# FNB CORP/PA/ (FNB) FY 2022 MD&A

Verbatim Item 7 Management's Discussion and Analysis from FNB CORP/PA/'s 10-K for fiscal year 2022.

SEC filing source: https://www.sec.gov/Archives/edgar/data/37808/000003780823000005/fnb-20221231.htm
Accession: 0000037808-23-000005
Filing date: 2023-02-24
Report date: 2022-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/FNB/
All MD&A years: /company/FNB/mda/
Previous year: /company/FNB/mda/fy2021/ (FY 2021)
Next year: /company/FNB/mda/fy2023/ (FY 2023)

ITEM 7.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MD&A represents an overview of and highlights material changes to our financial condition and consolidated results of operations. This MD&A should be read in conjunction with the Consolidated Financial Statements and Notes presented in Item 8 of this Report. 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 may contain statements regarding our outlook for earnings, revenues, expenses, tax rates, capital and liquidity levels and ratios, asset quality levels, financial position and other matters regarding or affecting our current or future business and operations. These statements can be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward‑looking statements involve various assumptions, risks and uncertainties which can change over time. Actual results or future events may be different from those anticipated in our forward-looking statements and may not align with historical performance and events. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance upon such statements. Forward-looking statements are typically identified by words such as "believe," "plan," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "will," "should," "project," "goal," and other similar words and expressions. We do not assume any duty to update forward-looking statements, except as required by federal securities laws.

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

•Our business, financial results and balance sheet values are affected by business, economic and political circumstances, including, but not limited to: (i) developments with respect to the U.S. and global financial markets; (ii) actions by the FRB, FDIC, CFPB, UST, OCC and other governmental agencies, especially those that impact money supply, market interest rates or otherwise affect business activities of the financial services industry; (iii) a slowing of the U.S. economy in general and regional and local economies within our market area; (iv) inflation concerns; (v) the impacts of tariffs or other trade policies of the U.S. or its global trading partners; and (vi) the sociopolitical environment in the U.S.

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

•Competition can have an impact on customer acquisition, growth and retention, and on credit spreads, deposit gathering and product pricing, which can affect market share, loans, deposits and revenues. Our ability to anticipate, react quickly and continue to respond to technological changes and potential additional COVID-19 challenges can also impact our ability to respond to customer needs and meet competitive demands.

•Business and operating results can also be affected by widespread natural and other disasters, pandemics and post-pandemic return to normalcy, global events, including the Ukraine-Russia conflict, shortages of labor, supply chain disruptions and shipping delays, terrorist activities, system failures, security breaches, significant political events, cyber-attacks or international hostilities through impacts on the economy and financial markets generally, or on us or our counterparties specifically.

•Legal, regulatory and accounting developments could have an impact on our ability to operate and grow our businesses, financial condition, results of operations, competitive position, and reputation. Reputational impacts could affect matters such as business generation and retention, liquidity, funding, and the ability to attract and retain talent. These developments could include:

◦Policies and priorities of the current U.S. presidential administration, including legislative and regulatory reforms, different approaches to supervisory or enforcement priorities, changes affecting oversight of the financial services industry, regulatory obligations or restrictions, consumer protection, taxes, employee benefits, compensation practices, pension, bankruptcy and other industry aspects, and changes in accounting policies and principles.

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

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

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◦Unfavorable resolution of legal proceedings or other claims and regulatory and other governmental investigations or inquiries. These matters may result in monetary judgments or settlements, enforcement actions or other remedies, including fines, penalties, restitution or alterations in our business practices, and in additional expenses and collateral costs, and may cause reputational harm to FNB.

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

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

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

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

•The COVID-19 pandemic and the federal, state, and local regulatory and governmental actions implemented in response to COVID-19 have resulted in increased volatility of the financial markets and national and local economic conditions, supply chain challenges, rising inflationary pressures, increased levels of unemployment and business failures, and the potential to have a material impact on, among other things, our business, financial condition, results of operations, liquidity, or on our management, employees, customers and critical vendors and suppliers. In view of the many unknowns associated with the COVID-19 pandemic, our forward-looking statements continue to be subject to various conditions that may be substantially different in the future than what we are currently experiencing or expecting, including, but not limited to, challenging headwinds for the U.S. economy and labor market and the possible change in commercial and consumer customer fundamentals, expectations and sentiments. As a result of the COVID-19 impact, including uncertainty regarding the potential impact of continuing variant mutations of the virus, U.S. government responsive measures to manage it or provide financial relief, the uncertainty regarding its duration and the success of vaccination efforts, it is possible the pandemic may have a material adverse impact on our business, operations and financial performance.

The risks identified here are not exclusive or the types of risks we may confront and actual results may differ materially from those expressed or implied as a result of these risks and uncertainties, including, but not limited to, the risk factors and other uncertainties described under Item 1A. Risk Factors and the Risk Management sections in this Annual Report on Form 10-K (including the MD&A section), our subsequent 2023 Quarterly Reports on Form 10-Q (including the risk factors and risk management discussions) and our other subsequent filings with the SEC, which are available on our corporate website at https://www.fnb-online.com/about-us/investor-information/reports-and-filings or the SEC's website at www.sec.gov. More specifically, our forward-looking statements may be subject to the evolving risks and uncertainties related to the COVID-19 pandemic and its macro-economic impact and the resulting governmental, business and societal responses to it. We have included our web address as an inactive textual reference only. Information on our website is not part of this Report.

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

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Consolidated Financial Statements. Management currently views the determination of the ACL, fair value of financial instruments, goodwill and other intangible assets, income taxes and DTAs and litigation reserves 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 to historical loss information, where applicable, are made for 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 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” and Note 6, “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 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 26, “Fair Value Measurements” in the Notes to Consolidated Financial Statements for further discussion of accounting for financial instruments.

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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 2022 financial statements, we completed our annual goodwill impairment test as of October 1, 2022. 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, 2022.

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 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 10, “Goodwill and Other Intangible Assets” in the Notes to Consolidated Financial Statements for further discussion of accounting for goodwill and other intangible assets.

Income Taxes and Deferred Tax Assets

We are subject to the income tax laws of federal, state and other taxing jurisdictions where we conduct business. 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.

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See Note 1, “Summary of Significant Accounting Policies” and Note 20, “Income Taxes” in the Notes to Consolidated Financial Statements for further discussion of accounting for income taxes.

Litigation Reserves

The Corporation is involved in various pending and threatened legal proceedings in which claims for monetary damages and other relief are asserted. These claims result from ordinary business activities relating to our current and/or former operations. Although the ultimate outcome for any asserted claim cannot be predicted with certainty, we believe that the Corporation has valid defenses for all asserted claims. In accordance with applicable accounting guidance, when a loss is considered probable and reasonably estimable, we, in conjunction with internal and outside counsel handling the matter, record a liability in the amount of our best estimate for the ultimate loss. We continue to monitor the matter for further developments that could affect the amount of the accrued liability that has previously been established.

Litigation expense represents a key area of judgment and is subject to uncertainty and factors outside of our control. Significant judgment is required in making these estimates and our financial liabilities may ultimately be more or less than the current estimate. See our policy on establishing accruals for litigation in Note 17, "Commitments, Credit Risk and Contingencies" in the Notes to Consolidated Financial Statements.

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 2022 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 stockholders, operating earnings per diluted common share, return on average tangible common equity, return on average tangible assets, tangible book value per common share, the ratio of tangible equity to tangible assets, the ratio of tangible common equity to tangible assets, 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. When non-GAAP financial measures are disclosed, the SEC's Regulation G requires: (i) the presentation of the most directly comparable financial measure calculated and presented in accordance with GAAP and (ii) a reconciliation of the differences between the non-GAAP financial measure presented and the most directly comparable financial measure calculated and presented in accordance with GAAP. Reconciliations of non-GAAP operating measures to the most directly comparable GAAP financial measures are included later in this report under the heading “Reconciliations of Non-GAAP Financial Measures and Key Performance Indicators to GAAP”.

Management believes items such as merger expenses, initial provision for non-PCD loans acquired, branch consolidation costs, loss on early debt extinguishment, COVID-19 expenses and gains on sale of Visa class B shares are not organic to run our operations and facilities. These items are considered significant items impacting earnings as they are deemed to be outside of ordinary banking activities. The merger expenses and branch consolidation costs principally represent expenses to satisfy contractual obligations of the acquired entity or closed branch without any useful ongoing benefit to us. These costs are specific to each individual transaction and may vary significantly based on the size and complexity of the transaction. Similarly, gains derived from the sale of Visa class B stock and losses on FHLB debt extinguishment and related hedge terminations are not organic to our operations. The COVID-19 expenses represent special Company initiatives to support our employees and the communities we serve during an unprecedented time of a pandemic.

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 the 2022, 2021 and 2020 periods were calculated using a federal statutory income tax rate of 21%.

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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, 2022, we had 348 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 the full-year of 2022, net income available to common stockholders was $431.1 million, or $1.22 per diluted common share. Comparatively, full-year 2021 net income available to common stockholders totaled $396.6 million, or $1.23 per diluted common share. On an operating basis, full-year 2022 earnings per diluted common share (non-GAAP) was $1.40, excluding $80.8 million of significant items. Operating earnings per diluted common share (non-GAAP) for the full year of 2021 was $1.24, excluding $4.4 million of significant items.

During 2022, we grew loans by $5.3 billion bringing total assets to nearly $44 billion through a strategic combination of footprint-wide organic growth and two value-adding acquisitions. Our full-year operating earnings per diluted common share (non-GAAP) of $1.40 was the highest level in recent company history, led by record revenue of $1.4 billion. As a result of our strong profitability and focus on shareholder value creation, we returned over $220 million to shareholders through common dividends and our active share repurchase program. The steadfast focus on our disciplined credit culture was evidenced by total delinquencies ending the year at 71 basis points, net charge-offs of 6 basis points for the full year, and a reserve coverage ratio of 1.33% at year end. The strength of our balance sheet coupled with the momentum produced by our consistent performance puts us in an advantageous position as we continue to navigate changing economic conditions.

In January 2022, we acquired Howard, located in Baltimore City, Maryland, including its wholly-owned bank subsidiary, Howard Bank, adding loans and deposits of $1.8 billion for both measures to the balance sheet. In December 2022, we acquired Union, located in Greenville, North Carolina, including its wholly-owned bank subsidiary, Union Bank, adding loans and deposits with estimated fair values of $651 million and $956 million, respectively.

Income Statement Highlights (2022 compared to 2021)

•Record total revenue of $1.4 billion, an increase of $206.4 million, or 16.7%, led to net income available to common stockholders of $431.1 million, an increase of $34.5 million, or 8.7%, and operating net income available to common stockholders (non-GAAP) of $494.9 million, an increase of $94.8 million, or 23.7%.

•Earnings per diluted common share was $1.22, compared to $1.23, a decrease of 0.8%, as average diluted common shares outstanding increased 30.6 million shares, primarily due to the Howard and Union acquisitions.

•Operating earnings per diluted common share (non-GAAP) was $1.40, compared to $1.24, an increase of 12.9%.

•Net interest income was $1.1 billion, compared to $906.5 million, up 23.5%, as the higher interest rate environment benefited earning asset yields given the asset sensitive positioning of the balance sheet and higher yields on new loan originations and investment securities purchases.

•Net interest margin (FTE) (non-GAAP) increased 35 basis points to 3.03% from 2.68%. The FOMC raised the target federal funds rate by a total of 425 basis points in 2022. The yield on earning assets (non-GAAP) increased 50 basis points to 3.47%, reflecting variable-rate loans that repriced upwards in 2022, as well as higher yields on new loan originations, investment securities and excess cash balances, partially offset by significant reductions in PPP contributions. The cost of funds increased 16 basis points to 0.46% due to the cost of interest-bearing deposits increasing 26 basis points to 0.49%, and long-term debt increasing 121 basis points primarily from the August 2022 offering of $350 million in senior notes. These increases in the cost of interest-bearing deposits and borrowings were partially offset by strong growth in non-interest-bearing deposits.

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•Non-interest income was $323.6 million, decreasing $6.9 million, or 2.1%, compared to a record level of $330.4 million in the prior year, primarily due to decreases in mortgage banking operations income and SBA premium income, with both being impacted by the higher interest rate environment, partially offset by an increase in service charges and wealth management revenues.

•Non-interest expense was $826.4 million, compared to $733.2 million. Excluding significant items totaling $52.3 million in 2022 and $4.4 million in 2021, operating non-interest expense (non-GAAP) increased $45.4 million, or 6.2%. Occupancy and equipment increased $16.1 million, or 12.6%, primarily from technology-related investments and the acquired Howard and Union expense bases.

•The provision for credit losses totaled $64.2 million, compared to $0.6 million, including $28.5 million of initial provision for non-PCD loans associated with the Howard and Union acquisitions in 2022. The increase was also due to coverage for significant loan growth, as well as CECL-related model impacts from forecasted macroeconomic slowdown and lower prepayment speed assumptions.

•Net charge-offs totaled $16.2 million, or 0.06% of total average loans, compared to $13.9 million, or 0.06%, in 2021.

•Income tax expense increased $15.1 million, or 15.4%, primarily due to higher pre-tax earnings. The effective tax rate was 20.6%, compared to 19.6% in 2021. The increase was driven by higher pre-tax earnings, higher state income taxes and increased FDIC insurance deduction disallowance.

•The efficiency ratio (non-GAAP) was 52.1%, compared to 57.2%.

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

Balance Sheet Highlights (period-end balances, 2022 compared to 2021, unless otherwise indicated)

•Total assets were $43.7 billion, compared to $39.5 billion, an increase of $4.2 billion, or 10.7%, primarily from organic growth in loans and the Howard and Union acquisitions.

•Period-end total loans and leases, increased $5.3 billion, or 21.2%, which includes Howard acquired loans ($1.8 billion as of the January 22, 2022 acquisition date) and the Union acquired loans ($651 million as of the December 9, 2022 acquisition date). Commercial loans and leases increased $2.8 billion, or 17.2%, even with the decline in PPP loans, and consumer loans increased $2.5 billion, or 29.0%. PPP loans totaled $25.7 million at December 31, 2022, compared to $336.6 million at December 31, 2021. FNB’s strong organic loan growth in 2022 was driven by our strategy to grow high-quality loans across our diverse geographic footprint.

•Average loans totaled $27.8 billion, an increase of $2.8 billion, or 11.0%, due to healthy organic growth across our footprint. Growth in average commercial loans totaled $927.0 million, or 5.5%, including growth of $964.9 million, or 9.9%, in commercial real estate partially offset by a decline of $113.9 million, or 1.7%, in commercial and industrial loans, reflecting average PPP loans declining $1.4 billion. Growth in total average consumer loans totaled $1.8 billion, or 22.5%, and was due to an increase in residential mortgage loans of $1.1 billion, or 31.5%, direct home equity installment loans of $533.8 million, or 24.9%, and indirect installment loans of $162.1 million, or 13.3%.

•Total average securities were $7.1 billion, compared to $6.2 billion, an increase of $914.8 million, or 14.7%.

•Total average deposits grew $3.0 billion, or 9.7%, led by growth of $1.5 billion, or 15.4%, in non-interest-bearing deposits, $1.1 billion, or 7.8%, in interest-bearing demand deposits and $533.5 million, or 15.5%, in savings deposits, driven by solid organic growth in customer relationships, as well as the Howard and Union acquisitions. Average time deposits declined $204.1 million, or 6.4%, as customer preferences had shifted to more liquid accounts, however, customers' preferences are beginning to shift back to time deposits as interest rates increase.

•The ratio of loans to deposits was 87.0%, compared to 78.7%, as loan growth outpaced deposit growth. Additionally, the deposit funding mix remained stable with non-interest-bearing deposits totaling 34% of total deposits. Cash and cash equivalents balances decreased $1.8 billion to $1.7 billion due primarily to funding the organic growth of loans and leases as well as the growth in investment securities.

•The dividend payout ratio for 2022 was 39.54%, compared to 39.20%.

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•We repurchased nearly 3.3 million shares of our common stock at a weighted average share price of $12.77 for $42.8 million. In April 2022, our Board of Directors approved an additional $150 million for the repurchase of our common stock to be added to our existing share repurchase program, bringing the total authorization to $300 million. There currently is $175.6 million of the authorized amount remaining for future repurchase activity.

•The ratio of the ACL to total loans and leases was 1.33%, compared to 1.38%, a reflection of the strong loan growth. The ACL on loans and leases totaled $402 million at December 31, 2022, compared to $344 million with the increase driven by significant loan growth, CECL-related model impacts from forecasted macroeconomic slowdown and lower prepayment speed assumptions, as well as the initial ACL related to the Howard and Union acquisitions.

•Tangible book value per share (non-GAAP) of $8.27 decreased 3.7% from year-end 2021. AOCI reduced the tangible book value per common share by $0.99 as of December 31, 2022, compared to $0.19 at the end of 2021, primarily due to the increase in unrealized losses on AFS securities resulting from the higher interest rate environment.

•The CET1 regulatory capital ratio was 9.82%, down from 9.92%, primarily due to the significant loan growth in 2022.

TABLE 1

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[["Year-to-Date Results Summary","","2022","","2021"],["Reported results"],["Net income available to common stockholders (millions)","","$","431.1","","","$","396.6"],["Net income per diluted common share","","1.22","","","1.23"],["Book value per common share (period-end)","","15.39","","","15.81"],["Common equity tier 1 capital ratio","","9.8","%","","9.9","%"],["Operating results (non-GAAP)"],["Operating net income available to common stockholders (millions)","","$","494.9","","","$","400.0"],["Operating net income per diluted common share","","1.40","","","1.24"],["Average diluted common shares outstanding (thousands)","","354,052","","","323,481"],["Significant items impacting earnings (1) (millions)"],["Pre-tax merger-related expenses","","$","(45.3)","","","$","(1.8)"],["After-tax impact of merger-related expenses","","(35.8)","","","(1.4)"],["Pre-tax provision expense related to acquisitions","","(28.5)","","","\u2014"],["After-tax impact of provision expense related to acquisitions","","(22.5)","","","\u2014"],["Pre-tax branch consolidation costs","","(7.0)","","","(2.6)"],["After-tax impact of branch consolidation costs","","(5.5)","","","(2.1)"],["Total significant items pre-tax","","$","(80.8)","","","$","(4.4)"],["Total significant items after-tax","","$","(63.8)","","","$","(3.5)"],["Capital measures"],["Common equity tier 1","","9.82","%","","9.92","%"],["Tangible common equity to tangible assets (period-end) (non-GAAP)","","7.24","","","7.36"],["Tangible book value per common share (period-end) (non-GAAP)","","$","8.27","","","$","8.59"],["(1) Favorable (unfavorable) impact on earnings"]]
[[/GREPCENT_TABLE]]

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Industry Developments

INFLATION REDUCTION ACT

On August 16, 2022, the Inflation Reduction Act (IRA) was signed into law. The IRA introduces a 15% corporate alternative minimum tax (AMT) based primarily on consolidated adjusted GAAP net income with a minimum threshold of $1 billion. The corporate AMT provisions are effective for taxable years beginning after December 31, 2022. The details of the computation will be subject to regulations to be issued by the UST. Our current net income levels are well below the $1 billion threshold, but we will monitor regulatory developments and will continue to evaluate the impact, if any, of the corporate AMT.

The IRA imposes a 1% excise tax on the fair market value of stock repurchases made by covered corporations after December 31, 2022. The total taxable value of shares repurchased is reduced by the fair market value of any newly issued shares during the taxable year, including stock issued to employees.

LIBOR and SOFR

The FCA, who is the regulator of LIBOR, announced on March 5, 2021 that they will no longer require any panel bank to continue to submit LIBOR after December 31, 2021. As it pertains to U.S. Dollar LIBOR, the FCA announced that certain LIBOR tenors will continue to be published through June 30, 2023. Bank regulators, in a joint statement urged banks to stop using LIBOR altogether on new transactions by the end of 2021 to avoid the possible creation of safety and soundness risk. The FRB of New York has created a working group called the ARRC to assist U.S. institutions in transitioning away from LIBOR as a benchmark interest rate. The ARRC has recommended the use of SOFR as a replacement index for LIBOR.

On March 15, 2022, the Adjustable Interest Rate Act (the LIBOR Act) was signed into law. The LIBOR Act establishes a uniform national approach for replacing LIBOR in legacy contracts that do not provide for the use of a clearly defined replacement benchmark rate. The LIBOR Act also directs the FRB to issue regulations to implement the legislation addressed by this Act.

We have LIBOR exposure in various agreements, including variable rate loans, derivatives and debt we issued and acquired. We created an internal transition team that is managing our transition away from LIBOR. This transition team is a cross-functional team composed of representatives from the commercial, retail and mortgage banking lines of business, as well as representatives from loan operations, information technology, legal, finance and other support functions. The transition team determined that the primary index to be utilized for loans will be SOFR-based.

Beginning in September 2020, adjustable rate mortgage loans have been originated with SOFR as the underlying index. We started originating commercial loans utilizing SOFR and other indices in the fourth quarter of 2021 and, effective January 1, 2022, ceased origination of LIBOR-based loans. For all existing LIBOR-based loans, remediation efforts are scheduled to be completed by June 30, 2023.

Our transition team continues to work within the guidelines established by the FCA and ARRC to provide for a smooth transition away from LIBOR.

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RESULTS OF OPERATIONS

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

Net income available to common stockholders for 2022 was $431.1 million or $1.22 per diluted common share, compared to net income available to common stockholders for 2021 of $396.6 million or $1.23 per diluted common share. Operating earnings per diluted common share (non-GAAP) was $1.40 for 2022 compared to $1.24 for 2021. The results for 2022 included net interest income of $1.1 billion, a 23.5% increase from 2021, driven by strong earning asset growth and a significantly higher interest rate environment, provision for credit losses of $64.2 million including $28.5 million of initial provision for non-PCD loans associated with the Howard and Union acquisitions, $7.0 million of branch consolidation expenses and $45.3 million of merger-related expenses. In comparison, the results for 2021 included the impact of $2.6 million of branch consolidation expenses and $1.8 million of merger-related expenses. Average diluted common shares outstanding increased 30.6 million shares, or 9.5%, to 354.1 million shares for 2022 primarily from our acquisitions of Howard and Union.

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

[[GREPCENT_TABLE]]
[["","Year Ended December 31","","$ Change","","% Change"],["(in thousands, except per share data)","2022","","2021"],["Net interest income","$","1,119,780","","","$","906,476","","","$","213,304","","","23.5","%"],["Provision for credit losses","64,206","","","629","","","63,577","","","10,108"],["Non-interest income","323,553","","","330,419","","","(6,866)","","","(2.1)"],["Non-interest expense","826,392","","","733,168","","","93,224","","","12.7"],["Income taxes","113,626","","","98,496","","","15,130","","","15.4"],["Net income","439,109","","","404,602","","","34,507","","","8.5"],["Less: Preferred stock dividends","8,041","","","8,041","","","\u2014","","","\u2014"],["Net income available to common stockholders","$","431,068","","","$","396,561","","","$","34,507","","","8.7","%"],["Earnings per common share \u2013 Basic","$","1.23","","","$","1.24","","","$","(0.01)","","","(0.8)","%"],["Earnings per common share \u2013 Diluted","1.22","","","1.23","","","(0.01)","","","(0.8)"],["Cash dividends per common share","0.48","","","0.48","","","\u2014","","","\u2014"]]
[[/GREPCENT_TABLE]]

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

TABLE 3

[[GREPCENT_TABLE]]
[["Year Ended December 31","2022","","2021"],["Return on average equity","8.02","%","","8.04","%"],["Return on average tangible common equity (2)","15.31","","","15.53"],["Return on average assets","1.05","","","1.05"],["Return on average tangible assets (2)","1.14","","","1.14"],["Book value per common share (1)","$","15.39","","","$","15.81"],["Tangible book value per common share (1) (2)","8.27","","","8.59"],["Equity to assets (1)","12.93","%","","13.03","%"],["Average equity to average assets","13.05","","","13.04"],["Common equity to assets (1)","12.68","","","12.76"],["Tangible equity to tangible assets (1) (2)","7.50","","","7.65"],["Tangible common equity to tangible assets (1) (2)","7.24","","","7.36"],["Common equity tier 1 capital ratio (1)","9.82","","","9.92"],["Dividend payout ratio","39.54","","","39.20"]]
[[/GREPCENT_TABLE]]

(1) Period-end

(2) 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

[[GREPCENT_TABLE]]
[["","Year Ended December 31"],["","2022","","2021","","2020"],["(dollars in thousands)","Average Balance","","Interest Income/ Expense","","Yield/ Rate","","Average Balance","","Interest Income/ Expense","","Yield/ Rate","","Average Balance","","Interest Income/ Expense","","Yield/ Rate"],["Assets"],["Interest-earning assets:"],["Interest-bearing deposits with banks","$","2,174,415","","","$","24,005","","","1.10","%","","$","2,723,493","","","$","3,732","","","0.14","%","","$","470,466","","","$","1,910","","","0.41","%"],["Federal funds sold","500","","","29","","","5.81","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014"],["Taxable investment securities (1)","6,126,544","","","115,956","","","1.89","","","5,131,473","","","85,633","","","1.67","","","5,038,547","","","106,266","","","2.11"],["Tax-exempt investment securities (1) (2)","1,010,819","","","34,508","","","3.41","","","1,091,130","","","37,408","","","3.43","","","1,132,307","","","40,121","","","3.54"],["Loans held for sale","189,360","","","8,151","","","4.30","","","227,181","","","8,276","","","3.64","","","212,328","","","9,817","","","4.62"],["Loans and leases (2) (3)","27,829,166","","","1,113,593","","","4.00","","","25,075,559","","","880,609","","","3.51","","","25,211,191","","","984,662","","","3.91"],["Total interest-earning assets (2)","37,330,804","","","1,296,242","","","3.47","","","34,248,836","","","1,015,658","","","2.97","","","32,064,839","","","1,142,776","","","3.56"],["Cash and due from banks","429,741","","","","","","","386,648","","","","","","","359,936"],["Allowance for credit losses","(377,252)","","","","","","","(363,462)","","","","","","","(350,309)"],["Premises and equipment","405,023","","","","","","","338,644","","","","","","","336,117"],["Other assets","4,166,392","","","","","","","3,992,426","","","","","","","4,196,847"],["Total assets","$","41,954,708","","","","","","","$","38,603,092","","","","","","","$","36,607,430"],["Liabilities"],["Interest-bearing liabilities:"],["Deposits:"],["Interest-bearing demand","$","14,951,905","","","78,599","","","0.53","","","$","13,866,846","","","18,676","","","0.13","","","$","12,161,766","","","57,224","","","0.47"],["Savings","3,976,285","","","8,512","","","0.21","","","3,442,809","","","664","","","0.02","","","2,890,440","","","2,822","","","0.10"],["Certificates and other time","3,004,482","","","21,410","","","0.71","","","3,208,586","","","27,875","","","0.87","","","4,261,738","","","72,825","","","1.71"],["Total interest-bearing deposits","21,932,672","","","108,521","","","0.49","","","20,518,241","","","47,215","","","0.23","","","19,313,944","","","132,871","","","0.69"],["Short-term borrowings","1,427,361","","","24,535","","","1.72","","","1,660,070","","","26,675","","","1.61","","","2,515,558","","","38,504","","","1.53"],["Long-term borrowings","836,154","","","32,118","","","3.84","","","924,090","","","24,344","","","2.63","","","1,473,708","","","36,849","","","2.50"],["Total interest-bearing liabilities","24,196,187","","","165,174","","","0.68","","","23,102,401","","","98,234","","","0.43","","","23,303,210","","","208,224","","","0.89"],["Non-interest-bearing demand","11,639,499","","","","","","","10,090,117","","","","","","","8,004,557"],["Total deposits and borrowings","35,835,686","","","","","0.46","","","33,192,518","","","","","0.30","","","31,307,767","","","","","0.66"],["Other liabilities","643,179","","","","","","","377,386","","","","","","","395,363"],["Total liabilities","36,478,865","","","","","","","33,569,904","","","","","","","31,703,130"],["Stockholders\u2019 equity","5,475,843","","","","","","","5,033,188","","","","","","","4,904,300"],["Total liabilities and stockholders\u2019 equity","$","41,954,708","","","","","","","$","38,603,092","","","","","","","$","36,607,430"],["Net interest-earning assets","$","13,134,617","","","","","","","$","11,146,435","","","","","","","$","8,761,629"],["Net interest income (FTE) (2)","","","1,131,068","","","","","","","917,424","","","","","","","934,552"],["Tax-equivalent adjustment","","","(11,288)","","","","","","","(10,948)","","","","","","","(12,470)"],["Net interest income","","","$","1,119,780","","","","","","","$","906,476","","","","","","","$","922,082"],["Net interest spread","","","","","2.79","%","","","","","","2.54","%","","","","","","2.67","%"],["Net interest margin (2)","","","","","3.03","%","","","","","","2.68","%","","","","","","2.91","%"]]
[[/GREPCENT_TABLE]]

(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. 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 $1.1 billion for 2022 increased $213.6 million, or 23.3%, from $917.4 million for 2021 as the higher interest rate environment benefited earning asset yields given the asset sensitive positioning of the balance sheet and higher yields on new loan originations and investment securities purchases. Average interest-earning assets of $37.3 billion increased $3.1 billion, or 9.0%, from 2021, primarily driven by an increase of $2.8 billion in average loans and leases which included organic growth combined with loans added from the Howard and Union acquisitions. Average interest-bearing liabilities of $24.2 billion increased $1.1 billion, or 4.7%, from 2021, driven by an increase of $1.4 billion in average interest-bearing deposits which included organic growth in new and existing customer relationships, and inflows from the Howard and Union acquisitions, partially offset by a decrease in average borrowings of $320.6 million. Our net interest margin FTE (non-GAAP) was 3.03% for 2022, compared to 2.68% for 2021, as the yield on earning assets increased 50 basis points to 3.47%, reflecting variable-rate loans that repriced upwards in 2022, as well as higher yields on new loan originations, investment securities and excess cash balances, partially offset by significant reductions in PPP contributions. The total cost of funds increased 16 basis points to 0.46%, due to a 26 basis point increase in interest-bearing deposit costs and long-term debt increasing 121 basis points primarily from the August 2022 offering of $350 million aggregate principal amount of 5.150% fixed-rate senior notes due in 2025, partially offset by strong growth in average non-interest-bearing deposits which increased $1.5 billion, or 15.4%.

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

[[GREPCENT_TABLE]]
[["","2022 vs 2021","","2021 vs 2020"],["(in thousands)","Volume","","Rate","","Net","","Volume","","Rate","","Net"],["Interest Income (1)"],["Interest-bearing deposits with banks","$","(752)","","","$","21,025","","","$","20,273","","","$","3,087","","","$","(1,265)","","","$","1,822"],["Federal funds sold","15","","","14","","","29","","","\u2014","","","\u2014","","","\u2014"],["Securities (2)","14,637","","","12,786","","","27,423","","","1,405","","","(24,751)","","","(23,346)"],["Loans held for sale","(1,004)","","","879","","","(125)","","","1,433","","","(2,974)","","","(1,541)"],["Loans and leases (2)","88,865","","","144,119","","","232,984","","","(13,799)","","","(90,254)","","","(104,053)"],["Total interest income (2)","101,761","","","178,823","","","280,584","","","(7,874)","","","(119,244)","","","(127,118)"],["Interest Expense (1)"],["Deposits:"],["Interest-bearing demand","1,021","","","58,902","","","59,923","","","2,576","","","(41,124)","","","(38,548)"],["Savings","91","","","7,757","","","7,848","","","94","","","(2,252)","","","(2,158)"],["Certificates and other time","(1,192)","","","(5,273)","","","(6,465)","","","(11,465)","","","(33,485)","","","(44,950)"],["Short-term borrowings","(3,747)","","","1,607","","","(2,140)","","","(12,380)","","","551","","","(11,829)"],["Long-term borrowings","(2,325)","","","10,099","","","7,774","","","(13,558)","","","1,053","","","(12,505)"],["Total interest expense","(6,152)","","","73,092","","","66,940","","","(34,733)","","","(75,257)","","","(109,990)"],["Net change (2)","$","107,913","","","$","105,731","","","$","213,644","","","$","26,859","","","$","(43,987)","","","$","(17,128)"]]
[[/GREPCENT_TABLE]]

(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 $1.3 billion for 2022, increased $280.6 million or 27.6% from 2021, resulting from the 2022 interest rate increases by the FOMC and an increase in interest-earning assets of $3.1 billion. The increase in earning assets was primarily driven by a $2.8 billion, or 11.0%, increase in average loans and an increase in average securities of $914.8 million. Growth in total average commercial loans included $964.9 million, or 9.9%, in commercial real estate, partially offset by a decline of $113.9 million, or 1.7%, in commercial and industrial loans, reflecting average PPP loans declining $1.4 billion. Commercial loan origination activity was led by the Cleveland, Pittsburgh and South Carolina markets, with the acquired Howard and Union loans also adding to portfolio balances. Average consumer loans increased $1.8 billion, or

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22.5%, with an increase in residential mortgage loans of $1.1 billion, or 31.5%, direct home equity installment loans of $533.8 million, or 24.9%, and indirect installment loans of $162.1 million, or 13.3%, driven by a combination of the Howard and Union acquisitions and organic loan origination activity. Additionally, the net increase in the securities portfolio was a result of management's strategy to deploy excess liquidity into higher yielding securities, as average securities increased $914.8 million, or 14.7%. For 2022, the yield on average earning assets (non-GAAP) increased 50 basis points to 3.47%, compared to 2021, reflecting variable-rate loans that repriced upwards in 2022, as well as higher yields on new loan originations, investment securities and excess cash balances, partially offset by significant reductions in PPP contributions.

Interest expense of $165.2 million for 2022 increased $66.9 million, or 68.1%, from 2021 primarily due to an increase in rates paid and an increase in average interest-bearing deposits. The growth in average deposits reflected inflows from the Howard and Union acquisitions and solid organic growth in new and existing customer relationships. Average interest-bearing deposits increased $1.4 billion, or 6.9%, which reflects the benefit of solid organic growth in customer relationships and the addition of Howard and Union. Average time deposits declined $204.1 million, or 6.4%, as customer preferences had shifted away from higher rate certificates of deposit to lower yielding, more liquid products, however, customers' preferences are beginning to shift back to certificates of deposits as interest rates increase. Average long-term borrowings decreased $87.9 million, or 9.5%, primarily due to a decrease of $234.5 million in long-term FHLB borrowings, partially offset by increases of $123.5 million in senior debt resulting from the issuance of $350 million in 5.150% fixed rate senior notes during August 2022 and $25.8 million in subordinated debt resulting from $25.0 million acquired in the Howard acquisition and $31.0 million acquired in the Union acquisition. The rate paid on interest-bearing liabilities increased 25 basis points to 0.68% for 2022, compared to 0.43% for 2021. Similarly, the cost of interest-bearing deposits increased 26 basis points from 0.23% to 0.49%. These increases were primarily a result of the interest rate actions taken by the FOMC, combined with the issuance of senior debt in August 2022.

Provision for Credit Losses

The provision for credit losses is determined based on management’s estimates of the appropriate level of ACL needed to absorb probable life-of-loan losses inherent 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 2020 through 2022:

TABLE 6

[[GREPCENT_TABLE]]
[["","","","2022 vs 2021","","","","2021 vs 2020"],["(dollars in thousands)","2022","","2021","","$ Change","","% Change","","2020","","$ Change","","% Change"],["Provision for credit losses (on loans and leases)","$","61,800","","","$","(4,853)","","","$","66,653","","","1,373","%","","$","121,756","","","$","(126,609)","","","(104)","%"],["Provision for unfunded loan commitments","2,230","","","5,472","","","(3,242)","","","(59)","","","1,046","","","4,426","","","423"],["Provision for credit losses","$","64,030","","","$","619","","","$","63,411","","","10,244","%","","$","122,802","","","$","(122,183)","","","(99)","%"],["Net loan charge-offs","$","16,151","","","$","13,949","","","$","2,202","","","16","%","","$","59,808","","","$","(45,859)","","","(77)","%"],["Net loan charge-offs / total average loans and leases","0.06","%","","0.06","%","","","","","","0.24","%"]]
[[/GREPCENT_TABLE]]

Provision for credit losses of $64.0 million during 2022 increased $63.6 million from 2021. The 2022 provision for credit losses is comprised of a $61.8 million provision for loans and leases outstanding and a $2.2 million provision for unfunded loan commitments. The increase reflects $28.5 million of initial provision for non-PCD loans associated with the Howard and Union acquisitions, significant loan growth, as well as CECL-related model impacts from forecasted macroeconomic slowdown and lower prepayment speed assumptions. The provision for unfunded loan commitments was down from a slight year-over-year decline in expected loss in certain segments that also experienced higher utilization. Net charge-offs of $16.2 million for 2022 increased $2.2 million from 2021, with both years at historically low levels of 0.06% of total average loans and leases. 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 2020 through 2022 is presented in the following table:

TABLE 7

[[GREPCENT_TABLE]]
[["","","","","","2022 vs 2021","","","","","2021 vs 2020"],["(dollars in thousands)","2022","","2021","","$ Change","","% Change","","","2020","","$ Change","","% Change"],["Service charges","$","137,698","","","$","121,735","","","$","15,963","","","13.1","%","","","$","108,146","","","$","13,589","","","12.6","%"],["Trust services","39,033","","","37,370","","","1,663","","","4.5","","","","31,249","","","6,121","","","19.6"],["Insurance commissions and fees","24,253","","","25,522","","","(1,269)","","","(5.0)","","","","24,212","","","1,310","","","5.4"],["Securities commissions and fees","23,715","","","22,207","","","1,508","","","6.8","","","","17,441","","","4,766","","","27.3"],["Capital markets income","35,295","","","36,812","","","(1,517)","","","(4.1)","","","","39,337","","","(2,525)","","","(6.4)"],["Mortgage banking operations","20,646","","","37,355","","","(16,709)","","","(44.7)","","","","49,665","","","(12,310)","","","(24.8)"],["Dividends on non-marketable equity securities","11,953","","","8,588","","","3,365","","","39.2","","","","13,736","","","(5,148)","","","(37.5)"],["Bank owned life insurance","11,942","","","14,866","","","(2,924)","","","(19.7)","","","","13,835","","","1,031","","","7.5"],["Net securities gains","48","","","193","","","(145)","","","(75.1)","","","","282","","","(89)","","","(31.6)"],["Loss on debt extinguishment","\u2014","","","\u2014","","","\u2014","","","\u2014","","","","(16,655)","","","16,655","","","n/m"],["Other","18,970","","","25,771","","","(6,801)","","","(26.4)","","","","13,308","","","12,463","","","93.7"],["Total non-interest income","$","323,553","","","$","330,419","","","$","(6,866)","","","(2.1)","%","","","$","294,556","","","$","35,863","","","12.2","%"],["n/m - not meaningful"]]
[[/GREPCENT_TABLE]]

Total non-interest income of $323.6 million for 2022 decreased $6.9 million, or 2.1%, from $330.4 million in 2021. The variances in significant individual non-interest income items are further explained in the following paragraphs.

Service charges of $137.7 million for 2022 increased $16.0 million, or 13.1%, from $121.7 million in 2021, driven by interchange fees, increases in treasury management services and higher customer activity.

Trust services of $39.0 million for 2022 increased $1.7 million, or 4.5%, from the same period of 2021, primarily driven by strong organic revenue production, partially offset by the market value of assets under management decreasing $346.8 million, or 4.2%, to $7.8 billion at December 31, 2022 given overall market conditions.

Insurance commissions and fees of $24.3 million for 2022 decreased $1.3 million, or 5.0%, from $25.5 million in 2021, with the reduction primarily driven by lower title insurance fees resulting from slowing mortgage demand in the current interest rate environment.

Securities commissions and fees of $23.7 million for 2022 increased $1.5 million, or 6.8% from $22.2 million in 2021, due to increased annuity sales activity, as the increasing interest rate environment provided attractive annuity rates, with revenue contributions across the geographic footprint, most notably in the Carolina and Cleveland regions.

Capital markets income of $35.3 million for 2022 decreased $1.5 million, or 4.1%, from $36.8 million for 2021, as swap activity decreased from elevated levels which was partially offset by an increase in syndications revenue.

Mortgage banking operations income of $20.6 million for 2022 decreased $16.7 million, or 44.7%, from $37.4 million for 2021, as secondary market revenue and mortgage held-for-sale pipelines declined from elevated levels in 2021 due to the sharp increase in interest rates and declining gain on sale margins. Additionally, we are currently holding adjustable-rate mortgage originations in our portfolio. During 2022, we sold $1.1 billion of originated residential mortgage loans, a decrease of 38.8% compared to $1.8 billion for 2021. During 2022, we also recognized a $2.5 million favorable interest-rate related valuation adjustment on MSRs, compared to a $4.8 million favorable adjustment in 2021.

Dividends on non-marketable equity securities of $12.0 million for 2022 increased $3.4 million, or 39.2%, from $8.6 million for 2021, reflecting an increase to the FHLB dividend rate.

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Income from BOLI of $11.9 million for 2022 decreased $2.9 million, or 19.7%, from $14.9 million in 2021, primarily due to higher life insurance claims in the prior year.

Other non-interest income was $19.0 million and $25.8 million for 2022 and 2021, respectively, as SBA premium income declined $6.2 million from elevated levels due to the higher interest rate environment leading to lower market premiums and correspondingly lower sold loan volumes.

Non-Interest Expense

The breakdown of non-interest expense for the years 2020 through 2022 is presented in the following table:

TABLE 8

[[GREPCENT_TABLE]]
[["","","","","","2022 vs 2021","","","","","2021 vs 2020"],["(dollars in thousands)","2022","","2021","","$ Change","","% Change","","","2020","","$ Change","","% Change"],["Salaries and employee benefits","$","426,237","","","$","418,328","","","$","7,909","","","1.9","%","","","$","405,529","","","$","12,799","","","3.2","%"],["Net occupancy","68,189","","","58,368","","","9,821","","","16.8","","","","71,166","","","(12,798)","","","(18.0)"],["Equipment","76,261","","","69,973","","","6,288","","","9.0","","","","65,312","","","4,661","","","7.1"],["Amortization of intangibles","13,868","","","12,117","","","1,751","","","14.5","","","","13,362","","","(1,245)","","","(9.3)"],["Outside services","72,961","","","70,553","","","2,408","","","3.4","","","","69,258","","","1,295","","","1.9"],["Marketing","15,674","","","14,320","","","1,354","","","9.5","","","","12,559","","","1,761","","","14.0"],["FDIC insurance","20,412","","","17,881","","","2,531","","","14.2","","","","20,073","","","(2,192)","","","(10.9)"],["Bank shares and franchise taxes","13,954","","","12,629","","","1,325","","","10.5","","","","14,376","","","(1,747)","","","(12.2)"],["Merger-related","45,259","","","1,764","","","43,495","","","2,466","","","","\u2014","","","1,764","","","\u2014"],["Other","73,577","","","57,235","","","16,342","","","28.6","","","","78,714","","","(21,479)","","","(27.3)"],["Total non-interest expense","$","826,392","","","$","733,168","","","$","93,224","","","12.7","%","","","$","750,349","","","$","(17,181)","","","(2.3)","%"]]
[[/GREPCENT_TABLE]]

Total non-interest expense of $826.4 million for 2022 increased $93.2 million, or 12.7%, from $733.2 million in 2021. Excluding significant items totaling $52.3 million in 2022 and $4.4 million in 2021, operating non-interest expense (non-GAAP) increased $45.4 million, or 6.2%. The variances in significant individual non-interest expense items are further explained in the following paragraphs.

Salaries and employee benefits of $426.2 million for 2022 increased $7.9 million, or 1.9%, from $418.3 million in 2021, related to normal merit increases and the acquired Howard and Union expense bases. Our total full-time equivalent employees were 4,018 and 3,884 at December 31, 2022 and 2021, respectively.

Net occupancy and equipment expense of $144.5 million for 2022 increased $16.1 million, or 12.6%, from $128.3 million in 2021, primarily from technology-related investments and the acquired Howard and Union expense bases, as well as non-operating expenses (non-GAAP) related to branch consolidation costs of $4.1 million for 2022 and $2.1 million in 2021.

Amortization of intangibles of $13.9 million for 2022 increased $1.8 million, or 14.5%, from the same period of 2021, primarily due to additional core deposit intangibles added as a result of our acquisitions in 2022.

FDIC insurance expense of $20.4 million for 2022 increased $2.5 million, or 14.2%, from 2021, primarily due to loan growth and a shift in the balance sheet mix.

We recorded $45.3 million in merger-related costs in 2022 related to the Howard and Union acquisitions compared to $1.8 million related to the Howard acquisition in 2021.

Other non-interest expense was $73.6 million and $57.2 million for 2022 and 2021, respectively, driven by $2.8 million in branch consolidation costs and an increase in business development expense and other operational costs in 2022. Comparatively, we had $0.5 million in branch consolidation costs and a $2.2 million mortgage recourse reserve release in 2021.

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

TABLE 9

[[GREPCENT_TABLE]]
[["","","","","","$","","%"],["(dollars in thousands)","2022","","2021","","Change","","Change"],["Total non-interest expense, as reported","$","826,392","","","$","733,168","","","$","93,224","","","12.7","%"],["Significant items:"],["Branch consolidations","(7,016)","","","(2,644)","","","(4,372)"],["Merger-related","(45,259)","","","(1,764)","","","(43,495)"],["Total non-interest expense, excluding significant items (1)","$","774,117","","","$","728,760","","","$","45,357","","","6.2","%"]]
[[/GREPCENT_TABLE]]

(1) Non-GAAP

Income Taxes

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

TABLE 10

[[GREPCENT_TABLE]]
[["Year ended December 31","2022","","2021","","2020"],["(dollars in thousands)"],["Income tax expense","$","113,626","","","$","98,496","","","$","57,485"],["Effective tax rate","20.6","%","","19.6","%","","16.7","%"],["Statutory federal tax rate","21.0","","","21.0","","","21.0"]]
[[/GREPCENT_TABLE]]

Our income tax expense for 2022 increased $15.1 million, or 15.4% from 2021. The effective tax rate was 20.6% for 2022, compared to 19.6% for 2021, primarily resulting from higher pre-tax earnings, higher state income taxes from acquisitions and increased FDIC insurance deduction disallowance. Effective tax rates are lower than the 21% federal statutory rate due to the tax benefits resulting from historic tax credits, tax-exempt income on investments and loans and income from BOLI.

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

Refer to the MD&A in our 2021 Annual Report on Form 10-K filed with the SEC on February 24, 2022 for a comparison of 2021 to 2020.

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FINANCIAL CONDITION

The following table presents our condensed Consolidated Balance Sheets:

TABLE 11

[[GREPCENT_TABLE]]
[["December 31","2022","","2021","","$ Change","","% Change"],["(dollars in millions)"],["Assets"],["Cash and cash equivalents","$","1,674","","","$","3,493","","","$","(1,819)","","","(52.1)","%"],["Securities","7,362","","","6,889","","","473","","","6.9"],["Loans held for sale","124","","","295","","","(171)","","","(58.0)"],["Loans and leases, net","29,853","","","24,624","","","5,229","","","21.2"],["Goodwill and other intangibles","2,566","","","2,304","","","262","","","11.4"],["Other assets","2,146","","","1,908","","","238","","","12.5"],["Total Assets","$","43,725","","","$","39,513","","","$","4,212","","","10.7","%"],["Liabilities and Stockholders\u2019 Equity"],["Deposits","$","34,770","","","$","31,726","","","$","3,044","","","9.6","%"],["Borrowings","2,465","","","2,218","","","247","","","11.1"],["Other liabilities","837","","","419","","","418","","","99.8"],["Total Liabilities","38,072","","","34,363","","","3,709","","","10.8"],["Stockholders\u2019 Equity","5,653","","","5,150","","","503","","","9.8"],["Total Liabilities and Stockholders\u2019 Equity","$","43,725","","","$","39,513","","","$","4,212","","","10.7","%"]]
[[/GREPCENT_TABLE]]

The significant increase in both assets and liabilities is primarily due to strong organic loan and deposit growth as well as the Howard and Union acquisitions.

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.

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Following is a summary of loans and leases:

TABLE 12

[[GREPCENT_TABLE]]
[["December 31","2022","","2021","","$ Change","","% Change"],["(in millions)"],["Commercial real estate","$","11,526","","","$","9,899","","","$","1,627","","","16.4","%"],["Commercial and industrial","7,131","","","5,977","","","1,154","","","19.3"],["Commercial leases","519","","","495","","","24","","","4.8"],["Other","114","","","94","","","20","","","21.3"],["Total commercial loans and leases","19,290","","","16,465","","","2,825","","","17.2"],["Direct installment","2,784","","","2,376","","","408","","","17.2"],["Residential mortgages","5,297","","","3,654","","","1,643","","","45.0"],["Indirect installment","1,553","","","1,227","","","326","","","26.6"],["Consumer lines of credit","1,331","","","1,246","","","85","","","6.8"],["Total consumer loans","10,965","","","8,503","","","2,462","","","29.0"],["Total loans and leases","$","30,255","","","$","24,968","","","$","5,287","","","21.2","%"]]
[[/GREPCENT_TABLE]]

Total loans and leases increased $5.3 billion, or 21.2%, to $30.3 billion at December 31, 2022, compared to $25.0 billion at December 31, 2021, reflecting a commercial loans and leases increase of $2.8 billion or 17.2%, and an increase in consumer loans of $2.5 billion or 29.0%. The increase included Howard acquired loans ($1.8 billion as of the January 22, 2022, acquisition date) and Union acquired loans ($651 million as of the December 9, 2022 acquisition date). Our strong organic loan growth in 2022 was primarily attributable to growth across our diverse footprint, with the largest increases noted in the Cleveland, Pittsburgh and South Carolina markets.

As of December 31, 2022, 30.2% of the commercial real estate loans were owner-occupied, while the remaining 69.8% were non-owner-occupied, compared to 28.8% and 71.2%, respectively, as of December 31, 2021. As of December 31, 2022 and 2021, we had commercial construction loans of $1.7 billion at each respective date representing 5.7% and 6.9% of total loans and leases, respectively. Additionally, as of December 31, 2022 and 2021, we had residential construction loans of $379.4 million and $300.6 million, respectively, representing 1.3% and 1.2% of total loans and leases, respectively. The increase in construction loans reflects the continued shortage of existing homes available for sale relative to strong homebuying demand.

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. PPP loans, included in the commercial and industrial loans category, have declined significantly and totaled $25.7 million and $336.6 million at December 31, 2022 and 2021, respectively. 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 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, 2022 and 2021, there were no concentrations of loans relating to any industry in excess of 10% of total loans.

Additional information relating to originated loans and loans acquired in business combinations is provided in Note 3, “Mergers and Acquisitions” and Note 6, “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, 2022:

TABLE 13

[[GREPCENT_TABLE]]
[["(in millions)","Within 1 Year","","1-5 Years","","Over 5 Years Through 15 years","","After 15 Years","","Total"],["Commercial real estate","$","1,424","","","$","4,657","","","$","4,845","","","$","600","","","$","11,526"],["Commercial and industrial","1,541","","","4,581","","","864","","","145","","","7,131"],["Commercial leases","78","","","283","","","154","","","4","","","519"],["Other","8","","","96","","","9","","","1","","","114"],["Total commercial loans and leases","3,051","","","9,617","","","5,872","","","750","","","19,290"],["Direct installment","16","","","173","","","1,622","","","973","","","2,784"],["Residential mortgages","9","","","59","","","414","","","4,815","","","5,297"],["Indirect installment","22","","","675","","","856","","","\u2014","","","1,553"],["Consumer lines of credit","146","","","35","","","262","","","888","","","1,331"],["Total consumer loans","193","","","942","","","3,154","","","6,676","","","10,965"],["Total","$","3,244","","","$","10,559","","","$","9,026","","","$","7,426","","","$","30,255"],["Loans with maturities over one year:"],["Fixed","","","$","3,424","","","$","4,453","","","$","4,081","","","$","11,958"],["Floating","","","7,135","","","4,573","","","3,345","","","15,053"]]
[[/GREPCENT_TABLE]]

For additional information relating to lending activity, see Note 6, “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 and non-performing TDRs. 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. TDRs are loans in which the borrower has been granted a concession on the interest rate or the original repayment terms due to financial distress.

Non-accrual loans of $113.4 million at December 31, 2022 increased 29.1% compared to December 31, 2021, representing a $25.5 million increase, however they were still at relatively low levels. This increase is primarily attributed to the migration of a commercial and industrial credit during the fourth quarter of 2022.

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

TABLE 14

[[GREPCENT_TABLE]]
[["December 31","2022","","2021","","$ Change","","% Change"],["(in millions)"],["Commercial real estate","$","39","","","$","48","","","$","(9)","","","(18.8)","%"],["Commercial and industrial","44","","","15","","","29","","","193.3"],["Commercial leases","1","","","1","","","\u2014","","","\u2014"],["Total commercial loans and leases","84","","","64","","","20","","","31.3"],["Direct installment","7","","","7","","","\u2014","","","\u2014"],["Residential mortgages","14","","","10","","","4","","","40.0"],["Indirect installment","1","","","2","","","(1)","","","(50.0)"],["Consumer lines of credit","7","","","5","","","2","","","40.0"],["Total consumer loans","29","","","24","","","5","","","20.8"],["Total non-performing loans and leases","$","113","","","$","88","","","$","25","","","28.4","%"]]
[[/GREPCENT_TABLE]]

Following is a summary of non-performing assets:

TABLE 15

[[GREPCENT_TABLE]]
[["December 31","2022","","2021"],["(dollars in millions)"],["Non-accrual loans","$","113","","","$","88"],["Total non-performing loans and leases","113","","","88"],["Other real estate owned","6","","","8"],["Total non-performing assets","$","119","","","$","96"],["Non-performing loans / total loans and leases","0.37","%","","0.35","%"],["Non-performing loans + OREO / total loans and leases + OREO","0.39","","","0.39"],["Non-performing assets / total assets","0.27","","","0.24"]]
[[/GREPCENT_TABLE]]

Troubled Debt Restructured Loans

TDRs are loans whose contractual terms have been modified in a manner that grants a concession to a borrower experiencing financial difficulties. TDRs typically result from loss mitigation activities and could include the extension of a maturity date, interest rate reduction, principal forgiveness, deferral or decrease in payments for a period of time and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of collateral.

TDRs that are accruing and performing include loans for which we can reasonably estimate the timing and amount of the expected cash flows on such loans and for which we expect to fully collect the new carrying value of the loans. TDRs that are accruing and non-performing are comprised of loans that have not demonstrated a consistent repayment pattern on the modified terms for more than six months, however it is expected that we will collect all future principal and interest payments. TDRs that are on non-accrual are not placed on accruing status until all delinquent principal and interest have been paid and the ultimate ability to collect the remaining principal and interest is reasonably assured. Some loan modifications classified as TDRs may not ultimately result in the full collection of principal and interest, as modified, and may result in incremental losses which are factored into the ACL estimate. Additional information related to our TDRs is included in Note 6, “Loans and Leases” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report. In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosure. We will adopt the ASU on its effective date, January 1, 2023. The ASU eliminates TDR accounting for entities that have adopted Update 2016-13, while enhancing disclosure requirements for certain loan modifications when a borrower is experiencing financial difficulty. Adoption of this Update is not expected to have a material impact on our consolidated financial statements.

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

TABLE 16

[[GREPCENT_TABLE]]
[["(in millions)","Accruing","","Non-Accrual","","Total"],["December 31, 2022"],["Commercial real estate","$","5","","","$","15","","","$","20"],["Commercial and industrial","\u2014","","","1","","","1"],["Total commercial loans","5","","","16","","","21"],["Direct installment","19","","","3","","","22"],["Residential mortgages","33","","","4","","","37"],["Consumer lines of credit","6","","","1","","","7"],["Total consumer loans","58","","","8","","","66"],["Total TDRs","$","63","","","$","24","","","$","87"],["December 31, 2021"],["Commercial real estate","$","6","","","$","21","","","$","27"],["Commercial and industrial","\u2014","","","1","","","1"],["Total commercial loans","6","","","22","","","28"],["Direct installment","21","","","4","","","25"],["Residential mortgages","27","","","5","","","32"],["Consumer lines of credit","6","","","1","","","7"],["Total consumer loans","54","","","10","","","64"],["Total TDRs","$","60","","","$","32","","","$","92"]]
[[/GREPCENT_TABLE]]

Following is a summary of loans and leases 90 days or more past due on which interest accruals continue:

TABLE 17

[[GREPCENT_TABLE]]
[["December 31","2022","","2021"],["(dollars in millions)"],["Total loans and leases 90 days or more past due","$","12","","","$","6"],["As a percentage of total loans and leases","0.04","%","","0.02","%"]]
[[/GREPCENT_TABLE]]

Following is a table showing the amounts of contractual interest income and actual interest income related to non-performing loans:

TABLE 18

[[GREPCENT_TABLE]]
[["December 31","2022","","2021","","2020"],["(in millions)"],["Gross interest income:"],["Per contractual terms","$","11","","","$","9","","","$","13"],["Recorded during the year","\u2014","","","\u2014","","","\u2014"]]
[[/GREPCENT_TABLE]]

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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, 2022 and 2021, we utilized a third-party consensus macroeconomic forecast reflecting the current and projected macroeconomic environment. For our ACL calculation at December 31, 2022, the macroeconomic variables that we utilized included, but were not limited to: (i) the purchase only Housing Price Index, which declines 3.7% over our R&S forecast period, (ii) a Commercial Real Estate Price Index, which declines 0.9% over our R&S forecast period, (iii) S&P Volatility, which decreases 41.0% in 2023 and 8.1% in 2024 and (iv) bankruptcies, which increase steadily over the R&S forecast period but average below historic levels. Macroeconomic variables that we utilized for our ACL calculation as of December 31, 2021 included, but were not limited to: (i) the purchase only Housing Price Index, which reflected growth of 6.3% over our R&S forecast period, (ii) a Commercial Real Estate Price Index, which reflected growth of 13.0% over our R&S forecast period, (iii) S&P Volatility, which increases 15.2% in 2022 and 1.9% in 2023 and (iv) bankruptcies, which increase steadily over the R&S forecast period but average below historical levels.

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

TABLE 19

[[GREPCENT_TABLE]]
[["","Net Loan Charge-Offs (Recoveries)","","Net Loan Charge-Offs to Average Loans"],["Year Ended December 31","2022","","2021","","2022","","2021"],["(dollars in millions)"],["Commercial real estate","$","8.4","","","$","2.5","","","0.03","%","","0.01","%"],["Commercial and industrial","1.5","","","9.1","","","0.01","","","0.04"],["Commercial leases","0.1","","","(0.7)","","","\u2014","","","\u2014"],["Other commercial","2.4","","","1.0","","","0.01","","","\u2014"],["Direct installment","(0.1)","","","0.4","","","\u2014","","","\u2014"],["Residential mortgages","0.1","","","0.4","","","\u2014","","","\u2014"],["Indirect installment","3.9","","","0.9","","","0.01","","","0.01"],["Consumer lines of credit","(0.1)","","","0.3","","","\u2014","","","\u2014"],["Total net loan charge-offs on loans and leases; net loan charge-offs/average loans","$","16.2","","","$","13.9","","","0.06","%","","0.06","%"],["Allowance for credit losses/total loans and leases","","","","","1.33","%","","1.38","%"],["Allowance for credit losses/non-performing loans","","","","","354.26","","","391.90"]]
[[/GREPCENT_TABLE]]

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

TABLE 20

[[GREPCENT_TABLE]]
[["Year Ended December 31","2022","","2021","","2020"],["(in millions)"],["Balance at beginning of period","$","19","","","$","14","","","$","3"],["Provision for unfunded loan commitments and letters of credit:"],["Commercial portfolio","2","","","5","","","1"],["Consumer portfolio","\u2014","","","\u2014","","","\u2014"],["ASC 326 adoption impact:"],["Commercial portfolio","\u2014","","","\u2014","","","8"],["Consumer portfolio","\u2014","","","\u2014","","","2"],["Balance at end of period","$","21","","","$","19","","","$","14"]]
[[/GREPCENT_TABLE]]

The ACL on loans and leases of $401.7 million at December 31, 2022 increased $57.4 million, or 16.7%, from December 31, 2021 with the increase primarily driven by significant loan growth, a forecasted macroeconomic slowdown and lower prepayment speed assumptions, as well as the initial ACL related to the Howard and Union acquisitions. Our ending ACL coverage ratio at December 31, 2022 was 1.33%, compared to 1.38% at December 31, 2021. Total provision for credit losses during 2022 was $64.2 million, compared to $0.6 million for the same period in 2021, reflecting $19.1 million of initial provision for non-PCD loans associated with the Howard acquisition in the first quarter of 2022 and $9.4 million related to the Union acquisition in the fourth quarter of 2022, and coverage for significant loan growth, as well as CECL-related model impacts from forecasted macroeconomic slowdown and lower prepayment speed assumptions. Net charge-offs were $16.2 million, or 0.06%, of total average loans, compared to $13.9 million, or 0.06%, in 2021, with both periods below historical levels. The ACL as a percentage of non-performing loans for the total portfolio decreased from 392% as of December 31, 2021 to 354% as of December 31, 2022.

Total provision for credit losses during 2021 was $0.6 million. Net charge-offs were $13.9 million, or 0.06%, of total average loans, compared to $59.8 million, or 0.24%, in 2020, reflecting COVID-19 impacts on certain segments of the loan portfolio in 2020.

The provision for credit losses during 2020 was $122.8 million, which reflected COVID-19 related macroeconomic impacts and life-of-loan CECL reserving requirements in 2020. Net charge-offs totaled $59.8 million or 0.24% of total average loans, compared to $28.3 million or 0.12% in 2019, reflecting COVID-19 impacts on certain segments of the loan portfolio.

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

TABLE 21

[[GREPCENT_TABLE]]
[["December 31","2022","","2021"],["(dollars in millions)","Allowance","","% of Loans","","Allowance","","% of Loans"],["Commercial real estate","$","162","","","38","%","","$","157","","","40","%"],["Commercial and industrial","102","","","24","","","87","","","24"],["Commercial leases","14","","","2","","","15","","","2"],["Other","4","","","\u2014","","","3","","","\u2014"],["Commercial loans and leases","282","","","64","","","261","","","66"],["Direct installment","36","","","9","","","26","","","9"],["Residential mortgages","56","","","18","","","33","","","15"],["Indirect installment","17","","","5","","","14","","","5"],["Consumer lines of credit","11","","","4","","","10","","","5"],["Consumer loans","120","","","36","","","83","","","34"],["Total","$","402","","","100","%","","$","344","","","100","%"]]
[[/GREPCENT_TABLE]]

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During 2022, the ACL allocated to commercial and industrial loans increased primarily due to loan growth, macroeconomic forecast model adjustments and the Howard and Union acquisitions; the ACL allocated to direct installment loans increased primarily due to macroeconomic forecast model and prepay speed adjustments; and the ACL allocated to residential mortgage loans increased due to new loan volume, as well as macroeconomic forecast model and prepay speed adjustments.

During 2021, the ACL allocated to commercial real estate decreased primarily due to the improving macroeconomic environment and positive credit quality trends for this portfolio.

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 similar interest rate and credit risk. In addition, by their nature, securities classified as AFS are also subject to fair value risks that could negatively affect the level of liquidity available to us, as well as stockholders’ equity. A change in the value of securities HTM could also negatively affect the level of stockholders’ equity if there was a decline in the underlying creditworthiness of the issuers. A CECL methodology is applied to securities HTM. As of December 31, 2022, securities HTM had a CECL ACL of $0.23 million.

As of December 31, 2022, debt securities classified as AFS and HTM totaled $3.3 billion and $4.1 billion, respectively. During 2022, debt securities AFS decreased by $150.4 million and debt securities HTM increased by $623.3 million from December 31, 2021. As of December 31, 2022 and 2021, 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, 2022:

TABLE 22

[[GREPCENT_TABLE]]
[["(dollars in millions)","Amount","","Weighted Average Yield"],["Obligations of U.S. Treasury:"],["Maturing after five years but within ten years","$","\u2014","","","5.25","%"],["Obligations of U.S. government agencies:"],["Maturing after ten years","1","","","5.25"],["Obligations of U.S. government-sponsored entities:"],["Maturing after one year but within five years","52","","","5.03"],["States of the U.S. and political subdivisions:"],["Maturing within one year","1","","","2.62"],["Maturing after one year but within five years","36","","","2.84"],["Maturing after five years but within ten years","170","","","3.13"],["Maturing after ten years","818","","","3.73"],["Other debt securities:"],["Maturing after five years but within ten years","12","","","4.23"],["Residential mortgage-backed securities:"],["Agency mortgage-backed securities","1,178","","","1.94"],["Agency collateralized mortgage obligations","953","","","1.87"],["Commercial mortgage-backed securities","866","","","3.53"],["Total","$","4,087","","","2.72","%"]]
[[/GREPCENT_TABLE]]

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 23

[[GREPCENT_TABLE]]
[["December 31","2022","","2021","","$ Change","","% Change"],["(in millions)"],["Securities Available for Sale:"],["U.S. Treasury","$","278","","","$","205","","","$","73","","","35.6","%"],["U.S. government agencies","107","","","154","","","(47)","","","(30.5)"],["U.S. government-sponsored entities","283","","","194","","","89","","","45.9"],["Residential mortgage-backed securities:"],["Agency mortgage-backed securities","1,360","","","1,342","","","18","","","1.3"],["Agency collateralized mortgage obligations","1,110","","","1,192","","","(82)","","","(6.9)"],["Commercial mortgage-backed securities","430","","","294","","","136","","","46.3"],["States of the U.S. and political subdivisions","33","","","33","","","\u2014","","","\u2014"],["Other debt securities","21","","","2","","","19","","","950.0"],["Total debt securities available for sale","$","3,622","","","$","3,416","","","$","206","","","6.0","%"],["Debt Securities Held to Maturity:"],["U.S. Treasury","$","\u2014","","","$","1","","","$","(1)","","","n/m"],["U.S. government agencies","1","","","1","","","\u2014","","","\u2014"],["U.S. government-sponsored entities","52","","","\u2014","","","52","","","n/m"],["Residential mortgage-backed securities:"],["Agency mortgage-backed securities","1,178","","","1,191","","","(13)","","","(1.1)"],["Agency collateralized mortgage obligations","953","","","930","","","23","","","2.5"],["Commercial mortgage-backed securities","866","","","323","","","543","","","168.1"],["States of the U.S. and political subdivisions","1,025","","","1,017","","","8","","","0.8"],["Other debt securities","12","","","\u2014","","","12","","","n/m"],["Total debt securities held to maturity","$","4,087","","","$","3,463","","","$","624","","","18.0","%"],["n/m - not meaningful"]]
[[/GREPCENT_TABLE]]

The growth in the HTM commercial mortgage-backed securities sector during the period was driven by our focus on longer duration and stable cash flows for new securities purchases.

For additional information relating to investment activity, see Note 4, “Securities” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report.

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Deposits

Our primary source of funds is deposits. These deposits are provided by business, consumer and municipal customers who we serve within our footprint.

Following is a summary of deposits:

TABLE 24

[[GREPCENT_TABLE]]
[["December 31","2022","","2021","","$ Change","","% Change"],["(in millions)"],["Non-interest-bearing demand","$","11,916","","","$","10,789","","","$","1,127","","","10.4","%"],["Interest-bearing demand","15,100","","","14,409","","","691","","","4.8"],["Savings","4,142","","","3,669","","","473","","","12.9"],["Certificates and other time deposits","3,612","","","2,859","","","753","","","26.3"],["Total deposits","$","34,770","","","$","31,726","","","$","3,044","","","9.6","%"]]
[[/GREPCENT_TABLE]]

Total deposits increased $3.0 billion, or 9.6%, from December 31, 2021, primarily as a result of growth in non-interest-bearing and interest-bearing demand balances from organic growth in new and existing customer relationships and inflows from the Howard and Union acquisitions. Customer preferences had shifted to more liquid accounts during the low-rate pandemic era, however, customers' preferences are beginning to shift back to certificates of deposits as interest rates increase. The deposit growth helped us eliminate overnight borrowings, reduce higher-cost short-term FHLB borrowings and provide funding for loan growth.

Following is a summary of estimated insured and uninsured time deposits in excess of the FDIC insurance limit by remaining maturity at December 31, 2022:

TABLE 25

[[GREPCENT_TABLE]]
[["(in millions)","Insured","","Uninsured","","Total"],["Three months or less","$","800","","","$","261","","","$","1,061"],["Three to six months","441","","","339","","","780"],["Six to twelve months","638","","","159","","","797"],["Over twelve months","865","","","109","","","974"],["Total","$","2,744","","","$","868","","","$","3,612"]]
[[/GREPCENT_TABLE]]

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 $1.4 billion at December 31, 2022 from $1.5 billion at December 31, 2021, primarily due to a $100.0 million decline in short-term FHLB borrowings.

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

TABLE 26

[[GREPCENT_TABLE]]
[["At or for the Year Ended December 31","2022","","2021","","2020"],["(dollars in millions)"],["FHLB Advances (Short-term)"],["Balance at year-end","$","930","","","$","1,030","","","$","1,280"],["Maximum month-end balance","930","","","1,280","","","2,055"],["Average balance during year","933","","","1,113","","","1,699"],["Weighted average interest rates:"],["At year-end","2.18","%","","2.14","%","","1.97","%"],["During the year","2.18","","","2.13","","","1.83"]]
[[/GREPCENT_TABLE]]

For additional information relating to deposits and short-term borrowings, see Note 13, “Deposits” and Note 14, “Short-Term Borrowings” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report.

Capital Resources

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 depend, in part, on our capital position.

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

We have an effective shelf registration statement filed with the SEC. Pursuant to this registration statement, we may, from time to time, issue and sell in one or more offerings any combination of common stock, preferred stock, debt securities, depositary shares, warrants, stock purchase contracts or units. On August 25, 2022, we completed an offering of $350 million of 5.150% fixed-rate senior notes due in 2025 under this registration statement. The net proceeds of the debt offering after deducting underwriting discounts and commissions and offering expenses were $347.4 million. We used the net proceeds from the sale of the notes for general corporate purposes, which may include repayment of the $300 million in 2.200% senior notes due February 2023, investments at the holding company level, capital to support the growth of FNBPA and refinancing of outstanding indebtedness.

On April 18, 2022, we announced that our Board of Directors approved an additional $150 million for the repurchase of our common stock through our existing share repurchase program bringing the total authorization to $300 million. Since inception, we repurchased 11.0 million shares at a weighted average share price of $11.33 for $124.4 million under this repurchase program, with $175.6 million remaining for repurchase. The repurchases will be made from time to time on the open market at prevailing market prices or in privately negotiated transactions. The purchases will be funded from available working capital. There is no guarantee as to the exact number of shares that will be repurchased and we may discontinue purchases at any time. The Inflation Reduction Act of 2022 includes a 1% excise tax on stock repurchases beginning January 1, 2023.

Capital management is a continuous process with capital plans and stress testing for FNB and FNBPA updated at least annually. These capital plans include assessing the adequacy of expected capital levels assuming various scenarios by projecting capital needs for a forecast period of 2-3 years beyond the current year. Both FNB and FNBPA are subject to various regulatory capital requirements administered by federal banking agencies. For additional information, see Note 23, “Regulatory Matters” in the Notes to the Consolidated Financial Statements, which is included in Item 8 of this Report. From time to time, we issue shares initially acquired by us as treasury stock under our various benefit plans. 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, 2022:

TABLE 27

[[GREPCENT_TABLE]]
[["(in millions)","","","","","","","","","Total"],["Deposits without a stated maturity","","","","","","","","","$","31,158"],["Certificates and other time deposits","","","","","","","","","3,612"],["Operating leases","","","","","","","","","165"],["Long-term borrowings","","","","","","","","","1,093"],["Total","","","","","","","","","$","36,028"]]
[[/GREPCENT_TABLE]]

The following table sets forth the amount of commitments to extend credit and standby letters of credit as of December 31, 2022:

TABLE 28

[[GREPCENT_TABLE]]
[["(in millions)","","","","","","","","","Total"],["Commitments to extend credit","","","","","","","","","$","13,250"],["Standby letters of credit","","","","","","","","","207"],["Total","","","","","","","","","$","13,457"]]
[[/GREPCENT_TABLE]]

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 17, “Commitments, Credit Risk and Contingencies” in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report.

LIQUIDITY

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

The principal sources of the parent company’s liquidity are its strong existing cash resources plus dividends and interest it receives from its subsidiaries. These dividends may be impacted by the parent’s or its subsidiaries’ capital needs, statutory laws and regulations, corporate policies, contractual restrictions, profitability and other factors. In addition, through one of our subsidiaries, we regularly issue subordinated notes, which are guaranteed by FNB. The cash position at December 31, 2022 was $654.3 million, up $358.9 million from year-end 2021, primarily due to the $347.7 million net proceeds from a Senior Debt offering in August, part of which will be used to retire debt in February of 2023 (for additional information, see Note 10, "Borrowings" in the Notes to the Consolidated Financial Statements in this Report). Management has utilized various strategies to ensure sufficient cash on hand is available to meet the parent's funding needs.

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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 cash on hand.

The LCR and MCH ratios are presented in the following table:

TABLE 29

[[GREPCENT_TABLE]]
[["December 31","2022","","2021","","Internal Limit"],["Liquidity coverage ratio","1.7 times","","2.4 times",""," 1 time"],["Months of cash on hand","13.6 months","","16.9 months",""," 12 months"]]
[[/GREPCENT_TABLE]]

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

Our liquidity position has been positively impacted by our ability to generate growth in relationship-based accounts. Organic growth in low-cost transaction deposits was complemented by management’s strategy of deposit gathering efforts focused on attracting new customer relationships and deepening relationships with existing customers, in part through internal lead generation efforts leveraging data analytics capabilities.  This year we also commenced the roll-out of the new digital eStore kiosks in all FNB branches. Total deposits increased $3.0 billion, or 9.6%, from December 31, 2021, primarily as a result of growth in non-interest-bearing demand balances, expansion of customer relationships as well as interest-bearing demand balances due to the Howard and Union acquisitions. We continue to have success growing total non-interest-bearing demand deposit accounts as they rose $1.1 billion, or 10.4%, and now represent 34.3% of total deposits, up from 34.0% as of December 31, 2021. Further, interest-bearing demand deposits increased $691.0 million, or 4.8% and savings account balances increased $473.5 million, or 12.9%, while time deposits increased $752.7 million, or 26.3%, of which $386.4 million is attributable to the Howard and Union acquisitions as of the closing date of the respective acquisitions. Customer preferences had shifted to more liquid accounts during the low-rate pandemic eras, however, customers' preferences have begun to shift back to certificates of deposits as interest rates have increased. Our strong liquidity position provided us the flexibility to reduce our FHLB borrowings by $100 million and eliminate Howard's overnight borrowings and retire $200 million of Howard's higher-cost FHLB borrowings.

Our cash balances held at the FRB decreased $1.9 billion from year-end 2021 to $1.1 billion at December 31, 2022 as cash was deployed primarily to fund loans and investments.

FNBPA has significant unused wholesale credit availability sources that include the availability to borrow from the FHLB, the FRB, correspondent bank lines, access to brokered deposits and other channels. In addition to credit availability, FNBPA also possesses salable unpledged government and agency securities that could be utilized to meet funding needs. We currently also have excess cash to meet our pledging requirements. At December 31, 2022, we have $1.7 billion of cash and salable unpledged government and agency securities to total assets, or 3.9%. This compares to a policy minimum of 3.0%.

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

TABLE 30

[[GREPCENT_TABLE]]
[["December 31","2022","","2021"],["(dollars in millions)"],["Unused wholesale credit availability","$","15,669","","","$","14,681"],["Unused wholesale credit availability as a % of FNBPA assets","35.9","%","","37.2","%"],["Salable unpledged government and agency securities","$","592","","","$","836"],["Salable unpledged government and agency securities as a % of FNBPA assets","1.4","%","","2.1","%"],["Cash and salable unpledged government and agency securities as a % of FNBPA assets","3.9","%","","9.8","%"]]
[[/GREPCENT_TABLE]]

The increase in unused wholesale credit availability was due to increased borrowing capacity with the FHLB.

Another metric for measuring liquidity risk is the liquidity gap analysis. The following liquidity gap analysis as of December 31, 2022 compares the difference between our cash flows from existing earning assets and interest-bearing liabilities

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over future time intervals. 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 repricing over the next 12 months than liabilities, and net interest income would benefit if interest rates were to rise. The twelve-month cumulative gap to total assets ratio was 3.8% as of December 31, 2022, compared to 11.3% as of December 31, 2021. Management calculates this ratio at least quarterly and it is reviewed regularly by ALCO. The change in the twelve-month cumulative gap to total assets is primarily related to the active deployment of cash into loans and securities.

TABLE 31

[[GREPCENT_TABLE]]
[["(dollars in millions)","Within 1 Month","","2-3 Months","","4-6 Months","","7-12 Months","","Total 1 Year"],["Assets"],["Loans","$","642","","","$","1,344","","","$","1,779","","","$","3,022","","","$","6,787"],["Investments","1,341","","","162","","","233","","","466","","","2,202"],["","1,983","","","1,506","","","2,012","","","3,488","","","8,989"],["Liabilities"],["Non-maturity deposits","316","","","631","","","947","","","1,893","","","3,787"],["Time deposits","434","","","634","","","781","","","801","","","2,650"],["Borrowings","185","","","316","","","124","","","272","","","897"],["","935","","","1,581","","","1,852","","","2,966","","","7,334"],["Period Gap (Assets - Liabilities)","$","1,048","","","$","(75)","","","$","160","","","$","522","","","$","1,655"],["Cumulative Gap","$","1,048","","","$","973","","","$","1,133","","","$","1,655"],["Cumulative Gap to Total Assets","2.4","%","","2.2","%","","2.6","%","","3.8","%"]]
[[/GREPCENT_TABLE]]

In addition, the ALCO regularly monitors various liquidity ratios and stress scenarios of our liquidity position. 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. 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 and not for trading or speculative purposes.

Interest rate risk is comprised of repricing risk, basis risk, yield curve risk and options risk. Repricing risk arises from differences in the cash flow or repricing between asset and liability portfolios. Basis risk arises when asset and liability portfolios are related to different market rate indices, which do not always change by the same amount. Yield curve risk arises when asset and liability portfolios are related to different maturities on a given yield curve; when the yield curve changes shape, the risk position is altered. Options risk arises from “embedded options” within asset and liability products as certain borrowers have the option to prepay their loans, which may be with or without penalty, when rates change, while certain depositors can redeem their certificates of deposit early, which may be with or without penalty, when rates change.

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

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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 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, 2022 compares the difference between the amount of interest-earning assets and interest-bearing liabilities subject to repricing over a period of time. Management utilizes the repricing gap analysis as a diagnostic tool in managing net interest income and EVE risk measures.

TABLE 32

[[GREPCENT_TABLE]]
[["(dollars in millions)","Within 1 Month","","2-3 Months","","4-6 Months","","7-12 Months","","Total 1 Year"],["Assets"],["Loans","$","12,251","","","$","932","","","$","1,004","","","$","1,832","","","$","16,019"],["Investments","1,351","","","167","","","327","","","454","","","2,299"],["","13,602","","","1,099","","","1,331","","","2,286","","","18,318"],["Liabilities"],["Non-maturity deposits","10,317","","","\u2014","","","\u2014","","","\u2014","","","10,317"],["Time deposits","558","","","633","","","779","","","797","","","2,767"],["Borrowings","674","","","633","","","5","","","35","","","1,347"],["","11,549","","","1,266","","","784","","","832","","","14,431"],["Off-balance sheet","(650)","","","400","","","(100)","","","(250)","","","(600)"],["Period Gap (assets - liabilities + off-balance sheet)","$","1,403","","","$","233","","","$","447","","","$","1,204","","","$","3,287"],["Cumulative Gap","$","1,403","","","$","1,636","","","$","2,083","","","$","3,287"],["Cumulative Gap to Assets","3.6","%","","4.2","%","","5.3","%","","8.4","%"]]
[[/GREPCENT_TABLE]]

The twelve-month cumulative repricing gap to total assets was 8.4% and 21.6% as of December 31, 2022 and 2021, respectively. The positive cumulative gap positions indicate that we have a greater amount of repricing earning assets than repricing interest-bearing liabilities over the subsequent twelve months. If interest rates increase as modeled, net interest income will increase and, conversely, if interest rates decrease as modeled, net interest income will decrease. The change in the cumulative repricing gap at December 31, 2022, compared to December 31, 2021, is primarily related to the active deployment of cash into longer duration loans and investment securities as well as lower projected prepayment rates on the loan and security portfolios.

The allocation of non-maturity deposits and customer repurchase agreements to the one-month maturity category above is based on the estimated sensitivity of each product to changes in market rates. For example, if a product’s rate is estimated to increase by 50% as much as the market rates, then 50% of the account balance was placed in this category.

Using a static Balance Sheet structure, and utilizing net interest income simulations, the following net interest income metrics were calculated using rate shocks which move market rates in an immediate and parallel fashion. 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, 2022. The measures do not reflect management's potential actions.

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The following table presents an analysis of the potential sensitivity of our net interest income and EVE to changes in interest rates using rate shocks:

TABLE 33

[[GREPCENT_TABLE]]
[["December 31,","2022","","2021","","ALCO Limits"],["Net interest income change (12 months):"],["+ 300 basis points","5.5","%","","21.6","%","","n/a"],["+ 200 basis points","3.3","","","14.4","","","(5.0)","%"],["+ 100 basis points","1.1","","","7.0","","","(5.0)"],["\u2013 100 basis points","1.2","","","(2.4)","","","(5.0)"],["Economic value of equity:"],["+ 300 basis points","(6.8)","","","6.6","","","(25.0)"],["+ 200 basis points","(4.0)","","","5.8","","","(15.0)"],["+ 100 basis points","(1.4)","","","3.8","","","(10.0)"],["\u2013 100 basis points","(2.0)","","","(9.5)","","","(10.0)"]]
[[/GREPCENT_TABLE]]

We also model rate scenarios which move all rates gradually over twelve months (Rate Ramps) and model scenarios that gradually change the shape of the yield curve. The comparative percentages are based on the projected base net interest income at the respective measurement dates. Assuming a static Balance Sheet, a +100 basis point Rate Ramp increases net interest income (12 months) by 0.5% at December 31, 2022 and 3.6% at December 31, 2021. For a +200 basis point Rate Ramp, net interest income (12 months) increases by 2.0% at December 31, 2022 and 7.6% at December 31, 2021. The corresponding metrics for a minus 100 basis point Rate Ramp are 0.6% and (0.5)% at December 31, 2022 and 2021, respectively. These changes are a direct result of our managing our interest rate exposure to benefit from higher rates. Management has reduced our exposure to higher interest rates over the course of 2022 as prospects for additional FRB interest rate increases has moderated.

Forty-eight percent of our net loans and leases are indexed to short-term LIBOR, SOFR and Prime that reprice within the next three months. Our cash position related to increased deposits has also been a significant factor in our asset sensitivity metrics. The deployment of cash into loans and investments, as well as a higher base net interest income due to the increase in the loan indices, are the primary factors of the change in the percentage sensitivity since December. The FOMC increased the Federal Funds rate by 425 basis points in 2022 and our balance sheet is positioned to benefit, in the near term, from further FOMC increases of the Federal Funds rate.

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

Management continues to be proactive in managing our interest rate risk (IRR) position with the near-term objective of having loan and investment cash flows reprice at a faster pace than deposit and borrowing costs during the current higher interest rate environment. In particular, we have made use of interest rate swaps to commercial borrowers (commercial swaps) to manage our IRR position as the commercial swaps effectively increase adjustable-rate loans. Total variable and adjustable-rate loans were 60.2% of total net loans and leases as of December 31, 2022 and 61.3% as of December 31, 2021. As of December 31, 2022, the commercial swaps totaled $5.3 billion of notional principal, with $1.2 billion in original notional swap principal originated during 2022. As mentioned earlier, we were successful in growing our transaction deposits which provides funding that is less interest rate-sensitive, as evidenced by a lower deposit re-pricing beta, than short-term time deposits and wholesale borrowings. Furthermore, we regularly sell long-term fixed-rate residential mortgages in the secondary market and have been successful in the origination of consumer and commercial loans with short-term repricing characteristics. Further, during 2022, management has adjusted our IRR position by opportunistically deploying excess cash balances into higher yielding loans and securities. We have also made use of derivatives to manage the IRR position, with the most recent transactions being the execution of received fixed / pay floating 1-month LIBOR and SOFR interest rate swaps that have a remaining life of 2.5 years. For additional information regarding interest rate swaps, see Note 16, “Derivative Instruments and Hedging Activities” in the Notes to the Consolidated Financial Statements in this Report.

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,

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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 Balance Sheet structure as of the valuation date and do not reflect the planned growth or management actions that could be taken.

RISK MANAGEMENT

As a financial institution, we take on a certain amount of risk in every business decision, transaction and activity. Our Board of Directors and senior management have identified seven major categories of risk: credit risk, market risk, liquidity risk, reputational risk, operational risk, legal and compliance 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.

The Board of Directors adopted a risk appetite statement that defines acceptable risk levels and limits under which we seek to operate in order to optimize returns. As such, the board monitors a series of KRIs, or Key Risk Indicators, for various business lines, operational units, and risk categories, providing insight into how our performance aligns with our stated risk appetite. These results are reviewed periodically by the Board of Directors and senior management to ensure adherence to our risk appetite statement, and where appropriate, adjustments are made to applicable business strategies and tactics where risks are approaching stated tolerances or for emerging risks.

We support our risk management process through a governance structure involving our Board of Directors and senior management. The joint Risk Committee of our Board of Directors and the FNBPA Board of Directors helps ensure that business decisions are executed within appropriate risk tolerances. The Risk Committee has oversight responsibilities with respect to the following:

•identification, measurement, assessment and monitoring of enterprise-wide risk;

•development of appropriate and meaningful risk metrics to use in connection with the oversight of our businesses and strategies;

•review and assessment of our policies and practices to manage our credit, market, liquidity, legal, regulatory and operating risk (including technology, operational, compliance and fiduciary risks); and

•identification and implementation of risk management best practices.

The Risk Committee serves as the primary point of contact between our Board of Directors and the Risk Management Council, which is the senior management level committee responsible for risk management. Risk appetite is an integral element 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. Our top-down risk appetite process serves as a limit for undue risk-taking for bottom-up planning from our various business functions. Our Board Risk Committee, in collaboration with our Risk Management Council, approves our risk appetite on an annual basis, or more frequently, as needed to reflect changes in the risk, regulatory, economic and strategic plan environments, with the goal of ensuring that our risk appetite remains consistent with our strategic plans and business operations, regulatory environment and our shareholders' expectations. Reports relating to our risk appetite and strategic plans, and our ongoing monitoring thereof, are regularly presented to our various management level risk oversight and planning committees and periodically reported up through our Board Risk Committee.

As noted above, we have a Risk Management Council comprised of senior management. The purpose of this committee is to provide regular oversight of specific areas of risk with respect to the level of risk and risk management structure. Management has also established an Operational Risk Committee that is responsible for identifying, evaluating and monitoring operational risks across FNB, evaluating and approving appropriate remediation efforts to address identified operational risks and providing periodic reports concerning operational risks to the Risk Management Council. The Risk Management Council reports on a regular basis to the Risk Committee of our Board of Directors regarding our enterprise-wide risk profile and other significant risk management issues. Our Chief Risk Officer is responsible for the design and implementation of our enterprise-wide risk management strategy and framework through the multiple second line of defense areas, including the following departments, which all report to the Chief Risk Officer, to ensure the coordinated and consistent implementation of risk management initiatives and strategies on a day-to-day basis:

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•Enterprise-Wide Risk Management Department - conducts risk and control assessments across all our business and operational areas to ensure the appropriate risk identification, risk management and reporting of risks enterprise-wide.

•Fraud Risk Department - monitors for internal and external fraud risk across all of our business and operational units.

•Loan Review Department - conducts independent testing of our loan risk ratings to ensure their accuracy, which is instrumental to calculating our ACL.

•Model Risk Management Department - oversees validation and testing of all models used in managing risk across our company.

•Third-Party Risk Management Department - ensures effective risk management and oversight of third-party relationships throughout the vendor life cycle.

•Anti-Money Laundering and Bank Secrecy Act Department - monitors for compliance with money laundering risk and associated regulatory compliance requirements.

•Appraisal Review Department - facilitates independent ordering and review of real estate appraisals obtained for determining the value of real estate pledged as collateral for loans to customers.

•Compliance Department - develops policies and procedures and monitors compliance with applicable laws and regulations which govern our business operations.

•Information and Cyber Security Department - maintains a risk assessment of our information and cybersecurity risks and ensures appropriate controls are in place to manage and control such risks, using the National Institute of Standards and Technology framework for improving critical infrastructure by measuring and evaluating the effectiveness of information and cybersecurity controls. This department also oversees our disaster recovery planning and testing efforts to allow us to be capable and ready for business resumption in the event of a disaster.

As discussed in more detail under the COVID-19 section of this Report, we have in place various business and emergency continuity plans to respond to different crises and circumstances which include rapid deployment of our Crisis Management Team, Incident Management Team and Business Continuity Coordinators to activate our plans for various types of emergency circumstances. Further, our audit function performs an independent assessment of our internal controls environment and plays an integral role in testing the operation of the internal controls systems and reporting findings to management and our Audit Committee. Each of the Risk, Audit, Credit Risk and CRA Committees of our Board of Directors regularly report on risk-related matters to the full Board of Directors. In addition, both the Risk Committee of our Board of Directors and our Risk Management Council regularly assess our enterprise-wide risk profile and provide guidance on actions needed to address key and emerging risk issues.

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 process.

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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 stockholders

[[GREPCENT_TABLE]]
[["Year Ended December 31","2022","","2021","","2020"],["(in thousands)"],["Net income available to common stockholders","$","431,068","","","$","396,561","","","$","277,965"],["Merger-related expense","45,259","","","1,764","","","\u2014"],["Tax benefit of merger-related expense","(9,504)","","","(370)","","","\u2014"],["COVID-19 expense","\u2014","","","\u2014","","","11,276"],["Tax benefit of COVID-19 expense","\u2014","","","\u2014","","","(2,368)"],["Gain on sale of Visa class B stock","\u2014","","","\u2014","","","(13,818)"],["Tax expense of gain on sale of Visa class B stock","\u2014","","","\u2014","","","2,902"],["Loss on FHLB debt extinguishment and related hedge terminations","\u2014","","","\u2014","","","25,611"],["Tax benefit of loss on FHLB debt extinguishment and related hedge terminations","\u2014","","","\u2014","","","(5,378)"],["Provision expense related to acquisitions","28,515","","","\u2014","","","\u2014"],["Tax benefit of provision expense related to acquisitions","(5,988)","","","\u2014","","","\u2014"],["Branch consolidation costs","7,016","","","2,644","","","18,745"],["Tax benefit of branch consolidation costs","(1,473)","","","(555)","","","(3,936)"],["Service charge refunds","\u2014","","","\u2014","","","3,780"],["Tax benefit of service charge refunds","\u2014","","","\u2014","","","(794)"],["Operating net income available to common stockholders (non-GAAP)","$","494,893","","","$","400,044","","","$","313,985"]]
[[/GREPCENT_TABLE]]

The table above shows how operating net income available to common stockholders (non-GAAP) is derived from amounts reported in our financial statements. We believe certain charges such as merger expenses, initial provision for non-PCD loans acquired, branch consolidation costs, service charge refunds and COVID-19 expenses are not organic costs to run our operations and facilities. The merger expenses and branch consolidation costs principally represent expenses to satisfy contractual obligations of the acquired entity or closed branches without any useful ongoing benefit to us. These costs are specific to each individual transaction and may vary significantly based on the size and complexity of the transaction. Similarly, gains on sale of Visa class B stock and losses on FHLB debt extinguishment and related hedge terminations are not organic to our operations. The COVID-19 expenses represent special company initiatives to support our front-line employees and the communities we serve during an unprecedented time of a pandemic.

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TABLE 35

Operating earnings per diluted common share

[[GREPCENT_TABLE]]
[["Year Ended December 31","2022","","2021","","2020"],["Net income per diluted common share","$","1.22","","","$","1.23","","","$","0.85"],["Merger-related expense","0.13","","","0.01","","","\u2014"],["Tax benefit of merger-related expense","(0.03)","","","\u2014","","","\u2014"],["COVID-19 expense","\u2014","","","\u2014","","","0.03"],["Tax benefit of COVID-19 expense","\u2014","","","\u2014","","","(0.01)"],["Gain on sale of Visa class B stock","\u2014","","","\u2014","","","(0.04)"],["Tax expense of gain on sale of Visa class B stock","\u2014","","","\u2014","","","0.01"],["Loss on FHLB debt extinguishment and related hedge terminations","\u2014","","","\u2014","","","0.08"],["Tax benefit of loss on FHLB debt extinguishment and related hedge terminations","\u2014","","","\u2014","","","(0.02)"],["Provision expense related to acquisitions","0.08","","","\u2014","","","\u2014"],["Tax benefit of provision expense related to acquisitions","(0.02)","","","\u2014","","","\u2014"],["Branch consolidation costs","0.02","","","0.01","","","0.06"],["Tax benefit of branch consolidation costs","\u2014","","","\u2014","","","(0.01)"],["Service charge refunds","\u2014","","","\u2014","","","0.01"],["Tax benefit of service charge refunds","\u2014","","","\u2014","","","\u2014"],["Operating earnings per diluted common share (non-GAAP)","$","1.40","","","$","1.24","","","$","0.96"]]
[[/GREPCENT_TABLE]]

TABLE 36

Return on average tangible common equity

[[GREPCENT_TABLE]]
[["Year Ended December 31","2022","","2021","","2020"],["(dollars in thousands)"],["Net income available to common stockholders","$","431,068","","","$","396,561","","","$","277,965"],["Amortization of intangibles, net of tax","10,956","","","9,573","","","10,556"],["Tangible net income available to common stockholders (non-GAAP)","$","442,024","","","$","406,134","","","$","288,521"],["Average total stockholders\u2019 equity","$","5,475,843","","","$","5,033,188","","","$","4,904,300"],["Less: Average preferred stockholders\u2019 equity","(106,882)","","","(106,882)","","","(106,882)"],["Less: Average intangible assets (1)","(2,481,533)","","","(2,310,419)","","","(2,322,981)"],["Average tangible common equity (non-GAAP)","$","2,887,428","","","$","2,615,887","","","$","2,474,437"],["Return on average tangible common equity (non-GAAP)","15.31","%","","15.53","%","","11.66","%"]]
[[/GREPCENT_TABLE]]

(1) Excludes loan servicing rights.

TABLE 37

Return on average tangible assets

[[GREPCENT_TABLE]]
[["Year Ended December 31","2022","","2021","","2020"],["(dollars in thousands)"],["Net income","$","439,109","","","$","404,602","","","$","286,006"],["Amortization of intangibles, net of tax","10,956","","","9,573","","","10,556"],["Tangible net income (non-GAAP)","$","450,065","","","$","414,175","","","$","296,562"],["Average total assets","$","41,954,708","","","$","38,603,092","","","$","36,607,430"],["Less: Average intangible assets (1)","(2,481,533)","","","(2,310,419)","","","(2,322,981)"],["Average tangible assets (non-GAAP)","$","39,473,175","","","$","36,292,673","","","$","34,284,449"],["Return on average tangible assets (non-GAAP)","1.14","%","","1.14","%","","0.87","%"]]
[[/GREPCENT_TABLE]]

(1) Excludes loan servicing rights.

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TABLE 38

Tangible book value per common share

[[GREPCENT_TABLE]]
[["December 31","2022","","2021"],["(dollars in thousands, except per share data)"],["Total stockholders\u2019 equity","$","5,653,364","","","$","5,149,864"],["Less: Preferred stockholders\u2019 equity","(106,882)","","","(106,882)"],["Less: Intangible assets (1)","(2,566,029)","","","(2,304,410)"],["Tangible common equity (non-GAAP)","$","2,980,453","","","$","2,738,572"],["Ending common shares outstanding","360,470,110","","","318,933,492"],["Tangible book value per common share (non-GAAP)","$","8.27","","","$","8.59"]]
[[/GREPCENT_TABLE]]

(1) Excludes loan servicing rights.

TABLE 39

Tangible equity to tangible assets (period-end)

[[GREPCENT_TABLE]]
[["December 31","2022","","2021"],["(dollars in thousands)"],["Total stockholders' equity","$","5,653,364","","","$","5,149,864"],["Less: Intangible assets (1)","(2,566,029)","","","(2,304,410)"],["Tangible equity (non-GAAP)","$","3,087,335","","","$","2,845,454"],["Total assets","$","43,724,973","","","$","39,513,318"],["Less: Intangible assets (1)","(2,566,029)","","","(2,304,410)"],["Tangible assets (non-GAAP)","$","41,158,944","","","$","37,208,908"],["Tangible equity / tangible assets (period-end) (non-GAAP)","7.50","%","","7.65","%"]]
[[/GREPCENT_TABLE]]

(1) Excludes loan servicing rights.

TABLE 40

Tangible common equity / tangible assets (period-end)

[[GREPCENT_TABLE]]
[["December 31","2022","","2021"],["(dollars in thousands)"],["Total stockholders' equity","$","5,653,364","","","$","5,149,864"],["Less: Preferred stockholders' equity","(106,882)","","","(106,882)"],["Less: Intangible assets (1)","(2,566,029)","","","(2,304,410)"],["Tangible common equity (non-GAAP)","$","2,980,453","","","$","2,738,572"],["Total assets","$","43,724,973","","","$","39,513,318"],["Less: Intangible assets (1)","(2,566,029)","","","(2,304,410)"],["Tangible assets (non-GAAP)","$","41,158,944","","","$","37,208,908"],["Tangible common equity / tangible assets (period-end) (non-GAAP)","7.24","%","","7.36","%"]]
[[/GREPCENT_TABLE]]

 (1) Excludes loan servicing rights.

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Key Performance Indicators

TABLE 41

Efficiency ratio

[[GREPCENT_TABLE]]
[["Year Ended December 31","2022","","2021","","2020"],["(dollars in thousands)"],["Non-interest expense","$","826,392","","","$","733,168","","","$","750,349"],["Less: Amortization of intangibles","(13,868)","","","(12,117)","","","(13,362)"],["Less: OREO expense","(1,692)","","","(2,598)","","","(4,434)"],["Less: Merger-related expense","(45,259)","","","(1,764)","","","\u2014"],["Less: COVID-19 expense","\u2014","","","\u2014","","","(11,276)"],["Less: Branch consolidation costs","(7,016)","","","(2,644)","","","(18,745)"],["Less: Tax credit-related project impairment","\u2014","","","\u2014","","","(4,101)"],["Adjusted non-interest expense","$","758,557","","","$","714,045","","","$","698,431"],["Net interest income","$","1,119,780","","","$","906,476","","","$","922,082"],["Taxable equivalent adjustment","11,288","","","10,948","","","12,470"],["Non-interest income","323,553","","","330,419","","","294,556"],["Less: Net securities gains","(48)","","","(193)","","","(282)"],["Less: Gain on sale of Visa class B stock","\u2014","","","\u2014","","","(13,818)"],["Add: Loss on FHLB debt extinguishment and related hedge terminations","\u2014","","","\u2014","","","25,611"],["Add: Service charge refunds","\u2014","","","\u2014","","","3,780"],["Adjusted net interest income (FTE) + non-interest income","$","1,454,573","","","$","1,247,650","","","$","1,244,399"],["Efficiency ratio (FTE) (non-GAAP)","52.15","%","","57.23","%","","56.13","%"]]
[[/GREPCENT_TABLE]]