and the ultimate ability to collect the remaining principal and interest is reasonably assured.

Non-accrual loans of $107.2 million at December 31, 2023 decreased $6.2 million, or 5.5%, compared to December 31, 2022, with both periods remaining at relatively low levels.

Non-accrual loans of $159.6 million at December 31, 2024 increased $52.4 million, or 48.9%, compared to December 31, 2023, attributed to a small number of commercial real estate loans, with both periods remaining at relatively low levels.

Following is a summary of non-performing loans and leases, by class, OREO and non-performing assets:

December 31 2024 2023 $

(in millions)

(dollars in millions)

Commercial real estate $ 88 $ 42 $ 46 109.5 %

1 unchanged sentence

Commercial leases 3 3 — —

Other 2 — 2 —

Total commercial loans and leases 144 84 60 71.4

25 unchanged sentences

For additional information relating to loan modifications, see Note 5, “Loans and Leases” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report.

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

Following is a summary of accruing and non-accrual TDRs, by class:

(in millions) Accruing Non-Accrual Total

December 31, 2022

Commercial real estate $ 5 $ 15 $ 20

Commercial and industrial — 1 1

Total commercial loans 5 16 21

Direct installment 19 3 22

Residential mortgages 33 4 37

Consumer lines of credit 6 1 7

Total consumer loans 58 8 66

Total TDRs $ 63 $ 24 $ 87

Allowance for Credit Losses on Loans and Leases

7 unchanged sentences

For our ACL calculation at December 31, 2024, the macroeconomic variables that we utilized included, but were not limited to:

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

(i) the purchase only Housing Price Index, which increases 7.4% over our R&S forecast period, (ii) a Commercial Real Estate Price Index, which increases 3.9% over our R&S forecast period, (iii) S&P Volatility, which increases 34.9% in 2025 and 2.5% in 2026 and (iv) personal and business bankruptcies, which increase steadily over the R&S forecast period but average below the historical through-the-cycle period.

Macroeconomic variables that we utilized for our ACL calculation as of December 31, 2023 included, but were not limited to:

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

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

Following is a summary of certain data related to the ACL and loans and leases:

22 unchanged sentences

Balance at end of period $ 21.4 $ 21.5 $ 21.4

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

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

Total provision for credit losses during 2023 was $71.8 million, compared to $64.2 million for the same period in 2022, with the year-ago period including $28.5 million of initial provision for non-PCD loans associated with the Howard and Union acquisitions.

The year-over-year increase was driven primarily by loan growth and charge-off activity and $31.9 million in provision for the previously disclosed commercial loan that was downgraded to non-performing status in the second quarter of 2023 and was fully charged-off during the third quarter of 2023 due to alleged fraud.

The ACL on loans and leases of $422.8 million at December 31, 2024 increased $17.2 million, or 4.3%, from December 31, 2023.

Our ending ACL coverage ratio at both December 31, 2024 and December 31, 2023 was 1.25%.

Total provision for credit losses during 2024 was $79.8 million, compared to $71.8 million for the same period in 2023.

The year-over-year increase was driven primarily by loan growth and an increase in substandard commercial real estate loans.

Net charge-offs were $62.7 million, or 0.19%, of total average loans, compared to $67.7 million, or 0.22%, in 2023.

Excluding the previously mentioned commercial charge-off, net charge-offs would have been $35.9 million, or 0.11% of total average loans (non-GAAP), remaining at historically low levels.

The ACL as a percentage of non-performing loans for the total portfolio increased from 354% as of December 31, 2022 to 378% as of December 31, 2023.

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

Comparatively, the AULC was $21.4 million at December 31, 2022 and included provision expense for unfunded loan commitments and letters of credit of $2.3 million for the year ended December 31, 2022.

The ACL as a percentage of non-performing loans for the total portfolio decreased from 378% as of December 31, 2023 to 265% remaining at an adequate level as of December 31, 2024.

Following is a summary of the allocation of the ACL and the percentage of loans in each category to total loans:

20 unchanged sentences

Securities, like loans, are subject to interest rate and credit risk.

In addition, by their nature, securities classified as AFS are also subject to fair value risks that could negatively affect the level of liquidity available to us, as well as stockholders’ equity.

A change in the value of securities HTM could also negatively affect the level of stockholders’ equity if there was a decline in the underlying creditworthiness of the issuers.

In addition, by their nature, securities classified as AFS are also subject to fair value risks that could negatively affect the level of liquidity available to us, as well as shareholders’ equity.

A change in the value of securities HTM could also negatively affect the level of shareholders’ equity if there was a decline in the underlying creditworthiness of the issuers.

A CECL methodology is applied to securities HTM.

1 unchanged sentence

As of December 31, 2024, debt securities classified as AFS and HTM totaled $3.5 billion and $4.0 billion, respectively.

During 2023, debt securities AFS decreased by $21.7 million and debt securities HTM decreased by $175.3 million from December 31, 2022.

AFS securities comprised 45% of the total securities portfolio and HTM securities comprised 55% of the total securities portfolio.

During 2024, debt securities AFS increased by $213.1 million and debt securities HTM increased by $67.1 million from December 31,

As of December 31, 2024, AFS securities comprised 47% of the total securities portfolio and HTM securities comprised 53% of the total securities portfolio.

As of December 31, 2024 and 2023, we did not hold any trading securities.

2 unchanged sentences

Obligations of U.S.

Maturing after five years but within ten years $ — 5.25 %

Maturing after one year but within five years $ 1 5.25 %

Obligations of U.S.

2 unchanged sentences

Obligations of U.S.

government-sponsored entities:

Maturing after one year but within five years 68 5.11

government-sponsored enterprises:

Maturing within one year 29 5.01

States of the U.S.

5 unchanged sentences

Other debt securities:

Maturing after one year but within five years 1 9.24

Maturing after five years but within ten years 15 5.98

Residential mortgage-backed securities:

Agency mortgage-backed securities 1,057 2.09

Residential MBS:

Agency MBS 901 2.07

Agency collateralized mortgage obligations 714 1.87

Commercial mortgage-backed securities 929 3.89

Commercial MBS 1,326 4.19

Total $ 3,979 3.15 %

2 unchanged sentences

December 31 2024 2023 $

(in millions)

(dollars in millions)

Securities Available for Sale:

1 unchanged sentence

government agencies 53 78 (25) (32.1)

government-sponsored entities 227 283 (56) (19.8)

Residential mortgage-backed securities:

Agency mortgage-backed securities 814 1,360 (546) (40.1)

government-sponsored enterprises 302 227 75 33.0

Residential MBS:

Agency MBS 714 814 (100) (12.3)

Agency collateralized mortgage obligations 796 946 (150) (15.9)

Commercial mortgage-backed securities 905 430 475 110.5

Commercial MBS 1,420 905 515 56.9

States of the U.S.

3 unchanged sentences

Debt Securities Held to Maturity:

Treasury $ 1 $ — $ 1 n/m

government agencies — 1 (1) (100.0) %

government-sponsored entities 68 52 16 30.8

Residential mortgage-backed securities:

Agency mortgage-backed securities 1,057 1,178 (121) (10.3)

government-sponsored enterprises 29 68 (39) (57.4)

Residential MBS:

Agency MBS 901 1,057 (156) (14.8)

Agency collateralized mortgage obligations 714 824 (110) (13.3)

Commercial mortgage-backed securities 929 866 63 7.3

Commercial MBS 1,326 929 397 42.7

States of the U.S.

3 unchanged sentences

n/m - not meaningful

We completed the sale of $648.7 million of AFS investment securities in December 2023, which resulted in a realized loss (pre-tax) of $67.4 million in the fourth quarter of 2023.

We completed the sale of $231.4 million of AFS investment securities in November 2024, which resulted in a realized loss (pre-tax) of $34.0 million in the fourth quarter of 2024.

We reinvested proceeds from the sale of those investment securities with an average yield of 1.41% into investment securities yielding 4.78% with a similar duration and convexity profile.

In December 2023, we completed the sale of $648.7 million of AFS investment securities, resulting in a realized loss (pre-tax) of $67.4 million in the fourth quarter of 2023.

4 unchanged sentences

December 31 2024 2023 $

(in millions)

(dollars in millions)

Non-interest-bearing demand $ 9,761 $ 10,222 $ (461) (4.5) %

3 unchanged sentences

Total deposits $ 37,107 $ 34,711 $ 2,396 6.9 %

Total deposits decreased slightly by $59.0 million, or 0.2%, from December 31, 2022, primarily due to the banking industry disruption in March 2023 and inflationary pressures on customers.

Total deposits increased $2.4 billion, or 6.9%, from December 31, 2023, primarily due to organic growth in new and existing customer relationships through our successful deposit initiatives.

We ended 2024 with approximately 77% of all deposits insured by the FDIC or collateralized.

The mix of non-interest-bearing deposits to total deposits equaled 29.4% at December 31, 2023, compared to 34.3% at December 31, 2022 as customers continue to migrate deposits into higher-yielding deposit products.

The mix of non-interest-bearing demand deposits to total deposits equaled 26.3% at December 31, 2024, compared to 29.4% at December 31, 2023 as customers continued to migrate deposits into higher-yielding deposit products.

Following is a summary of estimated insured and uninsured time deposits in excess of the FDIC insurance limit by remaining maturity at December 31, 2024:

7 unchanged sentences

Borrowings with original maturities of one year or less are classified as short-term.

Short-term borrowings, made up of customer repurchase agreements (also referred to as securities sold under repurchase agreements), FHLB advances and subordinated notes, increased to $2.5 billion at December 31, 2023 from $1.4 billion at December 31, 2022, primarily due to a $970.0 million increase in short-term FHLB borrowings, as we increased liquidity due to the bank failures in early 2023.

Short-term borrowings, made up of customer repurchase agreements (also referred to as securities sold under repurchase agreements), FHLB advances and subordinated notes, decreased to $1.3 billion at December 31, 2024 from $2.5 billion at December 31, 2023, primarily due to a $1.3 billion decrease in short-term FHLB borrowings.

Following is a summary of selected information relating to short-term FHLB borrowings:

10 unchanged sentences

Capital Resources

Our capital position, in part depends on the access to, and cost of, funding for new business initiatives, the ability to engage in expanded business activities, the ability to pay dividends and the level and nature of regulatory oversight.

Our capital position depends, in part, on the access to, and cost of, funding for new business initiatives, the ability to engage in expanded business activities, the ability to pay dividends and the level and nature of regulatory oversight.

The assessment of capital adequacy depends on a number of factors such as expected organic growth in the Consolidated Balance Sheet, asset quality, liquidity, earnings performance and sustainability, changing competitive conditions, regulatory changes or actions and economic forces.

We seek to maintain a strong capital base to support our growth and expansion activities, to provide stability to current operations and to promote public confidence.

We have an effective shelf registration statement filed with the SEC.

Pursuant to this registration statement, we may, from time to time, issue and sell in one or more offerings any combination of common stock, preferred stock, debt securities, depositary shares, warrants, stock purchase contracts or units.

On August 25, 2022, we completed an offering of $350 million of 5.150% fixed-rate senior notes due in 2025 under this registration statement.

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

We used the net proceeds from the sale of the notes for general corporate purposes, including repayment of the $300 million in 2.200% senior notes that matured in February 2023, investments at the holding company level, capital to support the growth of FNBPA and refinancing of outstanding indebtedness.

On April 18, 2022, we announced that our Board of Directors approved an additional $150 million for the repurchase of our common stock through our existing share repurchase program bringing the total authorization to $300 million.

Since inception, we repurchased 14.1 million shares at a weighted average share price of $11.39 for $160.9 million under this repurchase program, with $139.1 million remaining for repurchase.

The repurchases will be made from time to time on the open market at prevailing market prices or in privately negotiated transactions.

Pursuant to and in compliance with applicable SEC laws, rules and regulations, we may, from time to time, issue and sell in one or more offerings any combination of common stock, preferred stock, debt securities, depositary shares, warrants, stock purchase contracts or units.

On December 11, 2024, we completed a registered debt offering in which we issued $500 million aggregate principal amount of 5.722% fixed-rate / floating rate senior notes due in 2030.

The net proceeds of the debt offering after deducting underwriting discounts and commissions and offering costs were $496.7 million.

These proceeds are expected to be used for general corporate purposes, which may include investments at the holding company level, capital to support the growth of FNBPA and refinancing of outstanding indebtedness.

Since inception of our $300 million stock repurchase program starting in 2022, we repurchased 14.4 million shares at a weighted average share price of $11.43 for $164.3 million under this repurchase program, with $135.7 million remaining for repurchase.

Any repurchases will be made from time to time on the open market at prevailing market prices or in privately negotiated transactions.

The purchases will be funded from available working capital.

There is no guarantee as to the exact number of shares that will be repurchased and we may discontinue purchases at any time.

The Inflation Reduction Act of 2022 includes a 1% excise tax on stock repurchases beginning January 1, 2023.

The Inflation Reduction Act of 2022 includes a 1% excise tax on stock repurchases.

On February 15, 2024, we redeemed all our 7.25% Fixed Rate / Floating Rate Non-Cumulative Perpetual Preferred Stock, Series E, in the amount of $111 million.

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

Capital management is a continuous process with capital plans and stress testing for FNB and FNBPA updated at least annually.

These capital plans include assessing the adequacy of expected capital levels assuming various scenarios by projecting capital needs for a forecast period of 2-3 years beyond the current year.

These capital plans include assessing the adequacy of expected capital levels assuming various scenarios by projecting capital needs for a forecast period of two to three years beyond the current year.

Both FNB and FNBPA are subject to various regulatory capital requirements administered by federal banking agencies.

For additional information, see Note 23, “Regulatory Matters” in the Notes to the Consolidated Financial Statements, which is included in Item 8 of this Report.

For additional information, see Note 22, “Regulatory Matters” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report.

From time to time, we issue shares initially acquired by us as treasury stock under our various benefit plans.

22 unchanged sentences

Liquidity is centrally managed daily by our Treasury Department.

Liquidity sources from assets include payments from loans and investments, as well as the ability to securitize, pledge or sell loans, investment securities and other assets.

Liquidity sources from liabilities are generated primarily through the banking offices of FNBPA in the form of deposits and customer repurchase agreements.

FNB also has access to reliable and cost-effective wholesale sources of liquidity.

Short- and long-term funds are available for use to help fund normal business operations, and unused credit availability can be utilized to serve as contingency funding if faced with a liquidity crisis.

Our strong liquidity position is a result of management utilizing various strategies to ensure sufficient cash on hand is available to meet the parent's funding needs.

The principal sources of the parent company’s liquidity are its strong existing cash resources plus dividends and interest it receives from its subsidiaries.

These dividends may be impacted by the parent’s or its subsidiaries’ capital needs, statutory laws and regulations, corporate policies, contractual restrictions, profitability and other factors.

Parent Company Liquidity

The parent company’s funding requirements primarily consist of shareholder dividends, debt service, income taxes, operating expenses, funding of non-bank subsidiaries, and stock repurchases.

The parent company’s funding sources primarily consist of dividends and interest received from the Bank and other direct subsidiaries, net taxes collected from subsidiaries included in the consolidated tax returns, fees for services provided to subsidiaries and the issuance of debt instruments.

The dividends received from the Bank and other direct subsidiaries may be impacted by the parent’s or its subsidiaries’ capital and liquidity needs, statutory laws and regulations, corporate policies, contractual restrictions, profitability and other factors.

In addition, through one of our subsidiaries, we regularly issue subordinated notes, which are guaranteed by FNB.

During the third quarter of 2022, we completed a Senior Debt offering for $347.7 million in net proceeds.

A portion of these proceeds were used to retire $300 million of debt that matured in February of 2023 (for additional information, see Note 10, "Borrowings" in the Notes to the Consolidated Financial Statements in this Report).

The parent company's cash position at December 31, 2023 was

$375.4 million, down $278.9 million from December 31, 2022, primarily due to the repayment of the Senior Notes that matured in February 2023.

Additionally, in May, we purchased and retired $15 million par value of the 7.625% Subordinated Notes due August 12, 2023.

Management utilizes various strategies to ensure sufficient cash on hand is available to meet the parent company's funding needs.

During the fourth quarter of 2024, we successfully completed an offering of fixed / floating rate senior notes maturing in December 2030 for $496.7 million in net proceeds.

The issuance was met with strong investor interest and was priced with a coupon of 5.722%, a spread of 165 basis points above the yield of a comparable term Treasury Note.

We have historically been

opportunistic when accessing the capital markets, and we expect to continue with that strategy.

The parent company's cash position at December 31, 2024 was $803.4 million, increasing $428.0 million from December 31, 2023.

In February 2024, we redeemed all $111 million of our Series E, 7.25% Fixed Rate / Floating Rate Non-Cumulative Perpetual Preferred Stock.

The Board of Directors declared the redemption of the preferred stock given its higher relative cost of capital, a 3-month SOFR + 4.60%, and our strong capital position.

Our regulatory CET1 ratio and Total Capital ratios were 10.6% and 12.4%, respectively, at December 31, 2024 with the Total Capital ratio reflecting the completed preferred stock redemption.

Two metrics that are used to gauge the adequacy of the parent company’s cash position are the LCR and MCH.

6 unchanged sentences

Parent company cash on hand (millions) $ 803.4 $ 375.4 n/a

As previously mentioned, our parent company cash on hand increased materially due to the issuance of senior debt during the fourth quarter of 2024, which was partially offset by the preferred stock redemption.

The decrease in the LCR at December 31, 2024 is due to the scheduled maturity of $350 million in senior debt due in August 2025 and $100 million of subordinated debt scheduled to mature in October 2025, which are considered cash outflows for the ratio calculations.

The MCH increased from December 31, 2023 primarily due to the larger cash balance on hand.

The projected LCR and MCH after the maturity of the senior and subordinated debt in 2025 would be 2.7 times and 18.7 months, respectively.

Management has concluded that our cash levels remain appropriate given the current market environment.

On January 12, 2024, the Board of Directors announced the redemption of all $110 million of our Perpetual Preferred Stock, Series E, which was paid on February 15, 2024.

After the redemption, our liquidity remains appropriate with liquidity metrics continuing to be within policy limits.

Bank Liquidity

Bank-level liquidity sources from assets include payments from loans and investments, as well as the ability to securitize, pledge or sell loans, investment securities and other assets.

Liquidity sources from liabilities are generated primarily through the banking offices of FNBPA in the form of deposits and customer repurchase agreements.

The Bank also has access to reliable and cost-effective wholesale sources of liquidity.

Over time, our liquidity position has been positively impacted by FNBPA's ability to generate growth in relationship-based accounts.

Organic growth in low-cost transaction deposits was complemented by management’s continued strategy of deposit gathering efforts focused on attracting new customer relationships across our geographic footprint and deepening relationships with existing customers, in part through internal lead generation efforts leveraging data analytics capabilities.

Consistent with industry trends, we have experienced a shift in deposits from non-interest-bearing-deposits and checking into certificates of deposits (CDs).

The March 2023 banking disruption caused an acceleration of this shift.

We ended 2023 with approximately 78% of deposits insured by the FDIC or collateralized, an improvement from approximately 74% at December 31, 2022.

Non-interest-bearing demand deposit accounts decreased $1.7 billion, compared to December 31, 2022.

Interest-bearing demand deposits decreased $290.8 million and savings account balances decreased $677.8 million, while time deposits increased $2.6 billion, compared to December 31, 2022, as customers' preferences have shifted to CDs as interest rates have increased substantially.

Our cash balances held at the FRB were $1.1 billion at December 31, 2023, a slight decrease of $17.5 million from December 31, 2022.

Organic growth in low-cost transaction deposits has been complemented by management’s continued strategy of deposit gathering efforts focused on attracting new customer relationships across our geographic footprint and deepening relationships with existing customers, in part through internal lead generation efforts leveraging our data analytics capabilities.

These strategies helped management successfully grow total deposits by $2.4 billion, or 6.9%, when compared to December 31, 2023.

Interest-bearing demand deposits and time deposits increased $1.9 billion and $1.3 billion, respectively, when compared to December 31, 2023 through these efforts.

Non-interest-bearing demand deposits decreased $461.3 million and savings account balances declined $286.7 million compared to December 31, 2023 as customers continue to migrate deposits into higher-yielding deposit products.

The mix of non-interest-bearing demand deposits to total deposits remained consistent with the prior quarter at 26%.

The liquidity position of FNBPA was further strengthened by the sale of $431 million of indirect auto loans in the third quarter of 2024.

Our loan to deposit ratio declined from 93.1% at December 31, 2023 to 91.5% at December 31, 2024 as a result of the strong deposit growth and the sale of the indirect auto loans.

At December 31, 2024, approximately 77% of our deposits were insured by the FDIC or collateralized, stable with December 31, 2023.

Our cash balances held at the FRB were $2.0 billion at December 31, 2024 and $1.1 billion at December 31, 2023.

Management will continue to evaluate appropriate levels of liquidity based on expected loan and deposit growth and other balance sheet activity.

Our liquidity position was strong throughout 2023.

Our contingency funding policy and periodic liquidity stress testing of multiple stress scenarios was particularly valuable as we successfully managed our liquidity during the March banking industry disruption.

We continue to have ample unused borrowing capacity that could cover 1.9 times of the uninsured deposit and non-collateralized deposit balances as of December 31, 2023.

A portion of this capacity includes the FRB's Discount Window and their BTFP.

We have no borrowings under either facility.

Additional sources of unused wholesale credit availability for FNBPA include the ability to borrow from the FHLB, correspondent bank lines, and access to other channels.

In addition to credit availability, FNBPA also possesses salable unpledged government and agency securities that could be utilized to meet funding needs.

We currently have excess cash to meet our pledging requirements.

At December 31, 2023, we have $1.8 billion of cash and salable unpledged government and agency securities representing 3.8% of total assets.

This compares to a policy minimum of 3.0%.

The following table presents certain information relating to FNBPA’s credit availability and salable unpledged securities:

6 unchanged sentences

Cash and salable unpledged government and agency securities as a % of FNBPA assets 6.0 % 3.8 %

Our bank-level liquidity position has remained strong throughout 2024.

The strong deposit generation noted earlier provided management the flexibility to reduce short- and long-term borrowings by a combined $209 million.

Our contingency funding policy and periodic liquidity stress testing of multiple stress scenarios is particularly valuable as we successfully manage our liquidity.

We continue to have ample unused borrowing capacity that could cover 1.57 times the uninsured deposit and non-collateralized deposit balances as of December 31, 2024.

The previously mentioned strong deposit growth was partially responsible for a $1.8 billion increase in contingency funding availability, which resulted in the improvement in this ratio.

A portion of this capacity includes capacity at the FRB's Discount Window.

We have no borrowings under this facility.

Additional sources of unused wholesale credit availability for FNBPA include the ability to borrow from the FHLB, correspondent bank lines, and access to other funding channels.

In addition to credit availability, FNBPA also has salable unpledged government and agency securities that could be utilized to meet funding needs and has excess cash to meet its pledging requirements.

At December 31, 2024, FNBPA has $2.9 billion, an increase of $1.2 billion from December 31, 2023, of cash and salable unpledged government and agency securities representing 6.0% of total assets.

This compares to a policy minimum of 3.0%.

Another metric for measuring liquidity risk is the liquidity gap analysis.

The following liquidity gap analysis as of December 31, 2024 compares the difference between our cash flows from existing earning assets and interest-bearing liabilities over future time intervals.

Management calculates this ratio at least quarterly and it is reviewed regularly by ALCO.

Management monitors the size of the liquidity gaps so that sources and uses of funds are reasonably matched in the normal course of business and in relation to implied forward rate expectations.

1 unchanged sentence

A positive gap position means that more assets are expected to mature over the next 12 months than liabilities.

The twelve-month cumulative gap to total assets ratio was (2.6)% as of December 31, 2023, compared to 3.8% as of December 31, 2022.

The change in the twelve-month cumulative gap to total assets was primarily related to the active management of deposit pricing across the deposit product maturity tenors which reduced our asset sensitivity.

Management calculates this ratio at least quarterly and it is reviewed regularly by ALCO.

The allocation of non-maturity deposits and customer repurchase agreements to the twelve-month categories is based on the estimated lives of each product.

(dollars in millions) Within

9 unchanged sentences

Cumulative Gap to Total Assets 0.8 % (2.0) % (3.8) % (5.0) %

The twelve-month cumulative gap to total assets ratio was (5.0)% as of December 31, 2024, compared to (2.6)% as of December 31, 2023.

The change in the twelve-month cumulative gap to total assets was primarily related to management's shorter-term time deposit offerings that effectively reduced the average maturity of new time deposits, which reduced our asset

In addition, the ALCO regularly monitors various liquidity ratios, stress scenarios of our liquidity position and assumptions considering market disruptions, lending demand, deposit behavior, and funding availability.

2 unchanged sentences

Market risk refers to potential losses arising predominately from changes in interest rates, foreign exchange rates, equity prices and commodity prices.

Interest rate risk is comprised of repricing risk, basis risk, yield curve risk and options risk.

We are primarily exposed to interest rate risk inherent in our lending and deposit-taking activities as a financial intermediary.

3 unchanged sentences

Changes in market interest rates may result in changes in the fair value of our financial instruments, cash flows and net interest income.

Subject to its ongoing oversight, the Board of Directors has given ALCO the responsibility for market risk

management, which involves devising policy guidelines, risk measures and limits, and managing the amount of interest rate risk and its effect on net interest income and capital.

We use derivative financial instruments for interest rate risk management purposes and not for trading or speculative purposes.

Interest rate risk is comprised of repricing risk, basis risk, yield curve risk and options risk.

Repricing risk arises from differences in the cash flow or repricing between asset and liability portfolios.

Basis risk arises when asset and liability portfolios are related to different market rate indices, which do not always change by the same amount.

Yield curve risk arises when asset and liability portfolios are related to different maturities on a given yield curve;

when the yield curve changes shape, the risk position is altered.

Options risk arises from “embedded options” within asset and liability products as certain borrowers have the option to prepay their loans, which may be with or without penalty, when rates change, while certain depositors can redeem their certificates of deposit early, which may be with or without penalty, when rates change.

Subject to its ongoing oversight, the Board of Directors has given ALCO the responsibility for market risk management, which involves devising policy guidelines, risk measures and limits, and managing the amount of interest rate risk and its effect on net interest income and capital.

We use derivative financial instruments for interest rate risk management purposes.

We use an asset/liability model to measure our interest rate risk.

8 unchanged sentences

Reviewing these various measures provides us with a comprehensive view of our interest rate risk profile, which provides the basis for balance sheet management strategies.

The following repricing gap analysis as of December 31, 2023 compares the difference between the amount of interest-earning assets and interest-bearing liabilities subject to repricing over a period of time.

Management utilizes the repricing gap analysis as a diagnostic tool in managing net interest income and EVE risk measures.

The following repricing gap analysis as of December 31, 2024 compares the difference between the amount of interest-earning assets and interest-bearing liabilities subject to repricing.

The allocation of non-maturity deposits and customer repurchase agreements to the one-month maturity category below is based on the estimated sensitivity of each product to changes in market rates.

For example, if a product’s rate is estimated to increase by 50% as much as the market rates, then 50% of the account balance was placed in this category.

(dollars in millions) Within

10 unchanged sentences

Cumulative Gap to Earning Assets 9.4 % 5.7 % 3.2 % 4.5 %

The twelve-month cumulative repricing gap to total assets was 10.3% and 8.4% as of December 31, 2023 and December 31, 2022, respectively.

The positive cumulative gap positions indicate that we have a greater amount of repricing earning assets than repricing interest-bearing liabilities over the subsequent twelve months.

The change in the cumulative repricing gap at December 31, 2023, compared to December 31, 2022, is primarily related to customers moving into higher yielding deposit products and shorter-term time deposits.

The allocation of non-maturity deposits and customer repurchase agreements to the one-month maturity category above is based on the estimated sensitivity of each product to changes in market rates.

For example, if a product’s rate is estimated to increase by 50% as much as the market rates, then 50% of the account balance was placed in this category.

We model rate scenarios which move all rates gradually over twelve months (Rate Ramps).

Management utilizes the repricing gap analysis as a diagnostic tool in managing net interest income and EVE risk measures.

The positive cumulative gap positions indicate that we have a greater amount of repricing earning assets than repricing interest-bearing liabilities over the subsequent twelve months, thereby creating our current asset sensitive position.

As a result of management's strategies to reduce its asset sensitive position, the twelve-month cumulative repricing gap to total assets was 4.5% as of December 31, 2024, down from 10.3% at December 31, 2023.

Specific pricing actions included an emphasis on originating shorter-term time deposits so more interest bearing liabilities will mature in less than 12 months, hence reducing the repricing gap differential.

In addition, management actions included the use of interest rate swaps.

In addition to the repricing gap analysis above, we model rate scenarios which move all rates gradually over twelve months (Rate Ramps).

We also model rate scenarios which move all rates in an immediate and parallel fashion (Rate Shocks) and model scenarios that gradually change the shape of the yield curve.

Using a static Balance Sheet structure, and utilizing net interest income simulations, the following table presents an analysis of the potential sensitivity of our net interest income on changes in interest Rate Ramps and EVE to changes in interest rates using Rate Shocks.

Using a static Balance Sheet structure and utilizing net interest income simulations, the following table presents an analysis of the potential sensitivity of our net interest income to changes in interest rates using Rate Ramps and the sensitivity of EVE using Rate Shocks.

The variance percentages represent the change between the net interest income and EVE calculated under the particular rate scenario compared to the net interest income and EVE that was calculated assuming market rates as of December 31, 2024.

The measures do not reflect management's potential actions.

The calculated results do not reflect management's potential actions.

December 31, 2024 2023 ALCO

Net interest income change over 12 months (Rate Ramps):

+ 300 basis points 5.8 % 3.4 % n/a

+ 200 basis points 3.0 % 3.9 % (10.0) %

8 unchanged sentences

– 200 basis points (6.9) (8.0) (15.0)

Management continues to be proactive in managing our interest rate risk (IRR) position with the intention to manage to a more neutral position given the current market expectations for future rates.

During 2023, management has adjusted the IRR position by managing cash balances, originating higher yielding loans, strategically meeting our customers' preferences for higher yielding deposit products, in particular, shorter term time deposits, and utilizing borrowings of varying maturities.

There are multiple factors that influence our interest rate risk position and impact on net interest income, including external factors such as the shape of the yield curve, the competitive landscape and expectations regarding future interest rates, as well as internal factors regarding product offerings, product mix and pricing and re-pricing of loans and deposits.

Our current interest rate risk position is modestly asset sensitive.

A key driver of this position resulted from the origination of consumer and commercial loans with short-term repricing characteristics, some of which have been swapped to a fixed rate.

Total variable and adjustable-rate loans were 62.9% and 62.2% of total net loans and leases at December 31, 2024 and December 31, 2023, respectively.

Forty-seven percent of our net loans and leases reprice within the next three months and are indexed to short-term SOFR, Prime and other indices.

Furthermore, we regularly sell long-term fixed-rate residential mortgages in the secondary market.

Management continues to be proactive in managing our interest rate risk (IRR) position with the intention to manage to a more neutral position given the current market expectations for lower short-term interest rates.

During 2024, management adjusted the IRR position by slightly extending the duration of the investment securities portfolio, originating adjustable-rate mortgage loans with longer-duration fixed-rate reset periods, strategically meeting our customers' preferences for higher yielding deposit products, with shorter-term time deposits, utilizing borrowings with variable rates and varying maturities and executing receive-fixed interest rate swaps to hedge adjustable rate loans.

As a result, the net interest income change over 12 months shown above in both the up and down rate ramp scenarios is closer to neutral compared to December 31, 2023.

We also utilize derivatives to manage the IRR position.

We continue to make use of interest rate swaps to commercial borrowers (commercial swaps) to manage our IRR position as the commercial swaps effectively increase our level of adjustable-rate loans.

Total variable and adjustable-rate loans were 62.2% of total net loans and leases as of December 31, 2023 and 60.2% as of December 31, 2022.

As of December 31, 2023, the commercial swaps totaled $5.7 billion of notional principal, with $945 million in original notional swap principal originated during 2023, up from $5.3 billion at December 31, 2022.

Furthermore, we regularly sell long-term fixed-rate residential mortgages in the secondary market and have been successful in the origination of consumer and commercial loans with short-term repricing characteristics.

For additional information regarding interest rate swaps, see Note 16, "Derivative Instruments and Hedging Activities" in the Notes to the Consolidated Financial Statements in this Report.

These positions are used to protect the fair value of assets and liabilities by converting the contractual interest rate on a specified amount (i.e., notional amounts) to another interest rate index or to hedge the variability in cash flows attributable to the contractually specified interest rate by converting the variable rate index into a fixed rate.

The volume, maturity and mix of derivative positions change periodically as we adjust our broader interest rate risk management objectives, and the balance sheet positions to be hedged.

During the fourth quarter of 2024, we executed

receive-fixed interest rate swaps designated as cash flow hedges for variable rate commercial loans for $1.0 billion (notional) at an average rate of 3.9% and average maturity of 42.3 months.

At December 31, 2024, we have a total of $2.2 billion (notional) of these cash flow hedges at an average rate of 2.5% and average maturity of 23.9 months with the last hedge scheduled to expire in January 2029, with $1.0 billion (notional) of this total maturing in 2025 at an average rate of 0.9%.

Additionally, we have a $200.0 million (notional) interest rate collar on variable rate commercial loans with strike rates between 2.8525% and 5.50% that matures in April 2026.

Derivative financial instruments are also offered to enable commercial customers to meet their financing and investing objectives and for their risk management purposes.

We typically enter into offsetting third-party contracts with reputable counterparties with substantially matching terms to economically hedge the exposure related to these derivatives.

At December 31, 2024, the commercial customer-related interest rate swaps totaled $5.9 billion (notional), up from $5.7 billion (notional) at December 31, 2023.

For additional information regarding interest rate swaps, see Note 15, "Derivative Instruments and Hedging Activities" in the Notes to Consolidated Financial Statements in this Report.

In addition to the rate ramp scenarios for net interest income changes shown above, we also model immediate interest rate shock scenarios.

These results use historical long-term deposit rate beta assumptions that are regularly analyzed and adjusted as necessary for both rising and falling rate scenarios.

Assuming a static Balance Sheet, a +100 basis point Rate Shock increases net interest income (12 months) by 2.0% at December 31, 2024 and 3.4% at December 31, 2023.

For a +200 basis point Rate Shock, net interest income (12 months) increases by 3.9% at December 31, 2024 and 6.7% at December 31, 2023.

The corresponding metrics for a minus 100 basis point Rate Shock are (3.6)% and 1.2% at December 31, 2023 and December 31, 2022, respectively.

These results use historical long-term deposit rate beta assumptions that are regularly analyzed and adjusted as necessary for both rising and falling rate scenarios.

The drivers of the change in net interest income in the rate scenarios include the mix shift of deposit products, the pace of deposit repricing and assumed betas and loan prepayments.

The FOMC increased the Federal Funds rate 425 basis points in 2022 and 100 basis points in the first seven months of 2023.

Forty-eight percent of our net loans and leases reprice within the next three months and are indexed to short-term SOFR, Prime and other indices which benefit from higher rates.

Our cash position has also been a significant factor in our asset sensitivity metrics.

Projected base net interest income has decreased from year-end as deposit rates have increased faster than asset repricing indices.

There are multiple factors that influence our interest rate risk position and impact net interest income.

These include external factors such as the shape of the yield curve, the competitive landscape and expectations regarding future interest rates, as well as internal factors regarding product offerings, product mix and pricing of loans and deposits.

The metrics for a minus 200 basis point Rate Shock are (4.6)% and (7.7)% at December 31, 2024 and December 31, 2023, respectively, and for a minus 100 basis point Rate Shock are (2.2)% and (3.6)% at December 31, 2024 and December 31, 2023, respectively.

In addition to the cash flow hedges, the primary drivers of the change in net interest income in the rate shock scenarios include the mix shift of deposit products into shorter-term time deposits, the pace of deposit repricing and assumed betas and loan prepayments.

These results reflect a more neutral net interest income change over 12 months in both the up and down rate shock scenarios compared to December 31, 2023, consistent with the rate ramp results.

We recognize that all asset/liability models have some inherent shortcomings.

2 unchanged sentences

While management believes that its methodology for developing such assumptions is reasonable, there can be no assurance that modeled results will be achieved.

Furthermore, the metrics are based upon the Balance Sheet structure as of the valuation date and do not reflect the planned growth or management actions that could be taken.

Furthermore, the metrics are based upon the static Balance Sheet structure as of the valuation date and do not reflect planned growth or management actions that could be taken.

CREDIT RATINGS

Our credit ratings affect the cost and availability of short- and long-term funding and collateral requirements for certain derivative instruments.

Credit ratings are subject to ongoing review by rating agencies, which consider a number of factors, including our financial strength, performance, prospects and operations as well as factors not under our control.

Other factors that influence our credit ratings include changes to the rating agencies’ methodologies for our industry or certain security types;

20 unchanged sentences

Baseline credit assessment Baa1 n/a n/a

Issuer credit rating n/a BBB- A

Issuer credit rating Baa1 BBB A

Senior debt n/a n/a A

5 unchanged sentences

n/a - not applicable

On August 27,2023, Moody's affirmed our ratings and changed their outlook to negative as part of their review of 27 banks.

RISK MANAGEMENT

As a financial institution, we take on a certain amount of risk in every business decision, transaction and activity.

Accordingly, we have designed an Enterprise Risk Management Framework and risk management practices to help manage enterprise risks.

Accordingly, we have designed an Enterprise Risk Management Framework and risk management practices to identify, assess, monitor and report the material risks known throughout the organization in pursuit of our business strategies.

Our Board of Directors and senior management have identified seven major categories of risk:

credit risk, market risk, liquidity risk, operational risk, legal and compliance risk, reputation risk and strategic risk.

credit risk, market risk, liquidity risk, operational risk, compliance risk, reputation risk and strategic risk.

In its oversight role of our risk management function, the Board of Directors focuses on the strategies, analyses and conclusions of management relating to identifying, understanding and managing risks to optimize total shareholder value, while balancing prudent business and safety and soundness considerations.

We support our risk management processes and business oversight through the three lines of defense and a governance structure at the Board of Directors and management levels.

We support our risk management processes and business oversight through three lines of defense and a governance structure at the Board of Directors and management levels.

The lines of defense model consists of:

• First Line of Defense - make each of our businesses and enterprise support areas that generate risk and are principally responsible for owning and managing the day-to-day risk-taking activities in accordance with the risk frameworks.

• Second Line of Defense - consists of Risk Management and Compliance Departments responsible for developing risk frameworks, overseeing risk-taking activities and identifying, assessing, monitoring and reporting on enterprise aggregate risks.

• Third Line of Defense - is Internal Audit and provides independent assurance on the effectiveness of controls and risk management practices across our first and second lines of defense.

Our Board of Directors is responsible for the oversight of management on behalf of our stockholders.

• First Line of Defense - consists of our businesses and enterprise support areas that engage in risk-taking activities and are principally responsible for owning and managing the day-to-day operational activities in accordance with the risk frameworks.

• Second Line of Defense - consists of the Risk Management Department responsible for developing risk frameworks and identifying, assessing, overseeing and controlling enterprise aggregate risks independent from the First Line of Defense.

• Third Line of Defense - is Internal Audit and develops and executes a risk-based audit plan to provide assurance on the compliance and effectiveness of controls and risk management practices throughout the organization independent from the First and Second Lines of Defense.

Our Board of Directors is responsible for the oversight of management on behalf of our shareholders.

The Board of Directors has assistance in carrying out its duties and may delegate authority through the following standing Board Committees:

4 unchanged sentences

• Executive Committee - joint session of the FNB and FNBPA Board of Directors to cover special matters, as deemed necessary, in between regularly scheduled board meetings.

• Risk Committee - provides oversight of our risk management and assessment processes, including the review and approval of risk management policies, procedures and practices, to identify, assess, monitor and report material risks.

• Credit Fair Lending and CRA Committee - responsible for providing oversight of credit and lending strategies an objectives.

• Risk Committee - provides oversight and approves the enterprise-wide Risk Governance Framework (ERM Framework) including the review and approval of risk management policies and practices to identify, assess, monitor and report material risks.

• Credit Fair Lending and CRA Committee - responsible for providing oversight of credit and lending strategies and objectives.

The Risk Committee serves as the primary point of contact between our Board of Directors and the Risk Management Council (RMC), which is the senior management level committee responsible for identifying, assessing, monitoring and reporting on enterprise-wide risks.

3 unchanged sentences

The Board of Directors adopted an enterprise risk appetite that defines acceptable risk limits under which we seek to operate in pursuit of optimizing returns.

As such, we monitor a series of Key Risk Indicators for various business lines and operation units to measure performance alignment with our stated risk appetite.

Our top-down risk

appetite process serves as a limit for undue risk-taking for bottom-up planning from our various business functions.

Our Board Risk Committee, in collaboration with our Risk Management Council, approves our risk appetite on an annual basis, or more frequently, as needed to reflect changes in the risk, regulatory, economic and strategic plan environments, with the goal of ensuring that our risk appetite remains consistent with our strategic plans and business operations, regulatory environment and our shareholders' expectations.

As such, we monitor a series of Key Risk Indicators for various business lines and operations units to measure performance alignment with our stated risk appetite.

Our top-down risk appetite process serves as a limit for undue risk-taking for bottom-up planning from our various business functions.

Our Board Risk Committee, in collaboration with our Risk Management Council, approves our risk appetite on an annual basis, or more frequently, as needed to reflect changes in the risk, regulatory, economic and strategic plan environments, with the goal of ensuring that our strategic plans and business operations remain consistent with our risk appetite given the current regulatory environment and shareholders' expectations.

Our Enterprise Risk Management Framework provides the practices to identify, assess, control and monitor and report on risk across the organization.

Reports relating to our risk appetite and strategic plans, and our ongoing monitoring thereof, and our aggregate risk profile, are regularly presented to our various management level risk oversight and planning committees and periodically reported up through our Board Risk Committee.

We continue to assess our risk management practices on an ongoing basis and are making investments as necessary to position ourselves for continued growth and heightened regulatory risk management expectations for large banking institutions with average total consolidated assets of $50 billion or more.

The Board of Directors believes that our enterprise-wide risk management process is effective and enables the Board of Directors to:

5 unchanged sentences

Reconciliations of non-GAAP operating measures and key performance indicators discussed in this Report to the most directly comparable GAAP financial measures are included in the following tables.

Operating net income available to common stockholders

Operating net income available to common shareholders

Year Ended December 31 2024 2023 2022

(in thousands)

Net income available to common stockholders $ 476,810 $ 431,068 $ 396,561

Net income available to common shareholders $ 459,327 $ 476,810 $ 431,068

Preferred dividend at redemption 3,995 — —

Merger-related expense — 2,215 45,259

6 unchanged sentences

Tax benefit of FDIC special assessment (1,095) (6,287) —

Loss on securities restructuring 67,354 — —

Tax benefit of loss on securities restructuring (14,144) — —

Valuation allowance on auto loans held-for-sale 16,687 — —

Tax benefit of valuation allowance on auto loans held-for-sale (3,504) — —

Operating net income available to common stockholders (non-GAAP) $ 568,604 $ 494,893 $ 400,044

The table above shows how operating net income available to common stockholders (non-GAAP) is derived from amounts reported in our financial statements.

We believe certain charges such as merger expenses, FDIC special assessment, loss on securities restructuring, valuation allowance on auto loans held-for-sale, initial provision for non-PCD loans acquired and branch consolidation costs are not organic costs to run our operations and facilities.

Realized loss on investment securities restructuring 33,980 67,354 —

Tax benefit of realized loss on investment securities restructuring (7,136) (14,144) —

Software impairment 3,690 — —

Tax benefit of software impairment (775) — —

Loss related to indirect auto loan sales 8,969 16,687 —

Tax benefit of loss related to indirect auto loan sales (1,883) (3,504) —

Operating net income available to common shareholders (non-GAAP) $ 505,227 $ 568,604 $ 494,893

The table above shows how operating net income available to common shareholders (non-GAAP) is derived from amounts reported in our financial statements.

We believe certain charges such as preferred dividend at redemption, merger expenses, FDIC special assessment, realized loss on investment securities restructuring, software impairment, loss related to indirect auto loan sales, initial provision for non-PCD loans acquired and branch consolidation costs are not organic costs to run our operations and facilities.

These costs are specific to each individual transaction and may vary significantly based on the size and complexity of the transaction.

1 unchanged sentence

Year Ended December 31 2024 2023 2022

Net income per diluted common share $ 1.31 $ 1.22 $ 1.23

Earnings per diluted common share $ 1.27 $ 1.31 $ 1.22

Preferred dividend at redemption 0.01 — —

Merger-related expense — 0.01 0.13

6 unchanged sentences

Tax benefit of FDIC special assessment — (0.02) —

Loss on securities restructuring 0.19 — —

Tax benefit of loss on securities restructuring (0.04) — —

Valuation allowance on auto loans held-for-sale 0.05 — —

Tax benefit of valuation allowance on auto loans held-for-sale (0.01) — —

Realized loss on investment securities restructuring 0.09 0.19 —

Tax benefit of realized loss on investment securities restructuring (0.02) (0.04) —

Software impairment 0.01 — —

Tax benefit of software impairment — — —

Loss related to indirect auto loan sales 0.02 0.05 —

Tax benefit of loss related to indirect auto loan sales (0.01) (0.01) —

Operating earnings per diluted common share (non-GAAP) $ 1.39 $ 1.57 $ 1.40

2 unchanged sentences

(dollars in thousands)

Net income available to common stockholders $ 476,810 $ 431,068 $ 396,561

Net income available to common shareholders $ 459,327 $ 476,810 $ 431,068

Amortization of intangibles, net of tax 13,821 15,892 10,956

Tangible net income available to common stockholders (non-GAAP) $ 492,702 $ 442,024 $ 406,134

Average total stockholders’ equity $ 5,851,082 $ 5,475,843 $ 5,033,188

Average preferred stockholders’ equity (106,882) (106,882) (106,882)

Tangible net income available to common shareholders (non-GAAP) $ 473,148 $ 492,702 $ 442,024

Average total shareholders’ equity $ 6,132,346 $ 5,851,082 $ 5,475,843

Average preferred shareholders’ equity (13,141) (106,882) (106,882)

Average intangible assets (1)

5 unchanged sentences

(dollars in thousands) 2024 2023 2022

Operating net income available to common stockholders (annualized) $ 568,604 $ 494,893 $ 400,044

Amortization of intangibles, net of tax (annualized) 15,892 10,956 9,573

Tangible operating net income available to common stockholders (annualized) (non-GAAP) $ 584,496 $ 505,849 $ 409,617

Average total stockholders' equity $ 5,851,082 $ 5,475,843 $ 5,033,188

Average preferred stockholders' equity (106,882) (106,882) (106,882)

Operating net income available to common shareholders $ 505,227 $ 568,604 $ 494,893

Amortization of intangibles, net of tax 13,821 15,892 10,956

Tangible operating net income available to common shareholders (non-GAAP) $ 519,048 $ 584,496 $ 505,849

Average total shareholders' equity $ 6,132,346 $ 5,851,082 $ 5,475,843

Average preferred shareholders' equity (13,141) (106,882) (106,882)

Average intangible assets (1)

18 unchanged sentences

(dollars in thousands, except per share data)

Total stockholders’ equity $ 6,049,969 $ 5,653,364

Preferred stockholders’ equity (106,882) (106,882)

Total shareholders’ equity $ 6,301,650 $ 6,049,969

Preferred shareholders’ equity — (106,882)

Intangible assets (1)

4 unchanged sentences

(1) Excludes loan servicing rights.

Tangible equity to tangible assets

December 31 2023 2022

(dollars in thousands)

Total stockholders' equity $ 6,049,969 $ 5,653,364

Intangible assets (1)

(2,546,353) (2,566,029)

Tangible equity (non-GAAP) $ 3,503,616 $ 3,087,335

Total assets $ 46,157,693 $ 43,724,973

Intangible assets (1)

(2,546,353) (2,566,029)

Tangible assets (non-GAAP) $ 43,611,340 $ 41,158,944

Tangible equity to tangible assets (non-GAAP) 8.03 % 7.50 %

(1) Excludes loan servicing rights.

Tangible common equity to tangible assets

1 unchanged sentence

(dollars in thousands)

Total stockholders' equity $ 6,049,969 $ 5,653,364

Preferred stockholders' equity (106,882) (106,882)

Total shareholders' equity $ 6,301,650 $ 6,049,969

Preferred shareholders' equity — (106,882)

Intangible assets (1)

7 unchanged sentences

(1) Excludes loan servicing rights.

Net loan charge-offs, excluding isolated commercial loan charge-off due to alleged fraud to total average loans and leases

Year Ended December 31 2023

(dollars in thousands)

Net loan charge-offs $ 67,755

Isolated commercial loan charge-off (31,900)

Net loan charge-offs, excluding isolated commercial loan charge-off (non-GAAP) $ 35,855

Total average loans and leases $ 31,372,574

Net loan charge-offs / total average loans and leases 0.22 %

Net loan charge-offs, excluding isolated commercial loan charge-off to total average loans and leases (non-GAAP) 0.11 %

Operating non-interest income

2 unchanged sentences

Non-interest income $ 316,395 $ 254,332

Loss on securities restructuring 67,354 —

Realized loss on investment securities restructuring 33,980 67,354

Operating non-interest income (non-GAAP) $ 350,375 $ 321,686

6 unchanged sentences

FDIC special assessment (5,212) (29,938)

Valuation allowance on auto loans held-for-sale (16,687) —

Software impairment (3,690) —

Loss related to indirect auto loan sales (8,969) (16,687)

Operating non-interest expense (non-GAAP) $ 942,274 $ 866,596

9 unchanged sentences

FDIC special assessment (5,212) (29,938) —

Valuation allowance on auto loans held-for-sale (16,687) — —

Software impairment (3,690) — —

Loss related to indirect auto loan sales (8,969) (16,687) —

Tax credit-related project impairment (10,397) — —

Adjusted non-interest expense $ 913,386 $ 844,965 $ 758,557

2 unchanged sentences

Non-interest income 316,395 254,332 323,553

Net securities losses (gains) 67,432 (48) (193)

Net securities (gains) losses 34,011 67,432 (48)

Adjusted net interest income (FTE) + non-interest income $ 1,642,535 $ 1,650,609 $ 1,454,573

3 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.

What changed 10-K

Item 7. Management’s Discussion and Analysis