What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-27 compared with 2024-02-26 · 446 added, 383 removed, 2193 unchanged (27% of the section changed)

23 unchanged sentences

We have audited the accompanying consolidated balance sheets of F.N.B.

Corporation and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income (loss), stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

Corporation and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income (loss), changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S.

10 unchanged sentences

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

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

presentation of the financial statements.

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

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

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We have audited F.N.B.

Corporation’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, F.N.B.

Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our report dated February 26, 2024 expressed an unqualified opinion thereon.

Corporation and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income (loss), changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and our report dated February 27, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

48 unchanged sentences

Total Liabilities 42,323 40,108

Stockholders’ Equity

Preferred stock - $ 0.01 par value;

liquidation preference of $ 1,000 per share

Authorized – 20,000,000 shares

Issued – 110,877 shares

Shareholders’ Equity

Preferred stock

Issued – 0 and 110,877 shares - $ 0.01 par value

Common stock - $ 0.01 par value

6 unchanged sentences

( 180 ) ( 187 )

Total Stockholders’ Equity 6,050 5,653

Total Liabilities and Stockholders’ Equity $ 46,158 $ 43,725

Total Shareholders’ Equity 6,302 6,050

Total Liabilities and Shareholders’ Equity $ 48,625 $ 46,158

(1) Amount represents loans for which we have elected the fair value option.

36 unchanged sentences

Equipment 98 91 76

Amortization of intangibles 20 14 12

Outside services 96 84 73

2 unchanged sentences

Bank shares and franchise taxes 14 14 14

Merger-related 2 45 2

Other 108 116 133

4 unchanged sentences

Preferred stock dividends 6 8 8

Net Income Available to Common Stockholders $ 477 $ 431 $ 397

Net Income Available to Common Shareholders $ 459 $ 477 $ 431

Earnings per Common Share

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Securities available for sale:

Unrealized (losses) gains arising during the period, net of tax (benefit) expense of $ 16 , $( 79 ) and $( 16 )

Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $ 4 , $ 16 and $( 79 )

14 57 ( 277 )

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

Reclassification adjustment for (gains) losses included in net income, net of tax expense (benefit) of $( 7 ), $( 15 ) and $ 0

Derivative instruments:

Unrealized (losses) gains arising during the period, net of tax (benefit) expense of $( 2 ), $( 9 ) and $ 1

Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $( 4 ), $( 2 ) and $( 9 )

( 14 ) ( 8 ) ( 30 )

6 unchanged sentences

CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Dollars in millions, except per share data)

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

Issuance of common stock – acquisitions 1 569 570

Repurchase of common stock ( 43 ) ( 43 )

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

Issuance of common stock – acquisitions 1 569 570

Repurchase of common stock ( 36 ) ( 36 )

2 unchanged sentences

107 4 4,692 1,669 ( 235 ) ( 187 ) 6,050

Comprehensive income 485 122 607

Comprehensive income (loss) 465 66 531

Dividends declared:

4 unchanged sentences

( 175 ) ( 175 )

Redemption of preferred stock ( 107 ) ( 4 ) ( 111 )

Issuance of common stock — ( 14 ) — 10 ( 4 )

1 unchanged sentence

Restricted stock compensation 17 17

Adoption of new accounting standard ( 1 ) ( 1 )

Balance at December 31, 2024 $ — $ 4 $ 4,695 $ 1,952 $ ( 169 ) $ ( 180 ) $ 6,302

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Deferred tax expense (benefit) 45 ( 6 ) 11

Net securities losses 67 — —

Net securities (gains) losses 34 67 —

Loans originated for sale ( 1,455 ) ( 1,114 ) ( 1,042 )

Loans sold 1,391 1,071 1,239

Net gain on sale of loans ( 5 ) ( 38 ) ( 53 )

Net (gains) losses on sale of loans ( 18 ) ( 5 ) ( 38 )

Net change in:

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Increase in premises and equipment ( 139 ) ( 88 ) ( 95 )

Net cash received in business acquisitions — 188 —

Net cash received (paid) in business acquisitions — — 188

Net proceeds from sales of portfolio loans 799 — —

Net cash flows provided by (used in) investing activities ( 1,703 ) ( 2,261 ) ( 3,055 )

6 unchanged sentences

Repayment of long-term borrowings ( 341 ) ( 352 ) ( 231 )

Redemption of preferred stock ( 111 ) — —

Repurchases of common stock ( 3 ) ( 36 ) ( 43 )

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VIEs in which we do not hold the power to direct the activities of the entity that most significantly impact the entity’s economic performance or an obligation to absorb losses or the right to receive benefits which could potentially be significant to the VIE are not consolidated.

Investments in companies that are not consolidated are accounted for using the equity method when we have the ability to exert significant influence or the cost method when we do not have the ability to exert significant influence.

Investments in companies that are not consolidated are accounted for using the equity method when we have the ability to exert significant influence.

Investments in private investment partnerships that are accounted for under the equity method or the cost method are included in other assets and our proportional interest in the equity investments’ earnings are included in other non-interest income.

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

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

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

Events occurring subsequent to December 31, 2024 have been evaluated for potential recognition or disclosure in the Consolidated Financial Statements through the date of the filing of the Consolidated Financial Statements with the SEC.

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It also allows for a one-time transfer or sale of qualifying HTM securities.

We adopted RRR on October 1, 2020, and the guidance will be followed until the Update terminates on December 31, 2024.

We adopted RRR on October 1, 2020, and the guidance was followed until the Update terminated on December 31, 2024.

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

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

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

The ASU has been applied prospectively.

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

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

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

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

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

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

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

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

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

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

Accounting for Investments in Tax Credit Structures.

Effective January 1, 2024, we adopted the provision of ASU 2023-02, Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method , which permits reporting entities to make an accounting policy election to account for tax equity investments using the proportional amortization method if certain conditions are met.

The election is to be made on a tax-credit-program-by-tax-credit-program basis and should be applied consistently to all investments within an elected tax credit program.

Upon the adoption of ASU 2023-02, we elected to apply the proportional amortization method of accounting to our qualifying historic and new market tax credit investments.

The proportional amortization method recognizes the amortized cost of the investment as a component of income tax expense on the consolidated statements of income and as a component of operating activities within other assets and other liabilities on the consolidated statements of cash flows.

We historically applied proportional amortization to the majority of our LIHTC investments.

LIHTCs that do not meet the requirements of the proportional amortization method are recognized using the equity method.

See Note 11, "Variable Interest Entities" for additional information.

Business Combinations

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Interest income on debt securities includes amortization of purchase premiums or accretion of discounts.

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

Premiums on callable debt securities are amortized to

their earliest call date.

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

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

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

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We believe that these qualitative factors are indicators that historical credit loss information should be nominally impacted, if at all, by current conditions and R&S forecasts.

As such, we believe that without a change in these indicators, we may continue to assume zero credit losses on securities concluded to exhibit those factors.

As such, we believe that without

a change in these indicators, we may continue to assume zero credit losses on securities concluded to exhibit those factors.

We also have a portfolio of HTM debt securities where we do not expect credit losses to be zero.

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Intangible assets that have finite lives, such as core deposit intangibles, customer relationship intangibles and renewal lists, are amortized over their estimated useful lives and subject to periodic impairment testing.

Core deposit intangibles are primarily amortized over ten years using accelerated methods.

Customer renewal lists are amortized over their estimated useful lives which range from eight to thirteen years .

Core deposit intangibles are primarily amortized over 10 years using accelerated methods.

Customer renewal lists are amortized over their estimated useful lives which range from eight to 13 years.

Goodwill and other intangibles are subject to impairment testing at the reporting unit level, which must be conducted at least annually.

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These investments generate a return through the realization of federal tax credits.

We use the proportional amortization method to account for a majority of our investments in these entities.

proportional amortization method to account for a majority of our investments in these entities.

LIHTCs that do not meet the requirements of the proportional amortization method are recognized using the equity method.

58 unchanged sentences

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

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

expected to be realized.

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

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

12 unchanged sentences

Per Share Amounts

Earnings per common share is computed using net income available to common stockholders, which is net income adjusted for preferred stock dividends.

Basic earnings per common share is calculated by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding, net of unvested shares of restricted stock.

Diluted earnings per common share is calculated by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding, adjusted for the dilutive effect of potential common shares issuable for stock options and restricted shares, as calculated using the treasury stock method.

Adjustments to net income available to common stockholders and the weighted average number of shares of common stock outstanding are made only when such adjustments dilute earnings per common share.

Earnings per common share is computed using net income available to common shareholders, which is net income adjusted for preferred stock dividends.

Basic earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding, net of unvested shares of restricted stock.

Diluted earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding, adjusted for the dilutive effect of potential common shares issuable for stock options and restricted shares, as calculated using the treasury stock method.

Adjustments to net income available to common shareholders and the weighted average number of shares of common stock outstanding are made only when such adjustments dilute earnings per common share.

The assumed proceeds from applying the treasury stock method when computing diluted earnings per share excludes the amount of excess tax benefits that would have been recognized in accumulated paid-in capital.

10 unchanged sentences

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

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

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

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

We account for forfeitures as they occur.

2 unchanged sentences

Standard Description Financial Statements Impact

Income Statement

ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures:

Clarifying the Effective Date

ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures:

Disaggregation of Income Statement Expenses

This Update requires public business entities to disclose, on an annual and interim basis, disaggregated information about certain income statement line items in a tabular format in the notes to the financial statement.

Specifically, entities must disaggregate any relevant expense caption that includes one or more of the following natural expense categories:

(1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, (5) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities (DD&A).

Additionally, this Update also requires entities to disclose selling expense on both annual and interim bases.

This Update does not change the requirements for the presentation of expenses on the face of the income statement.

This Update is to be applied prospectively for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption and retrospective application are permitted.

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

ASU 2023-09, Income Taxes:

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Early adoption is permitted.

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

We are adopting this ASU using a prospective method for the period beginning January 1, 2025.

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

Standard Description Financial Statements Impact

Segment Reporting

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

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

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

Early adoption is permitted.

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

Standard Description Financial Statements Impact

We adopted this Update on a retrospective basis for the annual period ending December 31, 2024 and for the interim period beginning January 1, 2025.

The adoption of this ASU does not have a material impact on our consolidated financial statements.

Tax Equity Investments

4 unchanged sentences

Early adoption of this Update is permitted.

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

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

Troubled Debt Restructuring and Charge-offs

ASU 2022-02, Financial Instruments – Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures

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

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

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

This Update is to be applied using a prospective method.

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

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

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

MERGERS AND ACQUISITIONS

Howard Bancorp, Inc.

On January 22, 2022, we completed our acquisition of Howard, a bank holding company headquartered in Baltimore City, Maryland.

The acquisition enhanced our presence in the Mid-Atlantic Region.

Additionally, cost savings, efficiencies and other benefits were realized from the combined operations.

On the acquisition date, Howard had assets with a net book value of approximately $ 2.4 billion, including $ 1.8 billion in both loans and deposits.

The acquisition was valued at approximately $ 443 million and resulted in the issuance of 34,074,495 shares of our common stock in exchange for 18,930,329 shares of Howard common stock.

We also acquired restricted stock units and the fully vested outstanding stock options of Howard.

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

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

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

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

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

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

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

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

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

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

As part of the Howard acquisition, we acquired PCD loans and leases of $ 186.9 million.

We established an ACL at acquisition of $ 10.0 million with a corresponding gross-up to the amortized cost of the PCD loans and leases.

The non-credit discount on the PCD loans and leases was $ 5.4 million and the Day 1 fair value was $ 171.5 million.

The initial provision expense for non-PCD loans associated with the Howard acquisition was $ 19.1 million.

We integrated the systems and the operating activities of Howard into FNB in February 2022.

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

On December 9, 2022, we completed our acquisition of Union, a bank holding company based in Greenville, North Carolina.

This acquisition further increases our presence in North Carolina and adds low-cost granular deposits which continue to be value accretive in the current economic environment.

On the acquisition date, Union had assets with a net book value of approximately $ 1.1 billion, including $ 0.7 billion in loans and $ 1.0 billion in deposits.

The acquisition was valued at approximately $ 126 million and resulted in the issuance of 9,672,691 shares of our common stock in exchange for 6,008,123 shares of Union common stock.

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

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

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

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

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

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

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

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

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

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

As part of the Union acquisition, we acquired PCD loans and leases of $ 36.9 million.

We established an ACL at acquisition of $ 1.8 million with a corresponding gross-up to the amortized cost of the PCD loans and leases.

The non-credit discount on the PCD loans and leases was $ 0.5 million and the Day 1 fair value was $ 34.7 million.

The initial provision expense for non-PCD loans associated with the Union acquisition was $ 9.4 million.

We integrated the systems and the operating activities of Union in December 2022.

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

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

(in millions) Howard Union

Fair value of consideration paid $ 443 $ 126

Fair value of identifiable assets acquired:

Cash and cash equivalents 75 113

Securities 321 212

Loans 1,780 652

Core deposit and other intangible assets 19 41

Fixed and other assets 156 59

Total identifiable assets acquired 2,351 1,077

Fair value of liabilities assumed:

Deposits 1,831 956

Borrowings 247 30

Other liabilities 7 3

Total liabilities assumed 2,085 989

Fair value of net identifiable assets acquired 266 88

Goodwill recognized $ 177 $ 38

We adopted this Update on January 1, 2024 on a modified retrospective basis for tax credit programs that are eligible to apply proportional amortization.

As a result, we recorded a reduction of $ 0.5 million in retained earnings for the cumulative effect of the adoption.

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

1 unchanged sentence

Accrued interest receivable on AFS debt securities totaled $ 14.3 million and $ 9.6 million at December 31, 2024 and 2023, respectively, and is excluded from the estimate of credit losses and assessed separately in other assets in the Consolidated Balance Sheets.

Accordingly, we have excluded accrued interest receivable from both the fair value and the amortized cost basis of AFS debt securities.

Accordingly, we have excluded accrued interest receivable from both the fair value and amortized cost basis of AFS debt securities.

(in millions) Amortized

3 unchanged sentences

government agencies 53 — — 53

government-sponsored entities 227 — ( 4 ) 223

Residential mortgage-backed securities:

Agency mortgage-backed securities 814 — ( 62 ) 752

government-sponsored enterprises 302 — ( 2 ) 300

Residential MBS:

Agency MBS 714 — ( 20 ) 694

Agency collateralized mortgage obligations 796 — ( 98 ) 698

Commercial mortgage-backed securities 905 9 ( 30 ) 884

Agency commercial MBS 1,420 3 ( 35 ) 1,388

States of the U.S.

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government agencies 78 1 — 79

government-sponsored entities 283 — ( 21 ) 262

Residential mortgage-backed securities:

Agency mortgage-backed securities 1,360 — ( 128 ) 1,232

government-sponsored enterprises 227 — ( 4 ) 223

Residential MBS:

Agency MBS 814 — ( 62 ) 752

Agency collateralized mortgage obligations 946 — ( 114 ) 832

Commercial mortgage-backed securities 430 — ( 35 ) 395

Agency commercial MBS 905 9 ( 30 ) 884

States of the U.S.

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Accrued interest receivable on HTM debt securities totaled $ 14.6 million and $ 14.7 million at December 31, 2024 and 2023, respectively, and is excluded from the estimate of credit losses and assessed separately in other assets in the Consolidated Balance Sheets.

Accordingly, we have excluded accrued interest receivable from both the fair value and the amortized cost basis of HTM debt securities.

Accordingly, we have excluded accrued interest receivable from both the fair value and amortized cost basis of HTM debt securities.

(in millions) Amortized

1 unchanged sentence

December 31, 2024

government agencies $ 1 $ — $ — $ 1

government-sponsored entities 68 — — 68

Residential mortgage-backed securities:

Agency mortgage-backed securities 1,057 2 ( 101 ) 958

Treasury $ 1 $ — $ — $ 1

government-sponsored enterprises 29 — — 29

Residential MBS:

Agency MBS 901 1 ( 96 ) 806

Agency collateralized mortgage obligations 714 — ( 95 ) 619

Commercial mortgage-backed securities 929 4 ( 43 ) 890

Agency commercial MBS 1,326 2 ( 44 ) 1,284

States of the U.S.

6 unchanged sentences

government agencies $ 1 $ — $ — $ 1

government-sponsored entities 52 — — 52

Residential mortgage-backed securities:

Agency mortgage-backed securities 1,178 — ( 125 ) 1,053

government-sponsored enterprises 68 — — 68

Residential MBS:

Agency MBS 1,057 2 ( 101 ) 958

Agency collateralized mortgage obligations 824 — ( 104 ) 720

Commercial mortgage-backed securities 866 2 ( 50 ) 818

Agency commercial MBS 929 4 ( 43 ) 890

States of the U.S.

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During 2024, we sold $ 231.4 million of AFS securities resulting in a realized loss of $ 34.0 million as part of a proactive balance sheet management strategy.

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

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

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.

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

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

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

Unrealized losses on the AFS and HTM portfolios are due to the increase in market interest rates with 85.7 % of these securities backed or sponsored by the U.S.

9 unchanged sentences

690 686 1,038 935

Residential mortgage-backed securities:

Agency mortgage-backed securities 814 752 1,057 958

Residential MBS:

Agency MBS 714 694 901 806

Agency collateralized mortgage obligations 796 698 714 619

Commercial mortgage-backed securities 905 884 929 890

Agency commercial MBS 1,420 1,388 1,326 1,284

Total debt securities $ 3,620 $ 3,466 $ 3,979 $ 3,644

Actual maturities may differ from contractual terms because security issuers may have the right to call or prepay obligations with or without penalties.

Periodic principal payments are received on residential mortgage-backed securities based on the payment patterns of the underlying collateral.

Periodic principal payments are received on residential MBS based on the payment patterns of the underlying collateral.

Following is information relating to securities pledged:

17 unchanged sentences

government agencies 6 11 — 12 25 — 18 36 —

government-sponsored entities 1 25 — 7 123 ( 4 ) 8 148 ( 4 )

Residential mortgage-backed securities:

Agency mortgage-backed securities — — — 104 750 ( 62 ) 104 750 ( 62 )

government-sponsored enterprises 2 75 — 7 126 ( 2 ) 9 201 ( 2 )

Residential MBS:

Agency MBS 9 235 ( 1 ) 92 355 ( 19 ) 101 590 ( 20 )

Agency collateralized mortgage obligations — — — 66 698 ( 98 ) 66 698 ( 98 )

Commercial mortgage-backed securities 1 32 — 20 377 ( 30 ) 21 409 ( 30 )

Agency commercial MBS 23 709 ( 8 ) 20 359 ( 27 ) 43 1,068 ( 35 )

States of the U.S.

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government agencies 2 4 — 12 36 — 14 40 —

government-sponsored entities 9 150 ( 8 ) 4 112 ( 13 ) 13 262 ( 21 )

Residential mortgage-backed securities:

Agency mortgage-backed securities 104 773 ( 58 ) 13 455 ( 70 ) 117 1,228 ( 128 )

government-sponsored enterprises 1 25 — 7 123 ( 4 ) 8 148 ( 4 )

Residential MBS:

Agency MBS — — — 104 750 ( 62 ) 104 750 ( 62 )

Agency collateralized mortgage obligations — — — 71 832 ( 114 ) 71 832 ( 114 )

Commercial mortgage-backed securities 16 302 ( 21 ) 5 94 ( 14 ) 21 396 ( 35 )

Agency commercial MBS 1 32 — 20 377 ( 30 ) 21 409 ( 30 )

States of the U.S.

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Based on the nature of the issuers and current conditions, we have determined that securities backed by the UST, Fannie Mae, Freddie Mac, FHLB, Ginnie Mae, and the SBA have zero expected credit loss.

Our municipal bond portfolio with a carrying amount of $ 1.0 billion as of December 31, 2023 is highly rated with an average rating of AA and 100 % of the portfolio having an A or better rating.

Our municipal bond portfolio with a carrying amount of $ 1.0 billion as of December 31, 2024 is highly rated with an average rating of AA and 99 % of the portfolio is rated A or better.

All of the securities in the municipal portfolio are general obligation bonds.

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The average holding size of the securities in the municipal bond portfolio is $ 2.5 million.

In addition to the strong stand-alone ratings, 61 % of the municipal bonds have some formal credit enhancement (e.g., insurance) that strengthens the creditworthiness of the bond.

The ACL on the HTM municipal bond portfolio is calculated on each bond using:

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• Moody’s U.S.

Bond Defaults and Recoveries, 1970-2022 study.

Municipal Bond Default and Recovery Rates, 1970-2023.

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

We further refine the expected credit loss by factoring in economic forecast data using our Commercial and Industrial Non-Manufacturing loan portfolio forecast adjustment as derived through our assessment of the loan portfolio as a proxy for our municipal bond portfolio.

Our corporate bond portfolio, with a carrying amount of $ 52.4 million as of December 31, 2023 primarily consists of subordinated debentures of banks within our footprint.

Our corporate bond portfolio, with a carrying amount of $ 53.5 million as of December 31, 2024 consists of debentures of banks within our footprint.

The average holding size of the securities in the corporate bond portfolio is $ 3.4 million.

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• Moody’s Annual Default Study, 02/26/2024;

• Most recent financial statements.

• The most recent financial statements.

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

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Total loans and leases, net of unearned income $ 33,939 $ 32,323

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

The remaining accretable discount included in the amortized cost of acquired loans was $ 31.6 million and $ 42.6 million at December 31, 2024 and 2023, respectively.

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

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

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

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

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

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

The sale completed in February 2024.

During 2024, we sold $ 0.8 billion in indirect auto loans.

We recognized a $ 9.0 million loss during 2024 related to the sales.

The related servicing asset was not significant at December 31, 2024.

In the fourth quarter of 2023, we transferred $ 355 million of indirect automobile loans to the held-for-sale portfolio so those loans were not in the indirect installment portfolio balance in Table 5.1 at December 31, 2023.

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

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December 31 2024 2023

(dollars in millions)

Commercial real estate:

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Total charge-offs $ 0.4 $ 7.4 $ 7.7 $ 20.5 $ 17.0 $ 28.8 $ — $ 81.8

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

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

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

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

Commercial and Industrial:

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

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

Commercial Leases:

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Total commercial leases 254 138 86 54 25 42 — 599

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

Other Commercial:

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Total other commercial 39 — — — — 8 63 110

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

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

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

(in millions)

Direct Installment:

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

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

Residential Mortgages:

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

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

Indirect Installment:

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

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

Consumer Lines of Credit:

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

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

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

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

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

We use delinquency transition matrices within the consumer and other loan classes to establish the basis for the R&S forecast portion of the credit risk.

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Non-Performing and Past Due

The following tables provide an analysis of the aging of loans by class.

The following table provides an analysis of the aging of loans by class.

(in millions) 30-89 Days

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

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

The recorded investment of residential-secured consumer OREO for which formal foreclosure proceedings are in process at December 31, 2024 and 2023 totaled $ 10.6 million and $ 9.4 million, respectively.

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

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

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

Accrued interest receivable on loan modifications totaled $ 0.2 million and $ 0.4 million at December 31, 2024 and December 31, 2023, respectively, and is excluded from the amortized cost of loan modifications in the tables that follow.

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

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

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Commercial real estate $ 0.3 — % The modified loans had an average increase in term of 7 months, extending the maturity date.

Commercial and industrial 0.1 — Modifications were made with no material financial effect.

Direct installment 1.5 0.06 The modified loans had an average increase in term of 65 months, extending the maturity date.

Residential mortgages 7.3 0.09 The modified loans had an average increase in term of 70 months, extending the maturity date.

Consumer lines of credit 1.3 0.09 The modified loans had an average increase in term of 221 months, extending the maturity date.

Rate Reduction

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

Term Extension and Rate Reduction

Commercial real estate 17.6 0.14 The terms were extended, with a weighted average yield reduction of 190 basis points.

Commercial and industrial 15.5 0.21 The modified loans had an average increase in term of 6 months, at a reduced rate.

Residential mortgages 1.3 0.02 Modifications were made with no material financial effect.

Consumer lines of credit 0.2 0.01 Modifications were made with no material financial effect.

Balloon Payment

Commercial real estate 0.7 0.01 Modifications were made with no material financial effect.

Consumer lines of credit 0.2 0.03 Modifications were made with no material financial effect.

Commercial real estate 2.0 0.02 3 to 12 month payment deferrals with no income being earned on these loans.

Commercial and industrial 5.2 0.07 Temporarily lowered monthly payments, 3 to 9 month payment deferral or temporary interest only payments while borrowers were in work-out.

Total Outstanding Modified $ 53.3

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

Twelve Months Ended December 31, 2023

Term Extension

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

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

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Term Extension and Rate Reduction

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

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

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

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

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

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

extending the maturity date.

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

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

Commercial real estate 8.3 0.07 The modified loans had an average increase in term of 6 months, extending the maturity date.

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

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

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

Consumer lines of credit 0.6 0.05 Primarily changed to a payment schedule with a fixed rate reduction of 508 basis points.

Total Outstanding Modified $ 59.2

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

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

There were no additional funds committed to borrowers whose loans were modified during 2024, compared to $ 0.1 million during 2023.

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

Our ACL includes specific reserves for commercial loans modified.

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

There were $ 8.1 million and $ 5.3 million in specific reserves for commercial loans modified at December 31, 2024 and 2023, respectively, and pooled reserves for individual loans of $ 1.8 million and $ 2.0 million for those same periods, respectively, based on loan segment LGD.

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

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

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

Our ACL included pooled reserves for these classes of loans of $ 3.4 million and $ 3.8 million as of December 31, 2024 and 2023, respectively.

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

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Amortized cost basis of modified financing receivables that subsequently defaulted:

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

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

December 31, 2024

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Residential mortgages 4.7 0.4 — — 5.1

Consumer lines of credit 0.1 — — 0.1

Total consumer loans 5.4 0.4 — — 5.8

Total $ 24.1 $ 15.9 $ 0.7 $ 11.4 $ 52.1

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

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

Payment status - amortization cost basis:

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

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

December 31, 2023

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Total $ 22.4 $ 0.6 $ 5.2 $ 28.2

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

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

Year Ended December 31 2022

(dollars in millions) Number

Contracts Pre-Modification

Investment Post-

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

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

Payment status - amortization cost basis:

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

December 31, 2024

Commercial real estate $ 20.5 $ — $ —

Commercial and industrial 20.8 — —

Total commercial loans 21 3 2

Total commercial loans and leases 41.3 — —

Direct installment 1.2 0.3 —

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Total $ 49.4 $ 2.4 $ 1.5

Following is a summary of TDRs, by class, for which there was a payment default, excluding loans that have been paid off and/or sold.

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

Year Ended December 31 2022

(dollars in millions) Number

Contracts Recorded

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

December 31, 2023

Commercial real estate $ 20.7 $ 9.1 $ —

Commercial and industrial 20.8 — —

Total commercial loans 7 1

Total commercial loans and leases 41.5 9.1 —

Direct installment 1.9 0.3 —

Residential mortgages 2.8 1.7 0.1

Consumer lines of credit 1.6 0.2 —

Total consumer loans 6.3 2.2 0.1

Total $ 47.8 $ 11.3 $ 0.1

ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES

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Offs Provision

Losses Allowance for PCD Loans and Leases at Acquisition Balance at

Losses Balance at

Year Ended December 31, 2023

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Offs Provision

Losses Balance at

Losses Allowance for PCD Loans and Leases at Acquisition Balance at

Year Ended December 31, 2022

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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.

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

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

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

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

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

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

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.

(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.

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 was 1.25 % at both December 31, 2024 and December 31, 2023.

Total provision for credit losses for the year ended December 31, 2024 was $ 79.8 million, compared to $ 71.8 million in 2023.

Net charge-offs were $ 62.7 million during 2024, compared to $ 67.7 million during 2023, which included an isolated $ 31.9 million commercial loan charge-off due to indications of alleged fraud and subsequent bankruptcy filings by our borrower and its primary supplier.

LOAN SERVICING

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Impairment (charge) / recovery 0.1 ( 0.2 ) 2.5

Amortization ( 2.2 ) ( 2.7 ) ( 2.4 )

Amortization / other ( 2.3 ) ( 2.2 ) ( 2.7 )

Balance at end of period $ 70.5 $ 59.5 $ 52.8

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Fair value, end of period 86.3 71.8 68.6

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

We had a $ 0.1 million valuation allowance for MSRs as of December 31, 2024 and $ 0.2 million as of December 31, 2023.

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

Changes in prepayment speed assumptions have the most significant impact on the fair value of MSRs.

Changes in prepayment

speed assumptions have the most significant impact on the fair value of MSRs.

Generally, as interest rates decline, mortgage loan prepayments accelerate due to increased refinance activity, which results in a decrease in the fair value of MSRs and as interest rates increase, mortgage loan prepayments decline, which results in an increase in the fair value of MSRs.

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Also, in this table, the effects of an adverse variation in a particular assumption on the fair value of MSRs is calculated without changing any other assumptions, while in reality, changes in one factor may result in changing another, which may magnify or contract the effect of the change.

SBA-Guaranteed Loan Servicing

We retain the servicing rights on SBA-guaranteed loans sold to investors.

The standard sale structure under the SBA Secondary Participation Guaranty Agreement provides for us to retain a portion of the cash flow from the interest payment received on the SBA guaranteed portion of the loan, which is commonly known as a servicing spread.

The unpaid principal balance of SBA-guaranteed loans serviced for investors was as follows:

December 31 2023 2022

(in millions)

SBA loans sold to investors with servicing retained $ 142 $ 186

The following table summarizes activity relating to SBA loans sold with servicing retained:

Year Ended December 31 2023 2022 2021

(in millions)

SBA loans sold with servicing retained $ 7 $ 15 $ 64

Pretax gains resulting from above loan sales (1)

SBA servicing fees (1)

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

Following is a summary of SBA servicing rights:

Year Ended December 31 2023 2022 2021

(in millions)

Balance at end of period $ 1 $ 2 $ 3

Fair value, end of period 1 2 3

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

PREMISES AND EQUIPMENT

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Balance at December 31, 2024 $ 2,446 $ 8 $ 24 $ 2,478

There were no changes to goodwill during 2023.

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

There were no material changes to goodwill during 2024 and 2023.

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

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Net carrying amount $ 66 $ 3 $ 69

We recorded core deposit intangibles during 2022 relating to the Howard and Union acquisitions described in Note 3, "Mergers and Acquisitions." Core deposit intangibles are being amortized primarily over 10 years using accelerated methods.

Customer renewal lists are being amortized over their estimated useful lives, which range from eight to thirteen years .

Core deposit intangibles are being amortized primarily over 10 years using accelerated methods.

Customer renewal lists are being amortized over their estimated useful lives, which range from eight to 13 years.

The following table summarizes amortization expense recognized:

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The exercise of lease renewal options is at our sole discretion.

As of December 31, 2023, we had operating lease right-of-use assets and operating lease liabilities of $ 184.5 million and $ 215.3 million, respectively.

We have finance lease right-of-use assets and finance lease liabilities of $ 31.5 million and $ 32.7 million, respectively.

As of December 31, 2024, we had operating lease right-of-use assets and operating lease liabilities of $ 195.6 million and $ 236.6 million, respectively, including $ 71.3 million operating right-of-use assets and $ 102.0 million operating lease liabilities with a related party.

As of December 31, 2024, we had finance lease right-of-use assets and finance lease liabilities of $ 39.0 million and $ 41.1 million, respectively.

Our operating lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As of December 31, 2023, we have certain operating lease agreements, primarily for administrative office space, that have not yet commenced.

As of December 31, 2024, we have certain operating lease agreements, primarily for administrative office space, that are expected to commence in 2025 with lease terms of up to 15 years.

At commencement, it is expected that these leases will add approximately $ 17.2 million in right-of-use assets and $ 17.7 million in other liabilities.

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

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

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

In late 2024, the majority of FNB's Pittsburgh-based employees moved into the new headquarters building, consolidating several offices, subsidiaries and support departments under one roof to create opportunities for continued efficiency, collaboration and productivity improvements.

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

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Finance leases 3.5 % 3.2 %

Maturities of lease liabilities were as follows:

Future cash flows of lease liabilities are as follows:

(in millions) Operating Leases Finance Leases Total Leases

December 31, 2024

2024 $ 32 $ 2 $ 34

0 - 12 months $ 34 $ 2 $ 36

13 - 24 months 31 3 34

25 - 36 months 28 3 31

37 - 48 months 25 3 28

49 - 60 months 23 3 26

Later years 157 42 199

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

Additionally, we have an operating lease with a related party with a maximum exposure to loss of $ 71.3 million.

For further information about this unconsolidated VIE, please see Note 10, “Leases.”

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

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Trust preferred securities (1)

Affordable housing tax credit partnerships 143 62 143

Tax credit partnerships 164 68 164

Other investments 34 — 34

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Trust preferred securities (1)

Affordable housing tax credit partnerships 123 37 123

Tax credit partnerships 143 62 143

Other investments 40 6 40

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

Affordable Housing Tax Credit Partnerships

We make equity investments as a limited partner in various partnerships that sponsor affordable housing projects utilizing the LIHTC pursuant to Section 42 of the Internal Revenue Code.

The purpose of these investments is to support initiatives associated with the CRA while earning a satisfactory return.

The activities of these LIHTC partnerships include the development and operation of multi-family housing that is leased to qualifying residential tenants.

These partnerships are generally located in communities where we have a banking presence and meet the definition of a VIE;

Affordable Housing, Historic and New Market Tax Credit Partnerships

We make equity investments as a limited partner in various partnerships of affordable housing (LIHTC), historic tax credit (HTC) and new market tax credit (NMTC) programs pursuant to Sections 42, 47 and 45d of the Internal Revenue Code, respectively.

The purpose of many of these investments is to support initiatives associated with the CRA while earning a satisfactory return.

The activities of the LIHTC partnerships include the development and operation of multi-family housing that is leased to qualifying residential tenants.

HTC partnerships allow us to make investments in projects that involve the rehabilitation of historic structures, often combining our investments with bank financing.

NMTC partnerships are designed to channel investments into distressed communities, fostering community development and stimulating economic growth.

These tax credit partnerships are generally located in communities where we have a banking presence and meet the definition of a VIE;

however, we are not the primary beneficiary of the entities, as the general partner or managing member has both the power to direct the activities that most significantly impact the economic performance of the entities and the obligation to absorb losses beyond our own equity investment.

We record our investment in LIHTC partnerships as a component of other assets and use the proportional amortization method to account for our investments in LIHTC partnerships.

Amortization related to our LIHTC investments is recorded on a net basis as a component of the provision for income taxes on the Consolidated Statements of Income.

The following table presents the balances of our affordable housing tax credit investments and related unfunded commitments:

We apply the proportional amortization method of accounting for our investments in LIHTC partnerships.

Effective January 1, 2024, upon the adoption of ASU 2023-02, Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method , we also began applying the proportional amortization method of accounting to our investments in HTC and NMTC partnerships.

The proportional amortization method recognizes the amortized cost of the investments in these tax credit partnerships as a component of income tax expense on the Consolidated Statements of Income.

Prior to the adoption of ASU 2023-02, we applied the equity method of accounting to the investments in HTC and NMTC partnerships.

The adoption of ASU 2023-02 did not have a material impact on our consolidated financial statements.

We record our investment in tax credit partnerships as a component of other assets.

The following table presents the balances of our LIHTC, HTC and NMTC investments and related unfunded commitments:

December 31 2024 2023

(in millions)

LIHTC investments included in other assets $ 81 $ 86

Unfunded LIHTC commitments 62 37

The following table summarizes the impact of these LIHTC investments on the provision for income taxes in our Consolidated Statements of Income:

Tax credit investments included in other assets $ 96 $ 81

Unfunded tax credit investments 68 62

In the first quarter of 2024, we adopted ASU 2023-02, resulting in the amortization of HTC and NMTC investments being recognized in the provision for income taxes as of the adoption of this standard.

These activities were previously recognized in non-interest expense.

The following table summarizes the impact of these tax credit investments on the provision for income taxes in our Consolidated Statements of Income:

Year Ended December 31

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Provision for income taxes:

Amortization of LIHTC investments under proportional method $ 15 $ 14 $ 13

Low-income housing tax credits ( 16 ) ( 15 ) ( 15 )

Amortization of tax credit investments under proportional method $ 21 $ 15 $ 14

Tax credits from tax credit investments ( 21 ) ( 16 ) ( 15 )

Other tax benefits related to tax credit investments ( 3 ) ( 2 ) ( 2 )

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Other Investments

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

Other investments we also consider to be unconsolidated VIEs include investments in Small Business Investment Companies and other equity method investments.

Following is a summary of deposits:

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

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

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

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

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

Of the total short-term FHLB advances, $ 335.0 million, or 57.3 %, had overnight maturities as of December 31, 2024, compared to $ 450.0 million, or 23.7 %, as of December 31, 2023.

At December 31, 2024, none of the short-term FHLB advances were swapped to fixed rates, compared to $ 400.0 million, or 21.1 %, as of December 31, 2023.

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

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Our banking affiliate has available credit with the FHLB of $ 11.5 billion, of which $ 2.3 billion was utilized and included in short-term and long-term borrowings and $ 450.0 million was utilized for a letter of credit for pledging of public funds as of December 31, 2024.

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

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

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

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

These advances are secured by $ 16.2 billion of loans collateralized by residential mortgages, home equity lines of credit, commercial real estate and FHLB stock.

The short-term borrowings are scheduled to mature in various amounts periodically during 2025 while the long-term borrowings are scheduled to mature periodically through 2028.

Effective interest rates paid on the long-term fixed-rate FHLB advances held during 2024 ranged from 3.69 % to 4.88 % and 4.23 % and 4.88 % for the year ended December 31, 2023.

The effective interest rate paid on variable rate long-term FHLB advances was Overnight SOFR plus an average spread of 34 basis points for the three months ended December 31, 2024.

There were no variable rate advances for the year ended December 31, 2023.

Subordinated notes

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$ 350 $ 347 $ 350 8/25/2025 5.150 %

5.722 % Fixed-To-Floating Rate Senior Notes due December 11, 2030 (1)

500 497 497 12/11/2030 5.722 %

Total senior notes 850 844 847

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Total $ 1,120 $ 1,110 $ 1,115

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

(1) Fixed rate until December 11, 2029, at which time it converts to a floating rate determined by the Compounded SOFR plus 193 basis points.

(2) Floating rate effective February 14, 2024, determined by the Benchmark Replacement (three-month CME term SOFR plus a tenor spread adjustment of 26 basis points) plus 240 basis points.

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

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

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

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

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Borrowing Activity

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

During the fourth quarter of 2024, we completed a 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 were used for general corporate purposes, which included the repayment of $ 300 million in 2.200 % Senior Notes that matured in February 2023, and may also include investments at the holding company level, capital to support the growth of FNBPA and refinancing of outstanding indebtedness.

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.

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

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

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

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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Credit risk is included in the determination of the estimated fair value of derivatives.

Derivative assets are reported in the Consolidated Balance Sheets in other assets and derivative liabilities are reported in other liabilities .

Derivative assets are reported in the Consolidated Balance Sheets in other assets while derivative liabilities are reported in other liabilities .

Cash flow activity relating to derivative assets and derivative liabilities is reported in the other, net line in operating activities on the Consolidated Statements of Cash Flows.

Changes in fair value are recognized in earnings except for certain changes related to derivative instruments designated as part of a cash flow hedging relationship, which are recognized in other comprehensive income.

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Amount Fair Value

(in millions) Asset Liability Asset Liability

(in millions) Assets Liabilities Assets Liabilities

Gross Derivatives

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The daily settlement of the derivative exposure does not change or reset the contractual terms of the instrument.

We adopted RRR on October 1, 2020, and the guidance will be followed until the Update terminates on December 31, 2024.

We adopted RRR on October 1, 2020, and the guidance was followed until the Update terminated on December 31, 2024.

As of October 16, 2020, we changed our valuation methodology to reflect changes made by central clearinghouses that changed the discounting methodology and interest calculation of cash migration from overnight index swap (OIS) to SOFR for U.S.

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As of December 31, 2024, the maximum length of time over which forecasted interest cash flows are hedged is 5.0 years.

In the twelve months that follow December 31, 2023, we expect to reclassify from the amount currently reported in AOCI net derivative losses of $ 34.0 million ($ 26.3 million net of tax), in association with interest on the hedged loans and FHLB advances.

In the twelve months that follow December 31, 2024, we expect to reclassify from the amount currently reported in AOCI net derivative losses of $ 16.6 million ($ 12.9 million net of tax), in association with interest on the hedged loans.

This amount could differ from amounts actually recognized due to changes in interest rates, hedge de-designations, and the addition of other hedges subsequent to December 31, 2024.

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Forward Delivery Commitments .

Forward delivery commitments on mortgage-backed securities are used to manage the interest rate and price risk of our IRLCs and mortgage loan held for sale inventory by fixing the forward sale price that will be realized upon sale of the mortgage loans into the secondary market.

Forward delivery commitments on MBS are used to manage the interest rate and price risk of our IRLCs and mortgage loan held for sale inventory by fixing the forward sale price that will be realized upon sale of the mortgage loans into the secondary market.

Historical commitment-to-closing ratios are considered to estimate the quantity of mortgage loans that will fund within the terms of the IRLCs.

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

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

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

The fair values of risk participation agreements purchased and sold were $ 0.2 million and $ 0.1 million, respectively, at December 31, 2023 and $ 0.1 million and $ 0.1 million, respectively, at December 31, 2022.

Risk participation agreements sold with notional amounts totaling $ 603 million as of December 31, 2024 have remaining terms ranging from two months to 17 years.

Under these agreements, our maximum exposure assuming a customer defaults on their obligation to perform under certain derivative swap contracts with third parties would be $ 0 and $ 0.1 million at December 31, 2024 and 2023, respectively.

The fair values of risk participation agreements purchased and sold were $ 0.1 million and $ 0 , respectively, at December 31, 2024 and $ 0.2 million and $ 0.1 million, respectively, at December 31, 2023.

The following table presents the effect of certain derivative financial instruments on the Consolidated Statements of Income:

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

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

If we had breached our agreements with our derivative counterparties we would be required to settle our obligations under the agreements at the termination value and would be required to pay $ 0.2 million as of December 31, 2024 and no thing as of December 31, 2023, in excess of amounts previously posted as collateral with the respective counterparty.

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

Amount Not Offset in the

Consolidated Balance Sheets

(in millions) Net Amount

Swap derivative transactions with customers are generally secured by rights to non-financial collateral, such as real and personal property, which is not shown in the table below.

Gross Amounts Not Offset in the Consolidated Balance Sheets

(in millions) Gross Amount Recognized Gross Amount Offset in the Consolidated Balance Sheets Net Amount

the Consolidated Balance

Sheets Financial

Instruments Cash

Collateral Net

Instruments Available for Offset

Collateral Received/Pledged Net

December 31, 2024

Derivative Assets

Interest rate contracts:

Designated $ 1 $ — $ 1 $ —

Not designated 74 — 74 —

Subject to master netting arrangement $ 96 $ — $ 96 $ 16 $ 80 $ —

Not subject to master netting arrangement 16 — 16

Total $ 112 $ — $ 112

Derivative Liabilities

Interest rate contracts:

Not designated $ 35 $ — $ 35 $ —

Subject to master netting arrangement $ 22 $ — $ 22 $ 16 $ 6 $ —

Not subject to master netting arrangement 287 — 287

Total $ 309 $ — $ 309

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Derivative Assets

Interest rate contracts:

Not designated $ 89 $ — $ 88 $ 1

Subject to master netting arrangement $ 75 $ — $ 75 $ 34 $ 41 $ —

Not subject to master netting arrangement 35 — 35

Total $ 110 $ — $ 110

Derivative Liabilities

Interest rate contracts:

Designated $ 1 $ — $ 1 $ —

Not designated 6 — 6 —

Subject to master netting arrangement $ 35 $ — $ 35 $ 34 $ 1 $ —

Not subject to master netting arrangement 289 — 289

Total $ 324 $ — $ 324

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The credit risk involved in issuing letters of credit is actively monitored through review of the historical performance of our portfolios.

Our AULC for commitments that are not unconditionally cancellable, which is included in other liabilities on the Consolidated Balance Sheets was $ 21.5 million and $ 21.4 million at December 31, 2023 and 2022, respectively.

Our AULC for commitments that are not unconditionally cancellable, which is included in other liabilities on the Consolidated Balance Sheets, was $ 21.4 million at December 31, 2024 and $ 21.5 million at December 31, 2023.

Additional information relating to the AULC is provided in Note 6, "Allowance for Credit Losses on Loans and Leases" in the Notes to Consolidated Financial Statements.

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Other Legal Proceedings

In the ordinary course of business, we may assert claims in legal proceedings against another party or parties, and we are routinely named as defendants in, or made parties to, pending and potential legal actions.

In the ordinary course of business, we may assert claims in legal proceedings against another party or parties, and likewise may be named as defendants in, or made parties to, pending and potential legal actions.

Also, as regulated entities, we are subject to governmental and regulatory examinations, information-gathering requests, and may be subject to investigations and proceedings (both formal and informal).

Such threatened claims, litigation, investigations, regulatory and administrative proceedings typically entail matters that are considered incidental to the normal conduct of business.

Such asserted or threatened claims, litigation, investigations, inquiries, regulatory and administrative proceedings typically entail matters that are considered incidental to the normal conduct of business.

Claims for significant monetary damages may be asserted in many of these types of legal actions, while claims for disgorgement, reimbursement, restitution, penalties and/or other remedial actions or sanctions may be sought in regulatory matters.

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It is inherently difficult to predict the eventual outcomes of such matters given their complexity and the particular facts and circumstances at issue in each of these matters.

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

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

In view of the inherent unpredictability of outcomes in litigation and governmental and regulatory matters, particularly where (i) the damages sought are indeterminate, (ii) the proceedings are in the early stages, or (iii) the matters involve novel legal theories or a large number of parties, as a matter of course, there is considerable uncertainty surrounding the timing or ultimate resolution of litigation and governmental and regulatory matters, including a possible eventual loss, financial or other commitments, fine, restitution, penalty, business or adverse reputational impact, if any, associated with each such matter.

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

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

The settlement included no civil money penalties levied against FNBPA.

The settlement includes FNBPA's commitment to provide $ 11.75 million in subsidies on mortgages and home equity loans originated in the Charlotte and Winston-Salem, North Carolina markets beginning in 2024 continuing until the full amount has been deployed.

This subsidy amount is part of our existing, previously announced commitment to underserved communities, including the Winston-Salem and Charlotte markets.

The settlement was not initiated through a referral by a federal bank regulatory agency or consumer complaint, and included no civil money penalties levied against FNBPA.

STOCK INCENTIVE PLANS

Restricted Stock

We issue restricted stock awards to key employees under our Incentive Compensation Plan (Plan).

We issue time-based awards and performance-based awards under this Plan, both of which are based on a three-year vesting period.

We issue restricted stock unit awards to key employees under our Incentive Compensation Plan (Plan).

We issue time-based awards and performance-based awards under this Plan, both of which are based on a one to three-year vesting period.

The grant-date fair value of the time-based awards is equal to the price of our common stock on the grant date.

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We granted 1,280,942 and 1,438,195 restricted stock units during 2024 and 2023, respectively, including 336,588 and 293,296 performance-based restricted stock units during those same periods, respectively.

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

We have shareholder approval under the Plan to issue up to 14,000,000 shares of common stock, including 8,000,000 shares registered during the second quarter of 2024.

As of December 31, 2024, we had 9,070,832 remaining shares available for awards under the Plan.

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

These awards are subject to certain accelerated vesting provisions upon retirement, death, disability or in the event of a change of control as defined in the award agreements.

These awards are subject to certain accelerated vesting provisions upon retirement, death, disability or in the event of a change in control as defined in the award agreements.

The following table summarizes the activity relating to restricted stock units during the periods indicated:

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Options outstanding and exercisable at end of year 24,201 10.72 103,690 9.97 138,381 9.32

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

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

The aggregate intrinsic value represents the amount by which the fair value of underlying stock exceeds the option exercise price.

The stock options outstanding and exercisable at December 31, 2024 have exercise prices ranging from $ 10.72 to $ 11.37 and expire on various dates through March 2025.

RETIREMENT PLANS

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This monthly benefit is reduced by the monthly benefit the participant receives from the Social Security Administration, the RIP, the ERISA Excess Retirement Plan and the annuity equivalent of the automatic contributions paid to participants under the qualified 401(k) defined contribution plan and the ERISA Excess Lost Match Plan.

The following tables provide information relating to the accumulated benefit obligation, change in benefit obligation, change in plan assets, the plans’ funded status and the amount included in the Consolidated Balance Sheets for the qualified and non-qualified plans described above (collectively, the Plans):

The following table provides information relating to the accumulated benefit obligation, change in benefit obligation, change in plan assets, the plans’ funded status and the amount included in the Consolidated Balance Sheets for the qualified and non-qualified plans described above (collectively, the Plans):

December 31 2024 2023

3 unchanged sentences

Projected benefit obligation at beginning of year $ 116 $ 15 $ 131 $ 114 $ 16 $ 130

Acquisition — — — — 2 2

Interest cost 5 1 6 6 1 7

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Weighted average discount rate 5.48 % 4.99 %

Rates of average increase in compensation levels 3.30 3.30

Rates of average increase in compensation levels n/a 3.30

The discount rate assumption at December 31, 2024 and 2023 was determined using a yield-curve based approach.

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

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

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

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

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

The rates of increase in compensation levels only pertains to the non-qualified plan for 2023.

At the end of 2024, there were no participants accruing benefits under this plan, therefore the compensation level assumption was no longer used.

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

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Weighted average discount rate 4.99 % 5.34 % 2.72 %

Rates of increase in compensation levels 3.30 3.30 3.50

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

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

Rates of increase in compensation levels n/a 3.30 3.30

The rates of increase in compensation levels only pertains to the non-qualified plan for 2023 and 2022.

At the end of 2024, there were no participants accruing benefits under this plan, therefore the compensation level assumption was no longer used.

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

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For the non-qualified pension plans, the change in plan assets reflects benefits paid from and contributions made to the plans in the same amount.

This amount represents the actual benefit payments paid from general assets of $ 1.6 million for 2023 and $ 1.5 million for 2022.

This amount represents the actual benefit payments paid from general assets of $ 1.6 million for both 2024 and 2023.

The following table provides information regarding estimated future cash flows relating to the Plans at December 31, 2024:

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At December 31, 2024 and 2023, equity securities included 235,000 and 330,000 shares, respectively, of our common stock, representing 1.9 % and 2.6 % of total plan assets at December 31, 2024 and 2023, respectively.

Dividends received on our common stock held by the Plan were $ 0.2 million for both 2023 and 2022.

Dividends received on our common stock held by the Plan were $ 0.1 million for 2024 and $ 0.2 million for 2023.

The fair values of our pension plan assets by asset category are as follows:

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companies 58 — — 58

International companies 1 — — 1

Other equity 1 — — 1

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companies 62 — — 62

International companies 1 — — 1

Other equity 1 — — 1

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Fixed income securities:

Treasury bonds — 3 — 3

government agencies — 32 — 32

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Tax credits ( 9.0 ) ( 7.3 ) ( 3.2 )

Affordable housing cost amortization, net of tax benefits 2.3 2.2 2.2

Tax credit cost amortization, net of tax benefits 3.2 2.3 2.2

FDIC premium disallowance 1.3 1.0 0.6

Other items 0.4 0.1 0.5

1 unchanged sentence

The effective tax rates in 2024, 2023 and 2022, respectively, were lower than the 21 % statutory federal tax rate primarily due to the tax benefits resulting from renewable energy investment, historic and new market tax credits, tax-exempt income on investments and loans and income from BOLI.

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

For the years ended December 31, 2024, 2023 and 2022, we recognized net investment tax credits, under Internal Revenue Code (IRC) section 48, of $ 28.4 million, $ 23.7 million and $ 0 , respectively, using the flow-through method of accounting for income tax credits.

Deferred Income Taxes

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Deferred compensation 17 16

Securities impairments 2 2

Securities impairment 2 2

Lease liability 68 60

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We anticipate that neither the state net operating loss and state tax credit carryforwards nor the other net DTAs at certain of our subsidiaries will be utilized and, as such, have recorded a valuation allowance against the DTAs related to these items.

As of December 31, 2023, we had approximately $ 67.3 million of federal net operating loss and built-in loss carryforwards from acquired companies and $ 0.8 million of state tax credit carryforwards, net of valuation allowances.

As of December 31, 2024, we had approximately $ 60.3 million of federal net operating loss and built-in loss carryforwards from acquired companies.

The utilization of these tax attributes is subject to annual limitations under Section 382 of the Internal Revenue Code, or a similar state-level statute, which will cause the utilization of these attributes to be deferred over a number of years, not to exceed beyond 2038.

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At December 31, 2024 and 2023, we have approximately $ 5.4 million and $ 5.0 million, respectively, of unrecognized tax benefits related to uncertain tax positions.

As of December 31, 2023, $ 4.7 million of these tax benefits would affect the effective tax rate if recognized.

potential accrued interest and penalties related to unrecognized tax benefits in income tax expense.

As of December 31, 2024, $ 5.5 million of these net tax benefits, including accrued interest, would affect the effective tax rate if recognized.

We recognize potential accrued interest and penalties related to unrecognized tax benefits in income tax expense.

To the extent interest is not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision.

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With limited exception, we are no longer subject to state income tax examinations for years prior to 2021.

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

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

We anticipate that a reduction in the unrecognized tax benefit of up to $ 0.04 million may occur in the next twelve months from the expiration of statutes of limitations which would result in a reduction in income taxes.

We have an outstanding refund request on a final tax return from an acquisition.

We do not anticipate a material reduction in the unrecognized tax benefit within the next twelve months from the expiration of statutes of limitations which would result in a reduction in income taxes.

OTHER COMPREHENSIVE INCOME (LOSS)

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Balance at beginning of period $ ( 160 ) $ ( 33 ) $ ( 42 ) $ ( 235 )

Other comprehensive (loss) income before reclassifications 57 ( 8 ) 2 51

Other comprehensive income (loss) before reclassifications 14 ( 14 ) 7 7

Amounts reclassified from AOCI 27 32 — 59

Net current period other comprehensive (loss) income 109 11 2 122

Net current period other comprehensive income (loss) 41 18 7 66

Balance at end of period $ ( 119 ) $ ( 15 ) $ ( 35 ) $ ( 169 )

The amounts reclassified from AOCI related to debt securities AFS are included in net securities gains on the Consolidated Statements of Income, while the amounts reclassified from AOCI related to derivative instruments in cash flow hedge programs are generally included in interest income on loans and leases on the Consolidated Statements of Income.

The amounts reclassified from AOCI related to debt securities AFS are included in net securities gains (losses) on the Consolidated Statements of Income, while the amounts reclassified from AOCI related to derivative instruments in cash flow hedge programs are generally included in interest income on loans and leases on the Consolidated Statements of Income.

The tax (benefit) expense amounts reclassified from AOCI in connection with the debt securities AFS and derivative instruments reclassifications are included in income taxes on the Consolidated Statements of Income.

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Preferred stock dividends 6 8 8

Net income available to common stockholders $ 477 $ 431 $ 397

Net income available to common shareholders $ 459 $ 477 $ 431

Basic weighted average common shares outstanding 361,444,439 360,743,462 349,976,557

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The Insurance segment also includes a reinsurer.

The following tables provide financial information for these segments of FNB.

Our Chief Operating Decision Maker (CODM) is our Chief Executive Officer.

The CODM uses net interest income contributions, non-interest income, salary and employee benefits and net income for each segment predominantly in the annual budget and forecasting process.

The CODM considers budget-to-actual variances on a quarterly basis for these measures when making decisions about the allocation of operating and capital resources to each segment.

The CODM also uses segment income contributions for evaluating pricing strategies and segment operating income to assess the performance of each segment by comparing the results of each segment with one another and in determining the compensation of certain employees.

The following table provides financial information for these segments of FNB.

The information provided under the caption “Parent and Other” represents operations not considered to be reportable segments and/or general operating expenses of FNB, and includes the parent company, other non-bank subsidiaries and eliminations and adjustments to reconcile to the Consolidated Financial Statements.

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Interest expense 941 — — 31 972

Net interest income 1,343 — — ( 26 ) 1,317

Net interest income (loss) 1,305 — — ( 25 ) 1,280

Provision for credit losses 79 — — 1 80

Non-interest income:

Service charges 91 — — — 91

Interchange and card transaction fees 52 — — — 52

Trust services — 46 — — 46

Insurance commissions and fees 1 — 23 ( 2 ) 22

Securities commissions and fees — 31 — — 31

Capital markets income 21 — — 3 24

Mortgage banking operations 27 — — — 27

Other 31 — — ( 8 ) 23

Total non-interest income 223 77 23 ( 7 ) 316

Non-interest expense:

817 50 17 11 895

Amortization of intangibles 19 — 1 — 20

Salaries and employee benefits 445 45 14 — 504

Other 426 9 5 17 457

Total non-interest expense 871 54 19 17 961

Income tax expense (benefit) 97 5 1 ( 13 ) 90

1 unchanged sentence

Total assets $ 48,295 $ 44 $ 31 $ 255 $ 48,625

Total intangibles 2,511 9 26 — 2,546

Total loans and leases 33,895 — — 44 33,939

Total deposits 37,973 — — ( 866 ) 37,107

Market value of assets under management (1)

— 9,523 — — 9,523

(in millions) Community

Banking Wealth

ment Insurance Parent

Other Consolidated

At or for the Year Ended December 31, 2023

1 unchanged sentence

Interest expense 624 — — 32 656

Net interest income 1,135 — — ( 15 ) 1,120

Net interest income (loss) 1,343 — — ( 26 ) 1,317

Provision for credit losses 72 — — — 72

Non-interest income:

Service charges 82 — — — 82

Interchange and card transaction fees 52 — — — 52

Trust services — 43 — — 43

Insurance commissions and fees 1 — 22 — 23

Securities commissions and fees — 28 — — 28

Capital markets income 25 — — 2 27

Mortgage banking operations 21 — — — 21

Other ( 15 ) — — ( 7 ) ( 22 )

Total non-interest income 166 71 22 ( 5 ) 254

Non-interest expense:

744 42 19 7 812

Amortization of intangibles 13 — 1 — 14

Salaries and employee benefits 406 41 14 1 462

Other 430 9 4 10 453

Total non-interest expense 836 50 18 11 915

Income tax expense (benefit) 106 5 1 ( 13 ) 99

1 unchanged sentence

Total assets $ 45,924 $ 40 $ 29 $ 165 $ 46,158

Total intangibles 2,530 9 27 — 2,566

Total loans and leases 32,281 — — 42 32,323

Total deposits 35,127 — — ( 416 ) 34,711

Market value of assets under management (1)

— 8,633 — — 8,633

(in millions) Community

Banking Wealth

ment Insurance Parent

Other Consolidated

At or for the Year Ended December 31, 2022

4 unchanged sentences

Non-interest income:

Service charges 86 — — — 86

Interchange and card transaction fees 51 — — — 51

Trust services — 39 — — 39

Insurance commissions and fees 1 — 23 — 24

Securities commissions and fees — 24 — — 24

Capital markets income 35 — — — 35

Mortgage banking operations 21 — — — 21

Other 46 1 1 ( 5 ) 43

Total non-interest income 240 64 24 ( 5 ) 323

Non-interest expense:

653 39 21 8 721

Amortization of intangibles 11 — 1 — 12

Salaries and employee benefits 376 34 15 1 426

Other 381 8 5 6 400

Total non-interest expense 757 42 20 7 826

Income tax expense (benefit) 116 5 1 ( 8 ) 114

1 unchanged sentence

Total assets $ 43,586 $ 37 $ 33 $ 69 $ 43,725

Total intangibles 2,268 9 27 — 2,304

(1) Excludes amortization of intangibles, which is presented separately .

Total loans and leases 30,216 — — 39 30,255

Total deposits 35,469 — — ( 699 ) 34,770

Market value of assets under management (1)

— 7,843 — — 7,843

(1) The trust assets under management are not held on our Consolidated Balance Sheets.

FAIR VALUE MEASUREMENTS

26 unchanged sentences

We use prices from independent pricing services and, to a lesser extent, indicative (non-binding) quotes from independent brokers, to measure the fair value of AFS securities.

We validate prices received from pricing services or brokers using a variety of methods, including, but not limited to, comparison to secondary pricing services, corroboration of pricing by

reference to other independent market data such as secondary broker quotes and relevant benchmark indices, and review of pricing information by corporate personnel familiar with market liquidity and other market-related conditions.

We validate prices received from pricing services or brokers using a variety of methods, including, but not limited to, comparison to secondary pricing services, corroboration of pricing by reference to other independent market data such as secondary broker quotes and relevant benchmark indices, and review of pricing information by corporate personnel familiar with market liquidity and other market-related conditions.

Derivative Financial Instruments

6 unchanged sentences

However, as of December 31, 2024 and 2023, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our non-IRLC derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives.

As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

As a result, we have determined that our derivative

valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The fair value of IRLCs is based upon the estimated fair value of the underlying mortgage loan, including the expected cash flows related to MSRs and the estimated percentage of IRLCs that will result in a closed mortgage loan, and is classified as Level 3.

41 unchanged sentences

government agencies — 53 — 53

government-sponsored entities — 223 — 223

Residential mortgage-backed securities

Agency mortgage-backed securities — 752 — 752

government-sponsored enterprises — 300 — 300

Residential MBS

Agency MBS — 694 — 694

Agency collateralized mortgage obligations — 698 — 698

Commercial mortgage-backed securities — 884 — 884

Agency commercial MBS — 1,388 — 1,388

States of the U.S.

3 unchanged sentences

Loans held for sale — 214 — 214

Loans receivable — — 53 53

Derivative financial instruments

15 unchanged sentences

government agencies — 79 — 79

government-sponsored entities — 262 — 262

Residential mortgage-backed securities

Agency mortgage-backed securities — 1,232 — 1,232

government-sponsored enterprises — 223 — 223

Residential MBS

Agency MBS — 752 — 752

Agency collateralized mortgage obligations — 832 — 832

Commercial mortgage-backed securities — 395 — 395

Agency commercial MBS — 884 — 884

States of the U.S.

16 unchanged sentences

(in millions) Other

Securities Interest

Securities Loans Receivable Interest

Commitments Total

4 unchanged sentences

Settlements — — ( 5 ) ( 5 )

Transfers into Level 3 — 53 — 53

Balance at end of period $ — $ 53 $ 1 $ 54

2 unchanged sentences

Purchases, issuances, sales and settlements:

Purchases 2 — 2

Issuances — — 6 6

Settlements — — ( 1 ) ( 1 )

Transfers from Level 3 ( 1 ) — ( 1 )

Balance at end of period $ — $ — $ 5 $ 5

3 unchanged sentences

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

During 2024, $ 53.2 million in loans receivable were measured using the FVO at Level 3 on a recurring basis.

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

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

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

5 unchanged sentences

Collateral dependent loans $ — $ — $ 105 $ 105

Indirect installment loans held for sale — — 338 338

Other assets - MSRs — — 1 1

3 unchanged sentences

Collateral dependent loans $ — $ — $ 35 $ 35

Indirect installment loans held for sale — — 338 338

Other assets - MSRs — — 12 12

Other assets - SBA servicing asset — — 1 1

1 unchanged sentence

The fair value amounts for collateral dependent loans and OREO in the table above were estimated at a date during the twelve months ended December 31, 2024 and 2023, respectively.

Consequently, the fair value information presented is not necessarily

as of the period’s end.

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

Collateral dependent loans measured or re-measured at fair value on a non-recurring basis during 2024 had a carrying amount of $ 105.1 million, which includes an allocated ACL of $ 21.3 million.

92 unchanged sentences

Total Liabilities 1,539 1,009

Stockholders’ Equity 6,050 5,653

Total Liabilities and Stockholders’ Equity $ 7,059 $ 6,926

Shareholders’ Equity 6,302 6,050

Total Liabilities and Shareholders’ Equity $ 7,841 $ 7,059

Statements of Income (in millions)

24 unchanged sentences

Other, net ( 6 ) ( 4 ) —

Net cash flows provided by operating activities 345 236 196

Net cash flows provided by (used in) operating activities 259 345 236

Investing Activities

3 unchanged sentences

Net cash received in business combinations — — 9

Net cash flows used in investing activities ( 92 ) ( 6 ) ( 90 )

Net cash flows provided by (used in) investing activities ( 50 ) ( 92 ) ( 6 )

Financing Activities

1 unchanged sentence

Increase in long-term debt 499 2 351

Redemption of preferred stock ( 111 ) — —

Other, net 8 ( 29 ) ( 32 )

8 unchanged sentences

Interest $ 54 $ 48 $ 34

SUBSEQUENT EVENT

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

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