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What changed in FNB CORP/PA/'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of FNB CORP/PA/'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+580 added−670 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-26)

Top changes in FNB CORP/PA/'s 2024 10-K

580 paragraphs added · 670 removed · 394 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

125 edited+55 added−137 removed73 unchanged
Biggest changeCertain financial information concerning these subsidiaries, along with the parent company and intercompany eliminations, are included in the “Parent and Other” category in Note 25, “Business Segments” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report. 5 Table of Contents Recent Events FNBPA, in both its own capacity and as successor by merger to Yadkin Bank, has entered into an agreement with the DOJ and the State of North Carolina to resolve their fair lending allegations related to their assessment of mortgage lending activities in the Winston-Salem and Charlotte, NC, markets that began prior to Yadkin’s merger with FNBPA in March 2017.
Biggest changeCertain financial information concerning these subsidiaries, along with the parent company and intercompany eliminations, are 5 Table of Contents included in the “Parent and Other” category in Note 24, “Business Segments” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report.
The DOJ investigation encompassed both mortgage lending activity by Yadkin prior to the acquisition and FNBPA in the early years following its entry into the North Carolina markets. Although FNBPA denies the DOJ’s allegations, FNBPA cooperated fully to reach a settlement agreement in this inherited matter as a good faith effort to avoid prolonged litigation.
The DOJ investigation encompassed mortgage lending activity by both Yadkin prior to the acquisition and FNBPA in the early years following its entry into the North Carolina markets. Although FNBPA denies the DOJ’s allegations, FNBPA cooperated fully to reach a settlement agreement in this inherited matter as a good faith effort to avoid prolonged litigation.
The compensation program is a management tool that, when aligned with an effective communication plan, is designed to support, reinforce, and align our values, business strategy, operational and financial needs with our strategic goals.
The compensation program is a management tool that, when aligned with an effective communication plan, is designed to support, reinforce, and align our values, business strategy, and operational and financial needs with our strategic goals.
FNBPA is required to have a fair lending program that is of sufficient scope to monitor fair lending and that appropriately remediates issues which were identified during the DOJ investigation as well as add additional branches, increase marketing and mortgage and home equity loan subsidies in these MBHCTs.
FNBPA is required to have a fair lending program that is of sufficient scope to monitor fair lending and that appropriately remediates issues which were identified during the DOJ investigation as well as add additional branches and increase marketing and mortgage and home equity loan subsidies in these MBHCTs.
Waubank Securities LLC is a limited broker-dealer subsidiary which passively participates in corporate and municipal underwritings. We have four companies that issued TPS to third-party investors: F.N.B. Statutory Trust II, Yadkin Valley Statutory Trust I, FNB Financial Services Capital Trust I and Patapsco Statutory Trust I, the last three of which were assumed in acquisitions.
Waubank Securities LLC is a limited broker-dealer subsidiary which passively participates in corporate and municipal underwritings. In addition, we have four companies that issued TPS to third-party investors: F.N.B. Statutory Trust II, Yadkin Valley Statutory Trust I, FNB Financial Services Capital Trust I and Patapsco Statutory Trust I, the last three of which were assumed in acquisitions.
Employees complete quarterly and annual training, including regulatory and compliance requirements and ethical standards, to maintain and increase knowledge of standards required of the financial services industry. Additionally, we provide employees various avenues to confidentially and anonymously report perceived unethical behavior without repercussions to them, such as FNB’s Ethics Hotline.
Employees complete quarterly and annual training, including regarding regulatory and compliance requirements and ethical standards, to maintain and increase knowledge of standards required of the financial services industry. Additionally, we provide employees various avenues to confidentially and anonymously report perceived unethical behavior without repercussions to them, such as FNB’s Ethics Hotline.
In general, subject to certain exceptions as discussed further below, minimum capital standards established under the risk-based capital regulations include a CET1 capital to risk-weighted assets ratio of 4.5 percent, a Tier 1 capital to risk-weighted assets ratio of 6.0 percent, a total capital to risk-weighted assets ratio of 8.0 percent, and a Tier 1 capital to adjusted average total assets leverage ratio of 4.0 percent.
In general, subject to certain exceptions as discussed further below, minimum capital standards established under the agencies’ risk-based capital regulations include a CET1 capital to risk-weighted assets ratio of 4.5 percent, a Tier 1 capital to risk-weighted assets ratio of 6.0 percent, a total capital to risk-weighted assets ratio of 8.0 percent, and a leverage ratio of Tier 1 capital to adjusted average total assets of 4.0 percent.
Technology is not only important with respect to the delivery of financial services, risk management, regulatory compliance and security of customer information, but also in processing information. FNB and each of our subsidiaries must continually make technological investments to remain competitive in the financial services industry.
Technology is not only important with respect to the delivery of financial services, risk management, regulatory compliance and security of customer information, but also in processing information. FNB and each of our subsidiaries continually make technological investments to remain competitive in the financial services industry.
Governmental Policies The operations of FNB and our subsidiaries are affected not only by general economic conditions, but also by the policies of various regulatory authorities and the current Presidential Administration. In particular, the FRB regulates monetary policy and interest rates in order to influence general economic conditions.
Monetary Policy The operations of FNB and our subsidiaries are affected not only by general economic conditions, but also by the policies of various regulatory authorities and the current Presidential Administration. In particular, the FRB regulates monetary policy and interest rates in order to influence general economic conditions.
The Dodd-Frank Act also places restrictions on certain asset sales to and from an insider of an IDI, including requirements that such sales be on market terms and, in certain circumstances, receive the approval of the IDI’s board of directors. Enhanced Lending Limits.
The Dodd-Frank Act also places restrictions on certain asset sales to and from an insider of an IDI, including requirements that such sales be on market terms and, in certain circumstances, receive the approval of the IDI’s board of directors. Lending Limits.
Our registered investment adviser subsidiary is subject to the Investment Advisers Act of 1940 and related rules and regulations promulgated by the SEC. Our investment adviser subsidiary is also subject to additional regulation by states or local jurisdictions.
Our registered investment adviser subsidiary is subject to the Investment Advisers Act of 1940 and related rules and regulations promulgated by the SEC. Our investment adviser subsidiary is also subject to additional regulation by states and local jurisdictions.
Under the limited exception, qualified IDIs, like FNBPA, are able to exclude from treatment as “brokered” deposits up to $5 billion or 20% of the institution’s total liabilities in reciprocal deposits (which is defined as deposits received by a financial institution through a deposit placement network with the same maturity (if any) in the same aggregate amount as deposits placed by the institution in other network member banks).
Under the limited exception, qualified IDIs are able to exclude from treatment as “brokered” deposits up to $5 billion or 20% of the institution’s total liabilities in reciprocal deposits (which is defined as deposits received by a financial institution through a deposit placement network with the same maturity (if any) in the same aggregate amount as deposits placed by the institution in other network member banks).
In October 2021, the DOJ announced an initiative to combat redlining through utilization of its fair lending prosecutorial authority and has announced the settlement of a number of bank investigations concerning redlining and other violations of the fair lending laws, including a February 5, 2024 announcement that Yadkin Bank (Yadkin) and its successor by merger, FNBPA, reached a settlement with the DOJ and the State of North Carolina to resolve their fair lending allegations related to the assessment of mortgage lending activities during a five-year period in the Winston-Salem and Charlotte, North Carolina majority Black and 15 Table of Contents Hispanic census tracts (MBHCTs) that began prior to Yadkin’s merger with the FNBPA in March 2017.
In October 2021, the DOJ announced an initiative to combat redlining through utilization of its fair lending prosecutorial authority and has announced the settlement of a number of bank investigations concerning redlining and other violations of the fair lending laws, including a February 5, 2024 announcement that Yadkin Bank (Yadkin) and its successor by merger, FNBPA, reached a settlement with the DOJ and the State of North Carolina to resolve their fair lending allegations related to the assessment of mortgage lending activities during a five-year period in the Winston-Salem and Charlotte, North Carolina majority Black and Hispanic census tracts (MBHCTs) that began prior to Yadkin’s merger with FNBPA in March 2017.
FNB has also repeatedly been named to JUST Capital’s prestigious annual list of companies that demonstrate just business behavior based on our performance in categories that matter most to the American public and is, in part, an assessment of our employee practices relative to benefits, income inequality, racial equity and employee opportunity.
FNB has also repeatedly been named to JUST Capital’s prestigious annual list of companies that demonstrate just business behavior based on our performance in categories that matter most to the American public and is, in part, an assessment of our employee practices relative to benefits, income inequality and employee opportunity.
Office of Foreign Assets Control Regulation The U.S. has instituted economic sanctions which affect transactions with designated foreign countries, nationals and others. These are typically known as the “OFAC rules” because they are administered by the UST Office of Foreign Assets Control (OFAC). The OFAC-administered sanctions target countries in various ways.
Office of Foreign Assets Control Regulation The U.S. has instituted economic sanctions which affect transactions with designated foreign countries, nationals and others. These are sometimes known as the “OFAC rules” because they are administered by the UST Office of Foreign Assets Control (OFAC). The OFAC-administered sanctions target countries in various ways.
In addition, a financial holding company’s operating entities, including its subsidiary broker-dealers, investment managers, investment advisory companies, insurance companies and banks, as applicable, are subject to the jurisdiction of various federal and state “functional” regulators and self-regulatory organizations, such as FINRA.
In addition, a bank holding company’s operating entities, including its subsidiary broker-dealers, investment managers, investment advisory companies, insurance companies and banks, as applicable, are subject to the jurisdiction of various federal and state “functional” regulators and self-regulatory organizations, such as FINRA.
Fair lending laws include the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act, which outlaw discrimination in credit and residential real estate transactions on the basis of prohibited factors including, among others, race, color, national origin, gender, and religion.
Fair lending laws include the ECOA and the Fair Housing Act, which outlaw discrimination in credit and residential real estate transactions on the basis of prohibited factors including, among others, race, color, national origin, gender, and religion.
Banks' non-affiliated service providers are required under the final rule to notify any affected bank to or on behalf of which the service provider provides services "as soon as possible" after determining that it has experienced an incident that materially disrupts or degrades, or is reasonably likely to materially disrupt or degrade, covered services provided to such bank for as much as four hours.
Banks' non-affiliated service providers are required to notify any affected bank to or on behalf of which the service provider provides services "as soon as possible" after determining that it has experienced an incident that materially disrupts or degrades, or is reasonably likely to materially disrupt or degrade, covered services provided to such bank for as much as four hours.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available on the "About Us" portion of our website under the heading Investor Information (accessible by clicking on the SEC Filings link) as soon as reasonably 3 Table of Contents practicable after we electronically file such reports with, or furnish them to, the SEC and at the SEC’s website, www.sec.gov.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are also available on the "About Us" portion of our website under the heading Investor Information (accessible by clicking on the SEC Filings link) as soon as reasonably practicable after we electronically file such reports with, or furnish them to, the SEC and at the SEC’s website, www.sec.gov.
The goal of FNIA is to grow revenue through cross-selling to existing clients of the Community Banking segment and to gain new clients through its own channels. Our Insurance segment also includes a reinsurance subsidiary, Penn-Ohio. Penn-Ohio is not actively underwriting new policies. Additionally, FNBPA owns a direct subsidiary, First National Corporation, which offers title insurance products.
The goals of FNIA are to grow revenue through cross-selling to existing clients of the Community Banking segment and to gain new clients through its own channels. Our Insurance segment also includes a reinsurance subsidiary, Penn-Ohio. Penn-Ohio is not actively underwriting new policies. Additionally, FNBPA owns a direct subsidiary, First National Corporation, which offers title insurance products.
The most direct competition for deposits comes from commercial banks, savings banks and credit unions. Competition for deposits also comes from non-depository competitors such as financial technology companies, mutual funds, securities and brokerage firms and insurance companies.
The most direct competition for deposits comes from commercial banks, savings banks and credit unions. Competition for deposits also comes from non-depository competitors such as financial technology companies, mutual funds, securities and brokerage firms, government financial investments and insurance companies.
Information on our website is not incorporated by reference into this document and should not be considered part of this Report. Our common stock is traded on the NYSE under the symbol “FNB”. 23 Table of Contents
Information on our website is not incorporated by reference into this document and should not be considered part of this Report. Our common stock is traded on the NYSE under the symbol “FNB”. 18 Table of Contents
Applications to establish such branches must still be filed with the OCC. The Change in Bank Control Act prohibits a person, entity or group of persons or entities acting in concert, from acquiring “control” of a bank holding company or bank unless the FRB has been given prior notice and has not objected to the transaction.
Applications by a national bank to establish such branches must be filed with the OCC. The Change in Bank Control Act prohibits a person, entity or group of persons or entities acting in concert, from acquiring “control” of a bank holding company or bank unless the FRB has been given prior notice and has not objected to the transaction.
Business Segments In addition to the following information relating to our business segments, more detailed information is contained in Note 25, “Business Segments” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report.
Business Segments In addition to the following information relating to our business segments, more detailed information is contained in Note 24, “Business Segments” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report.
The OCC, however, as part of its bank supervision operational plan has prioritized review of national bank’s information security, data protection and third-party risk management, including the extent to which national banks are positioned to assess the evolving cyber-threat environment and maintain resilient defenses against such threats.
The OCC as part of its bank supervision operational plan has prioritized review of national banks' information security, data protection and third-party risk management, including the extent to which national banks are positioned to assess the evolving cyber-threat environment and maintain resilient defenses against such threats.
The comprehensive package includes robust development resources that encourage advancement and increased representation at all levels of the Company, furthering our strategic focus on building and sustaining a diverse workforce.
The comprehensive package includes robust development resources that encourage advancement and increased representation at all levels of the Company, furthering our strategic focus on building and sustaining a strong workforce.
Among other things, these laws and regulations: • require banks to disclose credit terms in meaningful and consistent ways; • prohibit discrimination against an applicant in any consumer or business credit transaction; 17 Table of Contents • prohibit discrimination in housing-related lending activities; • require banks to collect and report applicant and borrower data regarding loans for home purchases or improvement projects; • require lenders to provide borrowers with more detailed information regarding the nature and cost of real estate settlements; • prohibit certain lending practices and limit escrow account amounts with respect to real estate transactions; • prescribe possible penalties for violations of the requirements of consumer protection statutes and regulations; • require prescribed consumer disclosures and the adoption of error resolution procedures and other consumer protection protocols with respect to electronic fund transfers; and • prohibit unfair, deceptive or abusive acts and practices in connection with consumer loans, the collection of debt, and the provision of other consumer financial products and services.
Among other things, these laws and regulations: • require banks to disclose credit terms in meaningful and consistent ways; 14 Table of Contents • prohibit discrimination against an applicant in any consumer or business credit transaction; • prohibit discrimination in housing-related lending activities; • require banks to collect and report applicant and borrower data regarding loans for home purchases or improvement projects; • require lenders to provide borrowers with more detailed information regarding the nature and cost of real estate settlements; • prohibit certain lending practices and limit escrow account amounts with respect to real estate transactions; • prescribe possible penalties for violations of the requirements of consumer protection statutes and regulations; • require prescribed consumer disclosures and the adoption of error resolution procedures and other consumer protection protocols with respect to electronic fund transfers; and • prohibit unfair, deceptive or abusive acts and practices in connection with consumer loans, the collection of debt, and the provision of other consumer financial products and services, including identifying risks associated with certain overdraft practices.
Pursuant to Sections 23A and 23B of the Federal Reserve Act, as implemented by Regulation W, banks are subject to restrictions that limit certain types of transactions between banks and their non-bank affiliates. In general, banks are subject to quantitative and qualitative limits on extensions of credit, purchases of assets and certain other transactions involving non-bank affiliates.
Transactions with Affiliates. Pursuant to Sections 23A and 23B of the Federal Reserve Act, as implemented by Regulation W, banks are subject to restrictions that limit certain types of transactions between banks and their affiliates. In general, banks are subject to quantitative and qualitative limits on extensions of credit, purchases of assets and certain other transactions involving affiliates.
Commercial loans are generally made to established businesses within the geographic market areas served by the Community Banking segment. The Community Banking segment maintains formal policies which establish underwriting standards and processes.
Commercial loans are generally made to established businesses within the geographic market areas served by the Community Banking segment. The Community Banking segment maintains formal policies that establish underwriting standards and processes.
Federal banking law limits a national bank’s ability to extend credit to one person or group of related persons to an amount that does not exceed certain thresholds.
Federal banking law limits a national bank’s ability to extend credit to one person or group of related persons to an amount that does not exceed certain thresholds. Volcker Rule.
This team, chaired by FNB’s Chairman, President and Chief Executive Officer, regularly meets to promote compensation programs that are fair and equitable, to achieve a performance-driven work culture that generates company growth and to reward employees for focusing on customer needs, while avoiding inappropriate conduct regarding our clients, and demonstrating appropriate risk management behaviors. 7 Table of Contents Values & Training.
This team, chaired by FNB’s Chairman, President and Chief Executive Officer, regularly meets to promote compensation programs that are fair and equitable, to achieve a performance-driven work culture that generates company growth and to reward employees for focusing on customer needs, while avoiding inappropriate conduct regarding our clients, and demonstrating appropriate risk management behaviors. Values & Training.
The substantial majority of the loans and deposits have been generated within the geographic market areas in which the Community Banking segment operates. Wealth Management Our Wealth Management segment delivers wealth management services to individuals, corporations and retirement funds, as well as existing customers of the Community Banking segment, located primarily within our geographic markets.
The substantial majority of the loans and deposits have been generated within the geographic market areas in which the Community Banking segment operates. Wealth Management Our Wealth Management segment delivers wealth management services to individuals, corporations and retirement funds, including existing customers of the Community Banking segment, located primarily within our geographic markets.
If we fail to comply with these or other applicable laws and regulations, we may be subject to civil monetary penalties, imposition of cease and desist orders or other written directives, removal of management and, in certain cases, criminal penalties imposed by our regulators.
In addition, if we or our subsidiaries fail to comply with applicable laws and regulations, we may be subject to civil monetary penalties, imposition of cease and desist orders or other written directives, removal of management and, in certain cases, criminal penalties imposed by our regulators.
Financial Holding Company Status and Activities Under the BHC Act, an eligible bank holding company may elect to be a “financial holding company” and thereafter may engage in a range of activities that are financial in nature and that were not previously permissible for banks and bank holding companies. FNB is a financial holding company under the BHC Act.
Financial Holding Company Status and Activities Under the BHC Act, an eligible bank holding company may elect to be a “financial holding company” and thereafter may engage in a range of activities that are financial in nature and that are not otherwise permissible for banks and bank holding companies. FNB is a financial holding company under the BHC Act.
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (Interstate Banking Act) generally permits bank holding companies to acquire banks in any state and preempts all state laws restricting the ownership by a holding company of 19 Table of Contents banks in more than one state.
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (Interstate Banking Act) generally permits bank holding companies to acquire banks in any state and preempts all state laws restricting the ownership by a holding company of banks in more than one state.
FNBPA has enhanced eStore with our one-of-a-kind, universal eStore Common Application, which customers will be able to use to apply for almost all of our products and services simultaneously. These select examples, coupled with our investment in data science and analytics, contribute to our ability to efficiently grow and expand customer relationships.
FNBPA has enhanced eStore with our one-of-a-kind, universal eStore Common Application, which customers can use to apply for almost all of our products and services simultaneously. These select examples, coupled with our investment in data science and analytics, contribute to our ability to efficiently grow and expand customer relationships.
Activities and Acquisitions The BHC Act requires a bank or financial holding company to obtain the prior approval of the FRB before: • the company may acquire direct or indirect ownership or control of any voting shares of any bank or savings and loan association, if after such acquisition the bank holding company will directly or indirectly own or control more than 5% of any class of voting securities of the institution; • any of the company’s subsidiaries, other than a bank, may acquire all or substantially all of the assets of any bank or savings and loan association; or • the company may merge or consolidate with any other bank or financial holding company.
Expansion and Acquisitions The BHC Act requires a bank or financial holding company to obtain the prior approval of the FRB before: • the company may acquire direct or indirect ownership or control of any voting shares of any bank, if after such acquisition the bank holding company will directly or indirectly own or control more than 5% of any class of voting securities of the institution; • any of the company’s subsidiaries, other than a bank, may acquire all or substantially all of the assets of any bank; or • the company may merge or consolidate with any other bank or financial holding company.
Prompt Corrective Action FDICIA, among other things, classifies IDIs into five capital categories (well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) and requires the respective federal regulatory 14 Table of Contents agencies to implement systems for “prompt corrective action” for IDIs that do not meet minimum capital requirements within such categories.
Prompt Corrective Action FDICIA, among other things, classifies IDIs into five capital categories (well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) and requires the respective federal regulatory agencies to implement systems for “prompt corrective action” for IDIs that do not meet minimum capital requirements within such categories.
Under current FRB regulations, the acquisition of 10% or more (but less than 25%) of the voting stock of a corporation would, under the circumstances set forth in the regulations, create a rebuttable presumption of acquisition of control of the corporation.
Under current FRB regulations, the acquisition of 10% or more (but less than 25%) of the voting stock of a 11 Table of Contents corporation would, under the circumstances set forth in the regulations, create a rebuttable presumption of acquisition of control of the corporation.
Moreover, examination ratings of “3” or lower, “unsatisfactory” ratings, capital ratios below well-capitalized levels, regulatory concerns regarding management, controls, assets, operations or other factors can all potentially result in the loss of financial holding company status, practical limitations on the ability of a bank or bank (or financial) holding company to engage in new activities, grow, acquire new businesses, repurchase its stock or pay dividends or continue to conduct existing activities.
Unsatisfactory examination ratings, capital ratios below well-capitalized levels, and regulatory concerns regarding management, controls, assets, operations or other factors can all potentially result in the loss of financial holding company status, practical limitations on the ability of a bank or bank (or financial) holding company to engage in new activities, grow, acquire new businesses, repurchase its stock or pay dividends or continue to conduct existing activities.
Our market coverage spans several major metropolitan areas including: Pittsburgh, Pennsylvania; Baltimore, Maryland; Cleveland, Ohio; Washington, D.C.; Charlotte, Raleigh, Durham and the Piedmont Triad (Winston-Salem, Greensboro and High Point) in North Carolina; and Charleston, South Carolina.
Our branch network spans several major metropolitan areas including: Pittsburgh, Pennsylvania; Baltimore, Maryland; Cleveland, Ohio; Washington, D.C.; Charlotte, Raleigh, Durham and the Piedmont Triad (Winston-Salem, Greensboro and High Point) in North Carolina; and Charleston, South Carolina.
Additionally, our commitment to providing an inclusive, employee-centric workplace was further reinforced by various national media outlets, including appearances on Newsweek’s lists of America’s Greatest Workplaces for Diversity, LGBTQ+, Veterans and Parents and Families.
Additionally, our commitment to providing an inclusive, employee-centric workplace was further celebrated by various national media outlets, including an appearance on Newsweek’s lists of America’s Greatest Workplaces for Diversity, LGBTQ+, Veterans and Parents and Families.
The UST has issued a number of regulations that apply various requirements of the USA PATRIOT Act to financial institutions such as FNBPA. These regulations require financial institutions to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identity of their customers.
The UST and federal banking agencies have issued a number of regulations that apply various requirements of the USA PATRIOT Act to financial institutions such as FNBPA. These regulations require financial institutions to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identity of their customers.
We believe that compensation programs, through competitive base salary, short-term incentive plans, and long-term incentive plans, are essential for encouraging the behavior to set performance expectations, improving service quality and productivity, and recognizing contributions to our success, while also avoiding incentivizing undue risk to our financial condition.
We believe that compensation programs, through competitive base salary, short-term incentive plans, and long-term incentive plans, are essential for setting performance expectations, improving service quality and productivity, and recognizing contributions to our success, while also avoiding incentivizing undue risk to our financial condition.
The definition of a "covered cyber-incident" will be determined by CISA rulemaking, but the Act provides that, at a minimum, an incident must be reported if it: (1) causes a "substantial loss of confidentiality, integrity or availability" of information or a "serious impact on the safety and resiliency of 16 Table of Contents operational systems and processes"; (2) causes a "disruption of business or industrial operations, including due to a denial of service attack, ransomware attack or exploitation of a zero day vulnerability"; or (3) involves "unauthorized access or disruption of business or industrial operations" due to a "compromise of a cloud service provider, managed service provider or other third-party data hosting provider or by a supply chain compromise".
The definition of a "covered cyber-incident" will be determined by CISA rulemaking, but SACA provides that, at a minimum, an incident must be reported if it: (1) leads to "substantial loss of confidentiality, integrity, or availability" of an 15 Table of Contents information system or network or a "serious impact on the safety and resiliency of operational systems and processes"; (2) causes a "disruption of business or industrial operations, including due to a denial of service attack, ransomware attack, or exploitation of a zero day vulnerability" against an information system or network, or an operational technology system or process; or (3) involves "unauthorized access or disruption of business or industrial operations" due to a "compromise of a cloud service provider, managed service provider, or other third-party data hosting provider or by a supply chain compromise".
The Final Rule also establishes new standardized metrics and quantitative standards for evaluating banks’ CRA performance under various performance tests. The new requirements will be an extensive overhaul of the current data collection, calculations and reporting under the existing CRA rule and would require additional costs to come into compliance.
The final rule also would establish new standardized metrics and quantitative standards for evaluating banks’ CRA performance under various performance tests. The new requirements would include an extensive overhaul of the current data collection, calculations and reporting under the existing CRA rule and would require additional costs to come into compliance.
The right of FNB, our stockholders and our creditors to participate in any distribution of the assets or earnings of our subsidiaries is further subject to the prior claims of creditors of the respective subsidiaries.
Additionally, the right of FNB, our shareholders and our creditors to participate in any distribution of the assets or earnings of our subsidiaries is further subject to the prior claims of creditors of the respective subsidiaries.
We demonstrate this commitment to each group through varying initiatives and procedures to ensure that employees and customers alike leave our spaces as safely as they came. We provide our employees detailed information and training explaining the safety features, evacuation and emergency procedures process.
We demonstrate this commitment to each group through varying initiatives and procedures to ensure that employees and customers alike leave our spaces as safely as they came. We provide our employees detailed information and training explaining the safety features of our locations, evacuation routes and emergency procedures processes.
Other We also operate other non-banking subsidiaries which are not considered to be reportable segments of FNB. F.N.B. Capital Corporation, LLC (FNBCC) was formed as a merchant banking subsidiary to offer mezzanine financing options for small- to medium-sized businesses that need financial assistance beyond the parameters of typical commercial bank lending products.
Other We also operate other non-banking subsidiaries which are not considered to be reportable segments of FNB. F.N.B. Capital Corporation, LLC is a merchant banking subsidiary offering mezzanine financing options for small- to medium-sized businesses that need financial assistance beyond the parameters of typical commercial bank lending products.
Under federal law, the amount of dividends that a national bank, such as FNBPA, may pay in a calendar year is dependent on the amount of its net income for the current year combined with its retained net income for the two preceding years.
Under federal law, the amount of dividends that a national bank, such as FNBPA, may pay in a calendar year is generally limited to the amount of its net income for the current year combined with its retained net income for the two preceding years.
Our Wealth Management operations are conducted through three subsidiaries of FNBPA. FNTC provides a broad range of personal and corporate fiduciary services, including the administration of decedent and trust estates. As of December 31, 2023, the fair value of trust assets under management was approximately $8.6 billion.
Our Wealth Management operations are conducted through three subsidiaries of FNBPA. FNTC provides a broad range of personal and corporate fiduciary services, including the administration of decedent and trust estates. As of December 31, 2024, the fair value of trust assets under management was approximately $9.5 billion.
The increase in assessment rate schedules is intended to increase the likelihood that the reserve ratio of the DIF reaches the statutory minimum of 1.35 % by the statutory deadline of September 30, 2028. Assessment rates will remain in effect unless and until the reserve ratio meets or exceeds 2%.
The increase in assessment rate schedules is intended to increase the likelihood that the reserve ratio of the DIF reaches the statutory minimum of 1.35 % by the statutory deadline of September 30, 2028. Assessment rates will remain in effect unless and until the reserve ratio meets or exceeds 2%. The reserve ratio was 1.28% as of December 31, 2024.
The maximum permissible interchange fee for a $50 debit card transaction would be 17.7 cents under the proposal, down from 24.5 cents under the current rule. The FRB is also proposing that the interchange rate cap will be automatically updated every two years based on the data collected from issuers. Transactions with Affiliates.
The maximum permissible interchange fee for a $50 debit card transaction would be 17.7 cents under the proposal, down from 24.5 cents under the current rule. The FRB has also proposed that the interchange rate cap will be automatically updated every two years based on the data collected from issuers.
Also, under the "About Us" portion of our website under the heading Investors you may click on Corporate Governance to view the following: (i) our Code of Conduct and Code of Ethics; (ii) our Corporate Governance Guidelines; (iii) the charter of each active committee of our Board of Directors; and (iv) our Policy With Respect to Related Persons Transactions.
Also, under the "About Us" portion of our website under the heading "Investor Information" you can click on Corporate Governance to view the following: (i) our Code of Conduct and Code of Ethics; (ii) our Corporate Governance Guidelines; (iii) the charter of each active committee of our Board of Directors; and (iv) our Policy With Respect to Related Person Transactions.
The financial services industry is subject to extensive regulatory oversight and, in particular, bank holding companies, banks and their affiliates (depending upon charter and business activities) are subject to supervision, regulation and examination by the FRB, OCC, FDIC, CFPB, SEC, FINRA and various state regulatory agencies.
The financial services industry is subject to extensive regulatory oversight and, in particular, bank holding companies, banks and their affiliates (depending upon charter and business activities) are subject to supervision, regulation and examination by the FRB, OCC, FDIC, CFPB, SEC, FINRA and various state regulatory agencies. Also, FNB is subject to the rules of the NYSE for listed companies.
This guidance, which covers all employees that have the ability to expose the organization to material amounts of risk, either individually or as part of a group, is based upon the key principles that a banking organization’s incentive compensation arrangements should (i) provide employee incentives that appropriately balance risk in a manner that does not encourage employees to expose their organizations to imprudent risk, (ii) be compatible with effective controls and risk management, and (iii) be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors.
This guidance, which covers all employees that have the ability to materially affect the risk profile of an organization, either individually or as part of a group, is based upon the key principles 16 Table of Contents that a banking organization’s incentive compensation arrangements should (i) provide incentives that appropriately balance risk and financial results in a manner that does not encourage employees to expose their organizations to imprudent risk, (ii) be compatible with effective controls and risk management, and (iii) be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors.
ITEM 1. BUSINESS Overview We are a Pennsylvania corporation, a bank holding company and a financial holding company. We are incorporated under the laws of the Commonwealth of Pennsylvania, and through our subsidiaries, we have been in business since 1864. Our headquarters is located at 12 Federal Street, Pittsburgh, Pennsylvania 15212.
ITEM 1. BUSINESS Overview We are a Pennsylvania corporation, a bank holding company and a financial holding company. We are incorporated under the laws of the Commonwealth of Pennsylvania, and through our subsidiaries, we have been in business since 1864. Our headquarters is located at 626 Washington Place, Pittsburgh, Pennsylvania 15219.
As a regulated financial holding company, FNB’s relationships and good standing with our regulators are of fundamental importance to the continuation and growth of our businesses.
As a regulated banking organization, FNB’s relationships and good standing with our regulators are of fundamental importance to the continuation and growth of our businesses.
Also, transactions between banks and their non-bank affiliates are required to be on arm's-length terms and consistent with safe and sound banking practices.
Also, transactions between banks and their non-bank affiliates are required to be on arm's-length terms and consistent with safe and sound banking practices. Transactions with Insiders. Banks are subject to restrictions that limit their lending to insiders.
Regulatory enforcement and fines have also significantly increased across the banking and financial services sector. Many of these changes have occurred as a result of the enactment of the Dodd-Frank Act and adoption of implementing regulations, most of which are now in place.
Regulatory enforcement and fines have also significantly increased across the banking and financial services sector. Many of these changes have occurred as a result of the enactment of the Dodd-Frank Act and adoption of implementing regulations, most of which are now in place. General FNB is a legal entity separate and distinct from our subsidiaries.
Specifically, the final rule requires banking organizations to notify their primary federal regulator as soon as possible and no later than 36 hours after the discovery of a "computer security incident" that rises to the level of a "notification incident" within the meaning attributed to those terms by the final rule.
Under a November 2021 interagency rule, banking organizations are required to notify their primary federal regulator as soon as possible and no later than 36 hours after the discovery of a "computer security incident" that rises to the level of a "notification incident" within the meaning attributed to those terms.
Section 956 of the Dodd-Frank Act requires the federal banking agencies and the SEC to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at specified regulated entities, such as FNB, having at least $1 billion in total assets that encourage inappropriate risk-taking by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits or that could lead to material financial loss to the entity.
Incentive Compensation The Dodd-Frank Act requires the federal bank regulators and the SEC to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at specified regulated entities, including us and FNBPA, having at least $1 billion in total assets that encourage inappropriate risks by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits or that could lead to material financial loss to the entity.
Specific information requirements vary based on loan type, risk profile and secondary investor requirements where applicable. 4 Table of Contents No material portion of the loans or deposits of the Community Banking segment has been obtained from a single customer or small group of customers, and the loss of any one customer’s loans or deposits or a small group of customers’ loans or deposits by the Community Banking segment would not have a material adverse effect on the Community Banking segment specifically or on FNB generally.
No material portion of the loans or deposits of the Community Banking segment has been obtained from a single customer or small group of customers, and the loss of any one customer’s loans or deposits or a small group of customers’ loans or deposits by the Community Banking segment would not have a material adverse effect on the Community Banking segment specifically 4 Table of Contents or on FNB generally.
Significant elements of the laws and regulations applicable to FNB and our affiliates are described in this section. To the extent that the following information describes statutory and regulatory provisions or governmental policies, such descriptions are qualified in their entirety by reference to the full text of the statutes, regulations and policies referenced herein.
To the extent that the following information describes statutory and regulatory provisions or governmental policies, such descriptions are qualified in their entirety by reference to the full text of the statutes, regulations and policies referenced herein.
The agencies’ stated goal in issuing the Final Rule is to “strengthen and modernize” the CRA regulations, which have not been significantly revised in nearly three decades. Under the new requirements, FNB would be subject to new performance tests that would make it difficult to achieve a “Satisfactory” or “Outstanding” rating.
The agencies’ stated goal in issuing the Final Rule was to “strengthen and modernize” the CRA regulations. Under the new requirements, FNB would be subject to new performance tests that could make it difficult to achieve a “Satisfactory” or “Outstanding” rating.
In addition, IDIs that are less than well-capitalized are subject to restrictions on the interest rates that they may pay on deposits. The characterization of deposits as “brokered” may result in the imposition of higher deposit assessments on such deposits.
In addition, IDIs that are less than well-capitalized are subject to restrictions on the interest rates that they may pay on deposits. The characterization of deposits as “brokered” may result in the imposition of higher deposit insurance assessments on such deposits. FDIC regulations and guidance define the term “deposit broker” and related terms.
The following discussion is general in nature and seeks to highlight some of the more significant of these regulatory requirements, but does not purport to be complete or to describe all of the laws and regulations that apply to us and our subsidiaries.
The following discussion highlights some of the more significant regulatory requirements that govern our operations, but does not purport to be complete or to describe all of the laws and regulations that apply to us and our subsidiaries.
All of these corporate governance materials are also available free of charge in print to shareholders who request them in writing to: F.N.B. Corporation, Attention: Office of the Corporate Secretary, 12 Federal Street, 5 th Floor, Pittsburgh, Pennsylvania, 15212.
All of these corporate governance materials are also available free of charge in print to shareholders who request them in writing to: F.N.B. Corporation, Attention: Office of the Corporate Secretary, 626 Washington Place, Pittsburgh, Pennsylvania, 15219.
The FDIC has set the target designated reserve ratio at 2% since 2010. Assessment rates, which 10 Table of Contents declined for all banks when the reserve ratio first surpassed 1.15% in the third quarter of 2016, increased for all insurance depository institutions by 2 basis points in the first quarter of 2023.
Assessment rates, which declined for all banks when the reserve ratio first surpassed 1.15% in the third quarter of 2016, increased for all insurance depository institutions by 2 basis points in the first quarter of 2023.
The special assessment rate is 13.44 basis points and will be paid over eight quarters beginning in June 2024. Our total assessment accrued and expensed during 2023 totaled $29.9 million. The special assessment is not considered an FDIC premium under the TCJA and therefore is tax deductible for federal income tax purposes.
The special assessment rate was 13.44 basis points and will be paid over eight initial quarters beginning in June 2024. FNBPA recognized the entire initial special assessment expense of $29.9 million in the fourth quarter of 2023. The special assessment is not considered an FDIC premium under the TCJA and therefore is tax deductible for federal income tax purposes.
The development of a new state of the art headquarters building will ensure that employee safety is met in a facility that is fully ADA compliant, has full security access controls and will more closely manage and monitor guests and visitors entering our space.
The recent opening of our new state of the art headquarters building prioritizes employee safety in a facility that is fully ADA compliant, has full security access controls and closely manages and monitors guests and visitors entering our space.
As of December 31, 2023, our Community Banking segment operated in seven states and the District of Columbia. Our branch network spans several major metropolitan areas including: Pittsburgh, Pennsylvania; Baltimore, Maryland; Cleveland, Ohio; Washington, D.C.; Charlotte, Raleigh, Durham and the Piedmont Triad (Winston-Salem, Greensboro and High Point) in North Carolina; and Charleston, South Carolina.
Market Area and Competition We operate in seven states and the District of Columbia. Our market coverage spans several major metropolitan areas including: Pittsburgh, Pennsylvania; Baltimore, Maryland; Cleveland, Ohio; Washington, D.C.; Charlotte, Raleigh, Durham and the Piedmont Triad (Winston-Salem, Greensboro and High Point) in North Carolina; and Charleston, South Carolina.
As a response to the health and safety risks exposed during the COVID-19 outbreak our new headquarters building will also feature HVAC systems that are specifically designed to mitigate risks from airborne pathogens using state of the art filtration, Air Handling and Ionization indoor air systems.
As a response to the health and safety risks exposed during the COVID-19 outbreak our new headquarters building features HVAC systems that are specifically designed to mitigate risks from airborne pathogens using state of the art filtration, Air Handling and Ionization indoor air systems. The new headquarters was certified Leadership in Energy and Environmental Design (LEED) Gold by the U.S.
FNB elected to become a financial holding company under the BHC Act and, as such, may engage in a broader range of financial and related activities than a bank holding company. The ability to elect and maintain status as a financial holding company is subject to certain conditions.
FNB elected to become a financial holding company under the BHC Act and, as such, may engage in a broader range of financial and related activities.
The various regulatory agencies have adopted substantially similar regulations that define the five capital categories identified by FDICIA, using the total risk-based capital, tier 1 risk-based capital, CET1 and leverage capital ratios as the relevant capital measures. Such regulations establish various degrees of corrective action to be taken when an institution is considered undercapitalized.
The various regulatory agencies have adopted substantially similar regulations that define the five capital categories identified by FDICIA, using the CET1, Tier 1 risk-based capital, total risk-based capital, and leverage capital ratios as the relevant capital measures.
Higher levels of capital are required for asset categories believed to present greater risk. CET1 capital is generally defined as common shareholders’ equity and retained earnings. Tier 1 capital is generally defined as CET1 and additional Tier 1 capital.
Higher levels of capital are required for asset categories believed to present greater risk. CET1 capital is generally defined as common shareholders’ equity and retained earnings. Tier 1 capital is generally defined as CET1 and additional Tier 1 capital, which includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries.
Our outstanding scores continue to help us achieve external recognition as an employer of choice. Compensation. Our compensation philosophy is to maintain a program that supports our mission and values.
We regularly seek feedback from our employees and in 2024 participated in several regional Top Workplace surveys. Our outstanding scores continue to help us achieve external recognition as an employer of choice. Compensation. Our compensation philosophy is to maintain a program that supports our mission and values.
Consumer Protection Statutes and Regulations In addition to the consumer regulations promulgated by the FRB, OCC and state agencies, and the regulations issued by the CFPB pursuant to its authority under the Dodd-Frank Act, FNBPA is subject to various federal consumer protection statutes including the TILA, Truth in Savings Act, Equal Credit Opportunity Act (ECOA), Fair Housing Act, RESPA, Fair Debt Collection Practices Act, Fair Credit Reporting Act, Electronic Fund Transfer Act and Home Mortgage Disclosure Act, CRA and regulations and guidance promulgated thereunder by the CFPB and the federal banking agencies.
Consumer Protection Statutes and Regulations FNBPA is subject to various federal consumer protection laws and regulations including the TILA, Truth in Savings Act, ECOA, Fair Housing Act, Real Estate Settlement Procedures Act, Fair Debt Collection Practices Act, Fair Credit Reporting Act, Electronic Fund Transfer Act and Home Mortgage Disclosure Act, and regulations and guidance promulgated thereunder by the CFPB and the federal banking agencies, as well as certain state consumer protection requirements.
After eight quarters, there is a possibility for the FDIC to impose a one-time shortfall special assessment if the amount collected by the special assessment does not meet the final loss amounts of Silicon Valley Bank and Signature Bank after the termination of the receiverships. Brokered Deposits.
The FDIC retained the ability to extend the special assessment collection period or impose a one-time shortfall special assessment if the amount collected by the special assessment does not meet the final loss 12 Table of Contents amounts of Silicon Valley Bank and Signature Bank after the termination of the receiverships.
As mandated by the Economic Growth Act, the FDIC adopted a final rule in February 2019 to include a limited exception for reciprocal deposits for IDIs that are well-managed and well-capitalized (or adequately capitalized and have obtained a waiver from the FDIC, as mentioned above).
For example, FDIC regulations implementing the Economic Growth, Regulatory Relief and Consumer Protection Act include a limited exception to status as brokered deposits for reciprocal deposits for IDIs that are well-managed and well-capitalized (or adequately capitalized and have obtained a waiver from the FDIC, as mentioned above).

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe federal banking agencies, including the FDIC and OCC, issued an interagency policy statement in July 2023, noting that banks should maintain actionable contingency funding plans that take into account a range of possible stress scenarios, assess the stability of their funding and maintain a broad range of funding sources, ensure that collateral is available for borrowing, and review and revise contingency funding plans periodically and more frequently as market conditions and strategic initiatives change.
Biggest changeThe federal banking agencies, including the FDIC and OCC, issued an interagency policy statement in July 2023, noting that banks should maintain actionable contingency funding plans that take into account a range of possible stress scenarios, assess the stability of their funding and maintain a broad range of funding sources, ensure that collateral is available for borrowing, and review and revise contingency funding plans periodically and more frequently as market conditions and strategic initiatives change. 21 Table of Contents If a significant portion of our deposits were to be withdrawn within a short period of time such that additional sources of funding would be required to meet withdrawal demands, we may be unable to obtain funding at favorable terms, which may have an adverse effect on our net interest margin.
In addition, bank regulatory agencies periodically review our ACL and may require an increase in the provision for credit losses or the recognition of additional loan charge-offs, based on judgments different from those of management. In addition, if charge-offs in future periods exceed the ACL, we will need additional provisions to increase the ACL.
In addition, bank regulatory agencies periodically review our ACL and may require an increase in the provision for credit losses or the recognition of additional loan charge-offs, based on judgments different from those of our management. In addition, if charge-offs in future periods exceed the ACL, we will need additional provisions to increase the ACL.
The availability of additional capital or financing will depend on a variety of factors, many of which are outside of our control, including market conditions, credit availability, our credit ratings and credit capacity, marketability of our stock, and the possibility that lenders and investors could develop a negative perception of our long- or short-term financial prospects if we incur large credit losses or if the level of business activity decreases due to economic conditions.
The availability of additional capital or financing will depend on a variety of factors, many of which are outside of our control, including market conditions, credit availability, our credit ratings and credit capacity, marketability of our capital stock, and the possibility that lenders and investors could develop a negative perception of our long- or short-term financial prospects if we incur large credit losses or if the level of business activity decreases due to economic conditions.
These government agencies have expressed a heightened interest in fair lending and loan servicing, mortgage loan origination and mortgage loan servicing, bank and financial institution sales practices, management of consumer accounts and the charging of overdraft and various other fees, fair credit reporting, predatory lending, debt collection, and meaningful disclosure of credit and savings terms, among others, and perform periodic reviews, examinations, and investigations in these areas.
These government agencies have expressed a heightened interest in fair lending and loan servicing, mortgage loan origination and servicing, bank and financial institution sales practices, management of consumer accounts and the charging of overdraft and various other fees, fair credit reporting, predatory lending, debt collection, and meaningful disclosure of credit and savings terms, among others, and perform periodic reviews, examinations, and investigations in these areas.
Financial institutions are interrelated as a result of trading, clearing, counterparty and other relationships. FNB, FNBPA and other affiliates are exposed to many different industries and counterparties and they routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks and other institutional clients.
Financial institutions are interrelated as a result of trading, clearing, counterparty and other relationships. FNB, FNBPA and our affiliates are exposed to many different industries and counterparties and they routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks and other institutional clients.
Dividends on our common stock will be payable only if, when and as authorized and declared by our Board of Directors; however, our ability to pay dividends and make stock repurchases may be limited due to banking laws and regulations and limitations imposed by our banking regulators (including OCC limiting dividends from FNBPA).
Dividends on our common stock will be payable only if, when and as authorized and declared by our Board of Directors; however, our ability to pay dividends and make stock repurchases may be limited due to banking laws and regulations and limitations imposed by our banking regulators (including the OCC limiting dividends from FNBPA).
If we experience a material deterioration in our financial condition, liquidity, capital, results of operations or risk profile, our regulators may not permit us to make future payments on our TPS, which would also prevent us from paying any dividends on our common stock. 4.
If we experience a material deterioration in our financial condition, liquidity, capital, results of operations or risk profile, our regulators may not permit us to make future payments on our TPS, which would also prevent us from paying any dividends on our common stock.
A successful challenge to our institution’s performance under the CRA or fair lending laws and regulations could result in a wide variety of sanctions, including the required payment of damages and civil money penalties, injunctive relief, imposition of restrictions on mergers and acquisitions activity and restrictions on expansion activity.
A successful challenge to our performance under the CRA or fair lending laws and regulations could result in a wide variety of sanctions, including the required payment of damages and civil money penalties, injunctive relief, imposition of restrictions on mergers and acquisitions activity and restrictions on expansion activity.
As a result, should we pursue future bank acquisitions, we expect the bank regulatory approval process to be prolonged and more costly than we have experienced in the past, which restrictions could materially adversely affect our business, results of operation and financial condition. 7.
As a result, should we pursue future bank acquisitions, we expect the bank regulatory approval process to be prolonged and more costly than we have experienced in the past, which restrictions could materially adversely affect our business, results of operation and financial condition.
The federal banking agencies, including the OCC, the CFPB, as well as the DOJ, have in recent years adopted a more aggressive enforcement posture in line with general enforcement priorities - specifically with respect to consumer protection issues and anti-discrimination lending laws.
The federal banking agencies, including the OCC, FRB and CFPB, as well as the DOJ, have in recent years adopted a more aggressive enforcement posture in line with general enforcement priorities - specifically with respect to consumer protection issues and anti-discrimination lending laws.
We cannot predict with certainty which proposed rules will be adopted or if other initiatives may be pursued by lawmakers and agency leadership, nor can we predict the terms and scope of any such initiatives, including whether we would be impacted.
We cannot predict with certainty which rules will be adopted or if other initiatives may be pursued by lawmakers and agency leadership, nor can we predict the terms and scope of any such initiatives, including whether we would be impacted.
Accordingly, digital asset service providers - which, at present are not subject to the extensive regulation as banking organizations and other financial institutions - have become active competitors for our customers' banking business.
Accordingly, digital asset service providers - which, at present are not subject to the same extensive regulation as banking organizations and other financial institutions - have become active competitors for our customers' banking business.
Such scenarios may include the following: • changes in interest rates or interest rate spreads can affect the difference between the interest earned on assets and the interest paid on liabilities, which impacts FNBPA’s overall net interest income and profitability; • such changes can affect the ability of borrowers to meet obligations under variable or adjustable-rate loans and other debt instruments and can, in turn, affect our loss rates on those assets; • such changes may decrease the demand for interest rate-based products or services, including bank loans and deposit products and the subordinated notes offered by our subsidiary, FNB Financial Services, LP; • such changes can also affect our ability to hedge various forms of market and interest rate risks and may decrease the profitability or increase the risk associated with such hedges; and • movements in interest rates also affect mortgage repayment speeds and could result in impairments of MSAs or otherwise affect the profitability of such assets.
Such scenarios may include the following: • changes in interest rates or interest rate spreads can affect the difference between the interest earned on assets and the interest paid on liabilities, which impacts FNBPA’s overall net interest income and profitability; • such changes can affect the ability of borrowers to meet obligations under variable or adjustable-rate loans and other debt instruments and can, in turn, affect our loss rates on those assets; • such changes may decrease the demand for interest rate-based products or services, including bank loans and deposit products and the subordinated notes offered by our subsidiary, FNB Financial Services, LP; • such changes can affect our ability to hedge various forms of market and interest rate risks and may decrease the profitability or increase the risk associated with such hedges; and • movements in interest rates affect mortgage repayment speeds and could result in impairments of mortgage servicing assets or otherwise affect the profitability of such assets.
Under regulatory capital adequacy guidelines and other regulatory requirements, FNB and FNBPA must meet guidelines subject to qualitative judgments by regulators about components, risk weightings and other factors. On July 27, 2023, the federal banking agencies, including the OCC, issued a proposed rule to implement the final components of the Basel III standards.
Under regulatory capital adequacy guidelines and other regulatory requirements, FNB and FNBPA must meet guidelines subject to qualitative judgments by regulators about components, risk weightings and other factors. On July 27, 2023, the federal banking agencies, including the OCC, issued a proposed rule to implement the final components of the Basel III Capital Rules.
Our asset valuations may include methodologies, estimations and assumptions that are subject to differing interpretations and this, along with market factors such as volatility in one or more markets or industries, could result in changes to asset valuations that may materially adversely affect our results of operations or financial condition.
Our asset valuations may include methodologies, estimations and assumptions that are subject to differing interpretations which, along with market factors such as volatility in one or more markets or industries, could result in changes to asset valuations that may materially adversely affect our results of operations or financial condition.
Certain decisions that the regulators make, including those related to capital distributions and dividends to our stockholders, could be adversely affected due to the regulator’s perception that the quality of the models used to generate our relevant information is insufficient.
Certain decisions that regulators make, including those related to capital distributions and dividends to our shareholders, could be adversely affected due to the regulator’s perception that the quality of the models used to generate our relevant information is insufficient.
Despite our effort to modify our overdraft practices to conform to recent regulatory guidance and expectations, and industry 33 Table of Contents practices, we may remain subject to regulatory criticism or potential enforcement action, particularly in view of the CFPB's aggressive interpretations and guidance regarding bank overdraft practices, and potentially subject to negative public reaction through our continued offering of certain of these products and services.
Despite our effort to modify our overdraft practices to conform to recent regulatory guidance and expectations and industry practices, we may remain subject to regulatory criticism or potential enforcement action, particularly in view of the CFPB's aggressive interpretations and guidance regarding bank overdraft practices, and potentially subject to negative public reaction through our continued offering of certain of these products and services.
Changes in regulations or the regulatory environment could adversely affect the banking and financial services industry as a whole and could limit our growth and the return to investors by restricting such activities as, the payment of dividends and stock repurchases, balance sheet growth, investments, loans and interest rates, assessments of fees, such as overdraft and interchange fees, the provision of 32 Table of Contents securities, insurance, brokerage or trust services, mergers with or acquisitions of other institutions or branches, the types of deposit and non-deposit activities in which our subsidiaries may engage, and offering of new products and services.
Changes in regulations or the regulatory environment could adversely affect the banking and financial services industry as a whole and could limit our growth and returns to investors by restricting such activities as the payment of dividends and stock repurchases, balance sheet growth, investments, loans and interest rates, assessments of fees, such as overdraft and interchange fees, the provision of securities, insurance, brokerage or trust services, mergers with or acquisitions of other institutions or branches, the types of deposit and non-deposit activities in which our subsidiaries may engage, and offering of new products and services.
Although the Consent Orders constitute the resolution of open enforcement actions, under the OCC’s proposed rule ongoing compliance in a timely manner with the Consent Orders would be an important factor in the OCC’s evaluation of any proposed transaction we may present to the OCC for approval.
Although the Consent Orders constitute the resolution of open enforcement actions, under the OCC’s Policy Statement, ongoing compliance in a timely manner with the Consent Orders would be an important factor in the OCC’s evaluation of any proposed transaction we may present to the OCC for approval.
A further downgrade, or a downgrade by other rating agencies, as well as sovereign debt issues facing the governments of other countries, could have a material adverse impact on financial markets and economic conditions in the U.S. and worldwide.
A further downgrade, or a downgrade by other rating agencies, as well as sovereign debt issues facing the governments of other countries, could have a material adverse impact on financial markets and economic conditions in the U.S. and worldwide, which could adversely impact us.
FNBPA had uninsured deposits of $16.1 billion as of December 31, 2022, and we accrued and expensed a special assessment of $29.9 million based on the assessment base of $11.1 billion, which excludes the first $5 billion of FNBPA’s uninsured deposits as of December 31, 2022.
FNBPA had uninsured deposits of $16.1 billion as of December 31, 2022, and we accrued and expensed an initial special assessment of $29.9 million based on the assessment base of $11.1 billion, which excludes the first $5 billion of FNBPA’s uninsured deposits as of December 31, 2022.
We are subject to the CRA and fair lending laws, and failure to comply with these laws could lead to material penalties. The CRA, the Equal Credit Opportunity Act (ECOA), the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions.
We are subject to the CRA and fair lending laws, and failure to comply with these laws could lead to material penalties. The CRA, ECOA, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions.
Further evaluation of recent developments in the banking sector has led to governmental initiatives intended to prevent future bank failures and stem significant deposit outflows from the banking sector, including (i) agency rulemaking to modify and enhance relevant regulatory requirements, specifically with respect to liquidity risk management, deposit concentrations, capital adequacy, stress testing and contingency planning, and safe and sound banking practices; and (ii) enhancement of the agencies’ supervision and examination policies and priorities.
Further evaluation of recent developments in the banking sector has led to governmental initiatives intended to prevent future bank failures and stem significant deposit outflows from the banking sector, including (i) agency rulemaking to modify and enhance relevant regulatory requirements, which could include new rules with respect to liquidity risk management, deposit concentrations, capital adequacy, stress testing and contingency planning, and safe and sound banking practices; and (ii) enhancement of the agencies’ supervision and examination policies and priorities.
For instance, in response to the Russia-Ukraine war, the U.S. has imposed, and is likely to continue to impose, significant financial and economic sanctions and export controls against certain Russian organizations and individuals, with similar actions being taken by the European Union, the United Kingdom and other jurisdictions.
For instance, in response to the Russia-Ukraine war, the U.S. has imposed significant financial and economic sanctions and export controls against certain Russian organizations and individuals, with similar actions being taken by the European Union, the United Kingdom and other jurisdictions.
Specifically, the OCC noted in the bulletin that “authorize positive, settle negative” (APSN) transaction and representment fee practices may present a heightened risk of violations of Section 5 of the Federal Trade Commission Act of 2010, which prohibits unfair, deceptive, or abusive acts or practices.
Specifically, the OCC noted in the bulletin that “authorize positive, settle negative” (APSN) transaction and representment fee practices may present a heightened risk of violations of Section 5 of the FTC Act of 2010, which prohibits unfair, deceptive, or abusive acts or practices.
In addition, the attacks by Hamas on Israel in October 2023, Israel’s response and a potential broader armed conflict in the Middle East are likely to continue impacting the global economy, including that of the United States and have added to concerns of a widening conflict in the Middle East.
In addition, the attacks by Hamas on Israel in October 2023, Israel’s response and a potential broader armed conflict in the Middle East are likely to continue impacting the global economy, including that of the U.S. and have added to concerns of a widening conflict in the Middle East.
Overnight rates on Repo transactions are used by the 31 Table of Contents FRB to calculate SOFR. A disruption in the Repo markets could affect interest rates paid on SOFR-benchmarked loans and payments on swaps and other financial contracts that use SOFR as a benchmark rate.
Overnight rates on Repo transactions are used by the FRB to calculate SOFR. A disruption in the Repo markets could affect interest rates paid on SOFR-benchmarked loans and payments on swaps and other financial contracts that use SOFR as a benchmark rate.
Under the current regulatory framework governing proposed business combinations, an institution’s compliance with the fair lending laws and whether it is subject to an open or pending enforcement action are significant factors for the federal banking agencies in determining whether a proposed transaction is consistent with safe and sound banking principles.
Under the regulatory framework governing proposed business combinations, an institution’s compliance with the fair lending laws, whether the institution is subject to an open or pending enforcement action, and the institution's CRA rating are significant factors for the federal banking agencies in determining whether a proposed transaction is consistent with safe and sound banking principles.
Many of our investment securities are issued by the U.S. government and government agencies and sponsored entities.
Many of our investment securities are issued by the U.S. government and government agencies and sponsored enterprises.
Various factors, such as economic conditions, regulatory and other governmental concerns and competition, may impede or prohibit the opening of new retail branches or optimizing our existing branch network. If we are not able to continue our historical levels of growth, we may not be able to maintain our historical revenue trends.
Various factors, such as economic conditions, regulatory and other governmental concerns and competition, may impede or prohibit the opening of new retail branches or optimizing our existing branch network. If we are not able to continue our historical levels of growth, we may not be able to maintain our historical revenue trends. ITEM 1B. UNRESOLVED STAFF COMMENTS NONE.
In the wake of the failures of SIVB, SBNY, and FRC, which the FDIC concluded were generated by, in significant part, a high volume of uninsured deposits, many large depositors across the industry have withdrawn deposits in excess of applicable deposit insurance limits and deposited these funds in other financial institutions.
In the wake of the failures of Silicon Valley Bank (SIVB), Signature Bank (SBNY) and First Republic Bank (FRC), which the FDIC concluded were generated by, in significant part, a high volume of uninsured deposits, many large depositors across the industry have withdrawn deposits in excess of applicable deposit insurance limits and deposited these funds in other financial institutions.
The current and anticipated effects of climate change are creating an increasing level of concern for the state of the global environment. The U.S. Congress, state legislatures and federal and state regulatory agencies have continued to propose and advance numerous legislative and regulatory initiatives seeking to mitigate the effects of climate change.
The current and anticipated effects of climate change are creating an increasing level of concern for the state of the global environment. The U.S. Congress, state legislatures and federal and state regulatory agencies have proposed and advanced numerous legislative and regulatory initiatives seeking to mitigate the effects of climate change.
Any complications caused by these third parties, including those resulting from disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher volumes, cyber-attacks and security breaches at a vendor (including zero-day attacks associated with vulnerabilities in third-party software that were not previously known), failure of a vendor to comply with applicable laws and regulations or to conform to our internal controls and risk management procedures, and failure of a vendor to provide services for any reason or poor performance of services, could adversely affect our ability to deliver products and services to our customers and otherwise conduct our business. 30 Table of Contents There may be risks resulting from the extensive use of models in our business.
Any complications caused by these third parties, including those resulting from disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher volumes, cyber-attacks and security breaches at a vendor (including zero-day attacks associated with vulnerabilities in third-party software that were not previously known), failure of a vendor to comply with applicable laws and regulations or to conform to our internal controls and risk management procedures, and failure of a vendor to provide services for any reason or poor performance of services, could adversely affect our ability to deliver products and services to our customers and otherwise conduct our business.
A U.S. government debt default, threatened or wide spread perception of a potential debt default, or downgrade of the sovereign credit ratings of the U.S. by credit rating agencies, could have an adverse impact on financial markets, interest rates and economic conditions in the U.S. and worldwide.
A U.S. government debt default, threatened or wide-spread perception of a potential debt default, or downgrade of the sovereign credit ratings of the U.S. by credit rating agencies, could have an adverse impact on financial markets, interest rates and economic conditions in the U.S. and worldwide, which could have an adverse effect on our financial position or results of operations.
The Consent Orders resolve allegations that, from 2017 to 2021, FNBPA—including as a successor in interest to Yadkin Bank, which FNBPA acquired in 2017, committed violations of the Fair Housing Act and the Equal Credit Opportunity Act (Regulation B), as well as the North Carolina Unfair and Deceptive Practices Act, 36 Table of Contents within the Charlotte, North Carolina, and Winston-Salem, North Carolina assessment areas.
The Consent Orders resolve allegations that, from 2017 to 2021, FNBPA-(including as a successor in interest to Yadkin Bank, which FNBPA acquired in 2017) committed violations of the Fair Housing Act and the ECOA (Regulation B), as well as the North Carolina Unfair and Deceptive Practices Act, within the Charlotte, North Carolina, and Winston-Salem, North Carolina assessment areas.
We do not have any significant assets other than cash and the stock of our subsidiaries. Accordingly, we depend on dividends from our subsidiaries, in 26 Table of Contents particular FNBPA, to meet our financial obligations and to pay dividends to stockholders.
We do not have any significant assets other than cash and the stock of our subsidiaries. Accordingly, we depend on dividends from our subsidiaries, in particular FNBPA, to meet our financial obligations and to pay dividends to shareholders.
Further, the existence of the Consent Orders may adversely affect our reputation in the communities we serve and among third parties with which we conduct business.
Further, the existence of the Consent Orders may adversely affect our reputation in the communities we serve and among third parties with which we conduct business. In addition, the existence of the Consent Orders may adversely impact our CRA rating.
In particular, our Articles of Incorporation and By-laws: • require shareholders to give us advance notice to nominate candidates for election to our Board of Directors or to solicit proxies in support of such candidates, or to make shareholder proposals at a shareholders’ meeting; • permit our Board of Directors to issue, without approval of our common shareholders unless otherwise required by law, preferred stock with such terms as our Board of Directors may determine; • require the vote of the holders of at least 75% of our voting shares for shareholder amendments to our By-laws; • in the case of a proposed business combination with a shareholder owning 10% or more of the voting shares of FNB, the vote of the holders of at least two-thirds of the voting shares not owned by such shareholder is required to approve the business combination, unless it is approved by a majority of FNB’s disinterested directors.
In particular, consistent with Pennsylvania law, our Articles of Incorporation and By-laws: • require shareholders to give us advance notice to nominate candidates for election to our Board of Directors or to solicit proxies in support of such candidates, or to make shareholder proposals at a shareholders’ meeting; • permit our Board of Directors to issue, without approval of our common shareholders unless otherwise required by law, preferred stock with such terms as our Board of Directors may determine; • provide that a special meeting may only be called by shareholders holding not less than 25% of all votes entitled to be cast at the proposed special meeting; • require the vote of the holders of at least 75% of our voting shares for shareholder amendments to our By-laws; and • in the case of a proposed business combination with a shareholder owning 10% or more of the voting shares of FNB, the vote of the holders of at least two-thirds of the voting shares not owned by such shareholder is required to approve the business combination, unless it is approved by a majority of FNB’s disinterested directors.
In addition, FNBPA and other affiliates’ credit risks may be exacerbated when the collateral held by us cannot be realized or is liquidated at prices that are not sufficient to recover the full amount of the loan or derivative exposure that we are due. We are subject to operational risk that could damage our reputation and our business.
In addition, FNBPA and our affiliates’ credit risks may be exacerbated when the collateral held by us cannot be realized or is liquidated at prices that are not sufficient to recover the full amount of the loan or derivative exposure that we are due.
Cybersecurity risks appear to be growing and, as a result, the cyber-resilience of banking organizations is of increased importance to federal and state banking agencies and other regulators.
Cybersecurity risks continue to grow and, as a result, the cyber-resilience of banking organizations is of increased importance to federal and state banking agencies and other regulators.
During periods of reduced loan demand, our results of operations may be adversely affected to the extent that we are unable to reduce expenses commensurate with the decline in loan originations. • Future changes to our eligibility to participate in the programs offered by the government-sponsored entities (GSEs) and other secondary purchasers, or the loan criteria of the GSEs and other secondary purchasers could also result in a lower volume of corresponding loan originations and sales. • The estimates of revenues produced by the models we use to assess the impact of interest rates on mortgage-related revenues are dependent on estimates and assumptions of future loan demand, prepayment speeds and other factors which may differ from actual subsequent experience. 24 Table of Contents Our financial condition and results of operations could be adversely affected if we must further increase our provision for credit losses or if our ACL is not sufficient to absorb actual losses.
During periods of reduced loan demand, our results of operations may be adversely affected to the extent that we are unable to reduce expenses commensurate with the decline in loan originations. • Future changes to our eligibility to participate in the programs offered by the government-sponsored enterprises (GSEs) and other secondary purchasers, or the loan criteria of the GSEs and other secondary purchasers could also result in a lower volume of corresponding loan originations and sales. 19 Table of Contents • The estimates of revenues produced by the models we use to assess the impact of interest rates on mortgage-related revenues are dependent on estimates and assumptions of future loan demand, prepayment speeds and other factors which may differ from actual subsequent experience.
Many of these types of transactions expose FNB, FNBPA and other affiliates to credit risk in the event of default of the counterparty or client.
Many of these types of transactions expose FNB, FNBPA and our affiliates to credit risk in the event of default of the 23 Table of Contents counterparty or client.
If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, our net interest income, and therefore earnings, could be adversely affected.
If the interest rates paid on deposits and other borrowings decrease at a slower rate than the interest rates received on loans and other investments, or vice versa, our net interest income, and therefore earnings, could be adversely affected.
While certain aspects of a credit rating downgrade are quantifiable, the impact that such a downgrade would have on our liquidity, business and results of operations in future periods is inherently uncertain and would depend on a number of interrelated factors, including, among other things, the magnitude of the downgrade, the rating relative to peers, the rating assigned by the relevant agency pre-downgrade, individual client behavior and future mitigating actions we might take. 35 Table of Contents We are subject to supervision and examination by U.S. government authorities and may become subject to investigations, enforcement actions, fines, and other adverse effects.
While certain aspects of a credit rating downgrade are quantifiable, the impact that such a downgrade would have on our liquidity, business and results of operations in future periods is inherently uncertain and would depend on a number of interrelated factors, including, among other things, the magnitude of the downgrade, the rating relative to peers, the rating assigned by the relevant agency pre-downgrade, individual client behavior and future mitigating actions we might take.
Volatility in the banking sector, triggered by the failures of Silicon Valley Bank, Signature Bank and First Republic Bank, has resulted in agency rulemaking activities and changes in agency policies and priorities that could subject FNB and FNBPA to enhanced government regulation and supervision.
Volatility in the banking sector, triggered by the failures of SIVB, SBNY and FRC, has resulted in agency rulemaking activities and changes in agency policies and priorities that could subject FNB and FNBPA to enhanced government regulation and supervision.
Challenging macroeconomic, recessionary and employment conditions in the market areas we serve could result in the following consequences, any of which could have a material adverse effect on our business, financial condition and results of operations, such as: demand for our loans, deposits and services may decline; loan delinquencies, problem assets, foreclosures and charge-offs may increase; weak economic conditions could limit the demand for loans by creditworthy borrowers, limiting our capacity to leverage our retail deposits and maintain our net interest income; collateral for our loans may decline in value; and the amount of our low-cost or non-interest-bearing deposits may decrease.
Challenging macroeconomic, recessionary and employment conditions in the market areas we serve could result in the following consequences, among others, any of which could have a material adverse effect on our business, financial condition and results of operations: demand for our loans, deposits and services may decline; loan delinquencies, problem assets, foreclosures and charge-offs may increase; weak economic conditions could limit the demand for loans by creditworthy borrowers, limiting our capacity to leverage our retail deposits and maintain our net interest income; collateral for our loans may decline in value; and the amount of our low-cost or non-interest-bearing deposits may decrease. 24 Table of Contents The banking and financial services industry continually encounters technological change, especially in the systems that are used to deliver products to, and execute transactions on behalf of, customers.
For information about how our risk oversight and management process operates, see Item 7 of this Report, MD&A – "Risk Management.” The following discussion highlights specific risks that could affect us and our business, financial condition, results of operations and cash flows.
For information about how our risk oversight and management process operates, see Item 7 of this Report, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Risk Management.” The following discussion highlights certain material risks that, based on the information currently known to us, could affect us and our business, financial condition, results of operations and cash flows.
The consent orders entered into by FNBPA with the DOJ and the North Carolina State Department of Justice will cause us to incur additional compliance costs, may harm our reputation and may restrict our ability to engage in certain business activities and transactions, and our failure to comply with the terms of such consent orders may subject us to further enforcement actions.
Private parties may also have the ability to challenge our performance under fair lending laws in private class action litigation. 30 Table of Contents The consent orders entered into by FNBPA with the DOJ and the North Carolina State Department of Justice will cause us to incur additional compliance costs, may harm our reputation and may restrict our ability to engage in certain business activities and transactions, and our failure to comply with the terms of such consent orders may subject us to further enforcement actions.
Accordingly, there can be no assurance of our ability to expand our operations through organic growth or acquisitions. As such, we may be forced to delay raising capital, issue shorter-term securities than desired or bear an unattractive cost of capital, which could decrease profitability and significantly reduce financial flexibility.
As such, we may be forced to delay raising capital, issue shorter-term securities than desired or bear an unattractive cost of capital, which could decrease profitability, significantly reduce financial flexibility and adversely affect our ability to grow organically or through acquisitions.
The FASB, regulatory agencies and other bodies that establish accounting standards periodically change the financial accounting and reporting standards governing the preparation of our financial statements. Additionally, those bodies that establish and interpret the accounting standards (such as the FASB, SEC and banking regulators) may change prior interpretations or positions on how these standards should be applied.
Additionally, those bodies that establish and interpret the accounting standards (such as the FASB, SEC and banking regulators) may change prior interpretations or positions on how these standards should be applied.
An adverse finding or outcome of any such review, examination, or investigation that involves an assertion of regulatory noncompliance or a violation of law could result in possible fines, penalties, restitution, or other forms of remediation that could have a material adverse effect on our business, financial condition, results of operations, or reputation.
An adverse finding or outcome of any such review, examination, or investigation that involves an assertion of regulatory noncompliance, or a violation of law could result in possible fines, penalties, restitution, or other forms of remediation that could have a material adverse effect on our business, financial condition, results of operations, or reputation. 27 Table of Contents Fiscal challenges facing the U.S. government could negatively impact financial markets which in turn could have an adverse effect on our financial position or results of operations.
These events could also have a negative effect on the trading price of our securities. 1. Credit Risk Our results of operations are significantly affected by the ability of our borrowers to repay their loans. Lending money is an essential part of the banking business. However, for various reasons, borrowers do not always repay their loans.
Credit Risk Our results of operations are significantly affected by the ability of our borrowers to repay their loans. Lending money is an essential part of the banking business. However, for various reasons, borrowers do not always repay their loans.
Continuing deterioration in economic conditions affecting borrowers, new information regarding existing loans, suspected fraud, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in the ACL.
Determination of the allowance is inherently subjective and is based on factors that are susceptible to significant change. Continuing deterioration in economic conditions affecting borrowers, new information regarding existing loans, suspected fraud, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in the ACL.
While CRE values continue to fluctuate, some markets are showing signs of stabilizing prices. However, the outlook for CRE remains dependent on the broader economic environment and, specifically, how major subsectors respond to a rising interest rate environment and higher prices for commodities, goods and services.
However, the outlook for CRE remains dependent on the broader economic environment and, specifically, how major subsectors respond to a rising interest rate environment and higher prices for commodities, goods and services.
Even if a weather event does not cause any physical damage in our markets, it could affect the market value of property within our footprint, particularly agricultural interests, which are highly sensitive to excessive rainfall or droughts. 6.
Even if a weather event does not cause any physical damage in our markets, it could affect the market value of property within our footprint, particularly agricultural interests, which are highly sensitive to excessive rainfall or droughts. We grow our business in part by acquiring other banks and financial services businesses from time to time.
If any of the following risks and uncertainties develop into actual events or if the circumstances described in the risks and uncertainties occur or continue to occur, these events or circumstances could have a material adverse effect on our business, financial condition, results of operations or cash flows.
If any of the following risks and uncertainties develop into actual events or if the circumstances described in the risks and uncertainties occur or continue to occur, these events or circumstances could have a material adverse effect on our business, financial condition, results of operations, cash flows, competitive position or reputation, including by materially increasing expenses or decreasing revenues, which could result in material losses or a decrease in earnings.
Based on the duration of our AFS securities portfolio, a one percent increase or decrease in market rates is projected to positively or negatively impact the market value of the AFS securities portfolio by approximately $100.1 million. Increases or decreases in market interest rates are expected to further increase or decrease our AOCI (loss) and thereby decrease stockholders’ equity.
Based on the duration of our AFS securities portfolio, a one percent increase or decrease in market rates is projected to positively or negatively impact the market value of the AFS securities portfolio by approximately $100 million.
We maintain an investment portfolio consisting of various high-quality liquid fixed-income securities. The total carrying value of the AFS securities portfolio as of December 31, 2023 was $3.3 billion and the estimated duration of the portfolio was approximately 3 years. The nature of fixed-income securities is such that changes in market interest rates impact the value of these assets.
The total carrying value of the AFS securities portfolio as of December 31, 2024 was $3.5 billion with an estimated duration of approximately 2.9 years. The nature of fixed-income securities is such that changes in market interest rates impact the value of these assets.
For additional information, see the Lending Activity section of MD&A, which is included in Item 7 of this Report. Our mortgage banking profitability could be significantly reduced if we are not able to originate and resell a high volume of mortgage loans.
For additional information, see Item 7 of this Report, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Lending Activity.” Our mortgage banking profitability could be significantly reduced if we are not able to originate and resell a high volume of mortgage loans.
Although we cannot predict if there will be a subsequent shortfall after the eight quarters, any additional increase in our assessment fees could have a materially adverse effect on our results of operations and financial condition. Adverse changes to our credit ratings could limit our access to funding and increase our borrowing costs.
Any additional increase in our assessment fees could have a materially adverse effect on our results of operations and financial condition. Adverse changes to our credit ratings could limit our access to funding and increase our borrowing costs.
Our ability to implement our business strategy will depend on our liquidity and ability to obtain funding for loan originations, working capital and other general purposes. Liquidity is needed to fund various obligations, including credit commitments to borrowers, mortgage and other loan originations, withdrawals by depositors, repayment of borrowings, dividends to shareholders, operating expenses and capital expenditures.
Liquidity is needed to fund various obligations, including credit commitments to borrowers, mortgage and other loan originations, withdrawals by depositors, repayment of borrowings, dividends to shareholders, operating expenses and capital expenditures.
The Consent Orders will be in effect for a minimum of five years, which term could be longer depending upon the extent and timing of the requisite loan subsidies that will be paid by FNBPA to qualified applicants.
The Consent Orders will be in effect for a minimum of five years, which term could be longer depending upon the extent and timing of the requisite loan subsidies that will be paid by FNBPA to qualified applicants. Accordingly, our ability to pursue strategic growth initiatives involving combinations with other banking organizations may be substantially limited.
However, the sale of all or a material portion of our securities portfolio to increase liquidity in the face of withdrawals would cause the realization of significant losses that would, in turn, reduce our regulatory capital position. Our growth may require us to raise additional capital in the future, but that capital may not be available when it is needed.
However, the sale of all or a material portion of our securities portfolio to increase liquidity in the face of withdrawals would cause the realization of significant losses that would, in turn, reduce our regulatory capital position.
Each of these institutions experienced significant deposit losses in the run-up to their ultimate failures. Investor and customer confidence in the banking sector—particularly with regard to mid-size and larger regional banking organizations—waned in response to these failures.
Investor and customer confidence in the banking sector—particularly with regard to mid-size and larger regional banking organizations—waned in response to these failures.
Our future success will depend, in part, on our ability to address customer needs by using secure technology to provide products and services that will satisfy customer demands, as well as create additional efficiencies in our operations.
The effective use of technology increases efficiency and enables financial institutions to better compete for and serve customers and reduce costs. Our future success will depend, in part, on our ability to address customer needs by using secure technology to provide products and services that will satisfy customer demands, as well as create additional efficiencies in our operations.
Under federal law, the amount of dividends that a national bank, such as FNBPA, may pay in a calendar year is dependent on the amount of our net income for the current year combined with our retained net income for the two preceding years.
Under federal law, the amount of dividends that a national bank, such as FNBPA, may pay in a calendar year is generally limited to the amount of our net income for the current year combined with our retained net income for the two preceding years. Likewise, our state incorporated entities are subject to state laws governing dividend practices and payments.
In particular, oil prices have become increasingly volatile in the aftermath of the attacks on Israel. Each of the developments described above, or any combination of them, could adversely affect our businesses, financial condition and results of operations. Our business could be adversely affected by difficult economic conditions in the regions in which we operate.
In particular, oil and gas prices have become increasingly volatile in the aftermath of the attacks on Israel and may be adversely affected by actions taken by the Ukraine related to Russian-supplied natural gas to the European Union. Each of the developments described above, or any combination of them, could adversely affect our businesses, financial condition and results of operations.
However, any of the proposed or potential changes could, among other things, subject us to additional costs, limit the types of financial services and products we may offer, and limit our future growth, any of which could materially and adversely affect our business, results of operations or financial condition. 34 Table of Contents The proportion of our deposit account balances that exceed FDIC insurance limits may expose FNBPA to enhanced liquidity risk in times of financial distress.
However, any of the potential changes could, among other things, subject us to additional costs, limit the types of financial services and products we may offer, and limit our future growth, any of which could materially and adversely affect our business, results of operations or financial condition. 29 Table of Contents We have experienced increases in our FDIC insurance assessments due to the bank failures that occurred in 2023.
We rely on certain external vendors to provide products, information systems and services necessary, including our core processing system, to maintain our day-to-day operations. These third parties provide key components of our business operations such as data processing, recording and monitoring transactions, online banking interfaces and services, Internet connections and network access.
These third parties provide key components of our business operations such as data processing, recording and monitoring transactions, online banking interfaces and services, Internet connections and network access.
In response to this increased governmental scrutiny of the financial services industry, and in anticipation of possible enhanced supervision and enforcement of overdraft protection practices in the future, certain banking organizations including FNB have modified their overdraft protection programs, including by discontinuing the imposition of overdraft transaction fees.
The OCC further noted that banks should establish and maintain sound risk management of overdraft protection programs by establishing effective board and management oversight and appropriate procedures and practices for managing risks associated with overdraft protection programs. 28 Table of Contents In response to this increased governmental scrutiny of the financial services industry, and in anticipation of possible enhanced supervision and enforcement of overdraft protection practices in the future, certain banking organizations including FNB have modified their overdraft protection programs, including by discontinuing the imposition of overdraft transaction fees.
Adverse economic developments, specifically including inflation-related impacts, may have a negative effect on the ability of our borrowers to make timely repayments of their loans or to finance future home purchases. According to the FRB’s October 2023 Financial Stability Report, commercial real estate (CRE) values remained elevated relative to fundamentals, even as prices continued to decline.
Adverse economic developments, specifically including inflation-related impacts, may have a negative effect on the ability of our borrowers to make timely repayments of their loans or to finance future home purchases.
As cyber threats continue to evolve and increase, we may be required to spend significant additional resources to continue to modify or enhance our protective and preventative measures or to investigate and remediate any information security vulnerabilities. O ur day-to-day operations rely heavily on the proper functioning of products, information systems and services provided by third-party, external vendors.
As cyber threats continue to 25 Table of Contents evolve and increase, we may be required to spend significant additional resources to continue to modify or enhance our protective and preventative measures or to investigate and remediate any information security vulnerabilities.
Regulations are generally intended to provide protection for depositors, borrowers and other customers, as well as the stability of the financial services industry, rather than for investors in our securities. We are subject to changes in federal and state law, regulations, governmental policies, agency supervisory and enforcement policies and priorities, and tax laws and accounting principles.
We operate in a highly regulated environment and our businesses are subject to supervision, regulation, enforcement and prosecution by numerous governmental agencies, including at the federal and state levels. Regulations are generally intended to provide protection for depositors, borrowers and other customers, as well as the stability of the financial services industry, rather than for investors in our securities.
Although we monitor developments for areas of potential risk to our reputation and brand, negative perceptions or publicity could materially and adversely affect our revenues and profitability. We are subject to environmental, social and governance (ESG) risks that could adversely affect our reputation and the market price of our securities.
Although we monitor developments for areas of potential risk to our reputation and brand, negative perceptions or publicity could materially and adversely affect our revenues and profitability. Increasing, complex, evolving and conflicting regulatory, stakeholder, and other third-party expectations on ESG and DEI matters could adversely affect our reputation, our access to capital and the market price of our securities.
While we anticipate that our current capital resources will satisfy our capital requirements for the foreseeable future, we may, at some point need to raise additional capital to support current operations or continued growth.
As a financial holding company, we seek to maintain capital sufficient to meet the “well-capitalized” standard set by regulators. While we anticipate that our current capital resources will satisfy our capital requirements for the foreseeable future, we may in the future need to raise additional capital to support current operations or continued growth.
We operate in seven states and the District of Columbia. Most of our customers are individuals and small- and medium-sized businesses that are dependent upon their regional economies. The economic conditions in these local markets may be different from, and in some instances worse than, economic conditions in the U.S. as a whole.
Our business could be adversely affected by difficult economic conditions in the regions in which we operate. We operate in seven states and the District of Columbia. Most of our customers are individuals and small- and medium-sized businesses that are dependent upon their regional economies.
Under the OCC’s proposed rule, the OCC staff is unlikely to view a proposed merger transaction involving an acquirer with an open or pending fair lending enforcement action as being consistent with approval under the BMA.
Further, the OCC's Policy Statement governing its review of proposed national bank merger transactions under the Bank Merger Act (BMA) provides that the OCC is unlikely to view a proposed merger transaction involving an acquirer with an open or pending fair lending enforcement action as being consistent with approval under the BMA unless the applicant has adequately addressed the underlying supervisory concerns.
Any increases in the ACL will result in a decrease in net income and capital and may have a material adverse effect on our financial condition and results of operations. For additional discussion relating to this matter, refer to the Allowance and Provision for Credit Losses section of MD&A, which is included in Item 7 of this Report. 2.
Any increases in the ACL will result in a decrease in net income and capital and may have a material adverse effect on our financial condition and results of operations.
The banking and financial services industry continually encounters technological change, especially in the systems that are used to deliver products to, and execute transactions on behalf of customers. If we fail to continue to invest in technological improvements as they become appropriate or necessary, our ability to compete effectively could be severely impaired.
If we fail to continue to invest in technological improvements as they become appropriate or necessary, our ability to compete effectively could be severely impaired. The banking and financial services industry continually undergoes technological changes, with frequent introductions of new technology-driven products and services, including recent and rapid developments in artificial intelligence.
Further, the FRB and the OCC may consider increases in AOCI when evaluating our regulatory capital position, although current capital regulations permit AOCI to be excluded from capital for institutions of our size. 3. Liquidity Risk Liquidity risk could impair our ability to fund operations and meet our obligations as they become due.
Increases or decreases in market interest rates are expected to further increase or decrease our AOCI (loss) and thereby decrease or increase shareholders’ equity. Further, the FRB and the OCC may consider increases in AOCI when evaluating our regulatory capital position, although current capital regulations permit AOCI to be excluded from capital for institutions of our size. 3.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRegular internal and external vulnerability scanning is conducted at varying intervals to proactively identify configuration weaknesses, missing patches and other vulnerabilities in the FNB information systems environment. Identified vulnerabilities are classified and scored based on their Common Vulnerability Scoring System or CVSS score, known exploitation or malware impacting the vulnerability, and the age in the environment.
Biggest changeThe risk assessment considers the inherent risk and controls implemented in the FNB environment and measures the residual risk to ensure it is within the FNB risk tolerance. Vulnerability Management Process . Regular internal and external vulnerability scanning is conducted at varying intervals to proactively identify configuration weaknesses, missing patches and other vulnerabilities in the FNB information systems environment.
Using third party vendors to assist, threats are integrated into our monitoring solutions, email filtering, web-browsing controls, malware detection, and perimeter firewalls to proactively prevent, detect and deter threats with the capability to impact the FNB environment. Independent Penetration Testing . On an annual basis, we engage with an independent third-party provider to perform various penetration tests of the environment.
With the assistance of third-party vendors, threats are integrated into our monitoring solutions, email filtering, web-browsing controls, malware detection, and perimeter firewalls to proactively prevent, detect and deter threats with the capability to impact the FNB environment. Independent Penetration Testing . On an annual basis, we engage with an independent third-party provider to perform various penetration tests of the environment.
The security of the FNB network infrastructure is maintained via • internal and perimeter firewalls with intrusion detection, 38 Table of Contents • the use of some network segmentation to isolate access to certain applications and systems, • VLANs or virtual local area networks, • email filtering to identify spam, malware, and phishing messages in received email messages, • malware detection, • data loss prevention controls to prevent the theft, or mass exfiltration of data, • Virtual Private Networks (VPN) to control remote access to our network, • intrusion detection capabilities, • network access controls (NAC) to prevent unauthorized assets from connecting to the network, and • web filtering.
The security of the FNB network infrastructure is maintained via: • internal and perimeter firewalls with intrusion detection, • the use of some network segmentation to isolate access to certain applications and systems, • VLANs or virtual local area networks, • email filtering to identify spam, malware, and phishing messages in received email messages, • malware detection, 33 Table of Contents • data loss prevention controls to prevent the theft, or mass exfiltration of data, • Virtual Private Networks to control remote access to our network, • intrusion detection capabilities, • network access controls to prevent unauthorized assets from connecting to the network, and • web filtering.
The Information Security Department uses the National Institute of Standards and Technology framework for improving critical infrastructure by measuring and evaluating the effectiveness of information and cybersecurity controls. We have various processes for risk assessment, vulnerability management, threat management, independent penetration testing, security architecture, access management, network security management, security event monitoring and security awareness.
ITEM 1C. CYBERSECURITY Our Information Security Department uses the National Institute of Standards and Technology framework for improving critical infrastructure by measuring and evaluating the effectiveness of information and cybersecurity controls. We have various processes for risk assessment, vulnerability management, threat management, independent penetration testing, security architecture, access management, network security management, security event monitoring and security awareness.
To ensure the secure configuration, design, and implementation of our internally hosted and third-party hosted systems, security architecture reviews are conducted. The architecture reviews entail a series of questions. These questions are reviewed with internal IT and third-party vendor contacts to ensure the implementation is meeting policies, is configured with strong security practices, and utilizes appropriate access controls.
To ensure the secure configuration, design, and implementation of our internally hosted and third-party hosted systems, security architecture reviews are conducted. The architecture reviews entail a series of questions, the responses to which are reviewed with internal IT and third-party vendor contacts to ensure the implementation is meeting policies, is configured with strong security practices, and utilizes appropriate access controls.
ITEM 1C. CYBERSECURITY The Information Security Department reports to the Chief Information Security Officer and then directly to the Chief Risk Officer, to ensure the coordinated and consistent implementation of risk management initiatives and strategies on a day-to-day basis.
The Information Security Department reports to the Chief Information Security Officer (CISO) and then directly to the Chief Risk Officer, to ensure the coordinated and consistent implementation of risk management initiatives and strategies on a day-to-day basis.
The monitoring tool is third-party provided SIEM, and enables threat identification, detects suspicious activity in the environment using the MITRE Att&ck® framework, performs user behavior analytics, and endpoint detection and response. Alerts are investigated to ascertain whether a cyber incident is occurring or not. Security Awareness . Annual training is conducted for continuing education for all employees.
The monitoring tool is third-party provided SIEM, and enables threat identification, detects suspicious activity in the environment using the MITRE Att&ck® framework, performs user behavior analytics, and endpoint detection and response. Alerts are investigated to ascertain whether a cyber incident is occurring or not. Security Awareness .
The penetration tests look at our customer facing applications, how we respond to social engineering activities, overall external attack surface and internal vulnerabilities. Issues identified from the penetration tests are tracked and escalated to ensure appropriate remediation occurs before closure. Security Architecture .
The penetration tests review our customer facing applications, our response to social engineering activities, overall external attack surface and internal vulnerabilities. Issues identified from the penetration tests are tracked and escalated to ensure appropriate remediation occurs before closure. Security Architecture .
We prioritize the patching of critical and severe vulnerabilities. Threat Management Process . In addition to the regular and routine vulnerability scanning, FNB relies on various threat intelligence feeds for the identification and awareness of potential threats that could impact the FNB environment.
In addition to regular and routine vulnerability scanning, we rely on various threat intelligence feeds for the identification and awareness of potential threats that could impact the FNB environment.
Results of the information and cybersecurity efforts and recommendations are reported to the Risk Management Council no less than quarterly which is then shared with the Board Risk Committee. The Board Risk Committee is primarily responsible for overseeing risk management, including risks associated with cybersecurity and potential threats thereto. Our management is directly involved in assessing and managing cybersecurity risks.
Results of the information and cybersecurity evaluation and recommendations established by the Information Security Department are reported to the Risk Management Council no less than quarterly, and the results are then shared with the Board Risk Committee. The Board Risk Committee is primarily responsible for overseeing risk management, including risks associated with cybersecurity and potential threats thereto.
As noted, we employ a Chief Risk Officer, along with information security personnel in our Information Security Department. The Chief Risk Officer regularly reports to our Risk Management Council, which is comprised of our senior leadership. See “Risk Management” in section of MD&A for an overview of our risk management framework.
In addition, the Chief Risk Officer regularly reports to our Risk Management Council, which is comprised of our senior leadership, ensuring direct involvement by our management in assessing and managing cybersecurity risk. See “Risk Management” in section of MD&A for an overview of our risk management framework.
Routine phishing tests are administered routinely. We also post articles on our intranet of common attack schemes for our employee’s awareness. We have a Vendor Management department that established policies and procedures to follow when utilizing external third-parties. Third-party vendors are thoroughly vetted, approved and inventoried before partnership begins.
Annual security training is conducted for all employees, and routine phishing tests are administered routinely. We also post articles regarding common cybersecurity schemes on our intranet for our employees’ awareness. We have a Vendor Management department that established policies and procedures to follow when utilizing third-party vendors and ensures that key risk components are mitigated based on our standards.
The risk assessment takes into consideration a combination of risks related to the identification, prevention, detection, response, and recovery from cyber events. The risk assessment considers the inherent risk and controls implemented in the FNB environment and measures the residual risk to ensure it is within the FNB risk tolerance. Vulnerability Management Process .
On an annual basis, a risk assessment and maturity analysis is performed for the FNB environment based on the NIST CSF Framework. The risk assessment takes into consideration a combination of risks related to the identification, prevention, detection, response, and recovery from cyber events.
Removed
Certain processes involve the use of third parties. A summary of each process is below. Risk Assessment Process . On an annual basis, a risk assessment and maturity analysis is performed for the FNB environment based on the NIST CSF Framework.
Added
We believe our management has the appropriate expertise, background and depth of experience to manage risks arising from cybersecurity threats including applicable knowledge gained through industry experience, education, ongoing internal and external training and regular discussions with consultants and peers with applicable knowledge and expertise.
Removed
Vendor Management ensures key risk components are mitigated based on acceptable Company standards. Any third parties used in any cybersecurity processes are vetted through our vendor management process. Risks from Cybersecurity threats or previous incidents have not materially affected business strategy, results of operations, or financial condition. See cybersecurity risk factors in Item 1A. Risk Factors.
Added
See the following details of certain cybersecurity personnel. 32 Table of Contents The CISO has served FNB since 2016, and has a career over 25 years in information technology, enterprise risk and information security controls. The CISO is a Certified Information Systems Security Professional (CISSP). The CISO has a Bachelor’s degree in Criminal Justice with a minor in Computer Science.
Added
The CISO is supported by several managers including the following: • Manager of Cyber Security - CISSP with over 20 years of Information Technology and Systems Engineering experience. • Manager of Security Architecture - CISSP with over 20 years experience in Information Technology networking, network security and security engineering.
Added
The CISO chairs an Information Security Committee made up of other risk professionals, Information Technology and line of business leaders to maintain an understanding and balance between security and business functionality. A summary of the processes involved in our process of evaluating the effectiveness of information and cybersecurity controls is below. Risk Assessment Process .
Added
Identified vulnerabilities are classified and scored based on their Common Vulnerability Scoring System, known exploitation or malware impacting the vulnerability, and the age in the environment. We prioritize the patching of critical and severe vulnerabilities. Threat Management Process .
Added
Third-party vendors are thoroughly vetted, approved and inventoried before partnership begins. To date, we have not experienced cybersecurity incidents that have materially affected our business strategy, results of operations or financial condition. For additional information regarding cybersecurity threats, see Item 1 of this Report, “Business – Cybersecurity” and Item 1A of this Report, “Risk Factors—5.
Added
Operational Risk—An interruption in or breach in security of our information systems, or other cybersecurity risks, could result in a loss of customer business, increased compliance and remediation costs, civil litigation or governmental regulatory action, and have an adverse effect on our results of operations, financial condition and cash flows.”

Item 2. Properties

Properties — owned and leased real estate

3 edited+1 added−1 removed1 unchanged
Biggest changeAdditionally, we lease other office space in Harrisburg and Hermitage, Pennsylvania, and in Raleigh, North Carolina which houses various support departments. The operating leases for the branches/retail offices of the Community Banking segment expire at various dates through the year 2051 and generally include options to renew.
Biggest changeWe have both operating and finance leases for the branches/retail offices of the Community Banking segment expiring at various dates between 2046 and 2051, which generally include options to renew. We have other operating leases that have not commenced.
For additional information regarding the lease commitments, see Note 11, “Leases” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report. 39 Table of Contents Following is a table that shows the branches/retail offices, by state, and the branches/retail offices owned and leased for the Community Banking segment: December 31, 2023 Community Banking Pennsylvania 184 Ohio 27 Maryland 31 West Virginia 2 North Carolina 93 South Carolina 6 Washington, D.C. 1 Virginia 2 Total number of branches/retail offices 346 Total branches/retail offices owned 192 Total branches/retail offices leased 154
For additional information regarding the lease commitments, see Note 10, “Leases” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report. 34 Table of Contents Following is a table that shows the branches/retail offices, by state, and the branches/retail offices owned and leased for the Community Banking segment: December 31, 2024 Community Banking Pennsylvania 184 Ohio 27 Maryland 30 West Virginia 2 North Carolina 92 South Carolina 7 Washington, D.C. 1 Virginia 6 Total number of branches/retail offices 349 Total branches/retail offices owned 190 Total branches/retail offices leased 159
In Hermitage, Pennsylvania, we continue to maintain administrative offices, as well as offices for personnel of the Community Banking and Wealth Management segments, in a six-story office building, and a data processing and technology center in a two-story office building, both of which are owned by us.
In Hermitage, Pennsylvania, we own properties to house administrative, data processing personnel and various support departments, as well as offices for the Community Banking and Wealth Management segments. Additionally, we lease other office space in Harrisburg, Pennsylvania and Raleigh, North Carolina which houses various support departments.
Removed
We have other operating leases that have not commenced, including the lease, with a related party, of the future new FNB headquarters building in Pittsburgh, Pennsylvania. During 2023, several floors of the FNB headquarters building have been made available to FNB for the purpose of constructing our office spaces, and we commenced the lease of those floors.
Added
In late 2024, the majority of our Pittsburgh-based employees moved into the new headquarters building under leases with a related party, consolidating several offices, subsidiaries and support departments under one roof to create opportunities for continued efficiency, collaboration and productivity improvements.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed5 unchanged
Biggest changeThe information required by this Item is set forth in the “Other Legal Proceedings” discussion in Note 17, “Commitments, Credit Risk and Contingencies” in the Notes to the Consolidated Financial Statements, which is included in Item 8 of this Report, and which is incorporated herein by reference in response to this Item.
Biggest changeInformation required by this Item is set forth in the “Other Legal Proceedings” discussion in Note 16, “Commitments, Credit Risk and Contingencies” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report, and which is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. 35 Table of Contents PART II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+3 added−1 removed1 unchanged
Biggest changeIn April 2022, our Board of Directors authorized an additional $150 million available to repurchase shares of our common stock, bringing the total amount authorized for repurchase to $300 million. The information required by this Item 5 with respect to securities authorized for issuance under equity compensation plans is set forth in Part III, Item 12 of this Report.
Biggest changeThe information required by this Item 5 with respect to securities authorized for issuance under equity compensation plans is set forth in Part III, Item 12 of this Report. . STOCK PERFORMANCE GRAPH Comparison of Total Return on F.N.B.
This stock performance graph assumes $100 was invested on December 31, 2018, and the cumulative return is measured as of each subsequent fiscal year end. F.N.B. Corporation Five-Year Stock Performance Total Return, Including Stock and Cash Dividends Source: S & P Global Market Intelligence 42 Table of Contents
This stock performance graph assumes $100 was invested on December 31, 2019, and the cumulative return is measured as of each subsequent fiscal year end. F.N.B. Corporation Five-Year Stock Performance Total Return, Including Stock and Cash Dividends Source: S & P Global Market Intelligence ITEM 6. [RESERVED] 36 Table of Contents
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the NYSE under the symbol “FNB.” As of January 31, 2024, there were 14,596 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the NYSE under the symbol “FNB.” As of January 31, 2025, there were 13,867 holders of record of our common stock.
Removed
We did not purchase any of our own equity securities during the fourth quarter of 2023. STOCK PERFORMANCE GRAPH Comparison of Total Return on F.N.B.
Added
Holders of our common stock are entitled to receive cash dividends when declared by our Board of Directors out of legally available funds.
Added
The Board of Directors presently intends to continue the policy of paying quarterly cash dividends, however, there can be no assurance as to future dividends because they are dependent on our future earnings, capital requirements and financial condition. Our Board of Directors has authorized the repurchase of up to $300 million of shares of our common stock.
Added
Since inception of this stock repurchase program in 2022, we have repurchased 14.4 million shares at a weighted average share price of $11.43 for an aggregate of $164.3 million. We did not purchase any of our own equity securities during the fourth quarter of 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

145 edited+80 added−88 removed71 unchanged
Biggest changeIn comparison, the results for 2022 included provision for credit losses of $64.2 million including $28.5 million of initial provision for non-PCD loans associated with the Howard and Union acquisitions, the impact of $7.0 million of branch consolidation expenses and $45.3 million of merger-related expenses. 51 Table of Contents The major categories of the Consolidated Statements of Income and their respective impact to the increase (decrease) in net income are presented in the following table: TABLE 2 Year Ended December 31 $ Change % Change (in thousands, except per share data) 2023 2022 Net interest income $ 1,316,504 $ 1,119,780 $ 196,724 17.6 % Provision for credit losses 71,754 64,206 7,548 11.8 Non-interest income 254,332 323,553 (69,221) (21.4) Non-interest expense 915,436 826,392 89,044 10.8 Income taxes 98,795 113,626 (14,831) (13.1) Net income 484,851 439,109 45,742 10.4 Less: Preferred stock dividends 8,041 8,041 — — Net income available to common stockholders $ 476,810 $ 431,068 $ 45,742 10.6 % Earnings per common share – Basic $ 1.32 $ 1.23 $ 0.09 7.3 % Earnings per common share – Diluted 1.31 1.22 0.09 7.4 Cash dividends per common share 0.48 0.48 — — The following table presents selected financial ratios and other relevant data used to analyze our performance: TABLE 3 Year Ended December 31 2023 2022 Return on average equity 8.29 % 8.02 % Return on average tangible common equity (1) 15.45 15.31 Return on average assets 1.09 1.05 Return on average tangible assets (1) 1.19 1.14 Book value per common share $ 16.56 $ 15.39 Tangible book value per common share (1) 9.47 8.27 Equity to assets 13.11 % 12.93 % Average equity to average assets 13.12 13.05 Common equity to assets 12.88 12.68 Tangible equity to tangible assets (1) 8.03 7.50 Tangible common equity to tangible assets (1) 7.79 7.24 Common equity tier 1 capital ratio 10.04 9.82 Dividend payout ratio 36.51 39.54 (1) Non-GAAP 52 Table of Contents 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: TABLE 4 Year Ended December 31 2023 2022 2021 (dollars in thousands) Average Balance Interest Income/ Expense Yield/ Rate Average Balance Interest Income/ Expense Yield/ Rate Average Balance Interest Income/ Expense Yield/ Rate Assets Interest-earning assets: Interest-bearing deposits with banks $ 1,053,176 $ 40,860 3.88 % $ 2,174,415 $ 24,005 1.10 % $ 2,723,493 $ 3,732 0.14 % Federal funds sold — — — 500 29 5.81 — — — Taxable investment securities (1) 6,099,052 148,374 2.43 6,126,544 115,956 1.89 5,131,473 85,633 1.67 Tax-exempt investment securities (1) (2) 1,052,416 36,476 3.46 1,010,819 34,508 3.41 1,091,130 37,408 3.43 Loans held for sale 131,985 9,496 7.19 189,360 8,151 4.30 227,181 8,276 3.64 Loans and leases (2) (3) 31,372,574 1,749,786 5.58 27,829,166 1,113,593 4.00 25,075,559 880,609 3.51 Total interest-earning assets (2) 39,709,203 1,984,992 5.00 37,330,804 1,296,242 3.47 34,248,836 1,015,658 2.97 Cash and due from banks 435,271 429,741 386,648 Allowance for credit losses (409,342) (377,252) (363,462) Premises and equipment 456,844 405,023 338,644 Other assets 4,417,627 4,166,392 3,992,426 Total assets $ 44,609,603 $ 41,954,708 $ 38,603,092 Liabilities Interest-bearing liabilities: Deposits: Interest-bearing demand $ 14,296,571 283,914 1.99 $ 14,951,905 78,599 0.53 $ 13,866,846 18,676 0.13 Savings 3,766,920 37,338 0.99 3,976,285 8,512 0.21 3,442,809 664 0.02 Certificates and other time 5,176,674 173,680 3.36 3,004,482 21,410 0.71 3,208,586 27,875 0.87 Total interest-bearing deposits 23,240,165 494,932 2.13 21,932,672 108,521 0.49 20,518,241 47,215 0.23 Short-term borrowings 2,075,751 77,883 3.75 1,427,361 24,535 1.72 1,660,070 26,675 1.61 Long-term borrowings 1,685,554 83,332 4.94 836,154 32,118 3.84 924,090 24,344 2.63 Total interest-bearing liabilities 27,001,470 656,147 2.43 24,196,187 165,174 0.68 23,102,401 98,234 0.43 Non-interest-bearing demand 10,900,280 11,639,499 10,090,117 Total deposits and borrowings 37,901,750 1.73 35,835,686 0.46 33,192,518 0.30 Other liabilities 856,771 643,179 377,386 Total liabilities 38,758,521 36,478,865 33,569,904 Stockholders’ equity 5,851,082 5,475,843 5,033,188 Total liabilities and stockholders’ equity $ 44,609,603 $ 41,954,708 $ 38,603,092 Net interest-earning assets $ 12,707,733 $ 13,134,617 $ 11,146,435 Net interest income (FTE) (2) 1,328,845 1,131,068 917,424 Tax-equivalent adjustment (12,341) (11,288) (10,948) Net interest income $ 1,316,504 $ 1,119,780 $ 906,476 Net interest spread 2.57 % 2.79 % 2.54 % Net interest margin (2) 3.35 % 3.03 % 2.68 % (1) The average balances and yields earned on securities are based on historical cost.
Biggest changeDuring 2023, significant items impacting earnings of $91.9 million (see Table 1) were recognized. 44 Table of Contents The major categories of the Consolidated Statements of Income and their respective impact to the increase (decrease) in net income are presented in the following table: TABLE 2 Year Ended December 31 $ Change % Change (dollars in thousands, except per share data) 2024 2023 Net interest income $ 1,280,443 $ 1,316,504 $ (36,061) (2.7) % Provision for credit losses 79,776 71,754 8,022 11.2 Non-interest income 316,395 254,332 62,063 24.4 Non-interest expense 961,339 915,436 45,903 5.0 Income taxes 90,391 98,795 (8,404) (8.5) Net income 465,332 484,851 (19,519) (4.0) Less: Preferred stock dividends 6,005 8,041 (2,036) (25.3) Net income available to common shareholders $ 459,327 $ 476,810 $ (17,483) (3.7) % Earnings per common share – Basic $ 1.27 $ 1.32 $ (0.05) (3.8) % Earnings per common share – Diluted 1.27 1.31 (0.04) (3.1) Cash dividends per common share 0.48 0.48 — — The following table presents selected financial ratios and other relevant data used to analyze our performance: TABLE 3 Year Ended December 31 2024 2023 Return on average equity 7.59 % 8.29 % Return on average tangible common equity (1) 13.21 15.45 Return on average assets 0.99 1.09 Return on average tangible assets (1) 1.08 1.19 Book value per common share $ 17.52 $ 16.56 Tangible book value per common share (1) 10.49 9.47 Equity to assets 12.96 % 13.11 % Average equity to average assets 13.10 13.12 Common equity to assets 12.96 12.88 Tangible common equity to tangible assets (1) 8.18 7.79 Common equity tier 1 capital ratio 10.58 10.04 Dividend payout ratio 38.03 36.51 (1) Non-GAAP 45 Table of Contents 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: TABLE 4 Year Ended December 31 2024 2023 2022 (dollars in thousands) Average Balance Interest Income/ Expense Yield/ Rate Average Balance Interest Income/ Expense Yield/ Rate Average Balance Interest Income/ Expense Yield/ Rate Assets Interest-bearing deposits with banks $ 1,016,253 $ 42,894 4.22 % $ 1,053,176 $ 40,860 3.88 % $ 2,174,415 $ 24,005 1.10 % Federal funds sold — — — — — — 500 29 5.81 Taxable investment securities (1) 6,189,126 194,815 3.15 6,099,052 148,374 2.43 6,126,544 115,956 1.89 Tax-exempt investment securities (1) (2) 1,027,913 35,453 3.45 1,052,416 36,476 3.46 1,010,819 34,508 3.41 Loans held for sale 213,210 16,469 7.72 131,985 9,496 7.19 189,360 8,151 4.30 Loans and leases (2) (3) 33,320,176 1,974,205 5.92 31,372,574 1,749,786 5.58 27,829,166 1,113,593 4.00 Total interest-earning assets (2) 41,766,678 2,263,836 5.42 39,709,203 1,984,992 5.00 37,330,804 1,296,242 3.47 Cash and due from banks 400,194 435,271 429,741 Allowance for credit losses (419,291) (409,342) (377,252) Premises and equipment 493,820 456,844 405,023 Other assets 4,571,166 4,417,627 4,166,392 Total assets $ 46,812,567 $ 44,609,603 $ 41,954,708 Liabilities Deposits: Interest-bearing demand $ 15,204,358 416,860 2.74 $ 14,296,571 283,914 1.99 $ 14,951,905 78,599 0.53 Savings 3,314,905 39,926 1.20 3,766,920 37,338 0.99 3,976,285 8,512 0.21 Certificates and other time 6,929,342 297,183 4.29 5,176,674 173,680 3.36 3,004,482 21,410 0.71 Total interest-bearing deposits 25,448,605 753,969 2.96 23,240,165 494,932 2.13 21,932,672 108,521 0.49 Short-term borrowings 2,057,597 99,055 4.80 2,075,751 77,883 3.75 1,427,361 24,535 1.72 Long-term borrowings 2,292,523 118,683 5.18 1,685,554 83,332 4.94 836,154 32,118 3.84 Total interest-bearing liabilities 29,798,725 971,707 3.26 27,001,470 656,147 2.43 24,196,187 165,174 0.68 Non-interest-bearing demand deposits 9,897,298 10,900,280 11,639,499 Total deposits and borrowings 39,696,023 2.45 37,901,750 1.73 35,835,686 0.46 Other liabilities 984,198 856,771 643,179 Total liabilities 40,680,221 38,758,521 36,478,865 Shareholders’ equity 6,132,346 5,851,082 5,475,843 Total liabilities and shareholders’ equity $ 46,812,567 $ 44,609,603 $ 41,954,708 Net interest-earning assets $ 11,967,953 $ 12,707,733 $ 13,134,617 Net interest income (FTE) (2) 1,292,129 1,328,845 1,131,068 Tax-equivalent adjustment (11,686) (12,341) (11,288) Net interest income $ 1,280,443 $ 1,316,504 $ 1,119,780 Net interest spread 2.16 % 2.57 % 2.79 % Net interest margin (2) 3.09 % 3.35 % 3.03 % (1) The average balances and yields earned on securities are based on historical cost.
The model used to calculate the ACL is dependent on the portfolio composition and credit quality, as well as historical experience, current conditions and forecasts of economic conditions and interest rates.
The model used to calculate the ACL is dependent on the portfolio composition and credit quality, as well as historical experience, current conditions and forecasts of economic conditions and interest rates.
Specifically, the following considerations are incorporated into the ACL calculation: • a third-party macroeconomic forecast scenario; • a 24-month R&S forecast period for macroeconomic factors with a reversion to the historical mean on a straight-line basis over a 12-month period; and • the historical through-the-cycle default mean calculated using an expanded period to include a prior recessionary period.
Specifically, the following considerations are incorporated into the ACL calculation: • a third-party macroeconomic forecast scenario; • a 24-month R&S forecast period for macroeconomic factors with a reversion to the historical mean on a straight-line basis over a 12-month period; and • the historical through-the-cycle default mean calculated using an expanded period to include a prior recessionary period.
Capital Resources Our capital position, in part depends on the access to, and cost of, funding for new business initiatives, the ability to engage in expanded business activities, the ability to pay dividends and the level and nature of regulatory oversight.
Capital Resources Our capital position depends, in part, on the access to, and cost of, funding for new business initiatives, the ability to engage in expanded business activities, the ability to pay dividends and the level and nature of regulatory oversight.
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.
While management believes that its methodology for developing such assumptions is reasonable, there can be no assurance that modeled results will be achieved. Furthermore, the metrics are based upon the Balance Sheet structure as of the valuation date and do not reflect the planned growth or management actions that could be taken.
While management believes that its methodology for developing such assumptions is reasonable, there can be no assurance that modeled results will be achieved. Furthermore, the metrics are based upon the static Balance Sheet structure as of the valuation date and do not reflect planned growth or management actions that could be taken.
CREDIT RATINGS Our credit ratings affect the cost and availability of short- and long-term funding and collateral requirements for certain derivative instruments. Credit ratings are subject to ongoing review by rating agencies, which consider a number of factors, including our financial strength, performance, prospects and operations as well as factors not under our control.
CREDIT RATINGS Our credit ratings affect the cost and availability of short- and long-term funding and collateral requirements for certain derivative instruments. Credit ratings are subject to ongoing review by rating agencies, which consider a number of factors, including our financial strength, performance, prospects and operations as well as other factors not under our control.
Corporation Issuer credit rating Baa2 BBB- A- Senior debt Baa3 BBB- A- Subordinated debt Baa2 n/a BBB+ First National Bank of Pennsylvania Baseline credit assessment Baa1 n/a n/a Issuer credit rating n/a BBB- A Senior debt n/a n/a A Subordinated debt n/a n/a A- Bank deposits A2/P-1 n/a A Short-term borrowings n/a A-2 K1 Outlook for F.N.B.
Corporation Issuer credit rating Baa2 BBB- A- Senior debt Baa2 BBB- A- Subordinated debt Baa2 n/a BBB+ First National Bank of Pennsylvania Baseline credit assessment Baa1 n/a n/a Issuer credit rating Baa1 BBB A Senior debt n/a n/a A Subordinated debt n/a n/a A- Bank deposits A2/P-1 n/a A Short-term borrowings n/a A-2 K1 Outlook for F.N.B.
Using a static Balance Sheet structure, and utilizing net interest income simulations, the following table presents an analysis of the potential sensitivity of our net interest income on changes in interest Rate Ramps and EVE to changes in interest rates using Rate Shocks.
Using a static Balance Sheet structure and utilizing net interest income simulations, the following table presents an analysis of the potential sensitivity of our net interest income to changes in interest rates using Rate Ramps and the sensitivity of EVE using Rate Shocks.
Both FNB and FNBPA are subject to various regulatory capital requirements administered by federal banking agencies. For additional information, see Note 23, “Regulatory Matters” in the Notes to the Consolidated Financial Statements, which is included in Item 8 of this Report. From time to time, we issue shares initially acquired by us as treasury stock under our various benefit plans.
Both FNB and FNBPA are subject to various regulatory capital requirements administered by federal banking agencies. For additional information, see Note 22, “Regulatory Matters” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report. From time to time, we issue shares initially acquired by us as treasury stock under our various benefit plans.
Management has determined that no credit loss exists on securities AFS. Securities, like loans, are subject to interest rate and credit risk. In addition, by their nature, securities classified as AFS are also subject to fair value risks that could negatively affect the level of liquidity available to us, as well as stockholders’ equity.
Management has determined that no credit loss exists on securities AFS. Securities, like loans, are subject to interest rate and credit risk. In addition, by their nature, securities classified as AFS are also subject to fair value risks that could negatively affect the level of liquidity available to us, as well as shareholders’ equity.
We also performed a qualitative analysis through year-end and concluded that it was not more-likely-than-not that the fair value of one or more of our reporting units was below its respective carrying amount, and therefore no triggering event has occurred, as of December 31, 2023.
We also performed a qualitative analysis through year-end and concluded that it was not more-likely-than-not that the fair value of one or more of our reporting units was below its respective carrying amount, and therefore no triggering event has occurred, as of December 31, 2024.
Additionally, we can terminate a significant portion of these commitments at our discretion. For additional information relating to commitments to extend credit and standby letters of credit, see Note 17, “Commitments, Credit Risk and Contingencies” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report.
Additionally, we can terminate a significant portion of these commitments at our discretion. For additional information relating to commitments to extend credit and standby letters of credit, see Note 16, “Commitments, Credit Risk and Contingencies” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report.
Assets and liabilities carried at fair value inherently result in a higher degree of financial statement volatility. See Note 1, “Summary of Significant Accounting Policies” and Note 26, “Fair Value Measurements” in the Notes to Consolidated Financial Statements for further discussion of accounting for financial instruments.
Assets and liabilities carried at fair value inherently result in a higher degree of financial statement volatility. See Note 1, “Summary of Significant Accounting Policies” and Note 25, “Fair Value Measurements” in the Notes to Consolidated Financial Statements for further discussion of accounting for financial instruments.
Our Board of Directors is responsible for the oversight of management on behalf of our stockholders. The Board of Directors has assistance in carrying out its duties and may delegate authority through the following standing Board Committees: • Audit Committee - provides oversight of our internal and external audit processes.
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: • Audit Committee - provides oversight of our internal and external audit processes.
Provision for Credit Losses Provision for credit losses is determined based on management’s estimates of the appropriate level of ACL needed to absorb probable life-of-loan losses in the loan and lease portfolio, after giving consideration to charge-offs and recoveries for the period.
Provision for Credit Losses 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.
Management currently views the determination of the ACL, fair value of financial instruments, goodwill and other intangible assets, and income taxes and DTAs to be critical accounting policies. 44 Table of Contents Allowance for Credit Losses The ACL is a valuation account that is deducted from the amortized cost basis of loans and leases resulting in the net amount expected to be collected.
Management currently views the determination of the ACL, fair value of financial instruments, goodwill and other intangible assets, and income taxes and DTAs to be critical accounting policies. Allowance for Credit Losses The ACL is a valuation account that is deducted from the amortized cost basis of loans and leases resulting in the net amount expected to be collected.
Organic growth in low-cost transaction deposits was complemented by management’s continued strategy of deposit gathering efforts focused on attracting new customer relationships across our geographic footprint and deepening relationships with existing customers, in part through internal lead generation efforts leveraging data analytics capabilities.
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.
In connection with the preparation of the year-end 2023 financial statements, we completed our annual goodwill impairment test as of October 1, 2023. No impairment was identified in any of our reporting units.
In connection with the preparation of the year-end 2024 financial statements, we completed our annual goodwill impairment test as of October 1, 2024. No impairment was identified in any of our reporting units.
For our ACL calculation at December 31, 2023, the macroeconomic variables that we utilized included, but were not limited to: (i) the purchase only Housing Price Index, which increases 5.3% over our R&S forecast period, (ii) a Commercial Real Estate Price Index, which increases 0.1% over our R&S forecast period, (iii) S&P Volatility, which decreases 4.0% in 2024 and 2.9% in 2025 and (iv) personal and business bankruptcies, which increase steadily over the R&S forecast period but average below historical through-the-cycle period.
Macroeconomic variables that we utilized for our ACL calculation as of December 31, 2023 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.
For additional information relating to investment activity, see Note 4, “Securities” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report. 67 Table of Contents Deposits Our primary source of funds is deposits. Our diversified and granular deposit base are provided by business, consumer and municipal customers who we serve within our footprint.
For additional information relating to investment activity, see Note 3, “Securities” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report. 59 Table of Contents Deposits Our primary source of funds is deposits. Our diversified and granular deposit base are provided by business, consumer and municipal customers who we serve within our footprint.
See Note 1, “Summary of Significant Accounting Policies” and Note 20, “Income Taxes” in the Notes to Consolidated Financial Statements for further discussion of accounting for income taxes.
See Note 1, “Summary of Significant Accounting Policies” and Note 19, “Income Taxes” in the Notes to Consolidated Financial Statements for further discussion of accounting for income taxes.
Our market coverage spans several major metropolitan areas including: Pittsburgh, Pennsylvania; Baltimore, Maryland; Cleveland, Ohio; Washington, D.C.; Charlotte, Raleigh, Durham and the Piedmont Triad (Winston-Salem, Greensboro and High Point) in North Carolina; and Charleston, South Carolina. As of December 31, 2023, we had 346 branches throughout Pennsylvania, Ohio, Maryland, West Virginia, North Carolina, South Carolina, Washington D.C. and Virginia.
Our market coverage spans several major metropolitan areas including: Pittsburgh, Pennsylvania; Baltimore, Maryland; Cleveland, Ohio; Washington, D.C.; Charlotte, Raleigh, Durham and the Piedmont Triad (Winston-Salem, Greensboro and High Point) in North Carolina; and Charleston, South Carolina. As of December 31, 2024, we had 349 branches throughout Pennsylvania, Ohio, Maryland, West Virginia, North Carolina, South Carolina, Washington D.C. and Virginia.
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 Board Risk Committee, in collaboration with our Risk Management Council, approves our risk appetite on an annual basis, or more frequently, as needed to reflect changes in the risk, regulatory, economic and strategic plan environments, with the goal of ensuring that our strategic plans and business operations remain consistent with our risk appetite given the current regulatory environment and shareholders' expectations.
At December 31, 2023 and 2022, we utilized a third-party consensus macroeconomic forecast reflecting the current and projected macroeconomic environment.
At December 31, 2024 and 2023, we utilized a third-party consensus macroeconomic forecast reflecting the current and projected macroeconomic environment.
Reviewing these various measures provides us with a comprehensive view of our interest rate risk profile, which provides the basis for balance sheet management strategies. The following repricing gap analysis as of December 31, 2023 compares the difference between the amount of interest-earning assets and interest-bearing liabilities subject to repricing over a period of time.
Reviewing these various measures provides us with a comprehensive view of our interest rate risk profile, which provides the basis for balance sheet management strategies. The following repricing gap analysis as of December 31, 2024 compares the difference between the amount of interest-earning assets and interest-bearing liabilities subject to repricing.
The variance percentages represent the change between the net interest income and EVE calculated under the particular rate scenario compared to the net interest income and EVE that was calculated assuming market rates as of December 31, 2023. The measures do not reflect management's potential actions.
The variance percentages represent the change between the net interest income and EVE calculated under the particular rate scenario compared to the net interest income and EVE that was calculated assuming market rates as of December 31, 2024. The calculated results do not reflect management's potential actions.
See Note 1, “Summary of Significant Accounting Policies” and Note 10, “Goodwill and Other Intangible Assets” in the Notes to Consolidated Financial Statements for further discussion of accounting for goodwill and other intangible assets. Income Taxes and Deferred Tax Assets We are subject to the income tax laws of federal, state and other taxing jurisdictions where we conduct business.
See Note 1, “Summary of Significant Accounting Policies” and Note 9, “Goodwill and Other Intangible Assets” in the Notes to Consolidated Financial Statements for further discussion of accounting for goodwill and other intangible assets. 39 Table of Contents Income Taxes and Deferred Tax Assets We are subject to the income tax laws of federal, state and other taxing jurisdictions where we conduct business.
Capital management is a continuous process with capital plans and stress testing for FNB and FNBPA updated at least annually. These capital plans include assessing the adequacy of expected capital levels assuming various scenarios by projecting capital needs for a forecast period of 2-3 years beyond the current year.
Capital management is a continuous process with capital plans and stress testing for FNB and FNBPA updated at least annually. These capital plans include assessing the adequacy of expected capital levels assuming various scenarios by projecting capital needs for a forecast period of two to three years beyond the current year.
A portion of this capacity includes the FRB's Discount Window and their BTFP. We have no borrowings under either facility. Additional sources of unused wholesale credit availability for FNBPA include the ability to borrow from the FHLB, correspondent bank lines, and access to other channels.
A portion of this capacity includes capacity at the FRB's Discount Window. We have no borrowings under this facility. Additional sources of unused wholesale credit availability for FNBPA include the ability to borrow from the FHLB, correspondent bank lines, and access to other funding channels.
As such, we monitor a series of Key Risk Indicators for various business lines and operation units to measure performance alignment with our stated risk appetite. Our top-down risk 76 Table of Contents appetite process serves as a limit for undue risk-taking for bottom-up planning from our various business functions.
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.
In addition, monitors the integrity of the consolidated financial statements, internal controls over financial reporting, qualifications and independence of our audit function. • Nominating and Corporate Governance Committee - responsible for selecting and recommending nominees for election to the FNB and FNBPA Boards of Directors. • Compensation Committee - reviews performance and compensation of senior management and reviews and implements compensation and benefit matters having corporate-wide significance. • Executive Committee - joint session of the FNB and FNBPA Board of Directors to cover special matters, as deemed necessary, in between regularly scheduled board meetings. • Risk Committee - provides oversight of our risk management and assessment processes, including the review and approval of risk management policies, procedures and practices, to identify, assess, monitor and report material risks. • Credit Fair Lending and CRA Committee - responsible for providing oversight of credit and lending strategies an objectives.
In addition, monitors the integrity of the consolidated financial statements, internal controls over financial reporting, qualifications and independence of our audit function. 68 Table of Contents • Nominating and Corporate Governance Committee - responsible for selecting and recommending nominees for election to the FNB and FNBPA Boards of Directors. • Compensation Committee - reviews performance and compensation of senior management and reviews and implements compensation and benefit matters having corporate-wide significance. • 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 and approves the enterprise-wide Risk Governance Framework (ERM Framework) including the review and approval of risk management policies and practices to identify, assess, monitor and report material risks. • Credit Fair Lending and CRA Committee - responsible for providing oversight of credit and lending strategies and objectives.
Taxable-equivalent amounts for 2023, 2022 and 2021 were calculated using a federal statutory income tax rate of 21%. 47 Table of Contents OVERVIEW FNB, headquartered in Pittsburgh, Pennsylvania, is a diversified financial services company operating in seven states and the District of Columbia.
Taxable-equivalent amounts for 2024, 2023 and 2022 were calculated using a federal statutory income tax rate of 21%. OVERVIEW FNB, headquartered in Pittsburgh, Pennsylvania, is a diversified financial services company operating in seven states and the District of Columbia.
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 December 31, 2023: TABLE 34 Moody's Standard & Poor's Kroll F.N.B.
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. 67 Table of Contents The following table presents the credit ratings for FNB and FNBPA as of December 31, 2024: TABLE 33 Moody's Standard & Poor's Kroll F.N.B.
Average consumer loans increased $1.6 billion, or 16.5%, with an increase in residential mortgage loans of $1.4 billion, or 31.3%, reflecting adjustable-rate mortgages held in portfolio on the balance sheet and the continued success of the Physicians First mortgage program, which is a program that provides a bundled suite of specialized products to meet the personal and professional needs of physicians, dentists, veterinarians and other healthcare professionals.
Average consumer loans increased $808.6 million, or 7.0%, with an increase in residential mortgage loans of $1.3 billion, or 22.4%, reflecting adjustable-rate mortgages held in portfolio on the balance sheet and the continued success of the Physicians First mortgage program, which is a program that provides a bundled suite of specialized products to meet the personal and professional needs of physicians, dentists, veterinarians and other healthcare professionals.
A change in the value of securities HTM could also negatively affect the level of stockholders’ equity if there was a decline in the underlying creditworthiness of the issuers. A CECL methodology is applied to securities HTM. As of December 31, 2023, securities HTM had a CECL ACL of $0.28 million.
A change in the value of securities HTM could also negatively affect the level of shareholders’ equity if there was a decline in the underlying creditworthiness of the issuers. A CECL methodology is applied to securities HTM. As of December 31, 2024, securities HTM had a CECL ACL of $0.25 million.
Our organic loan growth in 2023 was driven by the continued success of our strategy to grow high-quality loans and deepen customer relationships across our diverse geographic footprint. As of December 31, 2023, 29.0% of the commercial real estate loans were owner-occupied, while the remaining 71.0% were non-owner-occupied, compared to 30.2% and 69.8%, respectively, as of December 31, 2022.
Our organic loan growth in 2024 was driven by the continued success of our strategy to grow high-quality loans and deepen customer relationships across our diverse geographic footprint. As of both December 31, 2024 and 2023, 29.0% of the commercial real estate loans were owner-occupied, while the remaining 71.0% were non-owner-occupied.
There is no guarantee as to the exact number of shares that will be repurchased and we may discontinue purchases at any time. The Inflation Reduction Act of 2022 includes a 1% excise tax on stock repurchases beginning January 1, 2023.
The purchases will be funded from available working capital. There is no guarantee as to the exact number of shares that will be repurchased and we may discontinue purchases at any time. The Inflation Reduction Act of 2022 includes a 1% excise tax on stock repurchases.
We ended 2023 with approximately 78% of all deposits insured by the FDIC or collateralized. The mix of non-interest-bearing deposits to total deposits equaled 29.4% at December 31, 2023, compared to 34.3% at December 31, 2022 as customers continue to migrate deposits into higher-yielding deposit products.
We ended 2024 with approximately 77% of all deposits insured by the FDIC or collateralized. The mix of non-interest-bearing demand deposits to total deposits equaled 26.3% at December 31, 2024, compared to 29.4% at December 31, 2023 as customers continued to migrate deposits into higher-yielding deposit products.
Subject to its ongoing oversight, the Board of Directors has given ALCO the responsibility for market risk 72 Table of Contents 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.
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.
Liquidity sources from assets include payments from loans and investments, as well as the ability to securitize, pledge or sell loans, investment securities and other assets. Liquidity sources from liabilities are generated primarily through the banking offices of FNBPA in the form of deposits and customer repurchase agreements. FNB also has access to reliable and cost-effective wholesale sources of liquidity.
Bank Liquidity Bank-level liquidity sources from assets include payments from loans and investments, as well as the ability to securitize, pledge or sell loans, investment securities and other assets. Liquidity sources from liabilities are generated primarily through the banking offices of FNBPA in the form of deposits and customer repurchase agreements.
Non-accrual loans of $107.2 million at December 31, 2023 decreased $6.2 million, or 5.5%, compared to December 31, 2022, with both periods remaining at relatively low levels. 61 Table of Contents Following is a summary of non-performing loans and leases, by class, OREO and non-performing assets: TABLE 15 December 31 2023 2022 $ Change % Change (in millions) Commercial real estate $ 42 $ 39 $ 3 7.7 % Commercial and industrial 39 44 (5) (11.4) Commercial leases 3 1 2 200.0 Total commercial loans and leases 84 84 — — Direct installment 5 7 (2) (28.6) Residential mortgages 10 14 (4) (28.6) Indirect installment 2 1 1 100.0 Consumer lines of credit 6 7 (1) (14.3) Total consumer loans 23 29 (6) (20.7) Total non-performing loans and leases $ 107 $ 113 (6) (5.3) Other real estate owned 3 6 (3) (50.0) Total non-performing assets $ 110 $ 119 $ (9) (7.6) % Non-performing loans / total loans and leases 0.33 % 0.37 % Non-performing loans plus OREO / total loans and leases plus OREO 0.34 0.39 Non-performing assets / total assets 0.24 0.27 Following is a summary of loans and leases 90 days or more past due on which interest accruals continue: TABLE 16 December 31 2023 2022 (dollars in millions) Total loans and leases 90 days or more past due $ 12 $ 12 As a percentage of total loans and leases 0.04 % 0.04 % Following is a table showing the amounts of contractual interest income and actual interest income related to non-performing loans: TABLE 17 December 31 2023 2022 2021 (in millions) Gross interest income: Per contractual terms $ 14 $ 11 $ 9 Recorded during the year — — — Loan Modifications During the period, there are loans whose contractual terms have been modified in a manner that grants a concession to a borrower experiencing financial difficulties.
Non-accrual loans of $159.6 million at December 31, 2024 increased $52.4 million, or 48.9%, compared to December 31, 2023, attributed to a small number of commercial real estate loans, with both periods remaining at relatively low levels. 54 Table of Contents Following is a summary of non-performing loans and leases, by class, OREO and non-performing assets: TABLE 15 December 31 2024 2023 $ Change % Change (dollars in millions) Commercial real estate $ 88 $ 42 $ 46 109.5 % Commercial and industrial 51 39 12 30.8 Commercial leases 3 3 — — Other 2 — 2 — Total commercial loans and leases 144 84 60 71.4 Direct installment 2 5 (3) (60.0) Residential mortgages 7 10 (3) (30.0) Indirect installment 2 2 — — Consumer lines of credit 4 6 (2) (33.3) Total consumer loans 15 23 (8) (34.8) Total non-performing loans and leases $ 159 $ 107 52 48.6 Other real estate owned 3 3 — — Total non-performing assets $ 162 $ 110 $ 52 47.3 % Non-performing loans / total loans and leases 0.47 % 0.33 % Non-performing loans plus OREO / total loans and leases plus OREO 0.48 0.34 Non-performing assets / total assets 0.33 0.24 Following is a summary of loans and leases 90 days or more past due on which interest accruals continue: TABLE 16 December 31 2024 2023 (dollars in millions) Total loans and leases 90 days or more past due $ 14 $ 12 As a percentage of total loans and leases 0.04 % 0.04 % Following is a table showing the amounts of contractual interest income and actual interest income related to non-performing loans: TABLE 17 December 31 2024 2023 2022 (in millions) Gross interest income: Per contractual terms $ 24 $ 14 $ 11 Recorded during the year — — — Loan Modifications During the period, there are loans whose contractual terms have been modified in a manner that grants a concession to a borrower experiencing financial difficulties.
Short-term borrowings, made up of customer repurchase agreements (also referred to as securities sold under repurchase agreements), FHLB advances and subordinated notes, increased to $2.5 billion at December 31, 2023 from $1.4 billion at December 31, 2022, primarily due to a $970.0 million increase in short-term FHLB borrowings, as we increased liquidity due to the bank failures in early 2023. 68 Table of Contents Following is a summary of selected information relating to short-term FHLB borrowings: TABLE 26 At or for the Year Ended December 31 2023 2022 2021 (dollars in millions) FHLB Advances (Short-term) Balance at year-end $ 1,900 $ 930 $ 1,030 Maximum month-end balance 2,245 930 1,280 Average balance during year 1,562 933 1,113 Weighted average interest rates: At year-end 5.64 % 2.18 % 2.14 % During the year 4.08 2.18 2.13 For additional information relating to deposits and short-term borrowings, see Note 13, “Deposits” and Note 14, “Short-Term Borrowings” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report.
Short-term borrowings, made up of customer repurchase agreements (also referred to as securities sold under repurchase agreements), FHLB advances and subordinated notes, decreased to $1.3 billion at December 31, 2024 from $2.5 billion at December 31, 2023, primarily due to a $1.3 billion decrease in short-term FHLB borrowings. 60 Table of Contents Following is a summary of selected information relating to short-term FHLB borrowings: TABLE 25 At or for the Year Ended December 31 2024 2023 2022 (dollars in millions) FHLB Advances (Short-term) Balance at year-end $ 585 $ 1,900 $ 930 Maximum month-end balance 2,990 2,245 930 Average balance during year 1,451 1,562 933 Weighted average interest rates: At year-end 4.68 % 5.64 % 2.18 % During the year 5.24 4.08 2.18 For additional information relating to deposits and short-term borrowings, see Note 12, “Deposits” and Note 13, “Short-Term Borrowings” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report.
Our top 25 non-owner occupied commercial real estate loans averaged approximately $31 million per exposure although the office space was comprised of mid-sized offices located outside of metropolitan business districts with 40% of the office portfolio averaging less than $5 million per exposure.
Our top 25 non-owner occupied commercial real estate loans averaged approximately $22 million per exposure with the office component comprised of mid-sized offices primarily located outside of central business districts with 43% of the office portfolio averaging less than $5 million per exposure.
Consumer banking products and services include deposit products, mortgage lending, consumer lending and a complete suite of mobile and online banking services. Wealth management services include asset management, private banking and insurance. FINANCIAL SUMMARY For the full year of 2023, net income available to common stockholders was $476.8 million, or $1.31 per diluted common share.
Consumer banking products and services include deposit products, mortgage lending, consumer lending and a complete suite of mobile and online banking services. Wealth management services include asset management, private banking and insurance. FINANCIAL SUMMARY For 2024, net income available to common shareholders was $459.3 million, or $1.27 per diluted common share.
As of December 31, 2023 and 2022, there were no concentrations of loans relating to any industry in excess of 10% of total loans. The decrease in indirect installment loans is primarily due to the transfer of $355 million of indirect auto loans to held-for-sale in December 2023.
As of December 31, 2024 and 2023, there were no concentrations of loans relating to any industry in excess of 10% of total loans. The decrease in indirect installment loans is primarily due to the sale of $431 million of indirect auto loans that closed in the third quarter of 2024.
We may issue additional preferred or common stock to maintain our well-capitalized status. 69 Table of Contents CONTRACTUAL OBLIGATIONS, COMMITMENTS AND OFF-BALANCE SHEET ARRANGEMENTS The following table sets forth contractual obligations of principal that represent required and potential cash outflows as of December 31, 2023: TABLE 27 (in millions) Total Deposits without a stated maturity $ 28,496 Certificates and other time deposits 6,215 Operating leases 266 Long-term borrowings 1,971 Total $ 36,948 The following table sets forth the amount of commitments to extend credit and standby letters of credit as of December 31, 2023: TABLE 28 (in millions) Total Commitments to extend credit $ 13,656 Standby letters of credit 257 Total $ 13,913 Commitments to extend credit and standby letters of credit do not necessarily represent future cash requirements because while the borrower has the ability to draw upon these commitments at any time, these commitments often expire without being drawn upon.
We may issue additional preferred or common stock to maintain our well-capitalized status. 61 Table of Contents CONTRACTUAL OBLIGATIONS, COMMITMENTS AND OFF-BALANCE SHEET ARRANGEMENTS The following table sets forth contractual obligations of principal that represent required and potential cash outflows as of December 31, 2024: TABLE 26 (in millions) Total Deposits without a stated maturity $ 29,607 Certificates and other time deposits 7,500 Operating leases 298 Long-term borrowings 3,012 Total $ 40,417 The following table sets forth the amount of commitments to extend credit and standby letters of credit as of December 31, 2024: TABLE 27 (in millions) Total Commitments to extend credit $ 14,283 Standby letters of credit 271 Total $ 14,554 Commitments to extend credit and standby letters of credit do not necessarily represent future cash requirements because while the borrower has the ability to draw upon these commitments at any time, these commitments often expire without being drawn upon.
To facilitate peer comparisons of net interest margin and efficiency ratio, we use net interest income on a taxable-equivalent basis in calculating net interest margin by increasing the interest income earned on tax-exempt assets (loans and investments) to make it fully equivalent to interest income earned on taxable investments (this adjustment is not permitted under GAAP).
These costs are specific to each individual transaction and may vary significantly based on the size and complexity of the transaction. 40 Table of Contents To facilitate peer comparisons of net interest margin and efficiency ratio, we use net interest income on a taxable-equivalent basis in calculating net interest margin by increasing the interest income earned on tax-exempt assets (loans and investments) to make it fully equivalent to interest income earned on taxable investments (this adjustment is not permitted under GAAP).
The increase in earning assets was primarily driven by a $3.5 billion, or 12.7%, increase in average loans, partially offset by a decrease of $1.1 billion, or 51.6%, in average interest-bearing deposits with banks.
The increase in earning assets was primarily driven by a $1.9 billion, or 6.2%, increase in average loans and $65.6 million, or 0.9%, increase in average securities, partially offset by a decrease of $36.9 million, or 3.5%, in average interest-bearing deposits with banks.
We also model rate scenarios which move all rates in an immediate and parallel fashion (Rate Shocks) and model scenarios that gradually change the shape of the yield curve.
In addition to the repricing gap analysis above, we model rate scenarios which move all rates gradually over twelve months (Rate Ramps). We also model rate scenarios which move all rates in an immediate and parallel fashion (Rate Shocks) and model scenarios that gradually change the shape of the yield curve.
The lines of defense model consists of: • First Line of Defense - make each of our businesses and enterprise support areas that generate risk and are principally responsible for owning and managing the day-to-day risk-taking activities in accordance with the risk frameworks. • Second Line of Defense - consists of Risk Management and Compliance Departments responsible for developing risk frameworks, overseeing risk-taking activities and identifying, assessing, monitoring and reporting on enterprise aggregate risks. • Third Line of Defense - is Internal Audit and provides independent assurance on the effectiveness of controls and risk management practices across our first and second lines of defense.
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 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 net interest margin FTE (non-GAAP) was 3.35%, compared to 3.03%, as the yield on earning assets increased 153 basis points to 5.00%, reflecting variable-rate loans that repriced upwards in 2023, as well as higher yields on new loan originations, investment securities and interest-bearing deposits with banks due to the impact of the higher interest rate environment.
The yield on earning assets increased 42 basis points to 5.42%, reflecting variable-rate loans that repriced upwards in 2024, as well as higher yields on new loan originations, investment securities and interest-bearing deposits with banks due to the impact of the higher interest rate environment.
As of December 31, 2023 and 2022, we did not hold any trading securities. 65 Table of Contents The following table indicates the respective contractual maturities and weighted-average yields of debt securities HTM, shown at amortized cost, as of December 31, 2023: TABLE 22 (dollars in millions) Amount Weighted Average Yield Obligations of U.S.
The following table indicates the respective contractual maturities and weighted-average yields of debt securities HTM, shown at amortized cost, as of December 31, 2024: TABLE 21 (dollars in millions) Amount Weighted Average Yield Obligations of U.S.
Our recorded goodwill relates to value inherent in our Community Banking, Wealth Management and Insurance segments. The value of goodwill and other identifiable intangibles is dependent upon our ability to provide high quality, cost-effective services in the face of competition.
Our recorded goodwill relates to value inherent in our Community Banking, Wealth Management and Insurance segments. The value of goodwill and other identifiable intangibles is dependent upon our ability to provide high quality, cost-effective services in the face of competition. As such, these values are supported ultimately by revenue that is driven by the volume of business transacted.
Assuming a static Balance Sheet, a +100 basis point Rate Shock increases net interest income (12 months) by 3.4% at December 31, 2023 and 1.1% at December 31, 2022. For a +200 basis point Rate Shock, net interest income (12 months) increases by 6.7% at December 31, 2023 and 3.3% at December 31, 2022.
For a +200 basis point Rate Shock, net interest income (12 months) increases by 3.9% at December 31, 2024 and 6.7% at December 31, 2023.
We believe certain charges such as merger expenses, FDIC special assessment, loss on securities restructuring, valuation allowance on auto loans held-for-sale, initial provision for non-PCD loans acquired and branch consolidation costs are not organic costs to run our operations and facilities.
We believe certain charges such as preferred dividend at redemption, merger expenses, FDIC special assessment, realized loss on investment securities restructuring, software impairment, loss related to indirect auto loan sales, initial provision for non-PCD loans acquired and branch consolidation costs are not organic costs to run our operations and facilities.
We seek to maintain a strong capital base to support our growth and expansion activities, to provide stability to current operations and to promote public confidence. We have an effective shelf registration statement filed with the SEC.
We seek to maintain a strong capital base to support our growth and expansion activities, to provide stability to current operations and to promote public confidence.
The effective tax rate was 16.9% for 2023, compared to 20.6% for 2022, primarily due to the recording of renewable energy investment tax credits in 2023, offset slightly by higher pre-tax earnings in 2023.
The effective tax rate was 16.3% for 2024, compared to 16.9% for 2023, primarily due to the recording of higher levels of renewable energy investment tax credits and lower pre-tax earnings in 2024.
Additionally, average non-interest-bearing deposits decreased $739.2 million, or 6.4% as customers shifted balances into higher yielding deposit products.
Additionally, average non-interest-bearing demand deposits decreased $1.0 billion, or 9.2%, as customers shifted balances into higher yielding deposit products.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS MD&A represents an overview of and highlights material changes to our financial condition and consolidated results of operations. This MD&A should be read in conjunction with the Consolidated Financial Statements and Notes presented in Item 8 of this Report.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) represents an overview of and highlights material changes to our financial condition and consolidated results of operations.
The rate paid on interest-bearing liabilities increased 175 basis points to 2.43% for 2023, compared to 2022, as the cost of interest-bearing deposits increased 164 basis points from 0.49% to 2.13%.
The rate paid on interest-bearing liabilities increased 83 basis points to 3.26% for 2024, compared to 2023, as the cost of interest-bearing deposits increased 83 basis points from 2.13% to 2.96%.
Since inception, we repurchased 14.1 million shares at a weighted average share price of $11.39 for $160.9 million under this repurchase program, with $139.1 million remaining for repurchase. The repurchases will be made from time to time on the open market at prevailing market prices or in privately negotiated transactions. The purchases will be funded from available working capital.
Since inception of our $300 million stock repurchase program starting in 2022, we repurchased 14.4 million shares at a weighted average share price of $11.43 for $164.3 million under this repurchase program, with $135.7 million remaining for repurchase. Any repurchases will be made from time to time on the open market at prevailing market prices or in privately negotiated transactions.
The Board of Directors believes that our enterprise-wide risk management process is effective and enables the Board of Directors to: • assess the quality of the information they receive; • understand the businesses, investments and financial, accounting, legal, regulatory and strategic considerations, and the risks that FNB faces; • oversee and assess how senior management evaluates risk; and • assess appropriately the quality of our enterprise-wide risk management processes.
The Board of Directors believes that our enterprise-wide risk management process is effective and enables the Board of Directors to: • assess the quality of the information they receive; • understand the businesses, investments and financial, accounting, legal, regulatory and strategic considerations, and the risks that FNB faces; • oversee and assess how senior management evaluates risk; and • assess appropriately the quality of our enterprise-wide risk management processes. 69 Table of Contents RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE INDICATORS TO GAAP 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.
The following table presents information regarding the provision for credit loss expense and net charge-offs for the years 2021 through 2023: TABLE 6 2023 vs 2022 2022 vs 2021 (dollars in thousands) 2023 2022 $ Change % Change 2021 $ Change % Change Provision for credit losses on loans and leases $ 71,607 $ 61,800 $ 9,807 16 % $ (4,853) $ 66,653 1,373 % Provision for unfunded loan commitments 99 2,230 (2,131) (96) 5,472 (3,242) (59) Total provision for credit losses on loans and leases 71,706 64,030 7,676 12 619 63,411 10,244 Provision for securities 48 176 (128) (73) 10 166 1,660 Total provision for credit losses $ 71,754 $ 64,206 $ 7,548 12 % $ 629 $ 63,577 10,108 % Net loan charge-offs $ 67,755 $ 16,151 $ 51,604 320 % $ 13,949 $ 2,202 16 % Net loan charge-offs / total average loans and leases 0.22 % 0.06 % 0.06 % Provision for credit losses of $71.7 million during 2023 increased $7.5 million from 2022.
The following table presents information regarding the provision for credit loss expense and net charge-offs for the years 2022 through 2024: TABLE 6 2024 vs 2023 2023 vs 2022 (dollars in thousands) 2024 2023 $ Change % Change 2022 $ Change % Change Provision for credit losses on loans and leases $ 79,904 $ 71,607 $ 8,297 12 % $ 61,800 $ 9,807 16 % Provision for unfunded loan commitments (98) 99 (197) (199) 2,230 (2,131) (96) Total provision for credit losses on loans and leases 79,806 71,706 8,100 11 64,030 7,676 12 Provision for securities (30) 48 (78) (163) 176 (128) (73) Total provision for credit losses $ 79,776 $ 71,754 $ 8,022 11 % $ 64,206 $ 7,548 12 % Net loan charge-offs $ 62,660 $ 67,755 $ (5,095) (8) % $ 16,151 $ 51,604 320 % Net loan charge-offs / total average loans and leases 0.19 % 0.22 % 0.06 % Provision for credit losses of $79.8 million during 2024 increased $8.0 million from 2023.
The total cost of funds increased 127 basis points to 1.73%, primarily due to a 164 basis point increase in interest-bearing deposit costs. The rates paid on short-term and long-term borrowings increased 203 and 110 basis points, respectively, due to the higher interest rate environment.
The total cost of funds increased 72 basis points to 2.45%, primarily due to an 83 basis point increase in interest-bearing deposit costs. The rates paid on short-term and long-term borrowings increased 105 and 24 basis points, respectively, due to the higher interest rate environment throughout much of 2024.
Growth in total average commercial loans included $1.0 billion, or 9.3%, in commercial real estate loans and an increase of $793.7 million, or 12.2%, in commercial and industrial loans driven by a combination of organic loan origination activity led by the Cleveland, Pittsburgh and South Carolina markets as well as 54 Table of Contents adding the acquired Union loans.
Growth in total average commercial loans included $867.0 million, or 7.4%, in commercial real estate loans and an increase of $189.3 million, or 2.6%, in commercial and industrial loans driven by a combination of organic loan origination 47 Table of Contents activity led by the Cleveland, Pittsburgh and South Carolina markets and fundings on previously originated commercial real estate projects.
The effective tax rate was 16.9%, compared to 20.6%, primarily due to renewable energy investment tax credits recognized in 2023 as part of a solar project financing transaction originated by our commercial leasing business. • Return on average tangible common equity ratio (non-GAAP) was 15.5%, compared to 15.3%.
The effective tax rate was 16.3%, compared to 16.9%, primarily due to renewable energy investment tax credits recognized in 2024 and 2023 as part of solar project financing transactions originated by our commercial leasing business.
TABLE 35 Operating net income available to common stockholders Year Ended December 31 2023 2022 2021 (in thousands) Net income available to common stockholders $ 476,810 $ 431,068 $ 396,561 Merger-related expense 2,215 45,259 1,764 Tax benefit of merger-related expense (465) (9,504) (370) Provision expense related to acquisitions — 28,515 — Tax benefit of provision expense related to acquisitions — (5,988) — Branch consolidation costs — 7,016 2,644 Tax benefit of branch consolidation costs — (1,473) (555) FDIC special assessment 29,938 — — Tax benefit of FDIC special assessment (6,287) — — Loss on securities restructuring 67,354 — — Tax benefit of loss on securities restructuring (14,144) — — Valuation allowance on auto loans held-for-sale 16,687 — — Tax benefit of valuation allowance on auto loans held-for-sale (3,504) — — Operating net income available to common stockholders (non-GAAP) $ 568,604 $ 494,893 $ 400,044 The table above shows how operating net income available to common stockholders (non-GAAP) is derived from amounts reported in our financial statements.
TABLE 34 Operating net income available to common shareholders Year Ended December 31 2024 2023 2022 (in thousands) Net income available to common shareholders $ 459,327 $ 476,810 $ 431,068 Preferred dividend at redemption 3,995 — — Merger-related expense — 2,215 45,259 Tax benefit of merger-related expense — (465) (9,504) Provision expense related to acquisitions — — 28,515 Tax benefit of provision expense related to acquisitions — — (5,988) Branch consolidation costs 1,194 — 7,016 Tax benefit of branch consolidation costs (251) — (1,473) FDIC special assessment 5,212 29,938 — Tax benefit of FDIC special assessment (1,095) (6,287) — Realized loss on investment securities restructuring 33,980 67,354 — Tax benefit of realized loss on investment securities restructuring (7,136) (14,144) — Software impairment 3,690 — — Tax benefit of software impairment (775) — — Loss related to indirect auto loan sales 8,969 16,687 — Tax benefit of loss related to indirect auto loan sales (1,883) (3,504) — Operating net income available to common shareholders (non-GAAP) $ 505,227 $ 568,604 $ 494,893 The table above shows how operating net income available to common shareholders (non-GAAP) is derived from amounts reported in our financial statements.
Corporation and First National Bank of Pennsylvania Negative Stable Stable n/a - not applicable On August 27,2023, Moody's affirmed our ratings and changed their outlook to negative as part of their review of 27 banks. 75 Table of Contents RISK MANAGEMENT As a financial institution, we take on a certain amount of risk in every business decision, transaction and activity.
Corporation and First National Bank of Pennsylvania Negative Stable Stable n/a - not applicable RISK MANAGEMENT As a financial institution, we take on a certain amount of risk in every business decision, transaction and activity.
Comparatively, the AULC was $21.4 million at December 31, 2022 and included provision expense for unfunded loan commitments and letters of credit of $2.3 million for the year ended December 31, 2022. 64 Table of Contents Following is a summary of the allocation of the ACL and the percentage of loans in each category to total loans: TABLE 21 December 31 2023 2022 (dollars in millions) Allowance % of Loans Allowance % of Loans Commercial real estate $ 167 38 % $ 162 38 % Commercial and industrial 88 23 102 24 Commercial leases 21 2 14 2 Other 4 — 4 — Commercial loans and leases 279 63 282 64 Direct installment 34 8 36 9 Residential mortgages 71 21 56 18 Indirect installment 13 4 17 5 Consumer lines of credit 9 4 11 4 Consumer loans 126 37 120 36 Total $ 406 100 % $ 402 100 % Investment Activity Investment activities serve to generate net interest income while supporting interest rate sensitivity and liquidity positions.
Following is a summary of the allocation of the ACL and the percentage of loans in each category to total loans: TABLE 20 December 31 2024 2023 (dollars in millions) Allowance % of Loans Allowance % of Loans Commercial real estate $ 167 38 % $ 167 38 % Commercial and industrial 86 22 88 23 Commercial leases 23 2 21 2 Other 4 — 4 — Commercial loans and leases 280 62 279 63 Direct installment 29 8 34 8 Residential mortgages 96 24 71 21 Indirect installment 10 2 13 4 Consumer lines of credit 9 4 9 4 Consumer loans 143 38 126 37 Total $ 423 100 % $ 406 100 % Investment Activity Investment activities serve to generate net interest income while supporting interest rate sensitivity and liquidity positions.
Treasury: Maturing after five years but within ten years $ — 5.25 % Obligations of U.S. government agencies: Maturing after five years but within ten years 1 7.48 Obligations of U.S. government-sponsored entities: Maturing after one year but within five years 68 5.11 States of the U.S. and political subdivisions: Maturing within one year 2 2.31 Maturing after one year but within five years 57 2.65 Maturing after five years but within ten years 201 3.39 Maturing after ten years 757 3.69 Other debt securities: Maturing after five years but within ten years 15 6.13 Residential mortgage-backed securities: Agency mortgage-backed securities 1,057 2.09 Agency collateralized mortgage obligations 824 1.87 Commercial mortgage-backed securities 929 3.89 Total $ 3,911 2.93 % The weighted average yields for tax-exempt debt securities are computed on an FTE basis using the federal statutory tax rate of 21.0%. 66 Table of Contents The amortized cost of AFS and HTM securities are summarized in the following table: TABLE 23 December 31 2023 2022 $ Change % Change (in millions) Securities Available for Sale: U.S.
Treasury: Maturing after one year but within five years $ 1 5.25 % Obligations of U.S. government agencies: Maturing after five years but within ten years 7.03 Obligations of U.S. government-sponsored enterprises: Maturing within one year 29 5.01 States of the U.S. and political subdivisions: Maturing within one year 5 2.78 Maturing after one year but within five years 68 2.67 Maturing after five years but within ten years 208 3.45 Maturing after ten years 711 3.66 Other debt securities: Maturing after one year but within five years 1 9.24 Maturing after five years but within ten years 15 5.98 Residential MBS: Agency MBS 901 2.07 Agency collateralized mortgage obligations 714 1.87 Commercial MBS 1,326 4.19 Total $ 3,979 3.15 % The weighted average yields for tax-exempt debt securities are computed on an FTE basis using the federal statutory tax rate of 21.0%. 58 Table of Contents The amortized cost of AFS and HTM securities are summarized in the following table: TABLE 22 December 31 2024 2023 $ Change % Change (dollars in millions) Securities Available for Sale: U.S.
Accordingly, we have designed an Enterprise Risk Management Framework and risk management practices to help manage enterprise risks. 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.
Our Board of Directors and senior management have identified seven major categories of risk: credit risk, market risk, liquidity risk, operational risk, compliance risk, reputation risk and strategic risk.
The sale of AFS investment securities resulted in a realized loss (pre-tax) of $67.4 million. We reinvested proceeds from the sale of those investment securities with an average yield of 1.08% into investment securities with yields approximately 350 basis points higher with a similar duration and convexity profile.
We reinvested proceeds from the sale of those investment securities with an average yield of 1.41% into investment securities yielding 4.78% with a similar duration and convexity profile. In December 2023, we completed the sale of $648.7 million of AFS investment securities, resulting in a realized loss (pre-tax) of $67.4 million in the fourth quarter of 2023.
These costs are specific to each individual transaction and may vary significantly based on the size and complexity of the transaction. 77 Table of Contents TABLE 36 Operating earnings per diluted common share Year Ended December 31 2023 2022 2021 Net income per diluted common share $ 1.31 $ 1.22 $ 1.23 Merger-related expense 0.01 0.13 0.01 Tax benefit of merger-related expense — (0.03) — Provision expense related to acquisitions — 0.08 — Tax benefit of provision expense related to acquisitions — (0.02) — Branch consolidation costs — 0.02 0.01 Tax benefit of branch consolidation costs — — — FDIC special assessment 0.08 — — Tax benefit of FDIC special assessment (0.02) — — Loss on securities restructuring 0.19 — — Tax benefit of loss on securities restructuring (0.04) — — Valuation allowance on auto loans held-for-sale 0.05 — — Tax benefit of valuation allowance on auto loans held-for-sale (0.01) — — Operating earnings per diluted common share (non-GAAP) $ 1.57 $ 1.40 $ 1.24 TABLE 37 Return on average tangible common equity Year Ended December 31 2023 2022 2021 (dollars in thousands) Net income available to common stockholders $ 476,810 $ 431,068 $ 396,561 Amortization of intangibles, net of tax 15,892 10,956 9,573 Tangible net income available to common stockholders (non-GAAP) $ 492,702 $ 442,024 $ 406,134 Average total stockholders’ equity $ 5,851,082 $ 5,475,843 $ 5,033,188 Less: Average preferred stockholders’ equity (106,882) (106,882) (106,882) Less: Average intangible assets (1) (2,556,119) (2,481,533) (2,310,419) Average tangible common equity (non-GAAP) $ 3,188,081 $ 2,887,428 $ 2,615,887 Return on average tangible common equity (non-GAAP) 15.45 % 15.31 % 15.53 % (1) Excludes loan servicing rights.
These costs are specific to each individual transaction and may vary significantly based on the size and complexity of the transaction. 70 Table of Contents TABLE 35 Operating earnings per diluted common share Year Ended December 31 2024 2023 2022 Earnings per diluted common share $ 1.27 $ 1.31 $ 1.22 Preferred dividend at redemption 0.01 — — Merger-related expense — 0.01 0.13 Tax benefit of merger-related expense — — (0.03) Provision expense related to acquisitions — — 0.08 Tax benefit of provision expense related to acquisitions — — (0.02) Branch consolidation costs — — 0.02 Tax benefit of branch consolidation costs — — — FDIC special assessment 0.01 0.08 — Tax benefit of FDIC special assessment — (0.02) — Realized loss on investment securities restructuring 0.09 0.19 — Tax benefit of realized loss on investment securities restructuring (0.02) (0.04) — Software impairment 0.01 — — Tax benefit of software impairment — — — Loss related to indirect auto loan sales 0.02 0.05 — Tax benefit of loss related to indirect auto loan sales (0.01) (0.01) — Operating earnings per diluted common share (non-GAAP) $ 1.39 $ 1.57 $ 1.40 TABLE 36 Return on average tangible common equity Year Ended December 31 2024 2023 2022 (dollars in thousands) Net income available to common shareholders $ 459,327 $ 476,810 $ 431,068 Amortization of intangibles, net of tax 13,821 15,892 10,956 Tangible net income available to common shareholders (non-GAAP) $ 473,148 $ 492,702 $ 442,024 Average total shareholders’ equity $ 6,132,346 $ 5,851,082 $ 5,475,843 Less: Average preferred shareholders’ equity (13,141) (106,882) (106,882) Less: Average intangible assets (1) (2,537,778) (2,556,119) (2,481,533) Average tangible common equity (non-GAAP) $ 3,581,427 $ 3,188,081 $ 2,887,428 Return on average tangible common equity (non-GAAP) 13.21 % 15.45 % 15.31 % (1) Excludes loan servicing rights. 71 Table of Contents TABLE 37 Operating return on average tangible common equity (dollars in thousands) 2024 2023 2022 Operating net income available to common shareholders $ 505,227 $ 568,604 $ 494,893 Amortization of intangibles, net of tax 13,821 15,892 10,956 Tangible operating net income available to common shareholders (non-GAAP) $ 519,048 $ 584,496 $ 505,849 Average total shareholders' equity $ 6,132,346 $ 5,851,082 $ 5,475,843 Less: Average preferred shareholders' equity (13,141) (106,882) (106,882) Less: Average intangible assets (1) (2,537,778) (2,556,119) (2,481,533) Average tangible common equity (non-GAAP) $ 3,581,427 $ 3,188,081 $ 2,887,428 Operating return on average tangible common equity (non-GAAP) 14.49 % 18.33 % 17.52 % (1) Excludes loan servicing rights.
For example, depositors may want short-term deposits, while borrowers may desire long-term loans. Changes in market interest rates may result in changes in the fair value of our financial instruments, cash flows and net interest income.
Changes in market interest rates may result in changes in the fair value of our financial instruments, cash flows and net interest income.
The following table presents non-interest expense excluding significant items impacting earnings: TABLE 10 $ % (dollars in thousands) 2023 2022 Change Change Total non-interest expense, as reported $ 915,436 $ 826,392 $ 89,044 10.8 % Significant items: Branch consolidations — (7,016) 7,016 Merger-related (2,215) (45,259) 43,044 FDIC special assessment (29,938) — (29,938) Valuation allowance on auto loans held-for-sale (16,687) — (16,687) Total non-interest expense, excluding significant items (1) $ 866,596 $ 774,117 $ 92,479 11.9 % (1) Non-GAAP Income Taxes The following table presents information regarding income tax expense and certain tax rates: TABLE 11 Year ended December 31 2023 2022 2021 (dollars in thousands) Income tax expense $ 98,795 $ 113,626 $ 98,496 Effective tax rate 16.9 % 20.6 % 19.6 % Statutory federal tax rate 21.0 21.0 21.0 Our income tax expense for 2023 decreased $14.8 million, or 13.1% from 2022.
The following table presents non-interest expense excluding significant items impacting earnings: TABLE 10 (dollars in thousands) 2024 2023 $ Change % Change Total non-interest expense, as reported $ 961,339 $ 915,436 $ 45,903 5.0 % Significant items: Branch consolidations (1,194) — (1,194) Merger-related — (2,215) 2,215 FDIC special assessment (5,212) (29,938) 24,726 Software impairment (3,690) — (3,690) Loss related to indirect auto loan sales (8,969) (16,687) 7,718 Total non-interest expense, excluding significant items (1) $ 942,274 $ 866,596 $ 75,678 8.7 % (1) Non-GAAP Income Taxes The following table presents information regarding income tax expense and certain tax rates: TABLE 11 Year ended December 31 2024 2023 2022 (dollars in thousands) Income tax expense $ 90,391 $ 98,795 $ 113,626 Effective tax rate 16.3 % 16.9 % 20.6 % Statutory federal tax rate 21.0 21.0 21.0 Our income tax expense for 2024 decreased $8.4 million, or 8.5%, from 2023.
The corresponding metrics for a minus 100 basis point Rate Shock are (3.6)% and 1.2% at December 31, 2023 and December 31, 2022, respectively. These results use historical long-term deposit rate beta assumptions that are regularly analyzed and adjusted as necessary for both rising and falling rate scenarios.
These results use historical long-term deposit rate beta assumptions that are regularly analyzed and adjusted as necessary for both rising and falling rate scenarios. Assuming a static Balance Sheet, a +100 basis point Rate Shock increases net interest income (12 months) by 2.0% at December 31, 2024 and 3.4% at December 31, 2023.
Average interest-bearing liabilities of $27.0 billion increased $2.8 billion, or 11.6%, driven by an increase of $1.3 billion in average interest-bearing deposits which included organic growth in new and existing customer relationships and acquired Union deposits, and an increase in average borrowings of $1.5 billion.
Average interest-bearing liabilities of $29.8 billion increased $2.8 billion, or 10.4%, driven by an increase of $2.2 billion in average interest-bearing deposits, which included organic growth in new and existing customer relationships, and an increase in average borrowings of $0.6 billion. Net interest margin FTE (non-GAAP) was 3.09% compared to 3.35%.
Non-Interest Income The breakdown of non-interest income for the years 2021 through 2023 is presented in the following table: TABLE 7 2023 vs 2022 2022 vs 2021 (dollars in thousands) 2023 2022 $ Change % Change 2021 $ Change % Change Service charges $ 81,892 $ 86,895 $ (5,003) (5.8) % $ 73,779 $ 13,116 17.8 % Interchange and card transaction fees 52,752 50,803 1,949 3.8 47,956 2,847 5.9 Trust services 42,490 39,033 3,457 8.9 37,370 1,663 4.5 Insurance commissions and fees 23,104 24,253 (1,149) (4.7) 25,522 (1,269) (5.0) Securities commissions and fees 27,734 23,715 4,019 16.9 22,207 1,508 6.8 Capital markets income 27,103 35,295 (8,192) (23.2) 36,812 (1,517) (4.1) Mortgage banking operations 20,692 20,646 46 0.2 37,355 (16,709) (44.7) Dividends on non-marketable equity securities 21,262 11,953 9,309 77.9 8,588 3,365 39.2 Bank owned life insurance 11,945 11,942 3 — 14,866 (2,924) (19.7) Net securities gains (losses) (67,432) 48 (67,480) n/m 193 (145) (75.1) Other 12,790 18,970 (6,180) (32.6) 25,771 (6,801) (26.4) Total non-interest income $ 254,332 $ 323,553 $ (69,221) (21.4) % $ 330,419 $ (6,866) (2.1) % n/m - not meaningful Total non-interest income of $254.3 million for 2023 decreased $69.2 million, or 21.4%, from $323.6 million in 2022.
For additional information relating to the allowance and provision for credit losses, refer to the Allowance for Credit Losses section of this MD&A. 48 Table of Contents Non-Interest Income The breakdown of non-interest income for the years 2022 through 2024 is presented in the following table: TABLE 7 2024 vs 2023 2023 vs 2022 (dollars in thousands) 2024 2023 $ Change % Change 2022 $ Change % Change Service charges $ 90,996 $ 81,892 $ 9,104 11.1 % $ 86,895 $ (5,003) (5.8) % Interchange and card transaction fees 51,539 52,752 (1,213) (2.3) 50,803 1,949 3.8 Trust services 45,576 42,490 3,086 7.3 39,033 3,457 8.9 Insurance commissions and fees 22,370 23,104 (734) (3.2) 24,253 (1,149) (4.7) Securities commissions and fees 31,005 27,734 3,271 11.8 23,715 4,019 16.9 Capital markets income 24,239 27,103 (2,864) (10.6) 35,295 (8,192) (23.2) Mortgage banking operations 27,380 20,692 6,688 32.3 20,646 46 0.2 Dividends on non-marketable equity securities 25,046 21,262 3,784 17.8 11,953 9,309 77.9 Bank owned life insurance 16,741 11,945 4,796 40.2 11,942 3 — Net securities gains (losses) (34,011) (67,432) 33,421 n/m 48 (67,480) n/m Other 15,514 12,790 2,724 21.3 18,970 (6,180) (32.6) Total non-interest income $ 316,395 $ 254,332 $ 62,063 24.4 % $ 323,553 $ (69,221) (21.4) % n/m - not meaningful Total non-interest income increased $62.1 million, or 24.4%.
Excluding significant items totaling $48.8 million in 2023 and $52.3 million in 2022, operating non-interest expense (non-GAAP) increased $92.5 million, or 11.9%. The 2023 compared to 2022 variances in significant individual non-interest expense items are further explained in the following paragraphs.
Excluding significant items totaling $19.1 million in 2024 and $48.8 million in 2023, operating non-interest expense (non-GAAP) increased $75.7 million, or 8.7%. The variances in significant individual non-interest expense items between 2024 and 2023 are explained in the following paragraphs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information called for by this item is provided in the Market Risk section of MD&A, which is included in Item 7 of this Report, and is incorporated herein by reference. 81 Table of Contents
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information called for by this item is provided in the Market Risk section of MD&A, which is included in Item 7 of this Report, and is incorporated herein by reference. 74 Table of Contents

Other FNB 10-K year-over-year comparisons