FNB US Equity☆

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. This MD&A should be read in conjunction with the Consolidated Financial Statements and Notes presented in Item 8 of this Report. Results of operations for the periods included in this review are not necessarily indicative of results to be obtained during any future period.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward‐looking statements are those that do not relate to historical facts and that are based on current assumptions, beliefs, estimates, expectations and projections, many of which, by their nature, are inherently uncertain and beyond our control. Forward-looking statements may relate to various matters, including our financial condition, results of operations, plans, objectives, future performance, business or industry, and usually can be identified by the use of forward-looking words, such as “anticipates,” “assumes,” “believes,” “can,” “continues,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “likely,” “may,” “might,” “objective,” “plans,” “potential,” “projects,” “remains,” “should,” “target,” “trend,” “will,” “would,” or similar words or expressions or variations thereof, and the negative thereof, but these terms are not the exclusive means of identifying such statements. You should not place undue reliance on forward-looking statements, as they are subject to risks and uncertainties, including, but not limited to, those described below. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements we may make.

There are various important factors that could cause future results to differ materially from historical performance and any forward-looking statements. Factors that might cause such differences, include, but are not limited to:

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

•the volatility of the mortgage banking business;

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

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

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

•the risk associated with uninsured deposit account balances;

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

•our ability to recruit and retain qualified banking professionals;

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

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

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

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

•risks associated with reliance on third-party vendors;

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

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

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

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

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

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

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

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

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

You should treat forward-looking statements as speaking only as of the date they are made and based only on information then actually known to us. We do not undertake, and specifically disclaim any obligation, to update or revise any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Our Consolidated Financial Statements are prepared in accordance with GAAP. Application of these principles requires management to make estimates, assumptions and judgments that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes. These estimates, assumptions and judgments are based on information available as of the date of the Consolidated Financial Statements; accordingly, as this information changes, the Consolidated Financial Statements could reflect different estimates, assumptions and judgments. Certain policies inherently are based to a greater extent on estimates, assumptions and judgments of management and, as such, have a greater possibility of producing results that could be materially different than originally reported.

The most significant accounting policies followed by FNB are presented in Note 1, “Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report. These policies, along with the disclosures presented in the Notes to Consolidated Financial Statements, provide information on how we value significant assets and liabilities in the Consolidated Financial Statements, how we determine those values and how we record transactions in the Consolidated Financial Statements.

Management views critical accounting policies to be those which are highly dependent on subjective or complex judgments, estimates and assumptions, and where changes in those estimates and assumptions could have a significant impact on the Consolidated Financial Statements. 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. We charge off loans against the ACL in accordance with our policies or if a loss-confirming event occurs. Expected recoveries do not exceed the aggregate of the amounts previously charged-off and expected to be charged-off. 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. Adjustments are made to the calculation of expected losses to address differences in current loan-specific risk characteristics such as differences in lending policies and procedures, underwriting standards, experience and depth of relevant personnel, the quality of our credit review function, concentrations of credit, external factors such as the regulatory, legal and technological environments; competition; and events such as natural disasters and other relevant factors. Such factors are used to adjust the quantitative output based on historical probabilities of default and severity of loss so that they reflect management's expectation of future conditions based on a R&S forecast. To the extent the lives of the loans in the portfolio extend beyond the period for which a R&S forecast can be made, the model reverts over 12 months on a straight-line basis back to the historical rates of default and severity of loss over the remaining life of the loans.

Determining the appropriateness of the ACL is complex and requires significant management judgment about the effect of matters that are inherently uncertain. Due to those significant management judgments and the factors included in the calculation, significant changes to the ACL level could occur in future periods.

The Provision for Credit Losses section in the Results of Operations includes a discussion of the factors affecting changes in the ACL during the current period. See Note 1, “Summary of Significant Accounting Policies,” Note 5, “Loans and Leases” and

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

Fair Value of Financial Instruments

We use fair value measurements to record fair value adjustments to certain financial assets and liabilities and determine fair value disclosures. Additionally, from time to time we may be required to record at fair value other assets on a non-recurring basis, such as loans held for sale, certain impaired loans, MSRs, OREO and certain other assets. The accounting guidance for fair value measurements includes a three-level hierarchy for disclosure of assets and liabilities recorded at fair value based on whether the inputs to the valuation methodology used for measurement are observable or unobservable. Judgment is required to determine which level of the three-level hierarchy certain assets or liabilities measured at fair value are classified.

Fair value represents the price that would be received to sell a financial asset or paid to transfer a financial liability in an orderly transaction between market participants at the measurement date. We use significant and complex estimates, assumptions and judgments when certain assets and liabilities are required to be recorded at or adjusted to fair value. Where available, fair value and information used to record valuation adjustments for certain assets or liabilities is based on either quoted market prices or are provided by independent third-party sources, including appraisers and valuation specialists. When such third-party information is not available, we may estimate fair value by using cash flow and other financial modeling techniques. Our assumptions about what a market participant would use in pricing an asset or liability is developed based on the best information available in the circumstances. These estimates are inherently subjective and can result in significant changes in the fair value estimates over the life of the asset or liability. 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.

Goodwill and Other Intangible Assets

As a result of acquisitions, we have recorded goodwill and other identifiable intangible assets on our Consolidated Balance Sheets. Goodwill represents the cost of acquired companies in excess of the fair value of net assets, including identifiable intangible assets, at the acquisition date. 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. A decline in earnings as a result of a lack of growth or our inability to deliver cost-effective services over sustained periods can lead to impairment in value, which could result in additional expense and adversely impact earnings in future periods.

Goodwill and other intangibles are subject to impairment testing at the reporting unit level, which must be conducted at least annually. We perform annual impairment testing during the fourth quarter, or more frequently if impairment indicators exist. We also continue to monitor other intangibles for impairment and to evaluate carrying amounts, as necessary.

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. 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.

Inputs and assumptions used in estimating fair value include projected future cash flows, discount rates reflecting the risk inherent in future cash flows, long-term growth rates, anticipated cost savings and an evaluation of market comparables and recent transactions. Goodwill assessments are highly sensitive to economic projections and the related assumptions and estimates used by management. In the event of a prolonged economic downturn or deterioration in the economic outlook, interim quantitative assessments of our goodwill balance could be required in future periods. Any impairment charge would not directly affect our capital ratios, tangible common equity, tangible book value per share or liquidity position.

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.

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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. The laws are complex and subject to different interpretations by the taxpayer and various taxing authorities. In determining the provision for income taxes, management must make judgments and estimates about the application of these inherently complex tax statutes, related regulations and case law. In the process of preparing our tax returns, management attempts to make reasonable interpretations of the tax laws. These interpretations are subject to challenge by the taxing authorities or based on management’s ongoing assessment of the facts and evolving case law.

We determine deferred income taxes using the balance sheet method. Under this method, the net DTA or DTL is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and recognizes the effect of enacted changes in tax rates and laws in the period in which they occur. That effect would be included in income in the reporting period that includes the enactment date of the change. See the Results of Operations, Income Taxes section later in this MD&A for further tax-related discussion.

On a quarterly basis, management assesses the reasonableness of our effective tax rate based on management’s current best estimate of pretax earnings and the applicable taxes for the full year. DTAs and DTLs are assessed on an annual basis, or sooner, if business events or circumstances warrant. DTAs represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, and from operating loss and tax credit carryforwards. We evaluate the recoverability of these future tax deductions and credits by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies.

We establish a valuation allowance when it is more likely than not that we will not be able to realize a benefit from our DTAs, or when future deductibility is uncertain. Periodically, the valuation allowance is reviewed and adjusted based on management’s assessments of realizable DTAs.

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.

Recent Accounting Pronouncements and Developments

Note 2, “New Accounting Standards” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report, discusses new accounting pronouncements adopted by us in 2024 and the expected impact of accounting pronouncements recently issued but not yet required to be adopted.

USE OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE INDICATORS

To supplement our Consolidated Financial Statements presented in accordance with GAAP, we use certain non-GAAP financial measures, such as operating net income available to common shareholders, operating earnings per diluted common share, return on average tangible common equity, operating return on average tangible common equity, return on average tangible assets, tangible book value per common share, the ratio of tangible common equity to tangible assets, operating non-interest income, operating non-interest expense, efficiency ratio and net interest margin (FTE) to provide information useful to investors in understanding our operating performance and trends, and to facilitate comparisons with the performance of our peers. Management uses these measures internally to assess and better understand our underlying business performance and trends related to core business activities. The non-GAAP financial measures and key performance indicators we use may differ from the non-GAAP financial measures and key performance indicators other financial institutions use to assess their performance and trends.

These non-GAAP financial measures should be viewed as supplemental in nature, and not as a substitute for, or superior to, our reported results prepared in accordance with GAAP. Reconciliations of non-GAAP operating measures to the most directly comparable GAAP financial measures are included later in this report under the heading “Reconciliations of Non-GAAP Financial Measures and Key Performance Indicators to GAAP”.

Management believes certain items (e.g. merger expenses, FDIC special assessment and realized loss on investment securities restructuring) are not organic to running our operations and facilities. These items are considered significant items impacting earnings as they are deemed to be outside of ordinary banking activities. These costs are specific to each individual transaction and may vary significantly based on the size and complexity of the transaction.

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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). 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. 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. We provide a full range of commercial banking, consumer banking, insurance and wealth management solutions through our subsidiary network which is led by our largest affiliate, FNBPA. Commercial banking solutions include corporate banking, small business banking, investment real estate financing, government banking, business credit, capital markets and lease financing. 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. Comparatively, net income available to common shareholders for 2023 totaled $476.8 million, or $1.31 per diluted common share. On an operating basis, 2024 earnings per diluted common share (non-GAAP) was $1.39, excluding $0.12 per diluted common share (non-GAAP) of significant items impacting earnings. Operating earnings per diluted common share (non-GAAP) for 2023 was $1.57, excluding $0.26 per diluted common share of significant items impacting earnings.

We achieved solid corporate performance in 2024 by, among other things, exceeding peer performance on loan growth, deposit growth, and deposit cost management amidst an uncertain interest rate environment. We achieved new milestones and set new records, notably in the areas of non-interest income, capital, and deposit market share. Additionally, in 2024, we grew to nearly $49 billion in total assets and achieved a record market capitalization ending the year at $5.3 billion. For 2024, tangible book value per share (non-GAAP) grew 11% year-over-year, to a record $10.49 and operating return on average tangible common equity (non-GAAP) equaled 14.5%. We also achieved full-year non-interest income of $316 million and record full-year operating non-interest income (non-GAAP) of $350 million, demonstrating the impact of our diversified business model and robust suite of products and services. We further strengthened our liquidity and capital position improving the loan-to-deposit ratio over 500 basis points from the peak in 2024 through strong deposit gathering initiatives and achieved higher capital ratios with a record CET1 ratio of 10.6%, and a tangible common equity to tangible assets (non-GAAP) ratio of 8.2%. We benefited from our geographic footprint, investments in technology, strong balance sheet and high caliber front-line bankers to generate year-over-year loan growth of 5.0% and robust deposit growth of 6.9%. Our credit metrics ended the year at solid levels in a changing economic environment with total delinquencies at 0.83% and net charge-offs at 0.19% for the full year 2024.

Income Statement Highlights (2024 compared to 2023)

•Total revenue of $1.6 billion, an increase of $26.0 million, or 1.7%. Total revenue on an operating basis was essentially flat (down 0.5%) as net interest income was impacted by lags in interest rate resets for interest bearing deposits compared to interest rate resets on loans related to the FOMC’s interest rate cuts. During the fourth quarter of 2024, the FOMC lowered the target federal funds rate by a total of 50 basis points, bringing the full-year decrease to 100 basis points.

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

•Net interest margin (FTE) (non-GAAP) decreased 26 basis points to 3.09% from 3.35%. The yield on earning assets (non-GAAP) increased 42 basis points to 5.42%. However, the cost of funds increased 72 basis points to 2.45% with the costs of interest-bearing deposits increasing 83 basis points to 2.96%, short-term borrowings increasing 105 basis points and long-term debt increasing 24 basis points.

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•The provision for credit losses totaled $79.8 million, compared to $71.8 million. The provision for credit losses increase for 2024 was primarily due to loan growth and net charge-off activity. The provision for credit losses increase for 2023 was primarily due to loan growth, the previously disclosed $31.9 million isolated commercial loan that was charged off in the third quarter of 2023 due to alleged fraud, and other charge-off activity.

•Non-interest income was $316.4 million, increasing $62.1 million, or 24.4%, compared to $254.3 million, primarily due to increases in service charges, wealth management, mortgage banking operations, dividends on non-marketable equity securities and other non-interest income, partially offset by decreases in interchange and card transaction fees, insurance commissions and fees and capital markets income. Additionally, we recognized a $34.0 million realized loss (pre-tax) on an investment securities restructuring in 2024 compared to a $67.4 million realized loss (pre-tax) on an investment securities restructuring in 2023. On an operating basis (non-GAAP), non-interest income totaled a record $350.4 million, compared to $321.7 million.

•Non-interest expense was $961.3 million, compared to $915.4 million. Excluding significant items, operating non-interest expense (non-GAAP) increased $75.7 million, or 8.7%. Salaries and employee benefits increased $42.4 million, or 9.2%, due to normal annual merit increases, higher production-related commissions given the strong non-interest income activity, strategic hiring associated with our focus to grow market share and continued investments in our risk management infrastructure, and elevated employer-paid healthcare costs. Outside services increased $12.3 million, or 14.6%, due to higher volume-related technology and third-party costs. Occupancy and equipment increased $15.0 million, or 9.3%, primarily from technology-related investments and the move to the new Pittsburgh headquarters.

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

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

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

•In the fourth quarter of 2024, we recognized renewable energy investment tax credits of $28.4 million as a benefit to income taxes from a solar project financing transaction. A related non-credit valuation impairment of $10.4 million (pre-tax) was recognized on the financing receivable in other non-interest expense.

•Income tax expense decreased $8.4 million, or 8.5%. The effective tax rate was 16.3%, compared to 16.9%, primarily due to renewable energy investment tax credits recognized in 2024 and 2023 as part of solar project financing transactions originated by our commercial leasing business.

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

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

•During 2024, we sold $231.4 million of AFS securities as part of a proactive balance sheet management strategy. We reinvested the proceeds from the sale of these AFS securities with an average yield of 1.41% into securities yielding 4.78% with a similar duration and convexity profile.

•Period-end total loans and leases increased $1.6 billion, or 5.0%. Consumer loans increased $949.0 million, or 8.0%, even with a $431 million indirect auto loan sale that closed in September 2024, and commercial loans and leases increased $667.2 million, or 3.3%. Our loan growth was driven by the continued success of our strategy to grow high-quality loans and deepen customer relationships across our diverse geographic footprint.

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

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

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

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•In December 2024, we issued $500 million aggregate principal amount of fixed rate / floating rate senior notes maturing in December 2030. The senior notes bear interest at 5.722% per annum until December 11, 2029. Starting on December 11, 2029, the senior notes will bear interest at a floating rate per annum equal to compounded SOFR plus 1.93%. The new debt will be used for general corporate purposes and serve as a replacement for $450 million of senior and subordinated note maturities occurring in 2025.

•The ratio of non-performing loans plus OREO to total loans and leases plus OREO increased 14 basis points to 0.48%. Total delinquency increased 13 basis points to 0.83%, compared to 0.70%. Overall, asset quality metrics continue to remain at solid levels. Net charge-offs totaled $62.7 million, or 0.19% of total average loans, compared to $67.7 million, or 0.22%.

•The ACL on loans and leases totaled $423 million at December 31, 2024, compared to $406 million with the increase reflecting net loan growth. The ratio of the ACL to total loans and leases was stable at 1.25%.

•On February 15, 2024, we redeemed all our outstanding Series E Perpetual Preferred Stock and paid the final preferred dividend of $2.0 million on the redemption date. The excess of the redemption value over the carrying value on the Series E Perpetual Preferred Stock of $4.0 million was considered a significant item impacting earnings.

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

•Book value per common share of $17.52 increased 5.8%, and tangible book value per common share (non-GAAP) of $10.49 increased $1.02, or 10.8%. AOCI reduced the tangible book value per common share (non-GAAP) by $0.47 as of December 31, 2024, compared to $0.65 at the end of 2023, primarily due to the impact of higher interest rates on the fair value of AFS securities, partially offset by the 2024 securities repositioning.

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

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TABLE 1

Reported results

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

Net income per diluted common share 1.27 1.31

Operating results (non-GAAP)

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

Operating net income per diluted common share 1.39 1.57

Average diluted common shares outstanding (thousands) 362,638 362,898

Significant items impacting earnings (1) (millions)

Preferred dividend equivalent at redemption $ (4.0) $ —

Pre-tax merger-related expenses — (2.2)

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

Pre-tax branch consolidation costs (1.2) —

After-tax impact of branch consolidation costs (0.9) —

Pre-tax FDIC assessment (5.2) (29.9)

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

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

Pre-tax software impairment (3.7) —

After-tax impact of software impairment (2.9) —

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

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

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

Capital measures

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

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

(1) Favorable (unfavorable) impact on earnings

RESULTS OF OPERATIONS

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

Net income available to common shareholders was $459.3 million or $1.27 per diluted common share, compared to net income available to common shareholders of $476.8 million or $1.31 per diluted common share. Operating net income available to common shareholders (non-GAAP) was $505.2 million, or $1.39 per diluted common share (non-GAAP), compared to operating net income available to common shareholders (non-GAAP) of $568.6 million, or $1.57 per diluted common share (non-GAAP). The results for 2024 included net interest income of $1.3 billion, a 2.7% decrease, with the decline driven by the FOMC’s rate cuts, record non-interest income of $350.4 million on an operating basis (non-GAAP), provision for credit losses of $79.8 million with stable asset quality, and non-interest expenses of $942.3 million on an operating basis (non-GAAP), an increase of $75.7 million or 8.7%, driven primarily by higher salaries and employee benefits expense. During 2024, significant items impacting earnings of $45.8 million (see Table 1) were recognized. In comparison, the 2023 results included net interest income of $1.3 billion, provision for credit losses of $71.8 million, including $31.9 million in provision for the previously disclosed commercial loan fully charged-off during the third quarter of 2023 due to alleged fraud, non-interest income of $321.7 million on an operating basis benefiting from our diversified business model and related revenue generation, and operating non-interest expenses (non-GAAP) of $866.6 million. During 2023, significant items impacting earnings of $91.9 million (see Table 1) were recognized.

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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 EndedDecember 31 $Change %Change

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

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

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

Average equity to average assets 13.10 13.12

Tangible common equity to tangible assets (1) 8.18 7.79

Common equity tier 1 capital ratio 10.58 10.04

(1) Non-GAAP

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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

Assets

Federal funds sold — — — — — — 500 29 5.81

Liabilities

Deposits:

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

(2)The interest income amounts are reflected on an FTE basis (non-GAAP), which adjusts for the tax benefit of income on certain tax-exempt loans and investments using the federal statutory tax rate of 21%. The yield on earning assets and the net interest margin are presented on an FTE basis (non-GAAP). We believe this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts.

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

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Net Interest Income

Net interest income on an FTE basis (non-GAAP) of $1.3 billion decreased $36.7 million, or 2.8%. These decreases were primarily due to higher interest-bearing deposit costs from balance growth in higher yielding deposit products, the FOMC cutting the federal funds target rate by 100 basis points during 2024 and higher total average borrowings, partially offset by growth in earning assets and higher earning asset yields. Average interest-earning assets of $41.8 billion increased $2.1 billion, or 5.2%, primarily driven by an increase of $1.9 billion in average loans and leases, which included organic loan origination activity and an indirect auto loan sale. Average interest-bearing liabilities of $29.8 billion increased $2.8 billion, or 10.4%, driven by an increase of $2.2 billion in average interest-bearing deposits, which included organic growth in new and existing customer relationships, and an increase in average borrowings of $0.6 billion. Net interest margin FTE (non-GAAP) was 3.09% compared to 3.35%. The yield on earning assets increased 42 basis points to 5.42%, reflecting variable-rate loans that repriced upwards in 2024, as well as higher yields on new loan originations, investment securities and interest-bearing deposits with banks due to the impact of the higher interest rate environment. The total cost of funds increased 72 basis points to 2.45%, primarily due to an 83 basis point increase in interest-bearing deposit costs. The rates paid on short-term and long-term borrowings increased 105 and 24 basis points, respectively, due to the higher interest rate environment throughout much of 2024. Additionally, average non-interest-bearing demand deposits decreased $1.0 billion, or 9.2%, as customers shifted balances into higher yielding deposit products.

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

TABLE 5

(in thousands) Volume Rate Net Volume Rate Net

Interest Income (1)

Federal funds sold — — (15) (14) (29)

Interest Expense (1)

Deposits:

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

(2)Interest income amounts are reflected on an FTE basis (non-GAAP) which adjusts for the tax benefit of income on certain tax-exempt loans and investments using the federal statutory tax rate of 21%. We believe this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts.

Interest income on an FTE basis (non-GAAP) of $2.3 billion for 2024, increased $278.8 million, or 14.0%, from 2023, resulting from the higher interest rate environment for much of 2024 until the FOMC began cutting the federal funds target rate by 100 basis points between September 2024 and December 2024 and an increase in interest-earning assets of $2.1 billion. The increase in earning assets was primarily driven by a $1.9 billion, or 6.2%, increase in average loans and $65.6 million, or 0.9%, increase in average securities, partially offset by a decrease of $36.9 million, or 3.5%, in average interest-bearing deposits with banks. Growth in total average commercial loans included $867.0 million, or 7.4%, in commercial real estate loans and an increase of $189.3 million, or 2.6%, in commercial and industrial loans driven by a combination of organic loan origination

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activity led by the Cleveland, Pittsburgh and South Carolina markets and fundings on previously originated commercial real estate projects. Average consumer loans increased $808.6 million, or 7.0%, with an increase in residential mortgage loans of $1.3 billion, or 22.4%, reflecting adjustable-rate mortgages held in portfolio on the balance sheet and the continued success of the Physicians First mortgage program, which is a program that provides a bundled suite of specialized products to meet the personal and professional needs of physicians, dentists, veterinarians and other healthcare professionals. This growth was partially offset by a decrease in indirect installment loans of $511.0 million, or 33.7%, reflecting the auto loan sales that closed in the first and third quarters of 2024. Also, the net increase in investment securities interest income was primarily the result of balance sheet repositioning actions, as the average total securities portfolio yield increased 60 basis points.

Interest expense of $971.7 million for 2024 increased $315.6 million, or 48.1%, from 2023 primarily due to the higher interest rate environment and an increase in average interest-bearing deposits. The growth in average deposits reflected solid organic growth in new and existing customer relationships resulting from numerous deposit gathering initiatives. Average interest-bearing deposits increased $2.2 billion, or 9.5%, which reflected the benefit of solid organic growth in customer relationships. Average time deposits increased $1.8 billion, or 33.9%, as customers continued to migrate balances into higher-yielding products. Average long-term borrowings increased $607.0 million, or 36.0%, primarily due to an increase of $638.2 million in long-term FHLB borrowings. Additionally, during the fourth quarter of 2024, we issued $500 million aggregate principal amount of senior notes due in 2030. The rate paid on interest-bearing liabilities increased 83 basis points to 3.26% for 2024, compared to 2023, as the cost of interest-bearing deposits increased 83 basis points from 2.13% to 2.96%.

Provision for Credit Losses

Provision for credit losses is determined based on management’s estimates of the appropriate level of ACL needed to absorb expected life-of-loan losses in the loan and lease portfolio, after giving consideration to charge-offs and recoveries for the period. The following table presents information regarding the provision for credit loss expense and net charge-offs for the years 2022 through 2024:

TABLE 6

(dollars in thousands) 2024 2023 $Change %Change 2022 $Change %Change

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 provision for credit losses in 2024 was primarily due to loan growth and charge-off activity, while the provision for credit losses in 2023 was primarily due to loan growth, CECL-related model impacts from forecasted macroeconomic conditions and charge-off activity, including a $31.9 million isolated commercial loan that was charged-off due to alleged fraud. Our non-performing loan coverage position remains strong at 265%. For 2024, net charge-offs were $62.7 million, or 0.19% of total average loans, compared to 2023 net charge-offs of $67.8 million, or 0.22% of total average loans. The ACL was $422.8 million as of December 31, 2024, an increase of $17.2 million from December 31, 2023, with the ratio of the ACL to total loans and leases remaining stable at 1.25%. For additional information relating to the allowance and provision for credit losses, refer to the Allowance for Credit Losses section of this MD&A.

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Non-Interest Income

The breakdown of non-interest income for the years 2022 through 2024 is presented in the following table:

TABLE 7

(dollars in thousands) 2024 2023 $Change %Change 2022 $Change %Change

n/m - not meaningful

Total non-interest income increased $62.1 million, or 24.4%. Excluding significant items totaling $34.0 million in 2024 and $67.4 million in 2023, operating non-interest income (non-GAAP) increased $28.7 million, or 8.9%, to a record level. The variances in significant individual non-interest income items between 2024 and 2023 are explained in the following paragraphs.

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

Wealth management revenues increased $6.4 million, or 9.1%, as trust income and securities commissions and fees increased 7.3% and 11.8%, respectively, through continued strong contributions across the geographic footprint. Additionally, the market value of assets under management increased $0.9 billion, or 10.3%, to $9.5 billion at December 31, 2024 given overall market conditions and customer acquisition activity.

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

Mortgage banking operations income increased $6.7 million, or 32.3%, driven by improved gain on sale from strong production volumes. During 2024, we sold $1.4 billion of originated residential mortgage loans, an increase of 37.7% compared to $1.0 billion for 2023.

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

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

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

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

TABLE 8

$ %

(dollars in thousands) 2024 2023 Change Change

Significant items:

(1) Non-GAAP

Non-Interest Expense

The breakdown of non-interest expense for the years 2022 through 2024 is presented in the following table:

TABLE 9

(dollars in thousands) 2024 2023 $Change %Change 2022 $Change %Change

Total non-interest expense increased $45.9 million, or 5.0%. Excluding significant items totaling $19.1 million in 2024 and $48.8 million in 2023, operating non-interest expense (non-GAAP) increased $75.7 million, or 8.7%. The variances in significant individual non-interest expense items between 2024 and 2023 are explained in the following paragraphs.

Salaries and employee benefits increased $42.4 million, or 9.2%, primarily related to normal annual merit increases, higher production-related commissions given the strong non-interest income activity, strategic hiring associated with our focus to grow market share and continued investments in our risk management infrastructure, and elevated employer-paid healthcare costs. Our total full-time equivalent employees were 4,192 and 4,123 at December 31, 2024 and 2023, respectively.

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

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

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

FDIC insurance expense decreased $19.4 million, or 31.8%. We paid $5.2 million in 2024 and $29.9 million in 2023 in FDIC special assessments to replenish the FDIC's DIF associated with protecting uninsured depositors following the failed banks in early 2023, partially offset by an increase in our regular FDIC insurance assessment due to loan growth and balance sheet mix changes.

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Other non-interest expense was $108.5 million and $116.5 million for 2024 and 2023, respectively. Excluding the non-interest expense significant items impacting earnings in Table 10 below, other non-interest expense was $99.5 million, a $1.9 million, or 1.9%, increase from 2023.

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

TABLE 10

(dollars in thousands) 2024 2023 $Change %Change

Significant items:

(1) Non-GAAP

Income Taxes

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

TABLE 11

(dollars in thousands)

Our income tax expense for 2024 decreased $8.4 million, or 8.5%, from 2023. The effective tax rate was 16.3% for 2024, compared to 16.9% for 2023, primarily due to the recording of higher levels of renewable energy investment tax credits and lower pre-tax earnings in 2024. Effective tax rates are lower than the 21% federal statutory rate due to the tax benefits resulting from tax credits, tax-exempt income on investments and loans and income from BOLI.

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

Refer to the MD&A in our 2023 Annual Report on Form 10-K filed with the SEC on February 26, 2024 for a comparison of 2023 to 2022.

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FINANCIAL CONDITION

The following table presents our condensed Consolidated Balance Sheets:

TABLE 12

(dollars in millions)

Assets

Liabilities and Shareholders’ Equity

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

Lending Activity

The loan and lease portfolio consists principally of loans and leases to individuals and small- and medium-sized businesses within our primary markets 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. Loans held for sale declined $270 million, or 55.3%, from December 31, 2023 due primarily to the sale of $332 million of indirect auto loans that closed in the first quarter of 2024.

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Following is a summary of loans and leases:

TABLE 13

(dollars in millions)

Total loans and leases increased $1.6 billion, or 5.0%, to $33.9 billion at December 31, 2024, compared to $32.3 billion at December 31, 2023, reflecting an increase in consumer loans of $949.0 million, or 8.0%, and commercial loans and leases increased $667.2 million or 3.3%. Our organic loan growth in 2024 was driven by the continued success of our strategy to grow high-quality loans and deepen customer relationships across our diverse geographic footprint.

As of both December 31, 2024 and 2023, 29.0% of the commercial real estate loans were owner-occupied, while the remaining 71.0% were non-owner-occupied. As of December 31, 2024 and 2023, we had commercial construction loans of $2.4 billion and $2.1 billion, respectively, representing 7.2% and 6.6% of total loans and leases, respectively. Additionally, as of December 31, 2024 and 2023, we had residential construction loans of $277.0 million and $360.6 million, respectively, representing 0.8% and 1.1% of total loans and leases, respectively. Our commercial real estate portfolio included $9.0 billion of non-owner occupied loans, of which 18.7% represented office loans. Our top 25 non-owner occupied commercial real estate loans averaged approximately $22 million per exposure with the office component comprised of mid-sized offices primarily located outside of central business districts with 43% of the office portfolio averaging less than $5 million per exposure.

Commercial and industrial loans are loans to businesses that are not secured by real estate where the borrower's leverage and cash flows from operations are the primary default risk drivers. The growth in the commercial and industrial loans category was led by activity in the Cleveland, Pittsburgh and North Carolina markets, while the growth in residential mortgages reflected growth in adjustable-rate mortgages and jumbo mortgages retained on the balance sheet and the continued success of our Physicians First mortgage program, which is a digital program that provides a bundled suite of specialized products to meet the personal and professional needs of physicians, dentists, veterinarians and other healthcare professionals.

Within our primary lending footprint, certain industries are more predominant given the geographic location of these lending markets. We strive to maintain a diverse commercial loan portfolio by avoiding undue concentrations or exposures to any particular sector, and we actively monitor our commercial loan portfolio to ensure that our industry mix is consistent with our risk appetite and within targeted thresholds. Several factors are taken into consideration when determining these thresholds, including recent economic and market trends. 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.

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

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Following is a summary of the maturity distribution of loan categories with fixed and floating interest rates as of December 31, 2024:

TABLE 14

Loans with maturities over one year:

For additional information relating to lending activity, see Note 5, “Loans and Leases” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report. For additional information on repricing of floating interest rates, see the Market Risk section of MD&A, which is included in Item 7 of this Report.

Non-Performing Assets

Non-performing loans include non-accrual loans. Past due loans are reviewed monthly to identify loans for non-accrual status. We place a loan on non-accrual status and discontinue interest accruals on originated loans generally when principal or interest is due and has remained unpaid for a certain number of days, unless the loan is both well secured and in the process of collection. Commercial loans are placed on non-accrual at 90 days, installment loans are placed on non-accrual at 120 days and residential mortgages and consumer lines of credit are generally placed on non-accrual at 180 days. When a loan is placed on non-accrual status, all unpaid accrued interest is reversed. Non-accrual loans may not be restored to accrual status until all delinquent principal and interest have been paid and the ultimate ability to collect the remaining principal and interest is reasonably assured.

Non-accrual loans of $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.

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

TABLE 15

(dollars in millions)

Commercial leases 3 3 — —

Other 2 — 2 —

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 non-performing loans and leases $ 159 $ 107 52 48.6

Other real estate owned 3 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

(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

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

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

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Allowance for Credit Losses on Loans and Leases

The CECL model takes into consideration the expected credit losses over the life of the loan at the time the loan is originated. 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.

At December 31, 2024 and 2023, we utilized a third-party consensus macroeconomic forecast reflecting the current and projected macroeconomic environment. For our ACL calculation at December 31, 2024, the macroeconomic variables that we utilized included, but were not limited to: (i) the purchase only Housing Price Index, which increases 7.4% over our R&S forecast period, (ii) a Commercial Real Estate Price Index, which increases 3.9% over our R&S forecast period, (iii) S&P Volatility, which increases 34.9% in 2025 and 2.5% in 2026 and (iv) personal and business bankruptcies, which increase steadily over the R&S forecast period but average below the historical through-the-cycle period. Macroeconomic variables that we utilized for our ACL calculation as of December 31, 2023 included, but were not limited to: (i) the purchase only Housing Price Index, which increases 5.3% over our R&S forecast period, (ii) a Commercial Real Estate Price Index, which increases 0.1% over our R&S forecast period, (iii) S&P Volatility, which decreases 4.0% in 2024 and 2.9% in 2025 and (iv) bankruptcies, which increase steadily over the R&S forecast period but average below the historical through the cycle period.

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

TABLE 18

Net Loan Charge-Offs (Recoveries) Net Loan Charge-Offs to Average Loans ACL at

(dollars in millions)

Commercial leases 0.2 — — — 22.9

Direct installment 0.7 — — — 29.1

Residential mortgages 1.4 0.2 — — 95.9

Consumer lines of credit 0.7 0.2 — — 8.6

Allowance for credit losses/total loans and leases 1.25 % 1.25 %

Allowance for credit losses/non-performing loans 264.98 % 378.46 %

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Following is a summary of changes in the AULC by portfolio segment:

TABLE 19

(in millions)

Balance at beginning of period $ 21.5 $ 21.4 $ 19.1

Provision for unfunded loan commitments and letters of credit:

Commercial portfolio 0.1 0.3 2.3

Consumer portfolio (0.2) (0.2) —

The ACL on loans and leases of $422.8 million at December 31, 2024 increased $17.2 million, or 4.3%, from December 31, 2023. Our ending ACL coverage ratio at both December 31, 2024 and December 31, 2023 was 1.25%. Total provision for credit losses during 2024 was $79.8 million, compared to $71.8 million for the same period in 2023. The year-over-year increase was driven primarily by loan growth and an increase in substandard commercial real estate loans. Net charge-offs were $62.7 million, or 0.19%, of total average loans, compared to $67.7 million, or 0.22%, in 2023. The ACL as a percentage of non-performing loans for the total portfolio decreased from 378% as of December 31, 2023 to 265% remaining at an adequate level as of December 31, 2024.

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

TABLE 20

(dollars in millions) Allowance % ofLoans Allowance % ofLoans

Other 4 — 4 —

Consumer lines of credit 9 4 9 4

Investment Activity

Investment activities serve to generate net interest income while supporting interest rate sensitivity and liquidity positions. Securities purchased with the intent and ability to hold until maturity are categorized as securities HTM and carried at amortized cost. All other securities are categorized as securities AFS and are recorded at fair value. AFS debt securities in unrealized loss positions are evaluated for impairment related to credit loss at least quarterly. 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. 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.

As of December 31, 2024, debt securities classified as AFS and HTM totaled $3.5 billion and $4.0 billion, respectively. During 2024, debt securities AFS increased by $213.1 million and debt securities HTM increased by $67.1 million from December 31,

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2023. As of December 31, 2024, AFS securities comprised 47% of the total securities portfolio and HTM securities comprised 53% of the total securities portfolio. As of December 31, 2024 and 2023, we did not hold any trading securities.

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 WeightedAverageYield

Obligations of 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 < 1 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 collateralized mortgage obligations 714 1.87

The weighted average yields for tax-exempt debt securities are computed on an FTE basis using the federal statutory tax rate of 21.0%.

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The amortized cost of AFS and HTM securities are summarized in the following table:

TABLE 22

(dollars in millions)

Securities Available for Sale:

Residential MBS:

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

States of the U.S. and political subdivisions 24 30 (6) (20.0)

Other debt securities 37 38 (1) (2.6)

Total debt securities available for sale $ 3,620 $ 3,460 $ 160 4.6 %

Debt Securities Held to Maturity:

U.S. Treasury $ 1 $ — $ 1 n/m

U.S. government agencies — 1 (1) (100.0) %

U.S. government-sponsored enterprises 29 68 (39) (57.4)

Residential MBS:

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

States of the U.S. and political subdivisions 992 1,017 (25) (2.5)

Total debt securities held to maturity $ 3,979 $ 3,911 $ 68 1.7 %

n/m - not meaningful

We completed the sale of $231.4 million of AFS investment securities in November 2024, which resulted in a realized loss (pre-tax) of $34.0 million in the fourth quarter of 2024. We reinvested proceeds from the sale of those investment securities with an average yield of 1.41% into investment securities yielding 4.78% with a similar duration and convexity profile. In December 2023, we completed the sale of $648.7 million of AFS investment securities, resulting in a realized loss (pre-tax) of $67.4 million in the fourth quarter of 2023. 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.

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.

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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.

Following is a summary of deposits:

TABLE 23

(dollars in millions)

Total deposits increased $2.4 billion, or 6.9%, from December 31, 2023, primarily due to organic growth in new and existing customer relationships through our successful deposit initiatives. We ended 2024 with approximately 77% of all deposits insured by the FDIC or collateralized. The mix of non-interest-bearing demand deposits to total deposits equaled 26.3% at December 31, 2024, compared to 29.4% at December 31, 2023 as customers continued to migrate deposits into higher-yielding deposit products.

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

TABLE 24

(in millions) Insured Uninsured Total

Short-Term Borrowings

Borrowings with original maturities of one year or less are classified as short-term. Short-term borrowings, made up of customer repurchase agreements (also referred to as securities sold under repurchase agreements), FHLB advances and subordinated notes, 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.

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

TABLE 25

(dollars in millions)

FHLB Advances (Short-term)

Weighted average interest rates:

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.

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.

The assessment of capital adequacy depends on a number of factors such as expected organic growth in the Consolidated Balance Sheet, asset quality, liquidity, earnings performance and sustainability, changing competitive conditions, regulatory changes or actions and economic forces. We seek to maintain a strong capital base to support our growth and expansion activities, to provide stability to current operations and to promote public confidence.

Pursuant to and in compliance with applicable SEC laws, rules and regulations, we may, from time to time, issue and sell in one or more offerings any combination of common stock, preferred stock, debt securities, depositary shares, warrants, stock purchase contracts or units. On December 11, 2024, we completed a registered debt offering in which we issued $500 million aggregate principal amount of 5.722% fixed-rate / floating rate senior notes due in 2030. The net proceeds of the debt offering after deducting underwriting discounts and commissions and offering costs were $496.7 million. These proceeds are expected to be used for general corporate purposes, which may include investments at the holding company level, capital to support the growth of FNBPA and refinancing of outstanding indebtedness.

Since inception of our $300 million stock repurchase program starting in 2022, we repurchased 14.4 million shares at a weighted average share price of $11.43 for $164.3 million under this repurchase program, with $135.7 million remaining for repurchase. Any repurchases will be made from time to time on the open market at prevailing market prices or in privately negotiated transactions. The purchases will be funded from available working capital. There is no guarantee as to the exact number of shares that will be repurchased and we may discontinue purchases at any time. The Inflation Reduction Act of 2022 includes a 1% excise tax on stock repurchases.

On February 15, 2024, we redeemed all our 7.25% Fixed Rate / Floating Rate Non-Cumulative Perpetual Preferred Stock, Series E, in the amount of $111 million. The preferred stock is no longer outstanding and dividends will no longer accrue on such securities.

Capital management is a continuous process with capital plans and stress testing for FNB and FNBPA updated at least annually. These capital plans include assessing the adequacy of expected capital levels assuming various scenarios by projecting capital needs for a forecast period of two to three years beyond the current year. Both FNB and FNBPA are subject to various regulatory capital requirements administered by federal banking agencies. For additional information, see Note 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. We may issue additional preferred or common stock to maintain our well-capitalized status.

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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

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

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. 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.

LIQUIDITY

Our primary liquidity management goal is to satisfy the cash flow requirements of customers and the operating cash needs of FNB with cost-effective funding. Our Board of Directors has established an Asset/Liability Management Policy to guide management in achieving and maintaining earnings performance consistent with long-term goals, while maintaining acceptable levels of interest rate risk, a “well-capitalized” Balance Sheet and appropriate levels of liquidity. Our Board of Directors has also established Liquidity and Contingency Funding Policies to guide management in addressing the ability to identify, measure, monitor and control both normal and stressed liquidity conditions. These policies designate our ALCO as the body responsible for meeting these objectives. The ALCO, which is comprised of members of executive management, reviews liquidity on a continuous basis and approves significant changes in strategies that affect Balance Sheet or cash flow positions. Liquidity is centrally managed daily by our Treasury Department.

Parent Company Liquidity

The parent company’s funding requirements primarily consist of shareholder dividends, debt service, income taxes, operating expenses, funding of non-bank subsidiaries, and stock repurchases. The parent company’s funding sources primarily consist of dividends and interest received from the Bank and other direct subsidiaries, net taxes collected from subsidiaries included in the consolidated tax returns, fees for services provided to subsidiaries and the issuance of debt instruments. The dividends received from the Bank and other direct subsidiaries may be impacted by the parent’s or its subsidiaries’ capital and liquidity needs, statutory laws and regulations, corporate policies, contractual restrictions, profitability and other factors. In addition, through one of our subsidiaries, we regularly issue subordinated notes, which are guaranteed by FNB.

Management utilizes various strategies to ensure sufficient cash on hand is available to meet the parent company's funding needs. During the fourth quarter of 2024, we successfully completed an offering of fixed / floating rate senior notes maturing in December 2030 for $496.7 million in net proceeds. The issuance was met with strong investor interest and was priced with a coupon of 5.722%, a spread of 165 basis points above the yield of a comparable term Treasury Note. We have historically been

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opportunistic when accessing the capital markets, and we expect to continue with that strategy. The parent company's cash position at December 31, 2024 was $803.4 million, increasing $428.0 million from December 31, 2023.

In February 2024, we redeemed all $111 million of our Series E, 7.25% Fixed Rate / Floating Rate Non-Cumulative Perpetual Preferred Stock. The Board of Directors declared the redemption of the preferred stock given its higher relative cost of capital, a 3-month SOFR + 4.60%, and our strong capital position. Our regulatory CET1 ratio and Total Capital ratios were 10.6% and 12.4%, respectively, at December 31, 2024 with the Total Capital ratio reflecting the completed preferred stock redemption.

Two metrics that are used to gauge the adequacy of the parent company’s cash position are the LCR and MCH. The LCR is defined as the sum of cash on hand plus projected cash inflows over the next 12 months divided by projected cash outflows over the next 12 months. The MCH is defined as the number of months of corporate expenses and dividends that can be covered by the existing cash on hand. The LCR and MCH ratios and Parent company cash on hand are presented in the following table:

TABLE 28

Liquidity coverage ratio 1.5 times 2.0 times > 1 time

Months of cash on hand 13.7 months 13.0 months > 12 months

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

As previously mentioned, our parent company cash on hand increased materially due to the issuance of senior debt during the fourth quarter of 2024, which was partially offset by the preferred stock redemption. The decrease in the LCR at December 31, 2024 is due to the scheduled maturity of $350 million in senior debt due in August 2025 and $100 million of subordinated debt scheduled to mature in October 2025, which are considered cash outflows for the ratio calculations. The MCH increased from December 31, 2023 primarily due to the larger cash balance on hand. The projected LCR and MCH after the maturity of the senior and subordinated debt in 2025 would be 2.7 times and 18.7 months, respectively. Management has concluded that our cash levels remain appropriate given the current market environment.

Bank Liquidity

Bank-level liquidity sources from assets include payments from loans and investments, as well as the ability to securitize, pledge or sell loans, investment securities and other assets. Liquidity sources from liabilities are generated primarily through the banking offices of FNBPA in the form of deposits and customer repurchase agreements. The Bank also has access to reliable and cost-effective wholesale sources of liquidity. Short- and long-term funds are available for use to help fund normal business operations, and unused credit availability can be utilized to serve as contingency funding if faced with a liquidity crisis.

Over time, our liquidity position has been positively impacted by FNBPA's ability to generate growth in relationship-based accounts. Organic growth in low-cost transaction deposits has been complemented by management’s continued strategy of deposit gathering efforts focused on attracting new customer relationships across our geographic footprint and deepening relationships with existing customers, in part through internal lead generation efforts leveraging our data analytics capabilities. These strategies helped management successfully grow total deposits by $2.4 billion, or 6.9%, when compared to December 31, 2023. Interest-bearing demand deposits and time deposits increased $1.9 billion and $1.3 billion, respectively, when compared to December 31, 2023 through these efforts. Non-interest-bearing demand deposits decreased $461.3 million and savings account balances declined $286.7 million compared to December 31, 2023 as customers continue to migrate deposits into higher-yielding deposit products. The mix of non-interest-bearing demand deposits to total deposits remained consistent with the prior quarter at 26%. The liquidity position of FNBPA was further strengthened by the sale of $431 million of indirect auto loans in the third quarter of 2024. Our loan to deposit ratio declined from 93.1% at December 31, 2023 to 91.5% at December 31, 2024 as a result of the strong deposit growth and the sale of the indirect auto loans.

At December 31, 2024, approximately 77% of our deposits were insured by the FDIC or collateralized, stable with December 31, 2023. Our cash balances held at the FRB were $2.0 billion at December 31, 2024 and $1.1 billion at December 31, 2023. Management will continue to evaluate appropriate levels of liquidity based on expected loan and deposit growth and other balance sheet activity.

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

TABLE 29

(dollars in millions)

Unused wholesale credit availability $ 16,056 $ 15,899

Unused wholesale credit availability as a % of FNBPA assets 33.2 % 34.6 %

Salable unpledged government and agency securities $ 927 $ 657

Our bank-level liquidity position has remained strong throughout 2024. The strong deposit generation noted earlier provided management the flexibility to reduce short- and long-term borrowings by a combined $209 million. Our contingency funding policy and periodic liquidity stress testing of multiple stress scenarios is particularly valuable as we successfully manage our liquidity. We continue to have ample unused borrowing capacity that could cover 1.57 times the uninsured deposit and non-collateralized deposit balances as of December 31, 2024. The previously mentioned strong deposit growth was partially responsible for a $1.8 billion increase in contingency funding availability, which resulted in the improvement in this ratio. A portion of this capacity includes capacity at the FRB's Discount Window. We have no borrowings under this facility. Additional sources of unused wholesale credit availability for FNBPA include the ability to borrow from the FHLB, correspondent bank lines, and access to other funding channels. In addition to credit availability, FNBPA also has salable unpledged government and agency securities that could be utilized to meet funding needs and has excess cash to meet its pledging requirements. At December 31, 2024, FNBPA has $2.9 billion, an increase of $1.2 billion from December 31, 2023, of cash and salable unpledged government and agency securities representing 6.0% of total assets. This compares to a policy minimum of 3.0%.

Another metric for measuring liquidity risk is the liquidity gap analysis. The following liquidity gap analysis as of December 31, 2024 compares the difference between our cash flows from existing earning assets and interest-bearing liabilities over future time intervals. Management calculates this ratio at least quarterly and it is reviewed regularly by ALCO. Management monitors the size of the liquidity gaps so that sources and uses of funds are reasonably matched in the normal course of business and in relation to implied forward rate expectations. A reasonably matched position lays a better foundation for dealing with additional funding needs during a potential liquidity crisis. A positive gap position means that more assets are expected to mature over the next 12 months than liabilities. The allocation of non-maturity deposits and customer repurchase agreements to the twelve-month categories is based on the estimated lives of each product.

TABLE 30

(dollars in millions) Within1 Month 2-3Months 4-6Months 7-12Months Total1 Year

Assets

Liabilities

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

The twelve-month cumulative gap to total assets ratio was (5.0)% as of December 31, 2024, compared to (2.6)% as of December 31, 2023. The change in the twelve-month cumulative gap to total assets was primarily related to management's shorter-term time deposit offerings that effectively reduced the average maturity of new time deposits, which reduced our asset

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sensitivity. In addition, the ALCO regularly monitors various liquidity ratios, stress scenarios of our liquidity position and assumptions considering market disruptions, lending demand, deposit behavior, and funding availability. The stress scenarios forecast that adequate funding will be available even under severe conditions. Management believes we have sufficient liquidity available to meet our normal operating and contingency funding cash needs.

MARKET RISK

Market risk refers to potential losses arising predominately from changes in interest rates, foreign exchange rates, equity prices and commodity prices. Interest rate risk is comprised of repricing risk, basis risk, yield curve risk and options risk. We are primarily exposed to interest rate risk inherent in our lending and deposit-taking activities as a financial intermediary. To succeed in this capacity, we offer an extensive variety of financial products to meet the diverse needs of our customers. These products sometimes contribute to interest rate risk for us when product groups do not complement one another. 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. Subject to its ongoing oversight, the Board of Directors has given ALCO the responsibility for market risk management, which involves devising policy guidelines, risk measures and limits, and managing the amount of interest rate risk and its effect on net interest income and capital. We use derivative financial instruments for interest rate risk management purposes.

We use an asset/liability model to measure our interest rate risk. Interest rate risk measures we utilize include earnings simulation, EVE and gap analysis. Gap analysis and EVE are static measures that do not incorporate assumptions regarding future business. Gap analysis, while a helpful diagnostic tool, displays cash flows for only a single rate environment. EVE’s long-term horizon helps identify changes in optionality and longer-term positions. However, EVE’s liquidation perspective does not translate into the earnings-based measures that are the focus of managing and valuing a going concern. Net interest income simulations explicitly measure the exposure to earnings from changes in market rates of interest. In these simulations, our current financial position is combined with assumptions regarding future business activities to calculate net interest income under various hypothetical rate scenarios. The ALCO regularly reviews earnings simulations over multiple years under various interest rate scenarios. 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 allocation of non-maturity deposits and customer repurchase agreements to the one-month maturity category below is based on the estimated sensitivity of each product to changes in market rates. For example, if a product’s rate is estimated to increase by 50% as much as the market rates, then 50% of the account balance was placed in this category.

TABLE 31

(dollars in millions) Within1 Month 2-3Months 4-6Months 7-12Months Total1 Year

Assets

Liabilities

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

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Management utilizes the repricing gap analysis as a diagnostic tool in managing net interest income and EVE risk measures. The positive cumulative gap positions indicate that we have a greater amount of repricing earning assets than repricing interest-bearing liabilities over the subsequent twelve months, thereby creating our current asset sensitive position. As a result of management's strategies to reduce its asset sensitive position, the twelve-month cumulative repricing gap to total assets was 4.5% as of December 31, 2024, down from 10.3% at December 31, 2023. Specific pricing actions included an emphasis on originating shorter-term time deposits so more interest bearing liabilities will mature in less than 12 months, hence reducing the repricing gap differential. In addition, management actions included the use of interest rate swaps.

In addition to the repricing gap analysis above, we model rate scenarios which move all rates gradually over twelve months (Rate Ramps). We also model rate scenarios which move all rates in an immediate and parallel fashion (Rate Shocks) and model scenarios that gradually change the shape of the yield curve. Using a static Balance Sheet structure and utilizing net interest income simulations, the following table presents an analysis of the potential sensitivity of our net interest income to changes in interest rates using Rate Ramps and the sensitivity of EVE using Rate Shocks. The variance percentages represent the change between the net interest income and EVE calculated under the particular rate scenario compared to the net interest income and EVE that was calculated assuming market rates as of December 31, 2024. The calculated results do not reflect management's potential actions.

TABLE 32

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

Economic value of equity (Rate Shocks):

There are multiple factors that influence our interest rate risk position and impact on net interest income, including external factors such as the shape of the yield curve, the competitive landscape and expectations regarding future interest rates, as well as internal factors regarding product offerings, product mix and pricing and re-pricing of loans and deposits. Our current interest rate risk position is modestly asset sensitive. A key driver of this position resulted from the origination of consumer and commercial loans with short-term repricing characteristics, some of which have been swapped to a fixed rate. Total variable and adjustable-rate loans were 62.9% and 62.2% of total net loans and leases at December 31, 2024 and December 31, 2023, respectively. Forty-seven percent of our net loans and leases reprice within the next three months and are indexed to short-term SOFR, Prime and other indices. Furthermore, we regularly sell long-term fixed-rate residential mortgages in the secondary market.

Management continues to be proactive in managing our interest rate risk (IRR) position with the intention to manage to a more neutral position given the current market expectations for lower short-term interest rates. During 2024, management adjusted the IRR position by slightly extending the duration of the investment securities portfolio, originating adjustable-rate mortgage loans with longer-duration fixed-rate reset periods, strategically meeting our customers' preferences for higher yielding deposit products, with shorter-term time deposits, utilizing borrowings with variable rates and varying maturities and executing receive-fixed interest rate swaps to hedge adjustable rate loans. As a result, the net interest income change over 12 months shown above in both the up and down rate ramp scenarios is closer to neutral compared to December 31, 2023.

We also utilize derivatives to manage the IRR position. These positions are used to protect the fair value of assets and liabilities by converting the contractual interest rate on a specified amount (i.e., notional amounts) to another interest rate index or to hedge the variability in cash flows attributable to the contractually specified interest rate by converting the variable rate index into a fixed rate. The volume, maturity and mix of derivative positions change periodically as we adjust our broader interest rate risk management objectives, and the balance sheet positions to be hedged. During the fourth quarter of 2024, we executed

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receive-fixed interest rate swaps designated as cash flow hedges for variable rate commercial loans for $1.0 billion (notional) at an average rate of 3.9% and average maturity of 42.3 months. At December 31, 2024, we have a total of $2.2 billion (notional) of these cash flow hedges at an average rate of 2.5% and average maturity of 23.9 months with the last hedge scheduled to expire in January 2029, with $1.0 billion (notional) of this total maturing in 2025 at an average rate of 0.9%. Additionally, we have a $200.0 million (notional) interest rate collar on variable rate commercial loans with strike rates between 2.8525% and 5.50% that matures in April 2026.

Derivative financial instruments are also offered to enable commercial customers to meet their financing and investing objectives and for their risk management purposes. We typically enter into offsetting third-party contracts with reputable counterparties with substantially matching terms to economically hedge the exposure related to these derivatives. At December 31, 2024, the commercial customer-related interest rate swaps totaled $5.9 billion (notional), up from $5.7 billion (notional) at December 31, 2023. For additional information regarding interest rate swaps, see Note 15, "Derivative Instruments and Hedging Activities" in the Notes to Consolidated Financial Statements in this Report.

In addition to the rate ramp scenarios for net interest income changes shown above, we also model immediate interest rate shock scenarios. These results use historical long-term deposit rate beta assumptions that are regularly analyzed and adjusted as necessary for both rising and falling rate scenarios. Assuming a static Balance Sheet, a +100 basis point Rate Shock increases net interest income (12 months) by 2.0% at December 31, 2024 and 3.4% at December 31, 2023. For a +200 basis point Rate Shock, net interest income (12 months) increases by 3.9% at December 31, 2024 and 6.7% at December 31, 2023. The metrics for a minus 200 basis point Rate Shock are (4.6)% and (7.7)% at December 31, 2024 and December 31, 2023, respectively, and for a minus 100 basis point Rate Shock are (2.2)% and (3.6)% at December 31, 2024 and December 31, 2023, respectively. In addition to the cash flow hedges, the primary drivers of the change in net interest income in the rate shock scenarios include the mix shift of deposit products into shorter-term time deposits, the pace of deposit repricing and assumed betas and loan prepayments. These results reflect a more neutral net interest income change over 12 months in both the up and down rate shock scenarios compared to December 31, 2023, consistent with the rate ramp results.

We recognize that all asset/liability models have some inherent shortcomings. Asset/liability models require certain assumptions to be made, such as prepayment rates on interest-earning assets and repricing impact on non-maturity deposits, which may differ from actual experience. These business assumptions are based upon our experience, business plans, economic and market trends and available industry data. 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 other factors not under our control. Other factors that influence our credit ratings include changes to the rating agencies’ methodologies for our industry or certain security types; the rating agencies’ assessment of the general operating environment for financial services companies; our relative positions in the markets in which we compete; our various risk exposures and risk management policies and activities; pending litigation and other contingencies; our reputation; our liquidity position, diversity of funding sources and funding costs; the current and expected level and volatility of our earnings; our capital position and capital management practices; our corporate governance; current or future regulatory and legislative initiatives; and the agencies’ views on whether the U.S. government would provide meaningful support to us or our subsidiaries in a crisis.

Credit rating downgrades or negative watch warnings could negatively impact our reputation with lenders, investors and other third parties, which could also impair our ability to compete in certain markets or engage in certain transactions. 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.

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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. 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

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. Accordingly, we have designed an Enterprise Risk Management Framework and risk management practices to identify, assess, monitor and report the material risks known throughout the organization in pursuit of our business strategies. Our Board of Directors and senior management have identified seven major categories of risk: credit risk, market risk, liquidity risk, operational risk, compliance risk, reputation risk and strategic risk. In its oversight role of our risk management function, the Board of Directors focuses on the strategies, analyses and conclusions of management relating to identifying, understanding and managing risks to optimize total shareholder value, while balancing prudent business and safety and soundness considerations.

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

The lines of defense model consists of:

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

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

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

Our Board of Directors is responsible for the oversight of management on behalf of our shareholders. The Board of Directors has assistance in carrying out its duties and may delegate authority through the following standing Board Committees:

•Audit Committee - provides oversight of our internal and external audit processes. In addition, monitors the integrity of the consolidated financial statements, internal controls over financial reporting, qualifications and independence of our audit function.

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•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.

The Risk Committee serves as the primary point of contact between our Board of Directors and the Risk Management Council (RMC), which is the senior management level committee responsible for identifying, assessing, monitoring and reporting on enterprise-wide risks. The Risk Committee and RMC are supported by other risk management committees, including Credit Risk Committees, Operational Risk Committee, Compliance Risk Committee and ALCO.

Risk appetite is an integral element of our enterprise risk management framework and of our business and capital planning processes through our Board Risk Committee and Risk Management Council. We use our risk appetite processes to promote appropriate alignment of risk, capital and performance tactics, while also considering risk capacity and appetite constraints from both financial and non-financial risks. The Board of Directors adopted an enterprise risk appetite that defines acceptable risk limits under which we seek to operate in pursuit of optimizing returns. As such, we monitor a series of Key Risk Indicators for various business lines and operations units to measure performance alignment with our stated risk appetite. Our top-down risk appetite process serves as a limit for undue risk-taking for bottom-up planning from our various business functions. Our Board Risk Committee, in collaboration with our Risk Management Council, approves our risk appetite on an annual basis, or more frequently, as needed to reflect changes in the risk, regulatory, economic and strategic plan environments, with the goal of ensuring that our strategic plans and business operations remain consistent with our risk appetite given the current regulatory environment and shareholders' expectations.

Our Enterprise Risk Management Framework provides the practices to identify, assess, control and monitor and report on risk across the organization. Reports relating to our risk appetite and strategic plans, and our ongoing monitoring thereof, and our aggregate risk profile, are regularly presented to our various management level risk oversight and planning committees and periodically reported up through our Board Risk Committee.

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

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

•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.

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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.

TABLE 34

Operating net income available to common shareholders

(in thousands)

Preferred dividend at redemption 3,995 — —

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)

Tax benefit of branch consolidation costs (251) — (1,473)

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

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

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) —

The table above shows how operating net income available to common shareholders (non-GAAP) is derived from amounts reported in our financial statements. We believe certain charges such as preferred dividend at redemption, merger expenses, FDIC special assessment, realized loss on investment securities restructuring, software impairment, loss related to indirect auto loan sales, initial provision for non-PCD loans acquired and branch consolidation costs are not organic costs to run our operations and facilities. These costs are specific to each individual transaction and may vary significantly based on the size and complexity of the transaction.

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TABLE 35

Operating earnings per diluted common share

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 —

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

(dollars in thousands)

Return on average tangible common equity (non-GAAP) 13.21 % 15.45 % 15.31 %

(1) Excludes loan servicing rights.

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TABLE 37

Operating return on average tangible common equity

(1) Excludes loan servicing rights.

TABLE 38

Return on average tangible assets

(dollars in thousands)

Return on average tangible assets (non-GAAP) 1.08 % 1.19 % 1.14 %

(1) Excludes loan servicing rights.

TABLE 39

Tangible book value per common share

(dollars in thousands, except per share data)

Less: Preferred shareholders’ equity — (106,882)

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

(1) Excludes loan servicing rights.

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TABLE 40

Tangible common equity to tangible assets