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Item 2. Management’s Discussion and Analysis

2025-05-07 compared with 2024-11-05 · 295 added, 638 removed, 563 unchanged (62% of the section changed)

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

MD&A represents an overview of and highlights material changes to our financial condition and consolidated results of operations at and for the nine-month periods ended September 30, 2024 and 2023.

This MD&A represents an overview of and highlights material changes to our financial condition and consolidated results of operations at and for the three-month periods ended March 31, 2025 and 2024.

This MD&A should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained herein and our 2024 Annual Report on Form 10-K filed with the SEC on February 27, 2025.

Our results of operations for the nine months ended September 30, 2024 are not necessarily indicative of results expected for the full year.

Our results of operations for the three months ended March 31, 2025 are not necessarily indicative of results expected for the full year.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

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

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

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

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

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

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

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

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

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

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

and global financial markets;

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

(iii) a slowing of the U.S.

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

(iv) inflation concerns;

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

or its global trading partners;

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

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

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

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

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

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

• Our ability to take certain capital actions, including returning capital to shareholders, is subject to us meeting or exceeding minimum capital levels.

Our regulatory capital ratios in the future will depend upon, among other things, our financial performance, the scope and terms of capital regulations then in effect and management actions affecting the composition of our balance sheet.

• Historically we have grown our business in part through acquisitions, new strategic and business initiatives and new products.

Potential risks and uncertainties include those presented by the nature of the business acquired, the strategic or business initiative or the new product, including in some cases those associated with our entry into new business lines or new geographic or other markets and risks resulting from our inexperience in those new areas, as well as risks and uncertainties related to the acquisition transactions themselves, increased scrutiny associated with the regulatory

approval process, other regulatory issues stemming from such acquisitions or new initiatives or product lines, the integration of the acquired businesses into us after closing or any failure to execute strategic, risk management or operational plans.

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

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

These developments could include:

◦ Policies and priorities of the current U.S.

presidential administration, including legislative and regulatory reforms, more aggressive approaches to supervisory or enforcement priorities with consumer and anti-discrimination lending laws by the federal banking regulatory agencies and the DOJ, changes affecting oversight of the financial services industry, regulatory obligations or restrictions, consumer protection, taxes, employee benefits, compensation practices, pension, bankruptcy and other industry aspects, and changes in accounting policies and principles.

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

◦ Changes to laws and regulations, including changes affecting the oversight of the financial services industry along with changes in enforcement and interpretation of such laws and regulations, and changes to accounting standards governing bank capital requirements, loan loss reserves and liquidity standards.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

• the volatility of the mortgage banking business;

• changes in market interest rates and the unpredictability of monetary, tax and other policies of government agencies, including tariffs or the imposition of new tariffs, trade wars, barriers or restrictions, or threats of such actions;

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

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

• the risk associated with uninsured deposit account balances;

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

• our ability to recruit and retain qualified banking professionals;

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

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

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

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

• risks associated with reliance on third-party vendors;

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

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

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

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

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

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

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

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

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

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

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

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

APPLICATION OF CRITICAL ACCOUNTING POLICIES

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USE OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE INDICATORS

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

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

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

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

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

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

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

Management believes items such as merger expenses, preferred deemed dividend at redemption, FDIC special assessment, software impairment, loss on indirect auto loan sales and branch consolidation costs are not organic to run our operations and facilities.

Management believes certain items (e.g.

FDIC special assessment) are not organic to running our operations and facilities.

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

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FINANCIAL SUMMARY

Net income available to common stockholders for the third quarter of 2024 was $110.1 million or $0.30 per diluted common share, compared to net income available to common stockholders for the third quarter of 2023 of $143.3 million or $0.40 per diluted common share.

On an operating basis, earnings per diluted common share (non-GAAP) was $0.34 for the third quarter of 2024, excluding $0.04 per share of significant items impacting earnings, while the third quarter of 2023 was $0.40.

Our third quarter operating earnings per diluted common share (non-GAAP) totaled $0.34 with significant tangible book value per share (non-GAAP) growth of 15% year-over-year to a record $10.33, strong sequential annualized revenue growth of 9%, with record non-interest income of $90 million, and a solid operating return on average tangible common equity (non-GAAP) of 14%.

We had robust linked-quarter deposit growth of $1.8 billion, or 5%, highlighting our ability to leverage our significant client relationships, digital and data analytics capabilities as part of our Clicks-to-Bricks strategy and our diverse geographic footprint to manage the loan-to-deposit ratio which improved nearly 500 basis points from last quarter to 91.7%.

Our capital levels reached all-time highs with a tangible common equity ratio (non-GAAP) at 8.2% and CET1 ratio at 10.4%.

Our credit metrics ended the quarter at solid levels with the reserve coverage ratio up slightly given our proactive approach to credit risk management.

Income Statement Highlights (third quarter of 2024 compared to third quarter of 2023, except as noted)

• Net interest income totaled $323.3 million, an increase of $7.4 million, or 2.4%, from the prior quarter, primarily due to improved earning asset yields and loan growth, as well as lower short-term borrowing levels, offsetting the higher cost of interest-bearing deposits.

• On a linked-quarter basis, the net interest margin (FTE) (non-GAAP) remained stable with a 1 basis point decline to 3.08%, reflecting an 8 basis point increase in the total yield on earning assets (non-GAAP) and a 10 basis point increase

in the total cost of funds.

In September 2024, the FOMC lowered the targeted Federal Funds interest rate by 50 basis points.

• The provision for credit losses was $23.4 million , an increase of $3.2 million from the prior quarter, with net charge-offs of $21.5 million compared to $7.8 million in the prior quarter.

• Non-interest income totaled a record $89.7 million, an increase of 10.0% from the year-ago quarter, benefiting from our diversified business model and related revenue generation.

• Pre-provision net revenue (non-GAAP) totaled $163.6 million, a 7.7% decrease from the prior quarter.

On an operating basis, pre-provision net revenue (non-GAAP) totaled $178.8 million, a 0.5% increase from the prior quarter, driven by continued strong non-interest income generation and growth in net interest income, offset by an increase in non-interest expense.

• Non-interest expense totaled $249.4 million, compared to $226.6 million in the prior quarter, including $15.3 million (pre-tax) of significant items in the third quarter of 2024 and $0.8 million in the second quarter of 2024.

When adjusting for the significant items, non-interest expense increased $8.4 million, or 3.7%, linked-quarter on an operating basis (non-GAAP).

• The efficiency ratio (non-GAAP) remained at a solid level of 55.2%, compared to 51.7% for the year-ago quarter and 54.4% for the prior quarter.

Net income available to common shareholders for the first quarter of 2025 was $116.5 million, or $0.32 per diluted common share, compared to net income available to common shareholders for the first quarter of 2024 of $116.3 million, or $0.32 per diluted common share.

On an operating basis, earnings per diluted common share (non-GAAP) was $0.32 for the first quarter of 2025, with no significant items impacting earnings, while the first quarter of 2024 was $0.34, excluding $0.02 of significant items impacting earnings.

Our tangible book value per common share (non-GAAP) grew 12.3% year-over-year to $10.83 and we produced a record CET1 regulatory capital ratio at 10.7% and tangible common equity to tangible assets ratio (non-GAAP) at 8.4%.

During the first quarter, we generated sequential and year-over-year revenue growth with net interest income expansion and solid non-interest income which benefited from the continuous strategic investments made to develop and expand high-value advisory businesses.

The first quarter’s annualized loan and deposit growth of 3.5% and 1.4%, respectively, in a seasonally slower quarter, demonstrated our successful focus on leveraging our technology and digital banking platform to enhance the customer experience and drive primacy.

Our comprehensive and conservative approach to credit risk management led to strong and stable asset quality with net-charge-offs at a solid 0.15%.

We remain prepared for a broad range of economic scenarios given our diversified and granular deposit base, consistent and conservative underwriting, solid capital and liquidity levels and sound risk management policies and governance.

Income Statement Highlights

• Net interest income totaled $323.8 million, an increase of $1.6 million, or 0.5%, from the prior quarter, primarily due to a lower cost of funds more than offsetting the impact of lower yields on earning assets and two less days in the current quarter.

The FOMC lowered the target Federal Funds interest rate by 100 basis points in the latter half of 2024.

• On a linked-quarter basis, the net interest margin (FTE) (non-GAAP) remained stable down only 1 basis point to 3.03%, reflecting an 11 basis point decline in the total yield on earning assets (non-GAAP) and a 10 basis point decrease in the total cost of funds.

• The provision for credit losses was $17.5 million, a decrease of $4.8 million from the prior quarter, with net charge-offs of $12.5 million, or 0.15% annualized of total average loans, compared to $20.6 million, or 0.24% annualized, in the prior quarter.

• Non-interest income totaled $87.8 million, a slight decrease of 0.1% from the year-ago quarter, benefiting from our diversified business model and related revenue generation, including record wealth management revenues, which offset lower capital markets income due to lower commercial customer activity in the current macroeconomic environment.

• The efficiency ratio (non-GAAP) was seasonally higher but remained at a solid level of 58.5%, compared to 56.0% for the year-ago quarter and 56.9% for the prior quarter.

Balance Sheet Highlights

• Period-end total loans and leases increased $1.6 billion, or 4.9%, compared to September 30, 2023.

Commercial loans and leases increased $1.0 billion, or 5.1%, and consumer loans increased $530.9 million, or 4.4%.

• Period-end total loans and leases increased $1.7 billion, or 5.1%, compared to March 31, 2024.

Consumer loans increased $964.6 million, or 8.0%, net of a $431 million indirect auto loan sale that closed in the third quarter of 2024, and commercial loans and leases increased $686.6 million, or 3.3%.

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

• On a linked-quarter basis, period-end total loans and leases decreased $39.6 million, or 0.1%, with an increase in commercial loans and leases of $92.6 million and a decrease in consumer loans of $132.2 million.

In September 2024, we sold $431 million of performing indirect auto loans as part of our balance sheet repositioning actions.

The related loss on sale of $11.6 million is reflected as a significant item impacting earnings in other non-interest expense.

The loan sale positively impacted the loan-to-deposit ratio by approximately 120 basis points and the CET1 regulatory capital ratio by approximately 10 basis points.

Excluding the indirect auto loan sale, period-end total loans and leases increased $391.4 million, or 1.2%.

• Period-end total deposits increased $2.2 billion, or 6.2%, compared to September 30, 2023, driven by an increase of $1.9 billion in shorter-term time deposits and $1.5 billion in interest-bearing demand deposits offsetting the decline in non-interest-bearing demand deposits of $833.2 million and savings deposits of $357.6 million as customers continued to opt for higher-yielding deposit products given the interest rate environment.

• On a linked-quarter basis, period-end total deposits increased $1.8 billion, or 5.1%, with an increase in interest-bearing deposits of $1.3 billion, or 8.9%, and shorter-term time deposits of $783.4 million, offsetting the slight decline in non-interest-bearing demand deposits of $191.5 million and savings deposits of $117.0 million.

The mix of non-interest-bearing deposits to total deposits equaled 27% at September 30, 2024, compared to 29% at the prior quarter-end, reflecting the strong interest-bearing deposit growth and fairly stable non-interest-bearing deposit balances.

• The loan-to-deposit ratio was 92% at September 30, 2024, compared to the prior quarter at 96%, reflecting $1.8 billion of linked-quarter deposit growth and the previously mentioned indirect auto loan sale.

• The ratio of non-performing loans plus OREO to total loans and leases plus OREO totaled 0.39%, compared to 0.33% in the prior quarter.

Total delinquency increased 16 basis points to 0.79%, compared to 0.63% at September 30, 2023.

While these two metrics increased compared to the prior periods shown, the overall asset quality metrics continue to remain near historically low levels.

• The third quarter of 2024 reflected net charge-offs of $21.5 million, or 0.25% annualized of total average loans, compared to $37.7 million, or 0.47% annualized, in the third quarter of 2023.

• The ACL on loans and leases was $420.2 million, an increase of $19.5 million compared to September 30, 2023, with the ratio of the ACL to total loans and leases stable at 1.25%.

• Tangible book value per common share (non-GAAP) of $10.33, increased $1.31, or 14.5%, compared to September 30, 2023.

AOCI reduced the tangible book value per common share (non-GAAP) by $0.43 as of September 30, 2024, primarily due to the impact of higher interest rates on the fair value of AFS securities, compared to a $1.06 reduction as of September 30, 2023, an improvement of $0.63 on a year-over-year basis.

• Our capital levels reached all-time highs with the tangible common equity ratio (non-GAAP) at 8.2% and the CET1 regulatory capital ratio at 10.4%.

• On a linked-quarter basis, period-end total loans and leases increased $296.4 million, or 3.5% annualized, with an increase in consumer loans of $224.3 million and commercial loans and leases of $72.1 million.

• Period-end total deposits increased $2.5 billion, or 7.2%, compared to March 31, 2024, driven by an increase of $2.2 billion in interest-bearing demand deposits and $0.6 billion in time deposits, more than offsetting the decline in savings deposits of $242.4 million and $115.1 million in non-interest-bearing demand deposits, as customers continued to opt for higher-yielding deposit products.

• On a linked-quarter basis, period-end total deposits increased $131.7 million, or 1.4% annualized, with increases in interest-bearing demand deposits of $251.9 million and non-interest-bearing demand deposits of $105.8 million in a seasonally slow quarter, more than offsetting the decline in time deposits of $194.8 million and savings deposits of $31.1 million.

The ratio of non-interest-bearing demand deposits to total deposits was stable at 26% at March 31, 2025, compared to the prior quarter end.

• The loan-to-deposit ratio was 92% at March 31, 2025, compared to the prior quarter at 91%, and 94% at March 31, 2024.

• The ratio of non-performing loans plus OREO to total loans and leases plus OREO was consistent with the prior quarter at 0.48%.

Total delinquency increased 11 basis points to 0.75%, compared to 0.64% at March 31, 2024, but declined 8 basis points from the prior quarter.

The overall asset quality metrics continue to remain at solid levels.

• The ACL on loans and leases was $428.9 million, an increase of $22.6 million compared to March 31, 2024, with the ratio of the ACL to total loans and leases stable at 1.25%.

• Tangible book value per common share (non-GAAP) of $10.83, increased $1.19, or 12.3%, compared to March 31, 2024.

AOCI reduced the tangible book value per common share (non-GAAP) by $0.34 as of March 31, 2025, primarily due to the impact of higher interest rates on the fair value of AFS securities, compared to a $0.70 reduction as of March 31, 2024, and $0.47 as of December 31, 2024.

• Record capital levels with the CET1 regulatory capital ratio at 10.70%.

The tangible common equity to tangible assets ratio (non-GAAP) equaled 8.37%.

• During the first quarter of 2025, we repurchased 0.7 million shares of common stock at a weighted average share price of $13.48 for $10.0 million while maintaining capital above stated operating levels and supporting loan growth in the quarter.

Three Months Ended

September 30,

Quarterly Results Summary 2025 2024

Reported results

Net income available to common stockholders (millions) $ 110.1 $ 143.3

Net income per diluted common share 0.30 0.40

Net income available to common shareholders (millions) $ 116.5 $ 116.3

Earnings per diluted common share 0.32 0.32

Book value per common share 17.86 16.71

Operating results (non-GAAP)

Operating net income available to common stockholders (millions) 122.2 143.3

Operating net income per diluted common share 0.34 0.40

Average diluted common shares outstanding (thousands) 362,426 361,778

Significant items impacting earnings (1) (millions)

Pre-tax software impairment $ (3.7) $ —

After-tax impact of software impairment (2.9) —

Pre-tax loss on indirect auto loan sale (11.6) —

After-tax impact of loss on indirect auto loan sale (9.1) —

Total significant items pre-tax $ (15.3) $ —

Total significant items after-tax $ (12.0) $ —

Capital measures

Common equity tier 1 10.44 % 10.17 %

Tangible common equity to tangible assets (non-GAAP) 8.17 7.54

Tangible book value per common share (non-GAAP) $ 10.33 $ 9.02

Nine Months Ended

September 30,

Year-to-Date Results Summary 2024 2023

Reported results

Net income available to common stockholders (millions) $ 349.5 $ 428.1

Net income per diluted common share 0.96 1.18

Operating results (non-GAAP)

Operating net income available to common stockholders (millions) 368.5 429.9

Operating net income per diluted common share 1.02 1.18

Operating net income available to common shareholders (millions) 116.5 122.7

Operating earnings per diluted common share 0.32 0.34

Average diluted common shares outstanding (thousands) 363,069 362,619

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Preferred dividend equivalent at redemption $ — $ (4.0)

Pre-tax merger-related expenses — (2.2)

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

Pre-tax branch consolidation costs — (1.2)

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After-tax impact of FDIC assessment — (3.5)

Pre-tax software impairment (3.7) —

After-tax impact of software impairment (2.9) —

Pre-tax loss on indirect auto loan sales (9.0) —

After-tax impact of loss on indirect auto loan sales (7.1) —

Pre-tax reduction of previous estimated loss on indirect auto loan sale — 2.6

After-tax impact of previous estimated loss on indirect auto loan sale — 2.1

Total significant items after-tax $ — $ (6.3)

Capital measures

CET1 capital ratio 10.70 % 10.21 %

Tangible common equity to tangible assets (non-GAAP) 8.37 7.99

Tangible book value per common share (non-GAAP) $ 10.83 $ 9.64

(1) Favorable (unfavorable) impact on earnings

RESULTS OF OPERATIONS

Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 2023

Net income available to common stockholders for the three months ended September 30, 2024 was $110.1 million or $0.30 per diluted common share, compared to $143.3 million or $0.40 per diluted common share for the three months ended September 30, 2023.

On an operating basis, third quarter of 2024 earnings per diluted common share (non-GAAP) was $0.34, excluding the $11.6 million loss on indirect auto loan sale and $3.7 million software impairment.

By comparison, third quarter of 2023 earnings per diluted common share (non-GAAP) was $0.40 on an operating basis.

Net interest income totaled $323.3 million, a slight decrease of $3.3 million, or 1.0%, primarily due to higher deposit costs resulting from balance migration to higher yielding deposit products, partially offset by growth in earning assets and higher earning asset yields.

The net interest margin (FTE) (non-GAAP) decreased 18 basis points to 3.08%.

The yield on earning assets (non-GAAP) increased 40 basis points to 5.51%, driven by a 50 basis point increase on investment securities to 3.33% which benefited from the balance sheet restructuring in late 2023 and a 34 basis point increase in yields on loans to 6.03%.

Total cost of funds increased 63 basis points to 2.56%, with a 72 basis point increase in interest-bearing deposit costs to 3.08% and an increase of 66 basis points in total borrowing costs.

The provision for credit losses was $23.4 million, compared to $25.9 million.

Non-interest income increased $8.1 million, or 10.0%, reflecting increased service charges income, mortgage banking operations income, wealth management revenues, bank owned life insurance and dividends on non-marketable equity securities, offset by reduced capital markets income and interchange and card transaction fees.

Non-interest expense for the third quarter of 2024 increased $31.4 million, or 14.4%.

Excluding significant items impacting earnings of $15.3 million, operating non-interest expense increased $16.2 million, or 7.4%, on an operating basis (non-GAAP).

The biggest drivers of the non-interest expense increase were salaries and benefits expense with an increase of $12.7 million, or 11.2%, primarily from higher production-related commissions and normal annual merit increases, net occupancy and equipment expense with an increase of $4.3 million, or 10.3%, largely due to $3.7 million of software impairment and other non-interest expense, reflecting the $11.6 million loss on the indirect auto loan sale.

Income taxes of $30.0 million increased $11.1 million, or 58.8%, as we had a reduction in 2023 income taxes due to renewable energy investment tax credits recognized in the third quarter of 2023 as part of a solar project financing transaction.

Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024

Net income available to common shareholders for the first three months of 2025 was $116.5 million, or $0.32 per diluted common share, compared to $116.3 million, or $0.32 per diluted common share for the first three months of 2024.

On an operating basis (non-GAAP), net income available to common shareholders for the first three months of 2025 was $116.5 million, or $0.32 per diluted common share, compared to $122.7 million or $0.34 per diluted common share for the first three months of 2024.

Net interest income totaled $323.8 million, an increase of $4.8 million, or 1.5%, compared to $319.0 million reflecting growth in earning assets partially offset by higher deposit costs resulting from balance growth in higher yielding deposit products.

The net interest margin (FTE) (non-GAAP) decreased 15 basis points to 3.03%, as the yield on earning assets (non-GAAP) declined 17 basis points to 5.23%, driven by a 25 basis point decline in yields on loans to 5.68%, offset by a 35 basis point increase in yields on investment securities to 3.41%.

Total cost of funds decreased 1 basis point to 2.32% with a 6 basis point decrease in interest-bearing deposit costs to 2.76%, and a decrease of 8 basis points in total borrowing costs.

The provision for credit losses for the first three months of 2025 totaled $17.5 million, compared to $13.9 million with net charge-offs of $12.5 million, or 0.15% annualized of total average loans, compared to $12.8 million, or 0.16% annualized.

Non-interest income totaled $87.8 million, stable compared to $87.9 million, reflecting increased service charges, strong wealth management revenues and elevated life insurance claims on bank owned life insurance.

Non-interest expense totaled $246.8 million, increasing $9.7 million, or 4.1%.

On an operating basis (non-GAAP), non-interest expense increased $12.7 million, or 5.4%, compared to the first three months of 2024 as the year-ago quarter included significant items impacting earnings of $3.0 million.

S alaries and benefits increased $6.0 million, or 4.7%, primarily reflecting strategic hiring associated with our efforts to grow market share and continued investments in our risk management infrastructure as well as higher performance and production-related compensation.

Additionally, outside services increased $3.5 million, or 15.1%, and net occupancy and equipment expense increased $2.3 million, or 5.2%.

Financial highlights are summarized below:

Three Months Ended

September 30, $ %

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

March 31, $ %

(dollars in thousands, except per share data) 2025 2024 Change Change

Net interest income $ 323,845 $ 319,008 $ 4,837 1.5 %

5 unchanged sentences

Preferred stock dividends — 6,005 (6,005) (100.0)

Net income available to common stockholders $ 110,103 $ 143,271 $ (33,168) (23.2) %

Net income available to common shareholders $ 116,515 $ 116,326 $ 189 0.2 %

Earnings per common share – Basic $ 0.32 $ 0.32 $ — — %

3 unchanged sentences

Three Months Ended

September 30,

Return on average equity 7.42 % 8.15 %

2 unchanged sentences

Return on average tangible assets (1)

Book value per common share $ 17.38 $ 16.13

Tangible book value per common share (1)

Equity to assets 13.09 13.09

Average equity to average assets 13.14 13.22

Common equity to assets 13.02 12.72

Tangible common equity to tangible assets (1)

Common equity tier 1 capital ratio 10.44 10.17

CET1 capital ratio 10.70 10.21

Dividend payout ratio 37.75 37.76

The following table provides information regarding the average balances and yields earned on interest-earning assets (non-GAAP) and the average balances and rates paid on interest-bearing liabilities:

Three Months Ended September 30,

(dollars in thousands) Average

Balance Interest

Expense Yield/

Balance Interest

Expense Yield/

Interest-earning assets:

Interest-bearing deposits with banks $ 1,003,513 $ 11,276 4.47 % $ 1,223,226 $ 12,835 4.16 %

Taxable investment securities (1)

6,177,736 48,317 3.13 6,046,294 37,140 2.46

Tax-exempt investment securities (1)(2)

1,023,050 8,816 3.45 1,051,475 9,107 3.46

Loans held for sale 300,326 5,729 7.61 109,568 2,416 8.80

Loans and leases (2)(3)

33,802,701 511,564 6.03 31,739,561 454,780 5.69

Total interest-earning assets (2)

42,307,326 585,702 5.51 40,170,124 516,278 5.11

Cash and due from banks 414,536 445,341

Allowance for credit losses (427,826) (415,722)

Premises and equipment 501,588 461,598

Other assets 4,620,414 4,432,826

Total assets $ 47,416,038 $ 45,094,167

Interest-bearing liabilities:

Interest-bearing demand $ 15,215,815 108,762 2.84 $ 13,997,552 75,840 2.15

Savings 3,281,732 10,406 1.26 3,676,239 9,875 1.07

Certificates and other time 7,234,412 79,868 4.39 5,698,129 53,293 3.71

Total interest-bearing deposits 25,731,959 199,036 3.08 23,371,920 139,008 2.36

Short-term borrowings 2,345,960 29,934 5.06 2,245,089 23,207 4.09

Long-term borrowings 2,314,914 30,473 5.24 1,974,017 24,565 4.94

Total interest-bearing liabilities 30,392,833 259,443 3.39 27,591,026 186,780 2.69

Non-interest-bearing demand 9,867,006 10,772,923

Total deposits and borrowings 40,259,839 2.56 38,363,949 1.93

Other liabilities 985,545 850,382

Total liabilities 41,245,384 39,214,331

Stockholders’ equity 6,170,654 5,879,836

Total liabilities and stockholders’ equity $ 47,416,038 $ 45,094,167

Net interest-earning assets $ 11,914,493 $ 12,579,098

Net interest income (FTE) (2)

326,259 329,498

Tax-equivalent adjustment (2,930) (2,917)

Net interest income $ 323,329 $ 326,581

Net interest spread 2.12 % 2.42 %

Net interest margin (2)

3.08 % 3.26 %

(1) The average balances and yields earned on securities are based on historical cost.

(2) The interest income amounts are reflected on an FTE basis (non-GAAP), which adjusts for the tax benefit of income on certain tax-exempt loans and investments using the federal statutory tax rate of 21%.

The yield on earning assets and the net interest margin are presented on an FTE basis (non-GAAP).

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

(3) Average loans and leases consist of average total loans, including non-accrual loans, less average unearned income.

Net Interest Income

Net interest income on an FTE basis (non-GAAP) decreased $3.2 million, or 1.0%, to $326.3 million for the third quarter of 2024, primarily due to higher deposit costs resulting from the continued deposit balance migration to higher yielding products as well as increased total average borrowings, partially offset by growth in earning assets and higher earning asset yields.

Average earning assets of $42.3 billion increased $2.1 billion, or 5.3%, driven by an increase in average loans and leases from the continued success of our strategy to grow high-quality loans and deepen customer relationships across our diverse geographic footprint.

Average interest-bearing liabilities of $30.4 billion increased $2.8 billion, or 10.2%, driven by an increase of $2.4 billion in average interest-bearing deposits and an increase in average borrowings of $441.8 million to support strong loan growth.

Our net interest margin FTE (non-GAAP) decreased 18 basis points on a year-over-year basis to 3.08%, as the total cost of funds increased 63 basis points to 2.56% which more than offset the increase in the yield on earning assets (non-GAAP) of 40 basis points to 5.51%.

The following table provides certain information regarding changes in net interest income on an FTE basis (non-GAAP) attributable to changes in the average volumes and yields earned on interest-earning assets and the average volume and rates paid for interest-bearing liabilities for the three months ended September 30, 2024, compared to the three months ended September 30, 2023:

(in thousands) Volume Rate Net

Interest Income (1)

Interest-bearing deposits with banks $ (2,355) $ 796 $ (1,559)

Securities (2)

592 10,294 10,886

Loans held for sale 2,317 996 3,313

Loans and leases (2)

30,747 26,037 56,784

Total interest income (2)

31,301 38,123 69,424

Interest Expense (1)

Interest-bearing demand 13,300 19,622 32,922

Savings 284 247 531

Certificates and other time 14,848 11,727 26,575

Short-term borrowings 1,981 4,746 6,727

Long-term borrowings 4,285 1,623 5,908

Total interest expense 34,698 37,965 72,663

Net change (2)

$ (3,397) $ 158 $ (3,239)

(1) The amount of change not solely due to rate or volume changes was allocated between the change due to rate and the change due to volume based on the net size of the rate and volume changes.

(2) Interest income amounts are reflected on an FTE basis (non-GAAP) which adjusts for the tax benefit of income on certain tax-exempt loans and investments using the federal statutory tax rate of 21%.

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

Interest income on an FTE basis (non-GAAP) of $585.7 million for the third quarter of 2024, increased $69.4 million, or 13.4%, from the same quarter of 2023, resulting from the interest rate increases by the FOMC and an increase in average earning assets of $2.1 billion.

The increase in earning assets was primarily driven by a $2.1 billion, or 6.5%, increase in average loans and leases, partially offset by a decrease of $219.7 million in average cash balances.

Average commercial loan growth of $1.2 billion, or 6.2%, was led by increases of $972.8 million in commercial real estate, $213.8 million in commercial and industrial loans and $62.1 million in commercial leases.

The increase in average commercial loans and leases was driven by activity across the footprint, with over half of the year-over-year growth in North and South Carolina.

The increase in commercial real estate included fundings on previously originated projects.

Average consumer loans increased $819.7 million, or 6.9%, with a $1.4 billion increase in residential mortgages largely due to the continued successful execution in key markets by our expanded mortgage banker team and long-standing strategy of serving the purchase market.

This growth was partially offset by a decrease in average indirect auto loans of $528.4 million reflecting the sale of $332 million of such loans that closed in the first quarter of 2024 and $431 million that closed in September of 2024, partially offset by new organic growth in the portfolio.

The yield on average earning assets (non-GAAP) increased 40 basis points to 5.51% for the third quarter of 2024,

primarily due to higher yields on loans and investment securities, which benefited from the balance sheet restructuring in late 2023 and a 34 basis point increase in yields on loans to 6.03%.

Interest expense of $259.4 million for the third quarter of 2024 increased $72.7 million from the same quarter of 2023, primarily due to the higher interest rate environment and an increase in average interest-bearing deposits and borrowings.

Average interest-bearing deposits increased $2.4 billion, or 10.1%, while average non-interest-bearing deposits decreased $905.9 million, or 8.4%, and average savings deposits of $394.5 million as customers continued to migrate balances into higher-yielding products.

The growth in average total deposits reflected organic growth in new and existing customer relationships.

Average short-term borrowings increased $100.9 million, or 4.5%, primarily reflecting an increase of $149.5 million in Federal Funds purchased, partially offset by a decrease of $62.3 million in repurchase agreements.

Average long-term borrowings increased $340.9 million, or 17.3%, primarily reflecting an increase in long-term FHLB advances as we have maintained additional liquidity following the banking industry disruption in early 2023 and in a continued effort to support strong loan growth.

The rate paid on interest-bearing liabilities increased 70 basis points from 2.69% to 3.39%.

The total cost of funds increased 63 basis points to 2.56% with a 72 basis point increase in interest-bearing deposit costs to 3.08%, and an increase of 66 basis points in total borrowing costs to fund the strong loan growth.

Since the current interest rate increases began in March 2022, our total cumulative spot deposit beta equaled 40% at August 31, 2024.

Provision for Credit Losses

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

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

Three Months Ended

September 30, $ %

(dollars in thousands) 2024 2023 Change Change

Provision for credit losses on loans and leases $ 22,850 $ 25,597 $ (2,747) (10.7) %

Provision for unfunded loan commitments

601 364 237 65.1

Total provision for credit losses on loans and leases 23,451 25,961 (2,510) (9.7)

Provision for securities (13) (27) 14 n/m

Total provision for credit losses $ 23,438 $ 25,934 $ (2,496) (9.6) %

Net loan charge-offs $ 21,450 $ 37,699 $ (16,249) (43.1) %

Net loan charge-offs (annualized) / total average loans and leases 0.25 % 0.47 %

n/m - not meaningful

Provision for credit losses was $23.4 million during the third quarter of 2024, a decrease of $2.5 million from the same period of 2023.

The third quarter of 2024 is comprised of a $22.9 million provision for loans and leases outstanding and a $0.6 million provision for unfunded loan commitments.

The third quarter of 2024 reflected net charge-offs of $21.5 million, or 0.25% annualized of total average loans, compared to $37.7 million, or 0.47% annualized, in the third quarter of 2023.

During the third quarter of 2023, there was a $31.9 million isolated commercial loan that was charged off due to alleged fraud.

For additional information relating to the allowance and provision for credit losses, refer to the Allowance for Credit Losses on Loans and Leases section of this Management’s Discussion and Analysis.

Non-Interest Income

The breakdown of non-interest income for the three months ended September 30, 2024 and 2023 is presented in the following table:

Three Months Ended

September 30, $ %

(dollars in thousands) 2024 2023 Change Change

Service charges $ 24,024 $ 21,245 $ 2,779 13.1 %

Interchange and card transaction fees 12,922 13,521 (599) (4.4)

Trust services 11,120 10,526 594 5.6

Insurance commissions and fees 5,118 5,047 71 1.4

Securities commissions and fees 7,876 6,577 1,299 19.8

Capital markets income 6,194 7,077 (883) (12.5)

Mortgage banking operations 5,540 3,914 1,626 41.5

Dividends on non-marketable equity securities 6,560 5,779 781 13.5

Bank owned life insurance 6,470 3,196 3,274 102.4

Net securities gains (losses) (28) (55) 27 —

Other 3,892 4,724 (832) (17.6)

Total non-interest income $ 89,688 $ 81,551 $ 8,137 10.0 %

Total non-interest income increased by $8.1 million, or 10.0%, to $89.7 million for the third quarter of 2024, compared to $81.6 million for the third quarter of 2023.

The variances in the individual non-interest income items are explained in the following paragraphs.

Service charges of $24.0 million increased $2.8 million, or 13.1%, with strong treasury management activity and higher consumer transaction levels.

Wealth management revenues increased $1.9 million, or 11.1%, as securities commissions and fees and trust income increased 19.8% and 5.6%, respectively, through continued strong contributions across the geographic footprint and a $949.3 million, or 11.1%, increase in the market value of assets under management to $9.5 billion.

Capital markets income decreased $0.9 million, or 12.5%, reflecting lower commercial customer transaction activity.

Mortgage banking operations income increased $1.6 million, or 41.5%, driven by improved gain on sale, partially offset by an MSR impairment of $2.8 million in the third quarter of 2024 reflecting accelerating prepayment speed assumptions given the recent declines in mortgage rates at the end of the quarter.

During the third quarter of 2024, we sold $339.2 million of residential mortgage loans, compared to $334.4 million for the same period of 2023.

Bank owned life insurance increased $3.3 million, or 102.4%, reflecting higher life insurance claims.

Non-Interest Expense

The breakdown of non-interest expense for the three months ended September 30, 2024 and 2023 is presented in the following table:

Three Months Ended

September 30, $ %

(dollars in thousands) 2024 2023 Change Change

Salaries and employee benefits $ 126,066 $ 113,351 $ 12,715 11.2 %

Net occupancy 22,384 18,241 4,143 22.7

Equipment 23,469 23,332 137 0.6

Amortization of intangibles 4,376 5,040 (664) (13.2)

Outside services 24,383 20,796 3,587 17.2

Marketing 6,023 5,419 604 11.1

FDIC insurance 10,064 8,266 1,798 21.8

Bank shares and franchise taxes 3,931 3,927 4 0.1

Other 28,735 19,626 9,109 46.4

Total non-interest expense $ 249,431 $ 217,998 $ 31,433 14.4 %

Total non-interest expense of $249.4 million for the third quarter of 2024 increased $31.4 million, or 14.4%, from the same period of 2023.

Non-interest expense increased $16.2 million, or 7.4%, when excluding significant items of $15.3 million in the third quarter of 2024.

The variances in the individual non-interest expense items are explained in the following paragraphs.

Salaries and employee benefits of $126.1 million increased $12.7 million, or 11.2%, primarily from normal annual merit increases and higher production-related commissions from strong non-interest income activity, as well as strategic hiring associated with our focus to grow market share and continued investments in our risk management infrastructure.

Net occupancy and equipment of $45.9 million increased $4.3 million, or 10.3%, largely due to the $3.7 million software impairment.

Outside services of $24.4 million increased $3.6 million, or 17.2%, due to higher volume-related technology and third-party costs.

FDIC insurance of $10.1 million increased $1.8 million, or 21.8%, primarily due to loan growth and balance sheet mix shift.

Other non-interest expense of $28.7 million increased $9.1 million, or 46.4%, primarily due to the $11.6 million loss on the indirect auto loan sale during the third quarter of 2024.

The following table presents non-interest expense excluding significant items for the three months ended September 30, 2024 and 2023:

Three Months Ended September 30, $ %

(dollars in thousands) 2024 2023 Change Change

Total non-interest expense, as reported $ 249,431 $ 217,998 $ 31,433 14.4 %

Significant items:

Software impairment (3,690) — (3,690)

Loss on indirect auto loan sale (11,572) — (11,572)

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

$ 234,169 $ 217,998 $ 16,171 7.4 %

The following table presents information regarding income tax expense and certain tax rates:

Three Months Ended

September 30,

(dollars in thousands) 2024 2023

Income tax expense $ 30,045 $ 18,919

Effective tax rate 21.4 % 11.5 %

Statutory federal tax rate 21.0 21.0

Income tax expense was higher due to the recording of renewable energy investment tax credits recognized in the third quarter of 2023 as part of a solar project financing transaction.

The increase was also attributable, to a lesser extent, from lower stock compensation vesting deductions, higher disallowance of FDIC premium deductions, and higher levels of proportional amortization for certain tax credit investments resulting from the adoption of FASB ASU 2023-02 on January 1, 2024.

The effective tax rate increased for the three months ended September 30, 2024 as a result of these items.

Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023

Net income available to common stockholders for the first nine months of 2024 was $349.5 million or $0.96 per diluted common share, compared to $428.1 million or $1.18 per diluted common share for the first nine months of 2023.

On an operating basis (non-GAAP), net income available to common stockholders for the first nine months of 2024 was $368.5 million, or $1.02 per diluted common share, compared to $429.9 million or $1.18 per diluted common share for the first nine months of 2023.

Net interest income totaled $958.2 million, a decrease of $34.3 million, or 3.5%, compared to $992.5 million.

The net interest margin (FTE) (non-GAAP) decreased 28 basis points to 3.11%, as the total cost of funds increased 87 basis points to 2.46% with a 100-basis point increase in interest-bearing deposit costs to 2.95%, as well as an increase of 29 basis points in long-term debt costs.

These funding cost increases were partially offset by an increase in the yield on earning assets (non-GAAP) of 54 basis points to 5.45%, primarily due to higher yields on loans and investment securities.

The provision for credit losses for the first nine months of 2024 totaled $57.5 million, compared to $58.5 million.

Non-interest income totaled $265.5 million, a 10.0% increase compared to $241.2 million, reflecting increased mortgage banking operations income, continued strong wealth management revenues, and higher levels of service charges and dividends on non-marketable equity securities, partially offset by lower capital markets income and insurance commissions and fees.

Non-interest expense totaled $713.1 million, increasing $63.3 million, or 9.7%.

On an operating basis (non-GAAP), non-interest expense totaled $694.1 million, an increase of $46.4 million, or 7.2%, compared to the first nine months of 2023.

Salaries and benefits increased $28.6 million, or 8.2%, due largely to normal annual merit increases and higher production-related commissions from strong non-interest income activity.

Additionally, net occupancy and equipment expense increased $13.1 million, or 11.0%, due to the $3.7 million software impairment, combined with technology-related investments.

FDIC insurance increased $9.6 million, or 41.5%, primarily due to incremental FDIC special assessment expense of $5.2 million to further replenish the FDIC's Deposit Insurance Fund after the 2023 bank failures, as well as loan growth and balance sheet mix changes.

Financial highlights are summarized below:

Nine Months Ended

September 30, $ %

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

Net interest income $ 958,227 $ 992,479 $ (34,252) (3.5) %

Provision for credit losses 57,517 58,511 (994) (1.7)

Non-interest income 265,472 241,249 24,223 10.0

Non-interest expense 713,139 649,870 63,269 9.7

Income taxes 97,572 91,169 6,403 7.0

Net income 355,471 434,178 (78,707) (18.1)

Preferred stock dividends 6,005 6,030 (25) (0.4)

Net income available to common stockholders $ 349,466 $ 428,148 $ (78,682) (18.4) %

Earnings per common share – Basic $ 0.97 $ 1.19 $ (0.22) (18.5) %

Earnings per common share – Diluted 0.96 1.18 (0.22) (18.6)

Cash dividends per common share 0.36 0.36 — —

The following table presents selected financial ratios and other relevant data used to analyze our performance:

Nine Months Ended

September 30,

Return on average equity 7.81 % 9.98 %

Return on average tangible common equity (1)

Return on average assets 1.02 1.31

Return on average tangible assets (1)

Book value per common share $ 17.86 $ 16.71

Tangible book value per common share (1)

Equity to assets 13.02 % 12.96 %

Average equity to average assets 13.07 13.12

Common equity to assets 13.02 12.72

Tangible common equity to tangible assets (1)

Common equity tier 1 capital ratio 10.44 10.17

Dividend payout ratio 37.51 30.50

Nine Months Ended September 30,

Three Months Ended March 31,

(dollars in thousands) Average

3 unchanged sentences

Expense Yield/

Interest-earning assets:

Interest-bearing deposits with banks $ 1,741,006 $ 17,073 3.98 % $ 872,353 $ 9,178 4.23 %

13 unchanged sentences

Total assets $ 48,482,198 $ 45,677,589

Interest-bearing liabilities:

Interest-bearing demand $ 16,901,025 108,828 2.61 $ 14,554,457 94,742 2.62

5 unchanged sentences

Total interest-bearing liabilities 31,523,535 235,593 3.03 28,723,528 224,489 3.14

Non-interest-bearing demand 9,908,989 11,061,043

Non-interest-bearing demand deposits 9,647,959 9,939,350

Total deposits and borrowings 41,171,494 2.32 38,662,878 2.33

1 unchanged sentence

Total liabilities 42,110,053 39,638,016

Stockholders’ equity 6,083,143 5,815,431

Total liabilities and stockholders’ equity $ 46,525,066 $ 44,314,922

Shareholders’ equity 6,372,145 6,039,573

Total liabilities and shareholders’ equity $ 48,482,198 $ 45,677,589

Net interest-earning assets $ 11,919,629 $ 11,929,674

6 unchanged sentences

3.03 % 3.18 %

(1) The average balances and yields earned on securities are based on historical cost.

(1) The average balances and yields earned on investment securities are based on historical cost.

3 unchanged sentences

Net Interest Income

Net interest income on an FTE basis (non-GAAP) totaled $967.0 million, decreasing $35.0 million, or 3.5%, primarily due to higher interest-bearing deposit costs from continued balance migration to higher yielding deposit products in the current interest rate environment and higher total average borrowings, partially offset by growth in earning assets and higher earning asset yields.

Net interest income on an FTE basis (non-GAAP) totaled $326.8 million, increasing $4.9 million, or 1.5%, reflecting growth in earning assets partially offset by higher deposit costs resulting from balance growth in higher yielding deposit products.

Average earning assets grew $2.8 billion, or 6.9%, primarily driven by loan growth.

Total average commercial loans increased $1.2 billion, or 6.1%.

Average consumer loans increased $873.5 million, or 7.7%, with an increase in average residential mortgage loans of $1.3 billion, or 22.9%, largely due to the continued successful execution in key markets by our expanded mortgage banker team and long-standing strategy of serving the purchase market.

Partially offsetting the growth in average residential mortgage loans, average indirect installment loans decreased $431.4 million, or 28.1%, reflecting the $332 million sale that closed in the first quarter of 2024 and $431 million sale that closed in September of 2024.

Additionally, we reinvested the proceeds of the AFS securities sold in December 2023 as part of our balance sheet repositioning with an average yield of 1.08% into securities with yields approximately 350 basis points higher and a similar duration and convexity profile.

For interest-bearing liabilities, average time deposits increased $1.8 billion, or 35.5%, given the continued migration into higher-yielding deposit products.

Total average borrowings increased $1.0 billion due to maintaining additional liquidity on the balance sheet following the banking industry disruption in 2023 and to support strong loan growth.

Additionally, we reinvested the proceeds of the AFS securities sold in November 2024 as part of our balance sheet repositioning with an average yield of 1.41% into securities yielding 4.78% with a similar duration and convexity profile.

Average interest-bearing demand deposits increased $2.3 billion, or 16.1%, with customers continuing to migrate into higher-yielding deposit products.

Total average borrowings decreased $255.7 million primarily due to a decrease in FHLB borrowings, partially offset by an increase in senior debt.

The net interest margin (FTE) (non-GAAP) decreased 15 basis points to 3.03%.

The following table provides certain information regarding changes in net interest income on an FTE basis (non-GAAP) attributable to changes in the average volumes and yields earned on interest-earning assets and the average volume and rates paid for interest-bearing liabilities for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023:

The following table provides certain information regarding changes in net interest income on an FTE basis (non-GAAP) attributable to changes in the average volumes and yields earned on interest-earning assets and the average volume and rates paid for interest-bearing liabilities for the three months ended March 31, 2025, compared to the three months ended March 31, 2024:

(in thousands) Volume Rate Net

1 unchanged sentence

Interest-bearing deposits with banks $ 8,443 $ (548) $ 7,895

Securities (2)

Investment securities (2)

2,371 6,232 8,603

16 unchanged sentences

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

Interest income on an FTE basis (non-GAAP) of $562.4 million, increased $16.0 million, or 2.9%, resulting from growth in average earning assets of $2.8 billion.

The increase in earning assets was primarily driven by a $1.7 billion, or 5.2%, increase in average loans and leases and an increase of $868.7 million in average cash balances.

Average commercial loan growth of $725.9 million, or 3.5%, included increases of $430.7 million in commercial real estate, $174.6 million in commercial and industrial loans and $107.5 million in commercial leases.

The increase in average commercial loans and leases was driven by activity across the footprint, including the South Carolina and eastern North Carolina markets with strong contributions from our commercial leasing team.

The increase in commercial real estate included fundings on previously originated construction projects.

Average consumer loans increased $943.9 million, or 7.9%, with a $1.3 billion increase in residential mortgages largely due to the continued successful execution in key markets and long-standing strategy of serving the purchase market.

Average indirect installment loans decreased $378.7 million, or 33.3%, reflecting the $431 million sale that closed in the third quarter of 2024, partially offset by new organic growth in the portfolio.

The yield on average earning assets (non-GAAP) decreased 17 basis points to 5.23%, driven by a 25-basis point decline in yields on loans to 5.68%, partially offset by a 35 basis point increase in yields on investment securities to 3.41%.

Interest expense of $235.6 million increased $11.1 million primarily due to an increase in average interest-bearing deposits.

Average total deposits increased $2.8 billion, or 8.1%, reflecting robust organic growth in new and existing customer relationships.

The growth in average interest-bearing demand deposits of $2.3 billion and average time deposits of $924.6 million more than offset the decline in average non-interest-bearing demand deposits of $291.4 million and average savings deposits of $215.5 million as customers continued to migrate balances into higher-yielding products.

The funding mix has slightly shifted with non-interest-bearing demand deposits comprising 26% of total deposits at March 31, 2025, compared to 29% at March 31, 2024.

Average short-term borrowings decreased $1.0 billion, or 42.7%, primarily reflecting a decrease in FHLB borrowings.

Average long-term borrowings increased $770.2 million, or 37.4%, primarily reflecting the December 2024 issuance of $500 million aggregate principal amount of 5.722% fixed rate / floating rate senior notes due in 2030.

The rate paid on interest-bearing liabilities decreased 11 basis points from 3.14% to 3.03%.

The total cost of funds decreased 1 basis point to 2.32%, with a decrease of 8 basis points in total borrowing costs and a 6 basis point decrease in interest-bearing deposit costs to 2.76%.

Provision for Credit Losses

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

Nine Months Ended

September 30, $ %

Three Months Ended

March 31, $ %

(dollars in thousands) 2025 2024 Change Change

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Total provision for credit losses on loans and leases 17,494 13,896 3,598 25.9

Provision for securities (24) 68 (92) (135.3)

Provision for investment securities (5) (7) 2 (28.6)

Total provision for credit losses $ 17,489 $ 13,889 $ 3,600 25.9 %

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Net loan charge-offs (annualized) / total average loans and leases 0.15 % 0.16 %

The provision for credit losses was $57.5 million, compared to $58.5 million in the first nine months of 2023.

The provision for credit losses for the first nine months of 2024 was primarily due to loan growth and charge-off activity.

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

Our non-performing loan coverage position remains strong at 327%.

The first nine months of 2024 reflected net charge-offs of $42.1 million, or 0.17% annualized of total average loans, compared to $59.6 million, or 0.26% annualized, in the first nine months of 2023.

The provision for credit losses was $17.5 million, compared to $13.9 million for the first three months of 2024.

The provision for credit losses for the first three months of 2025 was primarily due to loan growth and net charge-off activity.

The first three months of 2025 reflected net charge-offs of $12.5 million, or 0.15% annualized of total average loans, compared to $12.8 million, or 0.16% annualized, in the first three months of 2024.

The ACL on loans and leases was $428.9 million, an increase of $22.6 million, with the ratio of the ACL to total loans and leases remaining stable at 1.25%.

Non-Interest Income

The breakdown of non-interest income for the nine months ended September 30, 2024 and 2023 is presented in the following table:

Nine Months Ended

September 30, $ %

The breakdown of non-interest income for the three months ended March 31, 2025 and 2024 is presented in the following table:

Three Months Ended

March 31, $ %

(dollars in thousands) 2025 2024 Change Change

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Bank owned life insurance 5,350 3,343 2,007 60.0

Net securities gains (losses) (31) (78) 47 —

Other 2,802 4,481 (1,679) (37.5)

Total non-interest income $ 87,766 $ 87,862 $ (96) (0.1) %

Total non-interest income increased by $24.2 million, or 10.0%.

Total non-interest income was stable with a $0.1 million, or 0.1%, decline.

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

Service charges increased $5.9 million, or 9.5%, primarily due to strong treasury management activity and higher consumer transaction levels.

Wealth management revenues increased $5.3 million, or 10.0%, as securities commissions and fees and trust income increased 14.4% and 7.1%, respectively, through continued strong contributions across the geographic footprint.

Additionally, the market value of assets under management increased $949.3 million, or 11.1%, to $9.5 billion.

Capital markets decreased $2.1 million, or 10.6%, reflecting lower commercial customer transaction activity.

Mortgage banking operations income increased $6.7 million, or 49.2%, driven by improved gain on sale from strong production volumes, partially offset by an MSR impairment of $2.8 million in the third quarter of 2024 reflecting accelerating prepayment speed assumptions given the recent declines in mortgage rates.

During the first nine months of 2024, we sold $993.3 million of residential mortgage loans, a 28.5% increase compared to $772.7 million for the same period of 2023.

Dividends on non-marketable equity securities increased $4.3 million, or 28.0%, reflecting higher FHLB dividends due to additional borrowings.

Bank owned life insurance increased $4.2 million, or 46.8%, reflecting higher life insurance claims.

Service charges increased $1.8 million, or 8.7%, primarily due to strong treasury management activity and higher consumer transaction volumes.

Wealth management revenues increased $1.6 million, or 8.4%, to a record $21.2 million as trust income and securities commissions and fees increased 8.5% and 8.2%, respectively, through continued strong contributions across the geographic footprint.

Additionally, the market value of assets under administration increased $382.0 million, or 2.8%, to $13.9 billion.

Insurance commissions and fees decreased $1.0 million, or 14.2%, primarily due to lower contingent fees during the first three months of 2025.

Capital markets income decreased $1.0 million, or 15.9%, reflecting lower commercial customer transaction activity in the current macroeconomic environment.

Mortgage banking operations income decreased $0.9 million, or 11.6%, as lower gain-on-sale margins were partially offset by higher sold loan volume.

During the first three months of 2025, we sold $344.5 million of residential mortgage loans, a 4.6% increase compared to $329.2 million for the same period of 2024.

Bank owned life insurance increased $2.0 million due to elevated life insurance claims.

Non-Interest Expense

The breakdown of non-interest expense for the nine months ended September 30, 2024 and 2023 is presented in the following table:

Nine Months Ended

September 30, $ %

The breakdown of non-interest expense for the three months ended March 31, 2025 and 2024 is presented in the following table:

Three Months Ended

March 31, $ %

(dollars in thousands) 2025 2024 Change Change

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Equipment 25,885 23,772 2,113 8.9

Amortization of intangibles 13,197 15,203 (2,006) (13.2)

Outside services 26,341 22,880 3,461 15.1

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Bank shares and franchise taxes 4,136 4,126 10 0.2

Merger-related — 2,215 (2,215) (100.0)

Other 22,500 19,504 2,996 15.4

Total non-interest expense $ 246,811 $ 237,096 $ 9,715 4.1 %

Total non-interest expense of $713.1 million for the first nine months of 2024 increased $63.3 million, a 9.7% increase from the same period of 2023.

On an operating basis, non-interest expense (non-GAAP) totaled $694.1 million and increased $46.4 million, or 7.2%, when adjusting for significant items of $19.1 million and $2.2 million in the first nine months of 2024 and 2023, respectively.

See Table 18 in this section for a list of the significant items.

Total non-interest expense of $246.8 million for the first three months of 2025 increased $9.7 million, a 4.1% increase from the same period of 2024.

On an operating basis, non-interest expense (non-GAAP) increased $12.7 million, or 5.4%, when adjusting for significant items of $3.0 million in the first three months of 2024.

See Table 9 in this section for a list of the significant items impacting earnings.

The variances in the individual non-interest expense items are further explained in the following paragraphs.

Salaries and employee benefits increased $28.6 million, or 8.2%, related to normal annual merit increases and higher production-related commissions from strong non-interest income activity, as well as strategic hiring associated with our focus to grow market share and continued investments in our risk management infrastructure.

Salaries and employee benefits increased $6.0 million, or 4.7%, primarily reflecting strategic hiring associated with our efforts to grow market share and continued investments in our risk management infrastructure, as well as higher performance and production-related compensation.

Included in salaries and employee benefits in the first quarter of 2025 and 2024 were $7.6 million and $6.9 million, respectively, related to normal seasonal long-term compensation expense.

Net occupancy and equipment expense of $132.2 million increased $13.1 million, or 11.0%, primarily from continued technology-related investments, in addition to a $3.7 million software impairment.

Amortization of intangibles of $13.2 million decreased $2.0 million, or 13.2%, as certain intangibles have been fully amortized.

Outside services increased $9.8 million, or 16.1%, with higher volume-related technology and third-party costs.

Marketing expense of $15.5 million increased $2.4 million, or 18.3%, primarily due to the opportunistic timing of marketing campaigns related to our successful deposit initiatives.

FDIC insurance increased $9.6 million, or 41.5%, primarily due to special assessment expense of $5.2 million in 2024 to further replenish the FDIC's Deposit Insurance Fund associated with protecting uninsured depositors following the failed banks in early 2023 based on updated loss information provided by the FDIC, as well as loan growth and balance sheet mix changes.

Other non-interest expense was $61.0 million and $56.9 million for the first nine months of 2024 and 2023, respectively, with the increase primarily related to the $9.0 million loss on indirect auto loan sales which completed in the first and third quarters of 2024 offset by various miscellaneous items.

Net occupancy and equipment expense of $45.6 million increased $2.3 million, or 5.2%, largely from technology-related investments and increased occupancy costs.

Outside services increased $3.5 million, or 15.1%, with higher volume-related technology and third-party costs associated with ongoing investments in our ERM Framework.

Marketing expense of $4.6 million decreased $0.9 million, or 15.8%, primarily due the timing of certain marketing campaigns.

FDIC insurance decreased $4.2 million, or 33.0%, primarily due to special assessment expense of $4.4 million in 2024 to further replenish the FDIC's Deposit Insurance Fund associated with protecting uninsured depositors following the failed banks in early 2023 based on updated loss information provided by the FDIC.

Other non-interest expense was $22.5 million and $19.5 million for the first three months of 2025 and 2024, respectively.

The first three months of 2024 included a $2.6 million reduction to the previously estimated loss on the indirect auto loan sale.

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

Nine Months Ended

September 30, $ %

Three Months Ended

March 31, $ %

(dollars in thousands) 2025 2024 Change Change

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Branch consolidations — (1,194) 1,194

Merger-related — (2,215) 2,215

FDIC special assessment — (4,408) 4,408

Software impairment (3,690) — (3,690)

Loss on indirect auto loan sales (8,969) — (8,969)

Reduction in previously estimated loss on indirect auto loan sale — 2,603 (2,603)

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

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The following table presents information regarding income tax expense and certain tax rates:

Nine Months Ended

September 30,

Three Months Ended

(dollars in thousands) 2025 2024

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Statutory federal tax rate 21.0 21.0

Income tax expense was higher in 2024 due to the recording of renewable energy investment tax credits recognized in the third quarter of 2023 as part of a solar project financing transaction.

The effective tax rate increased for the nine months ended September 30, 2024 as a result of these items.

Income tax expense was lower for the three months ended March 31, 2025 primarily due to lower pre-tax earnings.

FINANCIAL CONDITION

The following table presents our condensed Consolidated Balance Sheets:

(dollars in millions) September 30,

(dollars in millions) March 31,

2025 December 31,

Cash and cash equivalents $ 2,445 $ 2,419 $ 26 1.1 %

Securities 7,314 7,165 149 2.1

Investment securities 7,506 7,445 61 0.8

Loans held for sale 190 218 (28) (12.8)

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Total Assets $ 49,020 $ 48,625 $ 395 0.8 %

Liabilities and Stockholders’ Equity

Liabilities and Shareholders’ Equity

Deposits $ 37,239 $ 37,107 $ 132 0.4 %

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Total Liabilities 42,602 42,323 279 0.7

Stockholders’ Equity 6,249 6,050 199 3.3

Total Liabilities and Stockholders’ Equity $ 47,976 $ 46,158 $ 1,818 3.9 %

Shareholders’ Equity 6,418 6,302 116 1.8

Total Liabilities and Shareholders’ Equity $ 49,020 $ 48,625 $ 395 0.8 %

Lending Activity

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and Charleston, South Carolina.

Loans held for sale declined $295 million, or 60.5%, from December 31, 2023 due primarily to the sale of $332 million of indirect auto loans that closed in the first quarter of 2024.

Following is a summary of loans and leases:

September 30,

(dollars in millions) March 31,

2025 December 31,

(in millions)

Commercial real estate $ 12,652 $ 12,705 $ (53) (0.4) %

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Our commercial real estate portfolio included $8.9 billion of non-owner-occupied loans of which 18.4% represented office loans.

Our top 25 non-owner-occupied commercial real estate loans averaged approximately $23 million per exposure with the office component primarily made up of mid-sized offices located outside of central business districts with 43% of the office portfolio averaging less than $5 million per exposure.

For consumer lending, average residential mortgages increased $1.3 billion, compared to September 2023, primarily driven by seasonal growth in mortgage originations in the second quarter of 2024.

Our top 25 non-owner-occupied commercial real estate

loans averaged approximately $22 million per exposure with the office component primarily made up of mid-sized offices located outside of central business districts with 44% of the office portfolio averaging less than $5 million per exposure.

For consumer lending, average residential mortgages increased $1.3 billion, compared to the three months ended March 31, 2024, largely due to the continued successful execution in key markets and long-standing strategy of serving the purchase market.

Non-Performing Assets

Following is a summary of non-performing assets:

(in millions) September 30,

(dollars in millions) March 31,

2025 December 31,

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Total non-performing assets $ 163 $ 162 $ 1 0.6 %

Non-performing assets increased $21.1 million, from $110.0 million at December 31, 2023 to $131.1 million at September 30, 2024, remaining at or near historically low levels.

Non-performing assets increased slightly, $0.8 million, from $162.4 million at December 31, 2024 to $163.2 million at March 31, 2025, remaining at or near historically low levels.

Allowance for Credit Losses on Loans and Leases

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• the historical through-the-cycle default mean calculated using an expanded period to include a prior recessionary period.

At September 30, 2024 and December 31, 2023, we utilized a third-party consensus macroeconomic forecast reflecting the current and projected macroeconomic environment.

For our ACL calculation at September 30, 2024, the macroeconomic variables that we utilized included, but were not limited to:

At March 31, 2025 and December 31, 2024, we utilized a third-party consensus macroeconomic forecast reflecting the current and projected macroeconomic environment.

For our ACL calculation at March 31, 2025, the macroeconomic variables that we utilized included, but were not limited to:

(i) the purchase only Housing Price Index, which increases 7.0% over our R&S forecast period, (ii) a Commercial Real Estate Price Index, which increases 4.9% over our R&S forecast period, (iii) S&P Volatility, which increases 25.1% in 2025 and 0% 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, 2024 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) bankruptcies, which increase steadily over the R&S forecast period but average below the 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.

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

Net Loan Charge-Offs Net Loan Charge-Offs to Average Loans ACL at

Nine Months Ended

September 30, Nine Months Ended

September 30, September 30,

2024 2023 2024 2023 2024

Three Months Ended

March 31, Three Months Ended

March 31, March 31,

(dollars in millions) 2025 2024 2025 2024 2025

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Allowance for credit losses/non-performing loans 266.93 % 388.61 %

The ACL on loans and leases of $420.2 million at September 30, 2024 increased $14.6 million, or 3.6%, from December 31, 2023.

Our ending ACL coverage ratio was stable at 1.25% at both September 30, 2024 and December 31, 2023.

Total provision for credit losses for the nine months ended September 30, 2024 was $57.5 million, compared to $58.5 million for the same period in 2023.

Net charge-offs were $42.1 million for the nine months ended September 30, 2024, compared to $59.6 million for the first nine months of 2023.

When excluding the impact of the previously disclosed $31.9 million isolated commercial loan that was charged-off during the third quarter of 2023, net charge-offs would have been $27.7 million, or 0.12% annualized of total average loans (non-GAAP).

Net charge-offs for both years remain at historically low levels.

The ACL as a percentage of non-performing loans for the total portfolio decreased to 327% as of September 30, 2024, compared to 378% as of December 31, 2023.

The ACL on loans and leases of $428.9 million at March 31, 2025 increased $6.1 million, or 1.4%, from December 31, 2024.

Our ending ACL coverage ratio was stable at 1.25% at both March 31, 2025 and December 31, 2024.

The ACL as a percentage of non-performing loans for the total portfolio increased to 267% as of March 31, 2025, compared to 265% as of December 31, 2024.

Total provision for credit losses for the three months ended March 31, 2025 was $17.5 million, compared to $13.9 million for the same period in 2024.

Net charge-offs were $12.5 million for the three months ended March 31, 2025, compared to $12.8 million for the first three months of 2024.

As a result of potential tariffs, U.S.

Department of Government Efficiency (DOGE) activity and other governmental policies, we completed an evaluation of the potential credit quality impacts on our loan portfolio during the first quarter.

Early in the first quarter of 2025, we instituted a mandatory assessment around potential tariffs into our underwriting process.

Additionally, we identified five sectors that we determined would be most impacted in our commercial and industrial (C&I) portfolio, and surveyed customers representing approximately 50% of our C&I portfolio exposures.

As a result, we estimated that less than 5% of the exposures would have high direct impacts from tariffs and concluded that FNB remained well-positioned at this point in time, with manageable exposure to the most heavily tariff-impacted businesses and consumer portfolios.

We will continue to diligently monitor our loan portfolio and engage in active dialogue with our customers.

A wider credit quality impact could result from a slowing or a recessionary macroeconomic environment, which we monitor via our ongoing quarterly stress testing process.

Our primary source of funds is deposits.

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Following is a summary of deposits:

(in millions) September 30,

(in millions) March 31,

2025 December 31,

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Total deposits $ 37,239 $ 37,107 $ 132 0.4 %

Total deposits increased $2.1 billion, or 5.9%, from December 31, 2023, however we continued to experience balance migration into higher-yielding deposit products.

Total deposits increased $131.7 million, or 0.4%, from December 31, 2024, due to growth in new and existing customer relationships more than offsetting the normal seasonal outflows in the first quarter of the year.

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

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

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

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

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

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

Since inception of our $300 million stock purchase program, we repurchased 14.4 million shares at a weighted average share price of $11.43 for $174.3 million, with $125.7 million remaining for repurchase under this program.

During the first quarter of 2025, we repurchased 0.7 million shares at a weighted average share price of $13.48 for $10.0 million.

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

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

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

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 $111 million.

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

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

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

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FNB’s and FNBPA’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

At September 30, 2024, the capital levels of both FNB and FNBPA exceeded all regulatory capital requirements and their regulatory capital ratios were above the minimum levels required to be considered “well-capitalized” for regulatory purposes.

In December 2018, the FRB and other U.S.

banking agencies approved a rule to address the impact of CECL on regulatory capital by allowing bank holding companies (BHCs) and banks, including FNB, the option to phase in the day-one impact of CECL over a three-year period.

In March 2020, the FRB and other U.S.

banking agencies issued a final rule that became effective on March 31, 2020, and provides BHCs and banks with an alternative option to temporarily delay the impact of CECL, relative to the incurred loss methodology for the ACL, on regulatory capital.

We have elected this alternative option instead of the one described in the December 2018 rule.

As a result, under the final rule, we delayed recognizing the estimated impact of CECL on regulatory capital until after a two-year deferral period, which for us extended through December 31, 2021.

Beginning on January 1, 2022, we were required to phase in 25% of the previously deferred capital impact of CECL, with an additional 25% to be phased in at the beginning of each subsequent year until fully phased in by the first quarter of 2025.

Under the final rule, the estimated impact of CECL on regulatory capital that we will defer and later phase in is calculated as

the entire day-one impact at adoption plus 25% of the subsequent change in the ACL during the two-year deferral period.

As of September 30, 2024, the total deferred impact on CET1 capital related to our adoption of CECL was approximately $17.2 million, or 5 basis points, which will be eliminated in 2025.

In this unprecedented economic and uncertain environment, we frequently run stress tests for a variety of economic situations, including severely adverse scenarios that have economic conditions like the current conditions.

At March 31, 2025, the capital levels of both FNB and FNBPA exceeded all regulatory capital requirements and their regulatory capital ratios were above the minimum levels required to be considered “well-capitalized” for regulatory purposes.

In this volatile economic and uncertain environment, we frequently run stress tests for a variety of economic situations, including severely adverse scenarios.

Under these scenarios, the results of these stress tests indicate that our regulatory capital ratios would remain above the regulatory requirements and we would be able to maintain appropriate liquidity levels, demonstrating our expected ability to continue to support our customers and communities under stressful financial conditions.

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(dollars in millions) Amount Ratio Amount Ratio Amount Ratio

As of September 30, 2024

As of March 31, 2025

Total capital $ 4,693 12.47 % $ 3,762 10.00 % $ 3,951 10.50 %

Tier 1 capital 4,026 10.70 2,257 6.00 3,198 8.50

Common equity tier 1 3,898 10.44 n/a n/a 2,612 7.00

CET1 4,026 10.70 n/a n/a 2,634 7.00

Leverage 4,026 8.72 n/a n/a 1,848 4.00

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Tier 1 capital 4,025 10.78 2,987 8.00 3,174 8.50

Common equity tier 1 3,832 10.34 2,409 6.50 2,595 7.00

CET1 3,944 10.56 2,427 6.50 2,614 7.00

Leverage 4,024 8.76 2,296 5.00 1,837 4.00

3 unchanged sentences

Tier 1 capital 3,971 10.58 2,253 6.00 3,191 8.50

Common equity tier 1 3,680 10.04 n/a n/a 2,565 7.00

CET1 3,971 10.58 n/a n/a 2,628 7.00

Leverage 3,971 8.75 n/a n/a 1,816 4.00

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Tier 1 capital 3,962 10.63 2,982 8.00 3,169 8.50

Common equity tier 1 3,689 10.12 2,370 6.50 2,553 7.00

CET1 3,882 10.41 2,423 6.50 2,610 7.00

Leverage 3,962 8.78 2,257 5.00 1,806 4.00

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

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

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

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

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

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

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

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

A portion of these proceeds was used to retire debt that matured in February 2023 (for additional information, see Note 9, "Borrowings" in the Notes to the Consolidated Financial Statements in this Report).

We have historically been opportunistic when accessing the capital markets, and we will continue with that strategy.

The parent company's cash position at September 30, 2024 was $286.8 million, down $88.6 million from year-end, primarily due to the redemption of all $111 million of our Series E, 7.25% Fixed Rate / Floating Rate Non-Cumulative Perpetual Preferred Stock in February 2024.

The Board of Directors declared the redemption of the preferred stock given its higher relative cost of capital and our strong capital position.

Our regulatory CET1 ratio and Total Capital ratios were 10.4% and 12.3%, respectively, at September 30, 2024 with the Total Capital ratio reflecting the completed preferred stock redemption.

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

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

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

The parent company's cash position at March 31, 2025 was $770.3 million, decreasing $33.1 million in part due to share repurchase activity, from December 31, 2024.

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

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

Our regulatory CET1 ratio and Total Capital ratios were 10.7% and 12.5%, respectively, at March 31, 2025 with the Total Capital ratio reflecting the completed preferred stock redemption.

Two metrics that are used to gauge the adequacy of the parent company’s cash position are the Liquidity Coverage Ratio (LCR) and Months of Cash on Hand (MCH).

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The LCR and MCH ratios and Parent company cash on hand are presented in the following table:

September 30,

2025 December 31,

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Parent company cash on hand (millions) $ 770.3 $ 803.4 n/a

As previously mentioned, our parent company cash on hand declined from December 31, 2023 due to the preferred stock redemption.

The decrease in the LCR and MCH at September 30, 2024 are due to the scheduled maturity of $350 million in

senior debt due in August of 2025, which is considered a cash outflow for the ratio calculations.

Assuming we replace the maturing senior debt, the ratios would be 2.8 times LCR and 15.3 MCH.

As previously mentioned, our parent company cash on hand increased materially due to the issuance of senior debt during the fourth quarter of 2024.

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

The MCH decreased from December 31, 2024 primarily due to the smaller cash balance on hand.

The projected LCR and MCH after the maturity of the senior and subordinated debt in 2025 would be 2.5 times and 16.3 months, respectively.

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

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

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

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

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

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

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

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

These strategies helped management successfully grow total deposits by $2.1 billion, when compared to December 31, 2023.

These efforts resulted in time deposits and interest-bearing demand deposits increasing $1.5 billion and $1.2 billion, respectively, when compared to December 31, 2023.

Non-interest-bearing demand deposits decreased $351.8 million and savings account balances declined $233.9 million compared to December 31, 2023 as customers continue to migrate deposits into higher-yielding deposit products.

The mix of non-interest-bearing deposits to total deposits remained consistent with the prior quarter at 27%.

At September 30, 2024, approximately 78% of our deposits were insured by the FDIC or collateralized, stable with December 31, 2023.

These strategies helped management successfully grow total deposits by $131.7 million, or 0.4%, when compared to December 31, 2024, in a quarter typically reflecting seasonal deposit outflows.

Interest-bearing demand deposits and non-interest-bearing demand deposits increased $251.9 million and $105.8 million, respectively, when compared to December 31, 2024 through these efforts.

Time deposits declined $194.8 million and savings account balances declined $31.1 million compared to December 31, 2024.

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

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

Our cash balances held at the FRB were $1.5 billion at September 30, 2024 and $1.1 billion at December 31, 2023.

Our loan to deposit ratio stood at 92% at March 31, 2025 compared to 91% at December 31, 2024.

At March 31, 2025, approximately 77% of our deposits were insured by the FDIC or collateralized, consistent with December 31, 2024 balances.

Our cash balances held at the FRB were $1.9 billion at March 31, 2025 and $2.0 billion at December 31, 2024.

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

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

(dollars in millions) September 30,

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

(dollars in millions) March 31,

2025 December 31,

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

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

The strong deposit generation noted earlier provided management the flexibility to reduce short- and long-term borrowings by a combined $400 million.

Our bank-level liquidity position has remained strong.

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

We continue to have ample unused borrowing capacity that could cover 2.0 times the uninsured deposit and non-collateralized deposit balances as of September 30, 2024.

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

A portion of our available borrowing capacity includes capacity at the FRB's Discount Window.

We have no borrowings under this facility.

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

At September 30, 2024, FNBPA has $783 million of cash and salable unpledged government and agency securities representing 4.7% of total assets.

At March 31, 2025, FNBPA has $2.9 billion, equal to December 31, 2024, of cash and salable unpledged government and agency securities representing 6.0% of total assets.

This compares to a policy minimum of 3.0%.

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

The following liquidity gap analysis as of September 30, 2024 compares the difference between our cash flows from existing earning assets and interest-bearing liabilities over future time intervals.

The following liquidity gap analysis as of March 31, 2025 compares the difference between our cash flows from existing earning assets and interest-bearing liabilities over future time intervals.

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

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A reasonably matched position lays a better foundation for dealing with additional funding needs during a potential liquidity crisis.

A positive gap position means that more assets are

expected to mature over the next 12 months than liabilities.

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

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

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Cumulative Gap to Total Assets (0.2) % (1.8) % (4.6) % (5.1) %

The twelve-month cumulative gap to total assets ratio was (4.3)% as of September 30, 2024, compared to (2.6)% as of December 31, 2023.

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

The twelve-month cumulative gap to total assets ratio was (5.1)% as of March 31, 2025, compared to (5.0)% as of December 31, 2024.

The change in the twelve-month cumulative gap to total assets was primarily related to management's shorter-term time deposit offerings, which reduced our asset sensitivity.

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

The stress scenarios forecast that adequate funding will be available even under severe conditions.

Management believes we have sufficient liquidity available to meet our normal operating and contingency funding cash needs.

Management believes we have sufficient liquidity available to meet our normal operating and contingency funding cash needs for the next twelve months and thereafter for the foreseeable future.

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

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

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

We use derivative financial instruments, among other strategies, for interest rate risk management purposes.

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

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

The following repricing gap analysis as of September 30, 2024 compares the difference between the amount of interest-earning assets and interest-bearing liabilities subject to repricing.

The following repricing gap analysis as of March 31, 2025 compares the difference between the amount of interest-earning assets and interest-bearing liabilities subject to repricing.

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

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

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

(dollars in millions) Within

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Cumulative Gap to Earning Assets 6.4 % 4.5 % 1.8 % 3.0 %

The twelve-month cumulative repricing gap to total assets was 6.7% and 10.3% as of September 30, 2024 and December 31, 2023, respectively, primarily as a result of management's deposit pricing actions on shorter-term time deposits which effectively reduced the average maturity of new time deposits.

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

The change in the cumulative repricing gap at September 30, 2024, compared to December 31, 2023, is primarily related to customers moving into shorter-term time deposits and the increase in short-term and variable-rate borrowings.

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

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

As a result of management's strategies to reduce its asset sensitive position, the twelve-month cumulative repricing gap to total assets was 3.0% as of March 31, 2025, down from 4.5% at December 31, 2024.

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

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

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

The variance percentages represent the change between the net interest income and EVE calculated under the particular rate scenario compared to the net interest income and EVE that was calculated assuming market rates as of September 30, 2024.

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

September 30,

2025 December 31,

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- 200 basis points (8.2) (6.9) (15.0)

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

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

Our current interest rate risk position is modestly asset sensitive.

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

Our current interest rate risk position is moderately asset sensitive.

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

Total variable and adjustable-rate loans were 63.5% and 62.2% of total net loans and leases at September 30, 2024 and December 31, 2023, respectively.

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

Total variable and adjustable-rate loans were 62.8% and 62.9% of total net loans and leases at March 31, 2025 and December 31, 2024, respectively.

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

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

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

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

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

During the first three months of 2025, management adjusted the IRR position by slightly extending the duration of the investment securities portfolio, originating adjustable-rate mortgage loans with longer-duration fixed-rate reset periods, strategically meeting our customers' preferences for higher yielding deposit products, with shorter-term time deposits and utilizing borrowings with variable rates and varying maturities.

As a result, the net interest income change over 12 months shown above in both the up and down rate ramp scenarios is, as intended, closer to neutral when compared to December 31, 2024.

We also utilize derivatives to manage the IRR position.

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

We currently have $1.2 billion (notional) of receive-fixed interest rate swaps designated as cash flow hedges for variable rate commercial loans that have an average rate of 1.37% and average maturity of 9.7 months with the last hedge scheduled to expire in May 2026.

During the fourth quarter of 2024, we executed receive-fixed interest rate swaps designated as cash flow hedges for variable rate commercial loans for $1.0 billion (notional) at an average rate of 3.9% and average maturity of 42.3 months.

At March 31, 2025, we have a total of $2.0 billion (notional) of these cash flow hedges at an average rate of 2.7% and average maturity of 22.8 months with the last hedge scheduled to expire in January 2030, with $0.75 billion (notional) of this total maturing in 2025 at an average rate of 0.8%.

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

We also designated $0.1 billion (notional) of interest rate swaps as hedges of variable rate short-term debt maturing in November 2024.

These actions lowered our asset sensitivity.

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

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

At September 30, 2024, the commercial customer-related interest rate swaps totaled $5.9 billion (notional), up from $5.7 billion (notional) at December 31, 2023.

At March 31, 2025, the commercial customer-related interest rate swaps totaled $6.0 billion (notional), up from $5.9 billion (notional) at December 31, 2024.

For additional information regarding interest rate swaps, see Note 10, "Derivative Instruments and Hedging Activities" in the Notes to Consolidated Financial Statements in this Report.

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

Assuming a static Balance Sheet, a +100 basis point Rate Shock increases net interest income (12 months) by 3.1% at September 30, 2024 and 3.4% at December 31, 2023.

For a +200 basis point Rate

Shock, net interest income (12 months) increases by 5.9% at September 30, 2024 and 6.7% at December 31, 2023.

The corresponding metrics for a minus 200 basis point Rate Shock are (7.2)% and (7.7)% at September 30, 2024 and December 31, 2023, respectively, compared to a minus 100 basis point Rate Shock of (3.4)% and (3.6)% at September 30, 2024 and December 31, 2023, respectively.

The drivers of the change in net interest income in the rate shock scenarios include the mix shift of deposit products into shorter-term time deposits, the pace of deposit repricing and assumed betas and loan prepayments.

Assuming a static Balance Sheet, a +100 basis point Rate Shock increases

net interest income (12 months) by 1.9% at March 31, 2025 and 2.0% at December 31, 2024.

For a +200 basis point Rate Shock, net interest income (12 months) increases by 3.5% at March 31, 2025 and 3.9% at December 31, 2024.

The metrics for a minus 200 basis point Rate Shock are (4.2)% and (4.6)% at March 31, 2025 and December 31, 2024, respectively, and for a minus 100 basis point Rate Shock are (2.0)% and (2.2)% at March 31, 2025 and December 31, 2024, respectively.

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

These results reflect a more neutral net interest income change over 12 months in both the up and down rate shock scenarios compared to December 31, 2024, consistent with the rate ramp results.

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

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

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

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In particular, holders of deposits which exceed FDIC insurance limits may perceive such a downgrade or warning negatively and withdraw all or a portion of such deposits.

The following table presents the credit ratings for FNB and FNBPA as of September 30, 2024:

The following table presents the credit ratings for FNB and FNBPA as of March 31, 2025:

Moody's Standard & Poor's Kroll

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

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

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

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

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

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

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

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

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

The lines of defense model consists of:

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

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

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

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

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

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

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

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

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

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

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

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

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

• Credit Risk, Fair Lending and Community Reinvestment Act Committee - responsible for providing oversight of credit and lending strategies and objectives.

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

The Risk Committee and RMC are supported by other risk management committees, including Credit Risk Committees, Operational Risk Committee, Compliance Risk Committee and ALCO.

Risk appetite is an integral element of our enterprise risk management framework and of our business and capital planning processes through our Board Risk Committee and Risk Management Council.

The Risk Committee and RMC are supported by other risk management committees, including Credit Risk Committees, the Operational Risk Committee, the Compliance Risk Committee and the ALCO.

Risk appetite is an integral element of our ERM Framework and of our business and capital planning processes through our Board Risk Committee and RMC.

We use our risk appetite processes to promote appropriate alignment of risk, capital and performance tactics, while also considering risk capacity and appetite constraints from both financial and non-financial risks.

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

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

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

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

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

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

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

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

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

We continue to assess our risk management practices on an ongoing basis and are making investments as necessary to position ourselves for continued growth and heightened regulatory risk management expectations for large banking institutions over $50 billion.

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

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

Operating net income available to common stockholders

Operating net income available to common shareholders

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2025 2024

Net income available to common stockholders $ 110,103 $ 143,271 $ 349,466 $ 428,148

Net income available to common shareholders $ 116,515 $ 116,326

Preferred dividend at redemption — 3,995

Merger-related expense — — — 2,215

Tax benefit of merger-related expense — — — (465)

Branch consolidation costs — 1,194

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Tax benefit of FDIC special assessment — (926)

Software impairment 3,690 — 3,690 —

Tax benefit of software impairment (775) — (775) —

Loss on indirect auto loan sales 11,572 — 8,969 —

Tax benefit of loss on indirect auto loan sales (2,430) — (1,883) —

Operating net income available to common stockholders (non-GAAP) $ 122,160 $ 143,271 $ 368,522 $ 429,898

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

We believe certain charges, such as merger expenses, preferred deemed dividend at redemption, FDIC special assessment, software impairment, loss on indirect auto loan sales and branch consolidation costs are not organic costs to run our operations and facilities.

Reduction of previous estimated loss on indirect auto loan sale — (2,603)

Tax expense of reduction of previous estimated loss on indirect auto loan sale — 547

Operating net income available to common shareholders (non-GAAP) $ 116,515 $ 122,690

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

We believe certain charges, such as preferred dividend at redemption, FDIC special assessment, loss related to indirect auto loan sale and branch consolidation costs are not organic costs to run our operations and facilities.

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

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Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Earnings per diluted common share $ 0.32 $ 0.32

Preferred dividend at redemption — 0.01

Merger-related expense — — — 0.01

Tax benefit of merger-related expense — — — —

Branch consolidation costs — —

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Tax benefit of FDIC special assessment — —

Software impairment 0.01 — 0.01 —

Tax benefit of software impairment — — — —

Loss on indirect auto loan sales 0.03 — 0.02 —

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

Reduction of previous estimated loss on indirect auto loan sale — (0.01)

Tax expense of reduction of previous estimated loss on indirect auto loan sale — —

Operating earnings per diluted common share (non-GAAP) $ 0.32 $ 0.34

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Three Months Ended

September 30, Nine Months Ended

September 30,

(dollars in thousands) 2025 2024

Net income available to common stockholders (annualized) $ 438,019 $ 568,414 $ 466,806 $ 572,432

Net income available to common shareholders (annualized) $ 472,534 $ 467,859

Amortization of intangibles, net of tax (annualized) 12,620 14,115

Tangible net income available to common stockholders (annualized) (non-GAAP) $ 451,772 $ 584,212 $ 480,732 $ 588,490

Average total stockholders’ equity $ 6,170,654 $ 5,879,836 $ 6,083,143 $ 5,815,431

Average preferred stockholders' equity — (106,882) (17,554) (106,882)

Tangible net income available to common shareholders (annualized) (non-GAAP) $ 485,154 $ 481,974

Average total shareholders’ equity $ 6,372,145 $ 6,039,573

Average preferred shareholders' equity — (52,854)

Average intangible assets (1)

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(1) Excludes loan servicing rights.

Operating return on average tangible common equity

Three Months Ended

September 30, Nine Months Ended

September 30,

(dollars in thousands) 2024 2023 2024 2023

Operating net income available to common stockholders (annualized) $ 485,984 $ 568,412 $ 492,259 $ 574,772

Amortization of intangibles, net of tax (annualized) 13,753 15,798 13,926 16,058

Tangible operating net income available to common stockholders (annualized) (non-GAAP) $ 499,737 $ 584,210 $ 506,185 $ 590,830

Average total stockholders' equity $ 6,170,654 $ 5,879,836 $ 6,083,143 $ 5,815,431

Average preferred stockholders' equity — (106,882) (17,554) (106,882)

Average intangible assets (1)

(2,535,769) (2,553,738) (2,539,822) (2,558,610)

Average tangible common equity (non-GAAP) $ 3,634,885 $ 3,219,216 $ 3,525,767 $ 3,149,939

Operating return on average tangible common equity (non-GAAP) 13.75 % 18.15 % 14.36 % 18.76 %

(1) Excludes loan servicing rights.

Return on average tangible assets

Three Months Ended

September 30, Nine Months Ended

September 30,

(dollars in thousands) 2025 2024

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Tangible book value per common share

September 30, 2024 September 30, 2023

(dollars in thousands, except per share data)

Total stockholders’ equity $ 6,248,456 $ 5,894,280

Preferred stockholders’ equity — (106,882)

(dollars in thousands, except per share data) March 31, 2025 March 31, 2024

Total shareholders’ equity $ 6,418,012 $ 6,005,562

Intangible assets (1)

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Tangible common equity to tangible assets

September 30, 2024 September 30, 2023

(dollars in thousands)

Total stockholders' equity $ 6,248,456 $ 5,894,280

Preferred stockholders' equity — (106,882)

(dollars in thousands) March 31, 2025 March 31, 2024

Total shareholders' equity $ 6,418,012 $ 6,005,562

Intangible assets (1)

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Three Months Ended

September 30, Three Months Ended Nine Months Ended

September 30,

2024 2023 June 30, 2024 2024 2023

(dollars in thousands)

(in thousands) 2025 2024

Non-interest expense $ 246,811 $ 237,096

Branch consolidations — (1,194)

Merger-related — — — — (2,215)

FDIC special assessment — (4,408)

Software impairment (3,690) — — (3,690) —

Loss on indirect auto loan sales (11,572) — — (8,969) —

Reduction of previous estimated loss on indirect auto loan sale — 2,603

Operating non-interest expense (non-GAAP) $ 246,811 $ 234,097

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

Nine Months Ended

September 30,

(dollars in thousands) 2023

Net loan charge-offs $ 59,596

Isolated commercial loan charge-off (31,900)

Net loan charge-offs, excluding isolated commercial loan charge-off (non-GAAP) $ 27,696

Total average loans and leases $ 31,070,965

Net loan charge-offs (annualized) / total average loans and leases 0.26 %

Net loan charge-offs, excluding isolated commercial loan charge-off (annualized) / total average loans and leases (non-GAAP) 0.12 %

Key Performance Indicator s

Pre-provision net revenue:

Three Months Ended

(Dollars in thousands) September 30, 2024 June 30, 2024

Net interest income $ 323,329 $ 315,890

Non-interest income 89,688 87,922

Non-interest expense (249,431) (226,612)

Pre-provision net revenue (reported) (non-GAAP) $ 163,586 $ 177,200

Pre-provision net revenue (reported) (annualized) (non-GAAP) $ 650,789 $ 712,695

FDIC special assessment (non-interest expense) $ — $ 804

Software impairment (non-interest expense) 3,690 —

Loss on indirect auto loan sales (non-interest expense) 11,572 —

Operating pre-provision net revenue (non-GAAP) $ 178,848 $ 178,004

Operating pre-provision net revenue (annualized) (non-GAAP) $ 711,505 $ 715,928

Key Performance Indicators

Efficiency ratio

Three Months Ended

September 30, Three Months Ended

(dollars in thousands) 2024 2023 June 30, 2024

March 31, Three Months Ended

(dollars in thousands) 2025 2024 December 31, 2024

Non-interest expense $ 246,811 $ 237,096 $ 248,200

1 unchanged sentence

OREO expense (315) (190) (252)

Merger-related expense — — —

Branch consolidation costs — (1,194) —

FDIC special assessment — (4,408) —

Software impairment (3,690) — —

Loss on indirect auto loan sales (11,572) — —

Reduction of previous estimated loss on indirect auto loan sale — 2,603 —

Tax credit-related project impairment — — (10,397)

Adjusted non-interest expense $ 242,557 $ 229,465 $ 233,253

8 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis