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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 10-Q  
(Mark One)
☒Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

For the quarterly period ended June 30, 2022
☐Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
For the transition period from                      to                     
Commission file number 001-31940  
 
F.N.B. CORPORATION
(Exact name of registrant as specified in its charter) 
 
Pennsylvania25-1255406
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)
One North Shore Center, 12 Federal Street, Pittsburgh, PA15212
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: 800-555-5455

(Former name, former address and former fiscal year, if changed since last report) 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer☒Accelerated Filer☐
Non-accelerated Filer☐Smaller reporting company☐
Emerging Growth Company☐
1

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Exchange on which Registered
Common Stock, par value $0.01 per shareFNBNew York Stock Exchange
Depositary Shares each representing 1/40th interest in a
share of Fixed-to-Floating Rate Non-Cumulative Perpetual
Preferred Stock, Series E		FNBPrENew York Stock Exchange
  
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
ClassOutstanding atJuly 31, 2022
Common Stock, $0.01 Par Value350,727,747 Shares
2

F.N.B. CORPORATION
FORM 10-Q
June 30, 2022
INDEX
 
 PAGE
PART I – FINANCIAL INFORMATION 
Item 1.Financial Statements
Item 2.
Item 3.
Item 4.
PART II – OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
3


Glossary of Acronyms and Terms
Acronym
Description
Acronym
Description
ACL
Allowance for credit losses
HowardHoward Bancorp, Inc.
AFS
Available for sale
HTM
Held to maturity
ALCO
Asset/Liability Committee
LGD
Loss given default
AOCI
Accumulated other comprehensive income
LIBOR
London Inter-bank Offered Rate
ASC
Accounting Standards Codification
LIHTC
Low income housing tax credit
ASU
Accounting Standards Update
MD&A
Management's Discussion and Analysis of
Financial Condition and Results of Operations
AULC
Allowance for unfunded loan commitments
MSRs
Mortgage servicing rights
BOLI
Bank owned life insurance
OCC
Office of the Comptroller of the Currency
CARES Act
Coronavirus Aid, Relief and Economic Security Act
OREO
Other real estate owned
CECL
Current expected credit losses
PCD
Purchased credit deteriorated
CET1
Common equity tier 1
PPPPaycheck Protection Program
COVID-19
Novel coronavirus disease of 2019
R&S
Reasonable and Supportable
EVE
Economic value of equity
RRR
Reference Rate Reform
FASB
Financial Accounting Standards Board
SBA
Small Business Administration
FDIC
Federal Deposit Insurance Corporation
SEC
Securities and Exchange Commission
FHLB
Federal Home Loan Bank
SOFR
Secured Overnight Financing Rate
FNB
F.N.B. Corporation
TDR
Troubled debt restructuring
FNBPA
First National Bank of Pennsylvania
TPS
Trust preferred securities
FRB
Board of Governors of the Federal Reserve
System
U.S.
United States of America
FTE
Fully taxable equivalent
UST
U.S. Department of the Treasury
GAAP
U.S. generally accepted accounting principles
VIE
Variable interest entity
4

PART I – FINANCIAL INFORMATION
 
ITEM 1.    FINANCIAL STATEMENTS

F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in millions, except share and per share data)
June 30,
2022		December 31,
2021
 (Unaudited) 
Assets
Cash and due from banks$438 $337 
Interest-bearing deposits with banks1,591 3,156 
Cash and Cash Equivalents2,029 3,493 
Debt securities available for sale (amortized cost of $3,785 and $3,416; allowance for credit losses of $0 and $0)
3,566 3,426 
Debt securities held to maturity (fair value of $3,470 and $3,506; allowance for credit losses of $0 and $0)
3,740 3,463 
Loans held for sale (includes $130 and $269 measured at fair value) (1)
164 295 
Loans and leases, net of unearned income of $20 and $36
28,044 24,968 
Allowance for credit losses on loans and leases(378)(344)
Net Loans and Leases27,666 24,624 
Premises and equipment, net405 345 
Goodwill2,434 2,262 
Core deposit and other intangible assets, net55 42 
Bank owned life insurance627 546 
Other assets995 1,017 
Total Assets$41,681 $39,513 
Liabilities
Deposits:
Non-interest-bearing demand$11,716 $10,789 
Interest-bearing demand14,739 14,409 
Savings3,982 3,669 
Certificates and other time deposits3,043 2,859 
Total Deposits33,480 31,726 
Short-term borrowings1,391 1,536 
Long-term borrowings712 682 
Other liabilities662 419 
Total Liabilities36,245 34,363 
Stockholders’ Equity
Preferred stock - $0.01 par value; liquidation preference of $1,000 per share
Authorized – 20,000,000 shares
Issued – 110,877 shares
107 107 
Common stock - $0.01 par value
Authorized – 500,000,000 shares
Issued – 365,197,355 and 329,464,669 shares
4 3 
Additional paid-in capital4,562 4,109 
Retained earnings1,182 1,110 
Accumulated other comprehensive loss(252)(62)
Treasury stock – 14,471,977 and 10,531,177 shares at cost
(167)(117)
Total Stockholders’ Equity5,436 5,150 
Total Liabilities and Stockholders’ Equity$41,681 $39,513 
(1)Amount represents loans for which we have elected the fair value option. See Note 19.
See accompanying Notes to Consolidated Financial Statements (unaudited)
5

F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in millions, except per share data)
Unaudited
 Three Months Ended
June 30,		Six Months Ended
June 30,
 2022202120222021
Interest Income
Loans and leases, including fees$242 $224 $463 $445 
Securities:
Taxable27 21 51 43 
Tax-exempt6 7 13 15 
Other5 1 7 1 
Total Interest Income280 253 534 504 
Interest Expense
Deposits15 12 23 27 
Short-term borrowings5 7 11 14 
Long-term borrowings6 6 12 12 
Total Interest Expense26 25 46 53 
Net Interest Income254 228 488 451 
Provision for credit losses6 (1)24 5 
Net Interest Income After Provision for Credit Losses248 229 464 446 
Non-Interest Income
Service charges35 30 66 58 
Trust services10 9 20 18 
Insurance commissions and fees6 6 14 13 
Securities commissions and fees6 6 12 12 
Capital markets income8 7 15 15 
Mortgage banking operations6 7 13 23 
Dividends on non-marketable equity securities3 3 5 5 
Bank owned life insurance4 5 7 8 
Other4 7 8 11 
Total Non-Interest Income
82 80 160 163 
Non-Interest Expense
Salaries and employee benefits104 102 216 209 
Net occupancy16 16 34 32 
Equipment18 17 36 34 
Amortization of intangibles4 3 7 6 
Outside services17 19 34 36 
Marketing5 4 8 7 
FDIC insurance5 4 10 9 
Bank shares and franchise taxes4 4 8 8 
Merger-related2 — 31 — 
Other18 13 36 26 
Total Non-Interest Expense
193 182 420 367 
Income Before Income Taxes137 127 204 242 
Income taxes28 25 42 47 
Net Income109 102 162 195 
Preferred stock dividends2 2 4 4 
Net Income Available to Common Stockholders$107 $100 $158 $191 
Earnings per Common Share
Basic$0.30 $0.31 $0.45 $0.60 
Diluted0.30 0.31 0.45 0.59 
See accompanying Notes to Consolidated Financial Statements (unaudited)
6

F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
Unaudited
 
 Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
Net income$109 $102 $162 $195 
Other comprehensive income (loss):
Securities available for sale:
Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $(15), $1, $(51) and $(5)
(50)2 (178)(19)
Derivative instruments:
Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $(1), $0, $(5) and $1
(2)— (17)4 
Reclassification adjustment for gains included in net income, net of tax expense of $1, $1, $1 and $2
2 3 4 7 
Pension and postretirement benefit obligations:
Unrealized gains arising during the period, net of tax expense of $0, $0, $0 and $0
— — 1 1 
Other Comprehensive Income (Loss)(50)5 (190)(7)
Comprehensive Income (Loss)$59 $107 $(28)$188 
See accompanying Notes to Consolidated Financial Statements (unaudited)
7

F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Dollars in millions, except per share data)
Unaudited
 
Preferred
Stock		Common
Stock		Additional
Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Treasury
Stock		Total
Three Months Ended June 30, 2021
Balance at beginning of period$107 $3 $4,099 $921 $(51)$(105)$4,974 
Comprehensive income102 5 107 
Dividends declared:
Preferred stock: $18.13/share
(2)(2)
Common stock: $0.12/share
(39)(39)
Issuance of common stock— 2 (1)(4)(3)
Balance at end of period$107 $3 $4,101 $981 $(46)$(109)$5,037 
Three Months Ended June 30, 2022
Balance at beginning of period$107 $4 $4,560 $1,118 $(202)$(148)$5,439 
Comprehensive income (loss)109 (50)59 
Dividends declared:
Preferred stock: $18.13/share
(2)(2)
Common stock: $0.12/share
(43)(43)
Issuance of common stock— — (6)(6)
Repurchase of common stock(13)(13)
Restricted stock compensation2 2 
Balance at end of period$107 $4 $4,562 $1,182 $(252)$(167)$5,436 
8

Preferred
Stock		Common
Stock		Additional
Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Treasury
Stock		Total
Six Months Ended June 30, 2021
Balance at beginning of period$107 $3 $4,087 $869 $(39)$(68)$4,959 
Comprehensive income (loss)195 (7)188 
Dividends declared:
Preferred stock: $36.26/share
(4)(4)
Common stock: $0.24/share
(78)(78)
Issuance of common stock— 3 (1)(5)(3)
Repurchase of common stock(36)(36)
Restricted stock compensation11 11 
Balance at end of period$107 $3 $4,101 $981 $(46)$(109)$5,037 
Six Months Ended June 30, 2022
Balance at beginning of period$107 $3 $4,109 $1,110 $(62)$(117)$5,150 
Comprehensive income (loss)162 (190)(28)
Dividends declared:
Preferred stock: $36.26/share
(4)(4)
Common stock: $0.24/share
(86)(86)
Issuance of common stock— 1 (7)(6)
Issuance of common stock - acquisitions1 442 443 
Repurchase of common stock(43)(43)
Restricted stock compensation10 10 
Balance at end of period$107 $4 $4,562 $1,182 $(252)$(167)$5,436 
See accompanying Notes to Consolidated Financial Statements (unaudited)
9

F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
Unaudited
 
 Six Months Ended
June 30,
 20222021
Operating Activities
Net income$162 $195 
Adjustments to reconcile net income to net cash flows provided by (used in) operating activities:
Depreciation, amortization and accretion35 2 
Provision for credit losses24 5 
Deferred tax expense (benefit)8 3 
Loans originated for sale(613)(1,099)
Loans sold774 1,107 
Net gain on sale of loans(30)(32)
Net change in:
   Interest receivable(4)6 
   Interest payable1 (2)
   Bank owned life insurance, excluding purchases(1)1 
Other, net336 114 
Net cash flows provided by (used in) operating activities692 300 
Investing Activities
Net change in loans and leases, excluding sales and transfers(1,275)381 
Debt securities available for sale:
Purchases(773)(854)
Sales287 — 
Maturities/payments430 1,161 
Debt securities held to maturity:
Purchases(636)(725)
Maturities/payments354 453 
Increase in premises and equipment(50)(32)
Net cash received in business acquisition75 — 
Net cash flows provided by (used in) investing activities(1,588)384 
Financing Activities
Net change in:
Demand (non-interest bearing and interest bearing) and savings accounts(40)1,807 
Time deposits(36)(461)
Short-term borrowings(160)(153)
Proceeds from issuance of long-term borrowings11 12 
Repayment of long-term borrowings(214)(218)
Repurchases of common stock(43)(36)
Cash dividends paid:
Preferred stock(4)(4)
Common stock(86)(78)
Other, net4 8 
Net cash flows provided by (used in) financing activities(568)877 
Net Increase in Cash and Cash Equivalents(1,464)1,561 
Cash and cash equivalents at beginning of period3,493 1,383 
Cash and Cash Equivalents at End of Period$2,029 $2,944 
See accompanying Notes to Consolidated Financial Statements (unaudited)
10

F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 2022
The terms “FNB,” “the Corporation,” “we,” “us” and “our” throughout this Report mean F.N.B. Corporation and our consolidated subsidiaries, unless the context indicates that we refer only to the parent company, F.N.B. Corporation. When we refer to "FNBPA" in this Report, we mean our bank subsidiary, First National Bank of Pennsylvania, and its subsidiaries.
NATURE OF OPERATIONS
F.N.B. Corporation, 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 June 30, 2022, we had 338 banking offices 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 and wealth management solutions through our subsidiary network which is led by our largest affiliate, FNBPA, founded in 1864. Commercial banking solutions include corporate banking, small business banking, investment real estate financing, government banking, business credit, capital markets and lease financing. Consumer banking provides a full line of consumer banking products and services, including 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.

NOTE 1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Our accompanying Consolidated Financial Statements and these Notes to Consolidated Financial Statements (unaudited) include subsidiaries in which we have a controlling financial interest. We own and operate FNBPA, First National Trust Company, First National Investment Services Company, LLC, F.N.B. Investment Advisors, Inc., First National Insurance Agency, LLC, Bank Capital Services, LLC, F.N.B. Capital Corporation, LLC and Waubank Securities, LLC, and include results for each of these entities in the accompanying Consolidated Financial Statements.
Companies in which we hold a controlling financial interest, or are a VIE in which we have the power to direct the activities of an entity that most significantly impact the entity’s economic performance and have an obligation to absorb losses or the right to receive benefits which could potentially be significant to the VIE, are consolidated. For a voting interest entity, a controlling financial interest is generally where we hold more than 50% of the outstanding voting shares. VIEs in which we do not hold the power to direct the activities of the entity that most significantly impact the entity’s economic performance or an obligation to absorb losses or the right to receive benefits which could potentially be significant to the VIE are not consolidated. Investments in companies that are not consolidated are accounted for using the equity method when we have the ability to exert significant influence or the cost method when we do not have the ability to exert significant influence. Investments in private investment partnerships that are accounted for under the equity method or the cost method are included in other assets and our proportional interest in the equity investments’ earnings are included in other non-interest income. Investment interests accounted for under the cost and equity methods are periodically evaluated for impairment.
The accompanying interim unaudited Consolidated Financial Statements include all adjustments that are necessary, in the opinion of management, to fairly reflect our financial position and results of operations in accordance with GAAP. All significant intercompany balances and transactions have been eliminated. Certain prior period amounts have been reclassified to the current period presentation. Such reclassifications had no impact on our net income and stockholders' equity. Events occurring subsequent to June 30, 2022 have been evaluated for potential recognition or disclosure in the Consolidated Financial Statements through the date of the filing of the Consolidated Financial Statements with the SEC.
Certain information and Note disclosures normally included in Consolidated Financial Statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The interim operating results are not necessarily indicative of operating results FNB expects for the full year. These interim unaudited Consolidated Financial
11

Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto included in our 2021 Annual Report on Form 10-K filed with the SEC on February 24, 2022.
Use of Estimates
Our accounting and reporting policies conform with GAAP. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes to Consolidated Financial Statements (unaudited). Actual results could materially differ from those estimates. Material estimates that are particularly susceptible to significant changes include the ACL, fair value of financial instruments, goodwill and other intangible assets, income taxes and deferred tax assets and litigation reserves, which are listed in the critical accounting estimates. For a detailed description of our significant accounting policies and critical accounting estimates, see Note 1, "Summary of Significant Accounting Policies" and the "Application of Critical Accounting Policies" section in the MD&A, both in our 2021 Annual Report on Form 10-K.

NOTE 2.    NEW ACCOUNTING STANDARDS
The following table summarizes accounting pronouncements issued by the FASB that we recently adopted or will be adopting in the future.
TABLE 2.1
StandardDescriptionFinancial Statements Impact
Troubled Debt Restructuring and Charge-offs
ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures
This Update eliminates the recognition and measurement guidance on TDRs for creditors that have adopted ASC 326 and requires enhanced disclosures about loan modifications for borrowers experiencing financial difficulty.

This Update also requires public business entities to present current-period gross write-offs by year of origination in their vintage disclosures.
This Update is to be applied using a prospective method. For the transition method related to TDRs, an entity has the option to apply a modified retrospective transition method.

Early adoption of this Update is permitted. An entity is allowed to early adopt the amendments about TDRs and related disclosure enhancements separately from the amendments related to vintage disclosures. We are currently assessing the potential impact to our consolidated financial statements.

NOTE 3.    MERGERS AND ACQUISITIONS
Howard Bancorp, Inc.

On January 22, 2022, we completed our acquisition of Howard, a bank holding company headquartered in Baltimore City, Maryland. The acquisition enhances our presence in the Mid-Atlantic Region. Additionally, cost savings, efficiencies and other benefits are expected from the combined operations. On the acquisition date, Howard had assets with a net book value of approximately $2.4 billion, including $1.8 billion in both loans and deposits. The acquisition was valued at approximately $443 million and resulted in the issuance of 34,074,495 shares of our common stock in exchange for 18,930,329 shares of Howard common stock. We also acquired restricted stock units and the fully vested outstanding stock options of Howard.

12

The merger was accounted for in accordance with the acquisition method of accounting. Preliminary fair values for all assets and liabilities are presented below. Determining the fair value of assets and liabilities is a complex process involving significant judgment regarding estimates and assumptions used to calculate fair values. Accordingly, the initial accounting for the merger is not complete.
TABLE 3.1
(in millions)Howard
Fair value of consideration paid$443 
Fair value of identifiable assets acquired:
Cash and cash equivalents75 
Securities321 
Loans1,780 
Core deposit and other intangible assets19 
Fixed and other assets161 
Total identifiable assets acquired2,356 
Fair value of liabilities assumed:
Deposits1,831 
Borrowings247 
Other liabilities7 
Total liabilities assumed2,085 
Fair value of net identifiable assets acquired271 
Goodwill recognized $172 
Goodwill related to the transaction was recorded in the Community Banking business segment and is not deductible for income tax purposes as the acquisition was accounted for as a tax-free exchange for tax purposes. We incurred merger expenses relating to the Howard acquisition of $30.2 million for the first six months of 2022.
We continue to analyze the valuations assigned to the acquired assets and assumed liabilities. Due to the complexity in valuing the loans and the significant amount of data inputs required, the valuation of the loans is not yet final. In addition, we are reviewing third-party valuations on acquired premises. We are also assessing the valuation on deferred taxes. During the second quarter, we completed the review of the third-party valuations for core deposit intangibles, deposits and debt. There were no changes to provisional amounts for core deposit intangibles, deposits and debt.
Purchased loans and leases that reflect a more-than-insignificant deterioration of credit from origination are considered PCD. We consider various factors in connection with the identification of more-than-insignificant deterioration in credit, including but not limited to nonperforming status, delinquency, risk ratings, TDR classification, Fair Isaac Corporation (FICO) scores and other qualitative factors that indicate deterioration in credit quality since origination. For PCD loans and leases, the initial estimate of expected credit losses is recognized in the ACL on the date of acquisition using the same methodology as other loans and leases held-for-investment. As part of the Howard acquisition, we acquired PCD loans and leases of $186.9 million. We established an ACL at acquisition of $10.0 million with a corresponding gross-up to the amortized cost of the PCD loans and leases. The non-credit discount on the PCD loans and leases was $5.4 million and the Day 1 fair value was $171.5 million. The initial provision expense for non-PCD loans associated with the Howard acquisition was $19.1 million.
We integrated the systems and the operating activities of Howard into FNB in February. Due to that integration, it is impracticable to disclose the revenue from the Howard assets acquired and income before income taxes subsequent to the acquisition.
Pending Acquisition – UB Bancorp
On May 31, 2022, FNB entered into a definitive merger agreement to acquire UB Bancorp, a bank holding company based in Greenville, North Carolina with approximately $1.2 billion in total assets. The transaction is valued at approximately $119 million. Under the terms of the merger agreement, UB Bancorp voting common shareholders will be entitled to receive 1.61 shares of FNB’s common stock for each share of UB Bancorp common stock. FNB expects to issue approximately 9.8 million shares of its common stock in exchange for approximately 6.0 million shares of UB Bancorp common stock. UB Bancorp’s banking affiliate, Union Bank, will be merged into FNBPA. The transaction is expected to be completed in late
13

2022, pending satisfaction of customary closing conditions, including regulatory approvals and the approval of UB Bancorp's stockholders.
NOTE 4.    SECURITIES
The amortized cost and fair value of AFS debt securities are presented in the table below. There was no ACL in the AFS portfolio at June 30, 2022 and December 31, 2021. Accrued interest receivable on AFS debt securities totaled $8.6 million and $7.3 million at June 30, 2022 and December 31, 2021, respectively, and is excluded from the estimate of credit losses and assessed separately in other assets in the Consolidated Balance Sheets. Accordingly, we have excluded accrued interest receivable from both the fair value and the amortized cost basis of AFS debt securities.
TABLE 4.1
(in millions)Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
 Value
Debt Securities AFS:
June 30, 2022
U.S. Treasury$279 $— $(14)$265 
U.S. government agencies128 2 — 130 
U.S. government-sponsored entities287 — (13)274 
Residential mortgage-backed securities:
Agency mortgage-backed securities1,459 — (82)1,377 
Agency collateralized mortgage obligations1,194 — (91)1,103 
Commercial mortgage-backed securities389 — (18)371 
States of the U.S. and political subdivisions (municipals)32 — (3)29 
Other debt securities17 — — 17 
Total debt securities AFS$3,785 $2 $(221)$3,566 
(in millions)Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
 Value
Debt Securities AFS:
December 31, 2021
U.S. Treasury$205 $— $(1)$204 
U.S. government agencies154 1 — 155 
U.S. government-sponsored entities194 — (2)192 
Residential mortgage-backed securities:
Agency mortgage-backed securities1,342 19 (4)1,357 
Agency collateralized mortgage obligations1,192 11 (17)1,186 
Commercial mortgage-backed securities294 5 (2)297 
States of the U.S. and political subdivisions (municipals)33 — — 33 
Other debt securities2 — — 2 
Total debt securities AFS$3,416 $36 $(26)$3,426 
The amortized cost and fair value of HTM debt securities are presented in the table below. The ACL for the HTM portfolio was $0.13 million and $0.05 million at June 30, 2022 and December 31, 2021, respectively. Accrued interest receivable on HTM debt securities totaled $12.7 million and $12.3 million at June 30, 2022 and December 31, 2021, respectively, and is excluded from the estimate of credit losses and assessed separately in other assets in the Consolidated Balance Sheets. Accordingly, we have excluded accrued interest receivable from both the fair value and the amortized cost basis of HTM debt securities.

14

TABLE 4.2
(in millions)Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
 Value
Debt Securities HTM:
June 30, 2022
U.S. Treasury$1 $— $— $1 
U.S. government agencies1 — — 1 
Residential mortgage-backed securities:
Agency mortgage-backed securities1,200 — (85)1,115 
Agency collateralized mortgage obligations1,043 — (75)968 
Commercial mortgage-backed securities517 1 (22)496 
States of the U.S. and political subdivisions (municipals)973 1 (90)884 
Other debt securities5 — — 5 
Total debt securities HTM$3,740 $2 $(272)$3,470 
(in millions)Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
 Value
Debt Securities HTM:
December 31, 2021
U.S. Treasury$1 $— $— $1 
U.S. government agencies1 — — 1 
Residential mortgage-backed securities:
Agency mortgage-backed securities1,191 15 (5)1,201 
Agency collateralized mortgage obligations930 5 (12)923 
Commercial mortgage-backed securities323 3 (2)324 
States of the U.S. and political subdivisions (municipals)1,017 39 — 1,056 
Total debt securities HTM$3,463 $62 $(19)$3,506 
There were no significant gross gains or gross losses realized on securities during the six months ended June 30, 2022 or 2021.

As of June 30, 2022, the amortized cost and fair value of debt securities, by contractual maturities, were as follows:
TABLE 4.3
Available for SaleHeld to Maturity
(in millions)Amortized
Cost		Fair
Value		Amortized
Cost		Fair
Value
Due in one year or less$13 $13 $1 $1 
Due after one year but within five years577 550 23 23 
Due after five years but within ten years102 101 162 154 
Due after ten years51 51 794 713 
743 715 980 891 
Residential mortgage-backed securities:
Agency mortgage-backed securities1,459 1,377 1,200 1,115 
Agency collateralized mortgage obligations1,194 1,103 1,043 968 
Commercial mortgage-backed securities389 371 517 496 
Total debt securities$3,785 $3,566 $3,740 $3,470 
15

Actual maturities may differ from contractual terms because security issuers may have the right to call or prepay obligations with or without penalties. Periodic principal payments are received on residential mortgage-backed securities based on the payment patterns of the underlying collateral.
Following is information relating to securities pledged:
TABLE 4.4
(dollars in millions)June 30,
2022		December 31,
2021
Securities pledged (carrying value):
To secure public deposits, trust deposits and for other purposes as required by law$5,963 $5,660 
As collateral for short-term borrowings340 392 
Securities pledged as a percent of total securities86.3 %87.9 %

16

Following are summaries of the fair values of AFS debt securities in an unrealized loss position for which an ACL has not been recorded, segregated by security type and length of continuous loss position:

TABLE 4.5
Less than 12 Months12 Months or MoreTotal
(dollars in millions)#Fair
 Value		Unrealized
Losses		#Fair
 Value		Unrealized
Losses		#Fair
 Value		Unrealized
Losses
Debt Securities AFS
June 30, 2022
U.S. Treasury5 $240 $(14)— $— $— 5 $240 $(14)
U.S. government agencies2 20 — 8 5 — 10 25 — 
U.S. government-sponsored entities13 228 (11)1 23 (2)14 251 (13)
Residential mortgage-backed securities:
Agency mortgage-backed securities113 1,372 (82)— — — 113 1,372 (82)
Agency collateralized mortgage obligations65 866 (61)9 237 (30)74 1,103 (91)
Commercial mortgage-backed securities16 343 (15)2 28 (3)18 371 (18)
States of the U.S. and political subdivisions (municipals)12 26 (2)1 2 (1)13 28 (3)
Other debt securities6 12 — 1 2 — 7 14 — 
Total 232 $3,107 $(185)22 $297 $(36)254 $3,404 $(221)
Less than 12 Months12 Months or MoreTotal
(dollars in millions)#Fair
 Value		Unrealized
Losses		#Fair
 Value		Unrealized
Losses		#Fair
 Value		Unrealized
Losses
Debt Securities AFS
December 31, 2021
U.S. Treasury3 $151 $(1)— $— $— 3 $151 $(1)
U.S. government agencies3 22 — 9 8 — 12 30 — 
U.S. government-sponsored entities3 99 (1)1 24 (1)4 123 (2)
Residential mortgage-backed securities:
Agency mortgage-backed securities13 599 (4)— — — 13 599 (4)
Agency collateralized mortgage obligations23 659 (15)3 68 (2)26 727 (17)
Commercial mortgage-backed securities5 125 (2)— — — 5 125 (2)
States of the U.S. and political subdivisions (municipals)10 24 — — — — 10 24 — 
Other debt securities— — — 1 2 — 1 2 — 
Total60 $1,679 $(23)14 $102 $(3)74 $1,781 $(26)
We evaluated the AFS debt securities that were in an unrealized loss position at June 30, 2022. Based on the credit ratings and implied government guarantee for these securities, we concluded the loss position is temporary and caused by the movement of
17

interest rates and does not reflect any expected credit losses. We do not intend to sell the AFS debt securities and it is not more likely than not that we will be required to sell the securities before the recovery of their amortized cost basis.

Credit Quality Indicators
We use credit ratings and the most recent financial information to help evaluate the credit quality of our credit-related AFS and HTM securities portfolios. Management reviews the credit profile of each issuer on an annual basis, and more frequently as needed. Based on the nature of the issuers and current conditions, we have determined that securities backed by the UST, Fannie Mae, Freddie Mac, FHLB, Ginnie Mae, and the SBA have zero expected credit loss.
Our municipal bond portfolio, with a carrying amount of $1.0 billion as of June 30, 2022 is highly rated with an average rating of AA and 99% of the portfolio having an A or better rating. All the securities in the municipal portfolio are general obligation bonds. Geographically, municipal bonds support our primary footprint as 61% of the securities are from municipalities located in the primary states within which we conduct business. The average holding size of the securities in the municipal bond portfolio is $3.5 million. In addition to the strong stand-alone ratings, 61% of the municipal bonds have some formal credit enhancement (e.g., insurance) that strengthens the creditworthiness of the bond.
The ACL on the HTM municipal bond portfolio is calculated on each bond using:
•The bond’s underlying credit rating, time to maturity and exposure amount;
•Credit enhancements that improve the bond’s credit rating (e.g., insurance); and
•Moody’s U.S. Bond Defaults and Recoveries, 1970-2021 study.
By using these components, we derive the expected credit loss on the HTM general obligation municipal bond portfolio. We further refine the expected credit loss by factoring in economic forecast data using our Commercial and Industrial Non-Manufacturing loan portfolio forecast adjustment as derived through our assessment of the loan portfolio as a proxy for our municipal bond portfolio.
Our corporate bond portfolio, with a carrying amount of $21.7 million as of June 30, 2022 primarily consists of subordinated debentures of banks within our footprint. The average holding size of the securities in the corporate bond portfolio is $2.0 million.
The ACL on the HTM corporate bond portfolio is calculated using:
•The bond’s credit rating, time to maturity and exposure amount;
•Moody’s Annual Default Study, 02/08/2022; and
•Most recent financial statements.
By using these components, we derive the expected credit loss on the HTM corporate bond portfolio. We further refine the expected credit loss by factoring in economic forecast data using our bank-wide loan portfolio forecast adjustment as derived through our assessment of the Bank's loan portfolio as a proxy for our corporate bond portfolio.
For the year-to-date periods ending June 30, 2022 and 2021, we had no significant provision expense and no charge-offs or recoveries. The ACL on the HTM portfolio was $0.13 million, consisting of $0.06 million relating to the municipal bond portfolio and $0.07 million relating to other debt securities, as of June 30, 2022 and $0.05 million relating to the municipal bond portfolio as of December 31, 2021. No other securities portfolios had an ACL. At June 30, 2022 and December 31, 2021, there were no securities that were past due or on non-accrual.
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NOTE 5.    LOANS AND LEASES
Accrued interest receivable on loans and leases, which totaled $60.8 million at June 30, 2022 and $48.9 million at December 31, 2021, is excluded from the estimate of credit losses and assessed separately in other assets in the Consolidated Balance Sheets for both periods and not included in the following tables.
Loans and Leases by Portfolio Segment
Following is a summary of total loans and leases, net of unearned income:
TABLE 5.1
(in millions)June 30, 2022December 31, 2021
Commercial real estate$10,787 $9,899 
Commercial and industrial6,564 5,977 
Commercial leases504 495 
Other136 94 
Total commercial loans and leases17,991 16,465 
Direct installment2,769 2,376 
Residential mortgages4,595 3,654 
Indirect installment1,384 1,227 
Consumer lines of credit1,305 1,246 
Total consumer loans10,053 8,503 
Total loans and leases, net of unearned income$28,044 $24,968 
The remaining accretable discount included in the amortized cost of acquired loans was $34.4 million and $30.0 million at June 30, 2022 and December 31, 2021, respectively, which includes the $10 million established for Howard at the time of acquisition.

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

•Commercial real estate includes both owner-occupied and non-owner-occupied loans secured by commercial properties where operational cash flows on owner-occupied properties or rents received by our borrowers from their tenant(s) on both a property and global basis are the primary default risk drivers, including rents paid by stand-alone business customers for owner-occupied properties;
•Commercial and industrial includes loans to businesses that are not secured by real estate where the borrower's leverage and cash flows from operations are the primary default risk drivers, except for PPP loans that are 100% guaranteed by the SBA, which provides a reduced risk of loss to us on these loans. PPP loans are included in the commercial and industrial category and comprise $85.8 million and $336.6 million of this category's outstanding balance at June 30, 2022 and December 31, 2021, respectively;
•Commercial leases consist of leases for new or used equipment where the borrower's cash flow from operations is the primary default risk driver;
•Other is comprised primarily of credit cards and mezzanine loans where the borrower's cash flow from operations is the primary default risk driver;
•Direct installment is comprised of fixed-rate, closed-end consumer loans for personal, family or household use, such as home equity loans and automobile loans where the primary default risk driver is the borrower's employment status and income;
•Residential mortgages consist of conventional and jumbo mortgage loans for 1-4 family properties where the primary default risk driver is the borrower's employment status and income;
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•Indirect installment is comprised of loans originated by approved third parties and underwritten by us, primarily automobile loans where the primary default risk driver is the borrower's employment status and income; and
•Consumer lines of credit include home equity lines of credit and consumer lines of credit that are either unsecured or secured by collateral other than home equity where the primary default risk driver is the borrower's employment status and income.
The loans and leases portfolio consists principally of loans to individuals and small- and medium-sized businesses within our primary market in seven states and the District of Columbia. Our primary 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.
The following table shows occupancy information relating to commercial real estate loans:
TABLE 5.2
(dollars in millions)June 30,
2022		December 31,
2021
Commercial real estate:
Percent owner-occupied29.6 %28.8 %
Percent non-owner-occupied70.4 71.2 

Credit Quality
We monitor the credit quality of our loan portfolio using several performance measures based on payment activity and borrower performance. We use an internal risk rating assigned to a commercial loan or lease at origination, summarized below.
TABLE 5.3
Rating CategoryDefinition
Passin general, the condition of the borrower and the performance of the loan is satisfactory or better
Special Mentionin general, the condition of the borrower has deteriorated, requiring an increased level of monitoring
Substandardin general, the condition of the borrower has significantly deteriorated and the performance of the loan could further deteriorate if deficiencies are not corrected
Doubtfulin general, the condition of the borrower has significantly deteriorated and the collection in full of both principal and interest is highly questionable or improbable
The use of these internally assigned credit quality categories within the commercial loan and lease portfolio permits our use of transition matrices to establish a basis which is then impacted by quantitative inputs from our econometric model forecasts over the R&S period. Our internal credit risk grading system is based on past experiences with similarly graded loans and leases and conforms to regulatory categories. In general, loan and lease risk ratings within each category are reviewed on an ongoing basis according to our policy for each class of loans and leases. Each quarter, we analyze the resulting ratings, as well as other external statistics and factors such as delinquency, to track the migration performance of the commercial loan and lease portfolio. Loans and leases within the Pass credit category or that migrate toward the Pass credit category generally have a lower risk of loss compared to loans and leases that migrate toward the Substandard or Doubtful credit categories. Accordingly, we apply higher risk factors to Substandard and Doubtful credit categories.
20

The following tables summarize the designated loan rating category by loan class including term loans on an amortized cost basis by origination year:
TABLE 5.4
June 30, 202220222021202020192018PriorRevolving Loans Amortized Cost BasisTotal
(in millions)
COMMERCIAL
Commercial Real Estate:
Risk Rating:
   Pass$897 $2,126 $1,743 $1,422 $785 $2,738 $252 $9,963 
   Special Mention1 33 21 85 99 259 3 501 
   Substandard2 11 13 35 45 189 28 323 
Total commercial real estate900 2,170 1,777 1,542 929 3,186 283 10,787 
Commercial and Industrial:
Risk Rating:
   Pass858 1,294 760 682 356 434 1,798 6,182 
   Special Mention1 4 21 10 4 102 38 180 
   Substandard2 17 10 15 50 57 51 202 
Total commercial and industrial861 1,315 791 707 410 593 1,887 6,564 
Commercial Leases:
Risk Rating:
   Pass87 157 88 83 46 36 — 497 
   Special Mention— — 1 — — — — 1 
   Substandard— 1 2 2 1 — — 6 
Total commercial leases87 158 91 85 47 36 — 504 
Other Commercial:
Risk Rating:
   Pass60 — — — — 13 63 136 
Total other commercial60 — — — — 13 63 136 
Total commercial loans and leases1,908 3,643 2,659 2,334 1,386 3,828 2,233 17,991 
CONSUMER
Direct Installment:
   Current604 945 493 182 103 429 — 2,756 
   Past due— 1 1 — 1 10 — 13 
Total direct installment604 946 494 182 104 439 — 2,769 
Residential Mortgages:
   Current701 1,518 907 401 141 885 — 4,553 
   Past due— 2 3 1 3 33 — 42 
Total residential mortgages701 1,520 910 402 144 918 — 4,595 
Indirect Installment:
   Current425 432 209 118 122 62 — 1,368 
   Past due1 8 3 2 1 1 — 16 
Total indirect installment426 440 212 120 123 63 — 1,384 
Consumer Lines of Credit:
   Current47 20 3 3 4 133 1,080 1,290 
   Past due— — — — — 13 2 15 
Total consumer lines of credit47 20 3 3 4 146 1,082 1,305 
Total consumer loans1,778 2,926 1,619 707 375 1,566 1,082 10,053 
Total loans and leases$3,686 $6,569 $4,278 $3,041 $1,761 $5,394 $3,315 $28,044 
21

December 31, 202120212020201920182017PriorRevolving Loans Amortized Cost BasisTotal
(in millions)
COMMERCIAL
Commercial Real Estate:
Risk Rating:
   Pass$1,878 $1,782 $1,503 $830 $743 $2,171 $183 $9,090 
   Special Mention15 21 89 105 107 175 9 521 
   Substandard— 15 28 45 45 152 3 288 
Total commercial real estate1,893 1,818 1,620 980 895 2,498 195 9,899 
Commercial and Industrial:
Risk Rating:
   Pass1,663 833 731 386 184 296 1,509 5,602 
   Special Mention8 12 18 7 37 42 52 176 
   Substandard1 4 14 57 42 17 64 199 
Total commercial and industrial1,672 849 763 450 263 355 1,625 5,977 
Commercial Leases:
Risk Rating:
   Pass182 109 98 53 39 1 — 482 
   Special Mention— 1 — 2 3 1 — 7 
   Substandard— 2 3 1 — — — 6 
Total commercial leases182 112 101 56 42 2 — 495 
Other Commercial:
Risk Rating:
   Pass39 — — — — 3 52 94 
Total other commercial39 — — — — 3 52 94 
Total commercial loans and leases3,786 2,779 2,484 1,486 1,200 2,858 1,872 16,465 
CONSUMER
Direct Installment:
   Current978 538 215 125 96 412 — 2,364 
   Past due— — 1 1 — 10 — 12 
Total direct installment978 538 216 126 96 422 — 2,376 
Residential Mortgages:
   Current1,280 932 392 152 212 652 — 3,620 
   Past due1 1 1 3 3 25 — 34 
Total residential mortgages1,281 933 393 155 215 677 — 3,654 
Indirect Installment:
   Current516 262 157 178 64 35 — 1,212 
   Past due6 3 2 2 1 1 — 15 
Total indirect installment522 265 159 180 65 36 — 1,227 
Consumer Lines of Credit:
   Current20 3 4 5 3 127 1,072 1,234 
   Past due— — — — — 10 2 12 
Total consumer lines of credit20 3 4 5 3 137 1,074 1,246 
Total consumer loans2,801 1,739 772 466 379 1,272 1,074 8,503 
Total loans and leases$6,587 $4,518 $3,256 $1,952 $1,579 $4,130 $2,946 $24,968 
We use delinquency transition matrices within the consumer and other loan classes to establish the basis for the R&S forecast portion of the credit risk. Each month, management analyzes payment and volume activity, FICO scores and Debt-to-Income (DTI) scores and other external factors such as unemployment, to determine how consumer loans are performing.
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Non-Performing and Past Due
The following tables provide an analysis of the aging of loans by class.
TABLE 5.5
(in millions)30-89 Days
Past Due
> 90 Days
Past Due
and Still
Accruing
Non-
Accrual		Total
Past Due		CurrentTotal
Loans and
Leases		Non-accrual with No ACL
June 30, 2022
Commercial real estate$8 $— $49 $57 $10,730 $10,787 $31 
Commercial and industrial7 — 10 17 6,547 6,564 2 
Commercial leases2 — 1 3 501 504 — 
Other— — — — 136 136 — 
Total commercial loans and leases17 — 60 77 17,914 17,991 33 
Direct installment5 1 7 13 2,756 2,769 — 
Residential mortgages21 4 17 42 4,553 4,595 — 
Indirect installment13 1 2 16 1,368 1,384 — 
Consumer lines of credit7 2 6 15 1,290 1,305 — 
Total consumer loans46 8 32 86 9,967 10,053 — 
Total loans and leases$63 $8 $92 $163 $27,881 $28,044 $33 

(in millions)30-89 Days
Past Due
> 90 Days
Past Due
and Still
Accruing
Non-
Accrual		Total
Past Due 		CurrentTotal
Loans and
Leases		Non-accrual with No ACL
December 31, 2021
Commercial real estate$11 $— $48 $59 $9,840 $9,899 $20 
Commercial and industrial4 — 15 19 5,958 5,977 4 
Commercial leases1 — 1 2 493 495 — 
Other— — — — 94 94 — 
Total commercial loans and leases16 — 64 80 16,385 16,465 24 
Direct installment5 — 7 12 2,364 2,376 — 
Residential mortgages20 4 10 34 3,620 3,654 — 
Indirect installment12 1 2 15 1,212 1,227 — 
Consumer lines of credit6 1 5 12 1,234 1,246 — 
Total consumer loans43 6 24 73 8,430 8,503 — 
Total loans and leases$59 $6 $88 $153 $24,815 $24,968 $24 
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Following is a summary of non-performing assets:
TABLE 5.6
(dollars in millions)June 30,
2022		December 31,
2021
Non-accrual loans$92 $88 
Total non-performing loans
92 88 
Other real estate owned 10 8 
Total non-performing assets
$102 $96 
Asset quality ratios:
Non-performing loans / total loans and leases
0.33 %0.35 %
Non-performing assets + 90 days past due / total loans and leases + OREO
0.39 0.41 
The carrying value of residential-secured consumer OREO held as a result of obtaining physical possession upon completion of a foreclosure or through completion of a deed in lieu of foreclosure amounted to $1.3 million at June 30, 2022 and $1.6 million at December 31, 2021. The recorded investment of residential-secured consumer OREO for which formal foreclosure proceedings are in process at June 30, 2022 and December 31, 2021 totaled $10.7 million and $4.3 million, respectively. During 2020 and 2021, we extended the residential mortgage foreclosure moratorium beyond the requirements for government-backed loans under the CARES Act to all residential mortgage loan customers.
Approximately $53.5 million of commercial loans are collateral dependent at June 30, 2022. Repayment is expected to be substantially through the operation or sale of the collateral on the loan. These loans are primarily secured by business assets or commercial real estate.

Troubled Debt Restructurings
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.
Following is a summary of the composition of total TDRs:
TABLE 5.7
(in millions)June 30,
2022		December 31,
2021
Accruing$62 $60 
Non-accrual33 32 
Total TDRs$95 $92 

TDRs that are accruing and performing include loans that met the criteria for non-accrual of interest prior to restructuring 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. During the six months ended June 30, 2022, we returned to accruing status $5.7 million in restructured residential mortgage loans that have consistently met their modified obligations for more than six months. TDRs that are on non-accrual are not placed on accruing status until all delinquent principal and interest have been paid and the ultimate collectability of 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 potential incremental losses which are factored into the ACL.
Commercial loans over $1.0 million whose terms have been modified in a TDR are generally placed on non-accrual, individually analyzed and measured based on the fair value of the underlying collateral. Our ACL includes specific reserves for commercial TDRs of $1.9 million at June 30, 2022, compared to $1.5 million at December 31, 2021, and pooled reserves for individual loans of $1.1 million and $1.5 million for those same periods, respectively, based on loan segment LGD. Upon
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default, the amount of the recorded investment in the TDR in excess of the fair value of the collateral, less estimated selling costs, is generally considered a confirmed loss and is charged-off against the ACL.
All other classes of loans whose terms have been modified in a TDR are pooled and measured based on the loan segment LGD. Our ACL included pooled reserves for these classes of loans of $3.7 million for June 30, 2022 and $3.9 million for December 31, 2021. Upon default of an individual loan, our charge-off policy is followed for that class of loan.

Following is a summary of TDR loans, by class, for loans that were modified during the periods indicated:
TABLE 5.8
Three Months Ended June 30, 2022Six Months Ended June 30, 2022
(dollars in millions)Number
of
Contracts		Pre-
Modification
Outstanding
Recorded
Investment		Post-
Modification
Outstanding
Recorded
Investment		Number
of
Contracts		Pre-
Modification
Outstanding
Recorded
Investment		Post-
Modification
Outstanding
Recorded
Investment
Commercial real estate7 $3 $3 9 $3 $4 
Commercial and industrial6 1 — 6 1 1 
Total commercial loans13 4 3 15 4 5 
Direct installment13 1 1 26 1 1 
Residential mortgages15 3 3 20 3 3 
Consumer lines of credit5 — 1 8 1 1 
Total consumer loans33 4 5 54 5 5 
Total46 $8 $8 69 $9 $10 

 Three Months Ended June 30, 2021Six Months Ended June 30, 2021
(dollars in millions)Number
of
Contracts		Pre-
Modification
Outstanding
Recorded
Investment		Post-
Modification
Outstanding
Recorded
Investment		Number
of
Contracts		Pre-
Modification
Outstanding
Recorded
Investment		Post-
Modification
Outstanding
Recorded
Investment
Commercial real estate9 $2 $2 19 $19 $19 
Commercial and industrial4 — — 5 — — 
Total commercial loans13 2 2 24 19 19 
Direct installment9 — — 19 1 1 
Residential mortgages2 — — 3 — — 
Consumer lines of credit15 1 1 25 2 2 
Total consumer loans26 1 1 47 3 3 
Total39 $3 $3 71 $22 $22 
The year-to-date items in the above tables have been adjusted for loans that have been paid off and/or sold.
25

Following is a summary of TDRs, by class, for which there was a payment default, excluding loans that have been paid off and/or sold. Default occurs when a loan is 90 days or more past due and is within 12 months of restructuring.
TABLE 5.9
 Three Months Ended
June 30, 2022		Six Months Ended
June 30, 2022
(dollars in millions)Number of
Contracts		Recorded
Investment		Number of
Contracts		Recorded
Investment
Commercial real estate— $— 2 $— 
Total commercial loans— — 2 — 
Direct installment1 — 2 — 
Residential mortgages3 — 3 — 
Total consumer loans4 — 5 — 
Total4 $— 7 $— 

 Three Months Ended
June 30, 2021		Six Months Ended
June 30, 2021
(dollars in millions)Number of
Contracts		Recorded
Investment		Number of
Contracts		Recorded
Investment
Commercial and industrial— $— 1 $— 
Total commercial loans— — 1 — 
Direct installment1 — 1 — 
Residential mortgages— — 1 — 
Total consumer loans1 — 2 — 
Total1 $— 3 $— 

NOTE 6.    ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES
The ACL is maintained for credit losses expected in the existing loan and lease portfolio and is presented as a reserve against loans and leases on the Consolidated Balance Sheets. Loan and lease losses are charged off against the ACL, with recoveries of amounts previously charged off credited to the ACL. Provisions for credit losses are charged to operations based on management’s periodic evaluation of the appropriate level of the ACL.
26

Following is a summary of changes in the ACL, by loan and lease class:
TABLE 6.1

(in millions)Balance at
Beginning of
Period		Charge-
Offs		RecoveriesNet
(Charge-
Offs) Recoveries		Provision for Credit LossesBalance at
End of
Period
Three Months Ended June 30, 2022
Commercial real estate$165.7 $(0.6)$0.7 $0.1 $(7.9)$157.9 
Commercial and industrial91.7 (1.1)2.7 1.6 1.0 94.3 
Commercial leases13.8 — — — (0.1)13.7 
Other3.8 (0.7)0.3 (0.4)0.8 4.2 
Total commercial loans and leases275.0 (2.4)3.7 1.3 (6.2)270.1 
Direct installment31.2 (0.2)0.2 — 3.0 34.2 
Residential mortgages39.7 (0.2)0.1 (0.1)7.6 47.2 
Indirect installment14.2 (1.2)0.4 (0.8)2.6 16.0 
Consumer lines of credit10.5 (0.2)0.2 — — 10.5 
Total consumer loans95.6 (1.8)0.9 (0.9)13.2 107.9 
Total allowance for credit losses on loans and leases370.6 (4.2)4.6 0.4 7.0 378.0 
Allowance for unfunded loan commitments18.8 — — — (0.6)18.2 
Total allowance for credit losses on loans and leases and allowance for unfunded loan commitments$389.4 $(4.2)$4.6 $0.4 $6.4 $396.2 
(in millions)Balance at
Beginning of
Period		Charge-
Offs		RecoveriesNet
(Charge-
Offs) Recoveries		Provision for Credit LossesAllowance for PCD Loans and Leases at AcquisitionBalance at
End of
Period
Six Months Ended June 30, 2022
Commercial real estate$156.5 $(1.6)$2.1 $0.5 $(3.5)$4.4 $157.9 
Commercial and industrial87.4 (4.3)4.0 (0.3)3.8 3.4 94.3 
Commercial leases14.7 (0.1)— (0.1)(0.9)— 13.7 
Other2.6 (1.4)0.5 (0.9)2.5 — 4.2 
Total commercial loans and leases261.2 (7.4)6.6 (0.8)1.9 7.8 270.1 
Direct installment26.4 (0.2)0.4 0.2 7.1 0.5 34.2 
Residential mortgages33.1 (0.3)0.3 — 12.8 1.3 47.2 
Indirect installment13.5 (2.2)1.1 (1.1)3.6 — 16.0 
Consumer lines of credit10.1 (0.4)0.6 0.2 (0.2)0.4 10.5 
Total consumer loans83.1 (3.1)2.4 (0.7)23.3 2.2 107.9 
Total allowance for credit losses on loans and leases344.3 (10.5)9.0 (1.5)25.2 10.0 378.0 
Allowance for unfunded loan commitments19.1 — — — (0.9)— 18.2 
Total allowance for credit losses on loans and leases and allowance for unfunded loan commitments$363.4 $(10.5)$9.0 $(1.5)$24.3 $10.0 $396.2 
27

(in millions)Balance at
Beginning of
Period		Charge-
Offs		RecoveriesNet
Charge-
Offs		Provision
for Credit
Losses		Balance at
End of
Period
Three Months Ended June 30, 2021
Commercial real estate$184 $(5)$2 $(3)$(5)$176 
Commercial and industrial79 (1)1 — 2 81 
Commercial leases17 — — — (1)16 
Other1 (1)— (1)1 1 
Total commercial loans and leases281 (7)3 (4)(3)274 
Direct installment26 — — — 1 27 
Residential mortgages32 — — — 1 33 
Indirect installment11 (1)1 — 1 12 
Consumer lines of credit12 — — — (1)11 
Total consumer loans81 (1)1 — 2 83 
Total allowance for credit losses on loans and leases362 (8)4 (4)(1)357 
Allowance for unfunded loan commitments 14 — — — — 14 
Total allowance for credit losses on loans and leases and allowance for unfunded loan commitments$376 $(8)$4 $(4)$(1)$371 
Six Months Ended June 30, 2021
Commercial real estate$181 $(6)$3 $(3)$(2)$176 
Commercial and industrial81 (9)2 (7)7 81 
Commercial leases17 — 1 1 (2)16 
Other1 (2)1 (1)1 1 
Total commercial loans and leases280 (17)7 (10)4 274 
Direct installment26 — — — 1 27 
Residential mortgages34 — — — (1)33 
Indirect installment11 (3)2 (1)2 12 
Consumer lines of credit12 — — — (1)11 
Total consumer loans83 (3)2 (1)1 83 
Total allowance for credit losses on loans and leases363 (20)9 (11)5 357 
Allowance for unfunded loan commitments14 — — — — 14 
Total allowance for credit losses on loans and leases and allowance for unfunded loan commitments$377 $(20)$9 $(11)$5 $371 
28

Following is a summary of changes in the AULC by portfolio segment:
TABLE 6.2
Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
(in millions)
Balance at beginning of period$19 $14 $19 $14 
Provision for unfunded loan commitments and letters of credit:
Commercial portfolio(1)— (1)— 
Consumer portfolio— — — — 
Balance at end of period$18 $14 $18 $14 
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 mean was calculated using an expanded period to include a prior recessionary period.
At June 30, 2022 and December 31, 2021, we utilized a third-party consensus macroeconomic forecast reflecting the current and projected macroeconomic environment. For our ACL calculation at June 30, 2022, the macroeconomic variables that we utilized included, but were not limited to: (i) the purchase only Housing Price Index, which reflects growth of 6.0% over our R&S forecast period, (ii) a Commercial Real Estate Price Index, which reflects growth of 11.4% over our R&S forecast period, (iii) S&P Volatility, which increases 2.3% in 2022 and decreases 8.6% in 2023 and (iv) bankruptcies, which increase steadily over the R&S forecast period but average below historical 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.
The ACL on loans and leases of $378.0 million at June 30, 2022 increased $33.7 million, or 9.8%, from December 31, 2021 primarily due to the Howard acquisition and the associated ACL attributable to the acquired loans and leases, significant loan growth and CECL-related model impacts from lower prepayment speed assumptions in the second quarter of 2022, partially offset by positive credit quality trends. Our ending ACL coverage ratio at June 30, 2022 was 1.35%, compared to 1.38% at December 31, 2021. Total provision for credit losses for the three months ended June 30, 2022 was $6.4 million. Net recoveries were $0.4 million during the three months ended June 30, 2022, compared to net charge-offs of $3.8 million during the three months ended June 30, 2021, reflecting continued strong underlying portfolio credit trends. Total provision for credit losses for the six months ended June 30, 2022 was $24.3 million and included $19.1 million of initial provision for non-PCD loans associated with the Howard acquisition. Net charge-offs were $1.5 million during the six months ended June 30, 2022, compared to $11.0 million during the six months ended June 30, 2021.

29

NOTE 7.    LOAN SERVICING
Mortgage Loan Servicing
We retain the servicing rights on certain mortgage loans sold. The unpaid principal balance of mortgage loans serviced for others is listed below:
TABLE 7.1
(in millions)June 30,
2022		December 31,
2021
Mortgage loans sold with servicing retained$5,094 $4,855 

The following table summarizes activity relating to mortgage loans sold with servicing retained:
TABLE 7.2
Three Months Ended
June 30,		Six Months Ended
June 30,
(in millions)2022202120222021
Mortgage loans sold with servicing retained$315 $518 $666 $1,024 
Pretax net gains resulting from above loan sales (1)
(7)11 (7)26 
Mortgage servicing fees (1)
3 3 6 6 
(1) Recorded in mortgage banking operations on the Consolidated Statements of Income.
Following is a summary of activity relating to MSRs:
TABLE 7.3
Three Months Ended
June 30,		Six Months Ended
June 30,
(in millions)2022202120222021
Balance at beginning of period$48.5 $38.6 $44.4 $35.6 
Additions4.0 5.7 8.1 10.9 
Payoffs and curtailments(1.4)(3.5)(3.0)(7.6)
(Impairment charge) / recovery0.2 0.3 2.5 2.8 
Amortization(0.6)(0.6)(1.3)(1.2)
Balance at end of period$50.7 $40.5 $50.7 $40.5 
Fair value, beginning of period$58.2 $40.2 $46.0 $35.6 
Fair value, end of period64.1 40.8 64.1 40.8 
We had no valuation allowance for MSRs as of June 30, 2022, compared to $2.5 million at December 31, 2021.
The fair value of MSRs is highly sensitive to changes in assumptions and is determined by estimating the present value of the asset’s future cash flows utilizing market-based prepayment rates, discount rates and other assumptions validated through comparison to trade information, industry surveys and with the use of independent third-party valuations. Changes in prepayment speed assumptions have the most significant impact on the fair value of MSRs. Generally, as interest rates decline, mortgage loan prepayments accelerate due to increased refinance activity, which results in a decrease in the fair value of MSRs and as interest rates increase, mortgage loan prepayments decline, which results in an increase in the fair value of MSRs. Measurement of fair value is limited to the conditions existing and the assumptions utilized as of a particular point in time, and those assumptions may not be appropriate if they are applied at a different time.
30

Following is a summary of the sensitivity of the fair value of MSRs to changes in key assumptions:
TABLE 7.4
(dollars in millions)June 30,
2022		December 31,
2021
Weighted average life (months)94.876.6
Constant prepayment rate (annualized)7.5 %11.2 %
Discount rate9.5 %9.5 %
Effect on fair value due to change in interest rates:
+2.00%$9 $15 
+1.00%5 9 
+0.50%3 5 
+0.25%1 3 
-0.25%(2)(3)
-0.50%(3)(7)
The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. Changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the changes in assumptions to fair value may not be linear. Also, in this table, the effects of an adverse variation in a particular assumption on the fair value of MSRs is calculated without changing any other assumptions, while, in reality, changes in one factor may result in changing another, which may magnify or contract the effect of the change.
NOTE 8.    LEASES

We have operating leases primarily for certain branches, office space, land and office equipment. We have finance leases for certain branches. Our operating leases expire at various dates through the year 2046 and generally include one or more options to renew. Our finance leases expire at various dates through the year 2051 and generally include one or more options to renew. The exercise of lease renewal options is at our sole discretion. As of June 30, 2022, we had operating lease right-of-use assets and operating lease liabilities of $136.2 million and $145.9 million, respectively. We have finance lease right-of-use assets and finance lease liabilities of $20.8 million and $21.1 million, respectively.
Our operating lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As of June 30, 2022, we have certain operating lease agreements, primarily for administrative office space, that have not yet commenced. At commencement, it is expected that these leases will add approximately $69.2 million in right-of-use assets and $90.6 million in other liabilities. These operating leases are currently expected to commence in 2023 with lease terms up to 16 years. These operating leases include the lease, with a related party, of the future new FNB headquarters building in Pittsburgh, Pennsylvania. The related party operating lease is accounted for in a manner consistent with all other leases on the basis of the legally enforceable terms and conditions of the lease and the related party represents a VIE for which we are not the primary beneficiary.
The components of lease expense were as follows:
TABLE 8.1
Three Months Ended
June 30,		Six Months Ended
June 30,
(dollars in millions)2022202120222021
Operating lease cost$8 $7 $16 $14 
Variable lease cost1 1 2 2 
Total lease cost$9 $8 $18 $16 
31

Other information related to leases is as follows:
TABLE 8.2
Six Months Ended
June 30,
(dollars in millions)20222021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$7 $7 
Operating cash flows from finance leases$— $— 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$1 $2 
Finance leases$6 $10 
Weighted average remaining lease term (years):
Operating leases9.609.36
Finance leases22.0624.34
Weighted average discount rate:
Operating leases2.4 %2.6 %
Finance leases2.5 %1.9 %

Maturities of lease liabilities were as follows:
TABLE 8.3
(in millions)Operating LeasesFinance LeasesTotal Leases
June 30, 2022
2022$14 $1 $15 
202324 1 25 
202422 1 23 
202516 1 17 
202613 1 14 
Later years77 23 100 
Total lease payments166 28 194 
Less: imputed interest(20)(7)(27)
Present value of lease liabilities$146 $21 $167 

As a lessor we offer commercial leasing services to customers in need of new or used equipment primarily within our market areas of Pennsylvania, Ohio, Maryland, North Carolina, South Carolina and West Virginia. Additional information relating to commercial leasing is provided in Note 5, “Loans and Leases” in the Notes to Consolidated Financial Statements.

NOTE 9.     VARIABLE INTEREST ENTITIES
We evaluate our interest in certain entities to determine if these entities meet the definition of a VIE and whether we are the primary beneficiary and required to consolidate the entity based on the variable interest we held both at inception and when there is a change in circumstances that requires a reconsideration.
32

Unconsolidated VIEs

The following table provides a summary of the assets and liabilities included in our Consolidated Financial Statements, as well as the maximum exposure to losses, associated with our interests related to VIEs for which we hold an interest, but are not the primary beneficiary, at June 30, 2022 and December 31, 2021.

TABLE 9.1
(in millions)Total AssetsTotal LiabilitiesMaximum Exposure to Loss
June 30, 2022
Trust preferred securities (1)
$1 $72 $— 
Affordable housing tax credit partnerships123 37 123 
Other investments30 5 30 
Total $154 $114 $153 
December 31, 2021
Trust preferred securities (1)
$1 $67 $— 
Affordable housing tax credit partnerships121 34 121 
Other investments28 6 28 
Total $150 $107 $149 
(1) Represents our investment in unconsolidated subsidiaries.

Trust-Preferred Securities

We have certain wholly-owned trusts whose assets, liabilities, equity, income and expenses are not included within our Consolidated Financial Statements. These trusts have been formed for the sole purpose of issuing TPS, from which the proceeds are then invested in our junior subordinated debentures, which are reflected in our Consolidated Balance Sheets as subordinated notes. The TPS are the obligations of the trusts, and as such, are not consolidated within our Consolidated Financial Statements. For additional information relating to our TPS, see Note 10, “Borrowings” in the Notes to Consolidated Financial Statements.

Each issue of the junior subordinated debentures has an interest rate equal to the corresponding TPS distribution rate. We have the right to defer payment of interest on the debentures at any time, or from time-to-time for a period not exceeding five years provided that no extension period may extend beyond the stated maturity of the related debentures. During any such extension period, distributions to the TPS will also be deferred and our ability to pay dividends on our common stock will be restricted. Periodic cash payments and payments upon liquidation or redemption with respect to TPS are guaranteed by us to the extent of funds held by the trusts. The guarantee ranks subordinate and junior in right of payment to all of our indebtedness to the same extent as the junior subordinated debt. The guarantee does not place a limitation on the amount of additional indebtedness that may be incurred by us.
Affordable Housing Tax Credit Partnerships
We make equity investments as a limited partner in various partnerships that sponsor affordable housing projects utilizing the LIHTC pursuant to Section 42 of the Internal Revenue Code. The purpose of these investments is to support initiatives associated with the Community Reinvestment Act while earning a satisfactory return. The activities of these LIHTC partnerships include the development and operation of multi-family housing that is leased to qualifying residential tenants. These partnerships are generally located in communities where we have a banking presence and meet the definition of a VIE; however, we are not the primary beneficiary of the entities, as the general partner or managing member has both the power to direct the activities that most significantly impact the economic performance of the entities and the obligation to absorb losses beyond our own equity investment. We record our investment in LIHTC partnerships as a component of other assets and use the proportional amortization method to account for our investments in LIHTC partnerships. Amortization related to our LIHTC investments is recorded on a net basis as a component of the provision for income taxes on the Consolidated Statements of Income.
33

The following table presents the balances of our affordable housing tax credit investments and related unfunded commitments:
TABLE 9.2
(in millions)June 30,
2022		December 31,
2021
LIHTC investments included in other assets$86 $87 
Unfunded LIHTC commitments37 34 
The following table summarizes the impact of these LIHTC investments on the provision for income taxes in our Consolidated Statements of Income:
TABLE 9.3
Three Months Ended
June 30,		Six Months Ended
June 30,
(in millions)2022202120222021
Provision for income taxes:
Amortization of LIHTC investments under proportional method$3 $4 $7 $7 
Low-income housing tax credits(4)(4)(8)(7)
Other tax benefits related to tax credit investments— (1)(1)(2)
Total impact on provision for income taxes$(1)$(1)$(2)$(2)
Other Investments
Other investments we also consider to be unconsolidated VIE’s include investments in Small Business Investment Companies, Historic Tax Credit investments, and other equity method investments.

NOTE 10.    BORROWINGS
Following is a summary of short-term borrowings:
TABLE 10.1
(in millions)June 30,
2022		December 31,
2021
Securities sold under repurchase agreements$328 $376 
Federal Home Loan Bank advances930 1,030 
Subordinated notes133 130 
Total short-term borrowings$1,391 $1,536 
Borrowings with original maturities of one year or less are classified as short-term. Securities sold under repurchase agreements are comprised of customer repurchase agreements, which are sweep accounts with next-day maturities utilized by larger commercial customers to earn interest on their funds. Securities are pledged to these customers in an amount at least equal to the outstanding balance. We did not have any short-term FHLB advances with overnight maturities as of June 30, 2022 or December 31, 2021. At June 30, 2022, $930.0 million, or 100.0%, of the short-term FHLB advances were swapped to fixed rates with various maturities through 2024. This compares to $1.0 billion, or 100.0%, as of December 31, 2021.
34

Following is a summary of long-term borrowings:
TABLE 10.2
(in millions)June 30,
2022		December 31,
2021
Senior notes$299 $299 
Subordinated notes67 68 
Junior subordinated debt72 67 
Other subordinated debt274 248 
Total long-term borrowings$712 $682 
We assumed $25 million of other subordinated debt and $5 million of junior subordinated debt from the Howard acquisition. Those additions are reflected in the balances above and in the tables below.
Our banking affiliate has available credit with the FHLB of $9.3 billion, of which $0.9 billion was utilized and included in short-term borrowings as of June 30, 2022. The short-term FHLB borrowings are secured by loans collateralized by residential mortgages, home equity lines of credit, commercial real estate and FHLB stock and are scheduled to mature in various amounts periodically during 2022. There were no long-term FHLB borrowings as of June 30, 2022 or December 31, 2021. Effective interest rates paid on the long-term FHLB borrowings held during 2021 ranged from 0.26% to 0.29% for the year ended December 31, 2021.
The following table provides information relating to our senior notes and other subordinated debt as of June 30, 2022. The subordinated notes are eligible for treatment as tier 2 capital for regulatory capital purposes.
TABLE 10.3
(dollars in millions)Aggregate Principal Amount Issued
Net Proceeds (4)
Carrying ValueStated Maturity DateInterest
Rate
2.20% Senior Notes due February 24, 2023
$300 $298 $299 2/24/20232.20 %
4.95% Fixed-To-Floating Rate Subordinated Notes due 2029 (1)
120 118 119 2/14/20294.95 %
4.875% Subordinated Notes due 2025
100 98 99 10/2/20254.875 %
7.625% Subordinated Notes due August 12, 2023 (3)
38 46 30 8/12/20237.625 %
6.00% Fixed-To-Floating Rate Subordinated Notes due December 6, 2028 (2) (3)
25 26 26 12/6/20286.00 %
Total$583 $586 $573 
(1) Fixed-to-floating rate until February 14, 2024, at which time the floating rate will be three-month LIBOR plus 240 basis points (bps), or an alternative rate that may replace LIBOR, as specified in the prospectus for this offering.
(2) Fixed-to-floating rate until December 6, 2023, at which time the floating rate will be three-month LIBOR plus 302 bps, or an alternative rate that may replace LIBOR, as specified in the prospectus for this offering.
(3) Assumed from an acquisition and adjusted to fair value at the time of acquisition.
(4) After deducting underwriting discounts and commissions and offering costs. For the debt assumed from acquisitions, this is the fair value of the debt at the time of the acquisition.
The junior subordinated debt is comprised of the debt securities issued by FNB, or companies we acquired, in relation to our unconsolidated subsidiary trusts (collectively, the Trusts), which are unconsolidated VIEs, and are included on the Consolidated Balance Sheets in long-term borrowings. Since third-party investors are the primary beneficiaries, the Trusts are not consolidated in our Financial Statements. We record the distributions on the junior subordinated debt issued to the Trusts as interest expense.
35

The following table provides information relating to the Trusts as of June 30, 2022:
TABLE 10.4
(dollars in millions)Trust
Preferred
Securities		Common
Securities		Junior
Subordinated
Debt		Stated
Maturity
Date		Interest Rate
Rate Reset Factor
F.N.B. Statutory Trust II$22 $1 $22 6/15/20363.48 %
LIBOR + 165 bps
Yadkin Valley Statutory Trust I25 1 22 12/15/20373.15 %
LIBOR + 132 bps
FNB Financial Services Capital Trust I25 1 23 9/30/20353.71 %
LIBOR + 146 bps
Patapsco Statutory Trust I5 — 5 12/15/20353.31 %
LIBOR + 148 bps
Total$77 $3 $72 
NOTE 11.    DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposures to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate risk, primarily by managing the amount, source, and duration of our assets and liabilities, and through the use of derivative instruments. Derivative instruments are used to reduce the effects that changes in interest rates may have on net income and cash flows. We also use derivative instruments to facilitate transactions on behalf of our customers.
All derivatives are carried on the Consolidated Balance Sheets at fair value and do not take into account the effects of master netting arrangements we have with other financial institutions. Credit risk is included in the determination of the estimated fair value of derivatives. Derivative assets are reported in the Consolidated Balance Sheets in other assets and derivative liabilities are reported in other liabilities. Changes in fair value are recognized in earnings except for certain changes related to derivative instruments designated as part of a cash flow hedging relationship, which are recognized in other comprehensive income.
The following table presents notional amounts and gross fair values of our derivative assets and derivative liabilities which are not offset in the Consolidated Balance Sheets:
TABLE 11.1
June 30, 2022December 31, 2021
NotionalFair ValueNotionalFair Value
(in millions)AmountAssetLiabilityAmountAssetLiability
Gross Derivatives
Subject to master netting arrangements:
Interest rate contracts – designated$1,980 $— $— $2,080 $1 $— 
Interest rate swaps – not designated5,310 40 9 5,547 2 20 
Total subject to master netting arrangements7,290 40 9 7,627 3 20 
Not subject to master netting arrangements:
Interest rate swaps – not designated5,310 14 242 5,547 172 24 
Interest rate lock commitments – not designated265 1 15 482 9 — 
Forward delivery commitments – not designated280 2 — 502 1 1 
Credit risk contracts – not designated385 — — 368 — — 
Total not subject to master netting arrangements6,240 17 257 6,899 182 25 
Total$13,530 $57 $266 $14,526 $185 $45 
The change in the fair value of assets and liabilities from December 31, 2021 is due to a significant increase in rates during 2022.
36

Certain derivative exchanges have enacted a rule change which in effect results in the legal characterization of variation margin payments for certain derivative contracts as settlement of the derivatives mark-to-market exposure and not collateral. Accordingly, we have changed our reporting of certain derivatives to record variation margin on trades cleared through these exchanges as settled.  The daily settlement of the derivative exposure does not change or reset the contractual terms of the instrument.
We adopted RRR on October 1, 2020, and the guidance will be followed until the Update terminates on December 31, 2022. As of October 16, 2020, we changed our valuation methodology to reflect changes made by central clearinghouses that changed the discounting methodology and interest calculation of cash migration from overnight index swap (OIS) to SOFR for U.S. dollar cleared interest rate swaps to better reflect prices obtainable in the markets in which we transact. Certain of these valuation methodology changes were applied to eligible hedging relationships. Accordingly, we have updated our hedge documentation to reflect the election of certain expedients and exceptions related to our cash flow hedging programs. The change in valuation methodology was applied prospectively as a change in accounting estimate and did not have a material impact on our consolidated financial position or results of operations.
Derivatives Designated as Hedging Instruments under GAAP
Interest Rate Contracts. We entered into interest rate derivative agreements to modify the interest rate characteristics of certain commercial loans and certain of our FHLB advances from variable rate to fixed rate in order to reduce the impact of changes in future cash flows due to market interest rate changes. These agreements are designated as cash flow hedges, hedging the exposure to variability in expected future cash flows. The derivative’s gain or loss, including any ineffectiveness, is initially reported as a component of other comprehensive income and subsequently reclassified into earnings in the same line item associated with the forecasted transaction when the forecasted transaction affects earnings.
The following table shows amounts reclassified from AOCI:
TABLE 11.2
Amount of Gain (Loss) Recognized in OCI on DerivativesLocation of Gain (Loss) Reclassified from AOCI into IncomeAmount of Gain (Loss) Reclassified from AOCI into Income
Six Months Ended
June 30,		Six Months Ended
June 30,
(in millions)2022202120222021
Derivatives in cash flow hedging relationships:
   Interest rate contracts $(22)$5 Interest income (expense)$(4)$(9)
Other income— — 
The following table represents gains (losses) recognized in the Consolidated Statements of Income on cash flow hedging relationships:
TABLE 11.3
Six months ended June 30,
20222021
(in millions)Interest Income - Loans and LeasesInterest Expense - Short-Term BorrowingsInterest Income - Loans and LeasesInterest Expense - Short-Term Borrowings
Total amounts of income and expense line items presented in the Consolidated Statements of Income (the effects of cash flow hedges are included in these line items)$463 $11 $445 $14 
The effects of cash flow hedging:
     Gain (loss) on cash flow hedging relationships:
     Interest rate contracts:
        Amount of gain (loss) reclassified from AOCI into net income3 (7)1 (10)
37

As of June 30, 2022, the maximum length of time over which forecasted interest cash flows are hedged is 3.3 years. In the twelve months that follow June 30, 2022, we expect to reclassify from the amount currently reported in AOCI net derivative losses of $13.9 million ($10.8 million net of tax), in association with interest on the hedged loans and FHLB advances. This amount could differ from amounts actually recognized due to changes in interest rates, hedge de-designations, and the addition of other hedges subsequent to June 30, 2022.
There were no components of derivative gains or losses excluded from the assessment of hedge effectiveness related to these cash flow hedges. Also, during the six months ended June 30, 2022 and 2021, there were no gains or losses from cash flow hedge derivatives reclassified to earnings because it became probable that the original forecasted transactions would not occur.
Derivatives Not Designated as Hedging Instruments under GAAP
A description of interest rate swaps, interest rate lock commitments, forward delivery commitments and credit risk contracts can be found in Note 15, "Derivative Instruments and Hedging Activities" in the Consolidated Financial Statements included in our 2021 Annual Report on Form 10-K filed with the SEC on February 24, 2022.
Interest rate swap agreements with loan customers and with the offsetting counterparties are reported at fair value in other assets and other liabilities on the Consolidated Balance Sheets with any resulting gain or loss recorded in current period earnings as other income or other expense.
Risk participation agreements sold with notional amounts totaling $286.3 million as of June 30, 2022 have remaining terms ranging from one month to nineteen years. Under these agreements, our maximum exposure assuming a customer defaults on their obligation to perform under certain derivative swap contracts with third parties would be $0.1 million at June 30, 2022 and $0.2 million at December 31, 2021. The fair values of risk participation agreements purchased and sold were $0.2 million and $0.1 million, respectively, at June 30, 2022 and $0.1 million and $0.2 million, respectively at December 31, 2021.
The following table presents the effect of certain derivative financial instruments on the Consolidated Statements of Income:
TABLE 11.4
Six Months Ended
June 30,
(in millions)Consolidated Statements of Income Location20222021
Interest rate swapsNon-interest income - other$— $— 
Interest rate lock commitmentsMortgage banking operations— — 
Forward delivery contractsMortgage banking operations2 (1)
Credit risk contractsNon-interest income - other— — 
Counterparty Credit Risk
We are party to master netting arrangements with most of our swap derivative dealer counterparties. Collateral, usually marketable securities and/or cash, is exchanged between FNB and our counterparties, and is generally subject to thresholds and transfer minimums. For swap transactions that require central clearing, we post cash to our clearing agency. Collateral positions are settled or valued daily, and adjustments to amounts received and pledged by us are made as appropriate to maintain proper collateralization for these transactions.
Certain master netting agreements contain provisions that, if violated, could cause the counterparties to request immediate settlement or demand full collateralization under the derivative instrument. If we had breached our agreements with our derivative counterparties we would be required to settle our obligations under the agreements at the termination value and would be required to pay an additional $0.0 million and $0.2 million as of June 30, 2022 and December 31, 2021, respectively, in excess of amounts previously posted as collateral with the respective counterparty.
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The following table presents a reconciliation of the net amounts of derivative assets and derivative liabilities presented in the Consolidated Balance Sheets to the net amounts that would result in the event of offset:
TABLE 11.5
  Amount Not Offset in the
Consolidated Balance Sheets		 
(in millions)Net Amount
Presented in
the Consolidated Balance
Sheets		Financial
Instruments		Cash
Collateral		Net
Amount
June 30, 2022
Derivative Assets
Interest rate contracts:
Not designated$40 $— $40 $— 
Total$40 $— $40 $— 
Derivative Liabilities
Interest rate contracts:
Not designated$9 $— $9 $— 
Total$9 $— $9 $— 
December 31, 2021
Derivative Assets
Interest rate contracts:
Designated$1 $— $1 $— 
Not designated2 — 2 — 
Total$3 $— $3 $— 
Derivative Liabilities
Interest rate contracts:
Not designated$20 $— $20 $— 
Total$20 $— $20 $— 

NOTE 12.    COMMITMENTS, CREDIT RISK AND CONTINGENCIES
We have commitments to extend credit and standby letters of credit that involve certain elements of credit risk in excess of the amount stated in the Consolidated Balance Sheets. Our exposure to credit loss in the event of non-performance by the customer is represented by the contractual amount of those instruments. The credit risk associated with commitments to extend credit and standby letters of credit is essentially the same as that involved in extending loans and leases to customers and is subject to normal credit policies. Since many of these commitments expire without being drawn upon, the total commitment amounts do not necessarily represent future cash flow requirements.
Following is a summary of off-balance sheet credit risk information:
TABLE 12.1
(in millions)June 30,
2022		December 31,
2021
Commitments to extend credit$12,277 $11,228 
Standby letters of credit203 194 
At June 30, 2022, funding of 71.9% of the commitments to extend credit was dependent on the financial condition of the customer. We have the ability to withdraw such commitments at our discretion. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Based on management’s credit evaluation of the customer,
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collateral may be deemed necessary. Collateral requirements vary and may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties.
Standby letters of credit are conditional commitments issued by us that may require payment at a future date. The credit risk involved in issuing letters of credit is actively monitored through review of the historical performance of our portfolios.
Our AULC for commitments that are not unconditionally cancellable, which is included in other liabilities on the Consolidated Balance Sheets, was $18.2 million at June 30, 2022 and $19.2 million at December 31, 2021. Additional information relating to the AULC is provided in Note 6, "Allowance for Credit Losses on Loans and Leases" in the Notes to Consolidated Financial Statements.
In addition to the above commitments, subordinated notes issued by FNB Financial Services, LP, a wholly-owned finance subsidiary, are fully and unconditionally guaranteed by FNB. These subordinated notes are included in the summaries of short-term borrowings and long-term borrowings in Note 10, “Borrowings” in the Notes to Consolidated Financial Statements.
Other Legal Proceedings
In the ordinary course of business, we may assert claims in legal proceedings against another party or parties, and we are routinely named as defendants in, or made parties to, pending and potential legal actions. Also, as regulated entities, we are subject to governmental and regulatory examinations, information-gathering requests, and may be subject to investigations and proceedings (both formal and informal). Such threatened claims, litigation, investigations, regulatory and administrative proceedings typically entail matters that are considered incidental to the normal conduct of business. Claims for significant monetary damages may be asserted in many of these types of legal actions, while claims for disgorgement, reimbursement, restitution, penalties and/or other remedial actions or sanctions may be sought in regulatory matters. In these instances, if we determine that we have meritorious defenses, we will engage in an aggressive defense. However, if management determines, in consultation with counsel, that settlement of a matter is in the best interest of FNB and our shareholders, we may do so. It is inherently difficult to predict the eventual outcomes of such matters given their complexity and the particular facts and circumstances at issue in each of these matters. However, on the basis of current knowledge and understanding, and advice of counsel, we do not believe that judgments, sanctions, settlement resolutions, regulatory actions, investigations, settlements or orders, if any, that have arisen or may arise from these matters (either individually or in the aggregate, after giving effect to applicable reserves and insurance coverage) will have a material adverse effect on our financial position or liquidity, although they could potentially have a material effect on net income in a given period.
In view of the inherent unpredictability of outcomes in litigation and governmental and regulatory matters, particularly where (i) the damages sought are indeterminate, (ii) the proceedings are in the early stages, or (iii) the matters involve novel legal theories or a large number of parties, as a matter of course, there is considerable uncertainty surrounding the timing or ultimate resolution of litigation and governmental and regulatory matters, including a possible eventual loss, fine, restitution, penalty, business or adverse reputational impact, if any, associated with each such matter. In accordance with applicable accounting guidance, we establish accruals for litigation and governmental and regulatory matters when those matters proceed to a stage where they present loss contingencies that are both probable and reasonably estimable. In such cases, there may be a possible exposure to loss in excess of any amounts accrued. We will continue to monitor such matters for developments that could affect the amount of the accrual, and will adjust the accrual amount as appropriate. If the loss contingency in question is not both probable and reasonably estimable, we do not establish an accrual and the matter will continue to be monitored for any developments that would make the loss contingency both probable and reasonably estimable. We believe that our accruals for legal proceedings are appropriate and, in the aggregate, are not material to our consolidated financial position, although future accruals could have a material effect on net income in a given period.

NOTE 13.    STOCK INCENTIVE PLANS
Restricted Stock
We issue restricted stock awards to key employees under our Incentive Compensation Plan (Plan). We issue time-based awards and performance-based awards under this Plan, both of which are based on a three-year vesting period. The grant date fair value of the time-based awards is equal to the price of our common stock on the grant date. The fair value of the performance-based awards is based on a Monte-Carlo simulation valuation of our common stock as of the grant date. The assumptions used for this valuation include stock price volatility, risk-free interest rate and dividend yield. We granted 1,219,416 and 1,102,607 restricted stock units during the six months ended June 30, 2022 and 2021, respectively, including 297,508 and 325,284 performance-based restricted stock units during those same periods, respectively. As of June 30, 2022, we had available up to
40

9,881,378 shares of common stock to issue under this Plan, including 7,397,956 shares registered during the second quarter of 2022.
The unvested restricted stock unit awards are eligible to receive cash dividends or dividend equivalents which are ultimately used to purchase additional shares of stock and are subject to forfeiture if the requisite service period is not completed or the specified performance criteria are not met. These awards are subject to certain accelerated vesting provisions upon retirement, death, disability or in the event of a change of control as defined in the award agreements.
The following table summarizes the activity relating to restricted stock units during the periods indicated:
TABLE 13.1
Six Months Ended June 30,
20222021
UnitsWeighted
Average
Grant
Price per
Share		UnitsWeighted
Average
Grant
Price per
Share
Unvested units outstanding at beginning of period4,680,786 $9.71 4,322,115 $9.46 
Granted1,219,416 13.11 1,102,607 12.66 
Acquired60,300 9.41 — — 
Net adjustment due to performance105,026 9.89 327,256 11.84 
Vested(1,648,252)10.60 (1,229,683)12.16 
Forfeited/expired/canceled(211,295)10.90 (75,132)11.55 
Dividend reinvestment93,375 11.90 84,619 13.10 
Unvested units outstanding at end of period4,299,356 10.32 4,531,782 9.71 
The following table provides certain information related to restricted stock units:
TABLE 13.2
(in millions)Six Months Ended
June 30,
 20222021
Stock-based compensation expense$12 $14 
Tax benefit related to stock-based compensation expense3 3 
Fair value of units vested21 15 
As of June 30, 2022, there was $14.0 million of unrecognized compensation cost related to unvested restricted stock units, including $1.9 million that is subject to accelerated vesting under the Plan’s immediate vesting upon retirement.
The components of the restricted stock units as of June 30, 2022 are as follows:
TABLE 13.3
(dollars in millions)Service-
Based
Units		Performance-
Based
Units		Total
Unvested restricted stock units2,825,768 1,473,588 4,299,356 
Unrecognized compensation expense$13 $1 $14 
Intrinsic value$31 $16 $47 
Weighted average remaining life (in years)2.041.381.82
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Stock Options
All outstanding stock options were assumed from acquisitions and are fully vested. Upon consummation of our acquisitions, all outstanding stock options issued by the acquired companies were converted into equivalent FNB stock options. We issue shares of treasury stock or authorized but unissued shares to satisfy stock options exercised.
As of June 30, 2022, we had 176,366 stock options outstanding and exercisable at a weighted average exercise price per share of $8.96, compared to 170,647 stock options outstanding and exercisable at a weighted average exercise price per share of $8.75 as of June 30, 2021.
The intrinsic value of outstanding and exercisable stock options at June 30, 2022 was $0.3 million. The aggregate intrinsic value represents the amount by which the fair value of underlying stock exceeds the option exercise price.

NOTE 14.      INCOME TAXES
Income Tax Expense
Federal and state income tax expense and the statutory tax rate and the actual effective tax rate consist of the following:
TABLE 14.1
Three Months Ended
June 30,		Six Months Ended
June 30,
(dollars in millions)2022202120222021
Current income taxes:
Federal taxes$22 $19 $29 $40 
State taxes3 1 5 3 
Total current income taxes25 20 34 43 
Deferred income taxes:
Federal taxes3 4 8 3 
State taxes— 1 — 1 
Total deferred income taxes3 5 8 4 
Total income taxes$28 $25 $42 $47 
Statutory tax rate21.0 %21.0 %21.0 %21.0 %
Effective tax rate20.1 19.7 20.4 19.3 
The increase in the effective tax rate for the six months ended June 30, 2022 compared to 2021 was primarily due to higher state income taxes and nondeductible merger-related expenses resulting from the Howard acquisition.

Deferred Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and tax purposes. Deferred tax assets and liabilities are measured based on the enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. Net deferred tax assets were $115.3 million and $43.4 million at June 30, 2022 and December 31, 2021, respectively. The increase is due to the acquisition of net deferred taxes from Howard, as well as increases in the deferred tax asset related to unrealized losses on debt securities.
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NOTE 15.    OTHER COMPREHENSIVE INCOME (LOSS)
The following table presents changes in AOCI, net of tax, by component:
TABLE 15.1
(in millions)Unrealized
Net Gains (Losses) on
Debt Securities
Available
for Sale		Unrealized
Net Gains
(Losses) on
Derivative
Instruments		Unrecognized
Pension and
Postretirement
Obligations		Total
Six Months Ended June 30, 2022
Balance at beginning of period$8 $(22)$(48)$(62)
Other comprehensive (loss) income before reclassifications(178)(17)1 (194)
Amounts reclassified from AOCI— 4 — 4 
Net current period other comprehensive (loss) income(178)(13)1 (190)
Balance at end of period$(170)$(35)$(47)$(252)
The amounts reclassified from AOCI related to debt securities AFS are included in net securities gains on the Consolidated Statements of Income, while the amounts reclassified from AOCI related to derivative instruments in cash flow hedge programs are generally included in interest income on loans and leases on the Consolidated Statements of Income. The tax (benefit) expense amounts reclassified from AOCI in connection with the debt securities AFS and derivative instruments reclassifications are included in income taxes on the Consolidated Statements of Income.

NOTE 16.    EARNINGS PER COMMON SHARE
Basic earnings per common share is calculated by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding net of unvested shares of restricted stock.
Diluted earnings per common share is calculated by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding, adjusted for the dilutive effect of potential common shares issuable for stock options and restricted shares, as calculated using the treasury stock method. Adjustments to the weighted average number of shares of common stock outstanding are made only when such adjustments dilute earnings per common share.
The following table sets forth the computation of basic and diluted earnings per common share:
TABLE 16.1
Three Months Ended
June 30,		Six Months Ended
June 30,
(dollars in millions, except per share data)
2022202120222021
Net income$109 $102 $162 $195 
Less: Preferred stock dividends2 2 4 4 
Net income available to common stockholders$107 $100 $158 $191 
Basic weighted average common shares outstanding351,269,791 319,599,352 347,830,430 320,283,480 
Net effect of dilutive stock options, warrants and restricted stock3,417,278 3,728,813 4,004,504 3,744,783 
Diluted weighted average common shares outstanding354,687,069 323,328,165 351,834,934 324,028,263 
Earnings per common share:
Basic$0.30 $0.31 $0.45 $0.60 
Diluted$0.30 $0.31 $0.45 $0.59 
There were no anti-dilutive shares for either the three months ended or six months ended June 30, 2022 and 2021. In January 2022, we issued 34.1 million common shares as part of the Howard acquisition.
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NOTE 17.    CASH FLOW INFORMATION
Following is a summary of supplemental cash flow information:
TABLE 17.1
Six Months Ended
June 30,
(in millions)20222021
Interest paid on deposits and other borrowings$45 $55 
Income taxes paid35 38 
Transfers of loans to other real estate owned1 2 
We did not have any restricted cash as of June 30, 2022 and 2021.
Supplemental non-cash information relating to the Howard acquisition is included in Note 3, Mergers and Acquisitions.

NOTE 18.    BUSINESS SEGMENTS
We operate in three reportable segments: Community Banking, Wealth Management and Insurance.

•The Community Banking segment provides commercial and consumer banking services. Commercial banking solutions include corporate banking, small business banking, investment real estate financing, 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.
•The Wealth Management segment provides a broad range of personal and corporate fiduciary services including the administration of decedent and trust estates. In addition, it offers various alternative products, including securities brokerage (under a third-party arrangement) and investment advisory services, mutual funds and annuities.
•The Insurance segment includes a full-service insurance brokerage service offering all lines of commercial and personal insurance through major carriers. The Insurance segment also includes a reinsurer.
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The following tables provide financial information for these segments of FNB. The information provided under the caption “Parent and Other” represents operations not considered to be reportable segments and/or general operating expenses of FNB, and includes the parent company, other non-bank subsidiaries and eliminations and adjustments to reconcile to the Consolidated Financial Statements.

TABLE 18.1
(in millions)Community
Banking		Wealth
Management		InsuranceParent and
Other		Consolidated
At or for the Three Months Ended June 30, 2022
Interest income$279 $— $— $1 $280 
Interest expense24 — — 2 26 
Net interest income255 — — (1)254 
Provision for credit losses6 — — — 6 
Non-interest income61 16 6 (1)82 
Non-interest expense (1)
173 10 4 2 189 
Amortization of intangibles3 — 1 — 4 
Income tax expense (benefit)28 1 1 (2)28 
Net income (loss)106 5 — (2)109 
Total assets41,545 37 35 64 41,681 
Total intangibles2,453 9 27 — 2,489 
At or for the Three Months Ended June 30, 2021
Interest income$253 $— $— $— $253 
Interest expense22 — — 3 25 
Net interest income231 — — (3)228 
Provision for credit losses(2)— — 1 (1)
Non-interest income60 15 7 (2)80 
Non-interest expense (1)
162 10 5 2 179 
Amortization of intangibles2 — 1 — 3 
Income tax expense (benefit)26 1 1 (3)25 
Net income (loss)103 4 — (5)102 
Total assets38,288 42 35 41 38,406 
Total intangibles2,273 9 28 — 2,310 
(1) Excludes amortization of intangibles, which is presented separately.
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(in millions)Community
Banking		Wealth
Management		InsuranceParent and
Other		Consolidated
At or for the Six Months Ended June 30, 2022
Interest income$532 $— $— $2 $534 
Interest expense41 — — 5 46 
Net interest income491 — — (3)488 
Provision for credit losses23 — — 1 24 
Non-interest income117 32 13 (2)160 
Non-interest expense (1)
380 21 9 3 413 
Amortization of intangibles6 — 1 — 7 
Income tax expense (benefit)42 2 1 (3)42 
Net income (loss)157 9 2 (6)162 
Total assets41,545 37 35 64 41,681 
Total intangibles2,453 9 27 — 2,489 
At or for the Six Months Ended June 30, 2021
Interest income$504 $— $— $— $504 
Interest expense47 — — 6 53 
Net interest income457 — — (6)451 
Provision for credit losses4 — — 1 5 
Non-interest income123 30 13 (3)163 
Non-interest expense (1)
327 20 10 4 361 
Amortization of intangibles5 — 1 — 6 
Income tax expense (benefit)48 2 1 (4)47 
Net income (loss)196 8 1 (10)195 
Total assets38,288 42 35 41 38,406 
Total intangibles2,273 9 28 — 2,310 
(1) Excludes amortization of intangibles, which is presented separately.
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NOTE 19.    FAIR VALUE MEASUREMENTS
Refer to Note 25 "Fair Value Measurements" to the Consolidated Financial Statements included in our 2021 Annual Report on Form 10-K filed with the SEC on February 24, 2022 for a description of additional valuation methodologies for assets and liabilities measured at fair value on a recurring and non-recurring basis.
The following table presents the balances of assets and liabilities measured at fair value on a recurring basis:
TABLE 19.1
(in millions)Level 1Level 2Level 3Total
June 30, 2022
Assets Measured at Fair Value
Debt securities available for sale
U.S. Treasury$265 $— $— $265 
U.S. government agencies— 130 — 130 
U.S. government-sponsored entities— 274 — 274 
Residential mortgage-backed securities:
Agency mortgage-backed securities— 1,377 — 1,377 
Agency collateralized mortgage obligations— 1,103 — 1,103 
Commercial mortgage-backed securities— 371 — 371 
States of the U.S. and political subdivisions (municipals)— 29 — 29 
Other debt securities— 15 2 17 
Total debt securities available for sale265 3,299 2 3,566 
Loans held for sale— 130 — 130 
Derivative financial instruments
Trading— 54 — 54 
Not for trading— 2 1 3 
Total derivative financial instruments— 56 1 57 
Total assets measured at fair value on a recurring basis$265 $3,485 $3 $3,753 
Liabilities Measured at Fair Value
Derivative financial instruments
Trading$— $250 $— $250 
Not for trading— 1 15 16 
Total derivative financial instruments— 251 15 266 
Total liabilities measured at fair value on a recurring basis$— $251 $15 $266 
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(in millions)Level 1Level 2Level 3Total
December 31, 2021
Assets Measured at Fair Value
Debt securities available for sale
U.S. Treasury$204 $— $— $204 
U.S. government agencies— 155 — 155 
U.S. government-sponsored entities— 192 — 192 
Residential mortgage-backed securities:
Agency mortgage-backed securities— 1,357 — 1,357 
Agency collateralized mortgage obligations— 1,186 — 1,186 
Commercial mortgage-backed securities— 297 — 297 
States of the U.S. and political subdivisions (municipals)— 33 — 33 
Other debt securities— 2 — 2 
Total debt securities available for sale204 3,222 — 3,426 
Loans held for sale— 269 — 269 
Derivative financial instruments
Trading— 174 — 174 
Not for trading— 2 9 11 
Total derivative financial instruments— 176 9 185 
Total assets measured at fair value on a recurring basis$204 $3,667 $9 $3,880 
Liabilities Measured at Fair Value
Derivative financial instruments
Trading$— $44 $— $44 
Not for trading— 1 — 1 
Total derivative financial instruments— 45 — 45 
Total liabilities measured at fair value on a recurring basis$— $45 $— $45 
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The following table presents additional information about assets measured at fair value on a recurring basis and for which we have utilized Level 3 inputs to determine fair value:
TABLE 19.2 
(in millions)Other
Debt
Securities		Interest
Rate
Lock
Commitments		Total
Six Months Ended June 30, 2022
Balance at beginning of period$— $9 $9 
Purchases, issuances, sales and settlements:
Purchases2 — 2 
Issuances— 1 1 
Settlements— (9)(9)
Balance at end of period$2 $1 $3 
Year Ended December 31, 2021
Balance at beginning of period$— $24 $24 
Purchases, issuances, sales and settlements:
Issuances— 9 9 
Settlements— (24)(24)
Balance at end of period$— $9 $9 
We review fair value hierarchy classifications on a quarterly basis. Changes in the observability of the valuation attributes may result in reclassification of certain financial assets or liabilities. Such reclassifications are reported as transfers in/out of Level 3 at fair value at the beginning of the period in which the changes occur. There were no transfers of assets or liabilities between the hierarchy levels during the first six months of 2022 or 2021.
From time to time, we measure certain assets at fair value on a non-recurring basis. These adjustments to fair value usually result from the application of the lower of cost or fair value accounting or write-downs of individual assets. Valuation methodologies used to measure these fair value adjustments were described in Note 25, "Fair Value Measurements" to the Consolidated Financial Statements included in 2021 Annual Report on Form 10-K. For assets measured at fair value on a non-recurring basis still held at the Balance Sheet date, the following table provides the hierarchy level and the fair value of the related assets or portfolios:
TABLE 19.3
(in millions)Level 1Level 2Level 3Total
June 30, 2022
Collateral dependent loans$— $— $15 $15 
Other assets - MSRs— — — — 
Other assets - SBA servicing asset— — 3 3 
Other real estate owned— — 2 2 
December 31, 2021
Collateral dependent loans$— $— $20 $20 
Other assets - MSRs— — 10 10 
Other assets - SBA servicing asset— — 3 3 
Other real estate owned— — 2 2 

The fair value amounts for collateral dependent loans and OREO in the table above were estimated at a date during the six months or twelve months ended June 30, 2022 and December 31, 2021, respectively. Consequently, the fair value information presented is not necessarily as of the period’s end. Collateral dependent loans measured or re-measured at fair value on a non-recurring basis during the six months ended June 30, 2022 had a carrying amount of $14.9 million, which includes an allocated
49

ACL of $9.0 million. The ACL includes a provision applicable to the current period fair value measurements of $0.3 million, which was included in provision for credit losses for the six months ended June 30, 2022.
MSRs measured at fair value on a non-recurring basis had a carrying value of $0.03 million, which included a valuation allowance of $1 thousand, as of June 30, 2022. The valuation allowance reflects a recovery of $2.5 million included in earnings for the six months ended June 30, 2022. SBA servicing assets measured at fair value on a non-recurring basis had a carrying value of $2.3 million, which included a valuation allowance of $1.5 million, as of June 30, 2022. There was no recovery of the valuation allowance included in earnings for the six months ended June 30, 2022.
OREO measured at fair value on a non-recurring basis during 2022 had a carrying amount of $2.4 million, which included a valuation allowance of $0.3 million, as of June 30, 2022. The valuation allowance includes a loss of $0.3 million, which was included in earnings for the six months ended June 30, 2022.
Fair Value of Financial Instruments
Refer to Note 25, "Fair Value Measurements" to the Consolidated Financial Statements included in our 2021 Annual Report on Form 10-K filed with the SEC on February 24, 2022 for a description of methods and assumptions that were used to estimate the fair value of each financial instrument.

50

The fair values of our financial instruments are as follows:
TABLE 19.4
  Fair Value Measurements
(in millions)Carrying
Amount		Fair
 Value		Level 1Level 2Level 3
June 30, 2022
Financial Assets
Cash and cash equivalents$2,029 $2,029 $2,029 $— $— 
Debt securities available for sale3,566 3,566 265 3,299 2 
Debt securities held to maturity3,740 3,470 — 3,470 — 
Net loans and leases, including loans held for sale27,830 26,973 — 130 26,843 
Loan servicing rights53 67 — — 67 
Derivative assets57 57 — 56 1 
Accrued interest receivable86 86 86 — — 
Financial Liabilities
Deposits33,480 33,415 30,437 2,978 — 
Short-term borrowings1,391 1,383 1,383 — — 
Long-term borrowings712 719 — — 719 
Derivative liabilities266 266 — 251 15 
Accrued interest payable11 11 11 — — 
December 31, 2021
Financial Assets
Cash and cash equivalents$3,493 $3,493 $3,493 $— $— 
Debt securities available for sale3,426 3,426 204 3,222 — 
Debt securities held to maturity3,463 3,506 — 3,506 — 
Net loans and leases, including loans held for sale24,919 24,518 — 269 24,249 
Loan servicing rights47 49 — — 49 
Derivative assets185 185 — 176 9 
Accrued interest receivable76 76 76 — — 
Financial Liabilities
Deposits31,726 31,725 28,867 2,858 — 
Short-term borrowings1,536 1,536 1,536 — — 
Long-term borrowings682 704 — — 704 
Derivative liabilities45 45 — 45 — 
Accrued interest payable10 10 10 — — 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MD&A represents an overview of and highlights material changes to our financial condition and consolidated results of operations at and for the three- and six-month periods ended June 30, 2022 and 2021. This MD&A should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained herein and our 2021 Annual Report on Form 10-K filed with the SEC on February 24, 2022. Our results of operations for the six months ended June 30, 2022 are not necessarily indicative of results expected for the full year.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Report may contain statements regarding our outlook for earnings, revenues, expenses, tax rates, capital and liquidity levels and ratios, asset quality levels, financial position and other matters regarding or affecting our current or future business and operations. These statements can be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve various assumptions, risks and uncertainties which can change over time. Actual results or future events may be different from those anticipated in our forward-looking statements and may not align with historical performance and events. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance upon such statements. Forward-looking statements are typically identified by words such as "believe," "plan," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "will," "should," "project," "goal," and other similar words and expressions. We do not assume any duty to update forward-looking statements, except as required by federal securities laws.
Our forward-looking statements are subject to the following principal risks and uncertainties:
•Our business, financial results and balance sheet values are affected by business, 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, 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 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 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, including the impact of the COVID-19 pandemic crisis and post-pandemic return to normalcy, global events, including the Ukraine-Russia conflict, dislocations, including 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:
◦Changes resulting from 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.
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◦Changes in monetary and fiscal policies, including interest rate policies and strategies of the Federal Open Market Committee (FOMC).
◦Unfavorable resolution of legal proceedings or other claims and regulatory and other governmental investigations or other inquiries. These matters may result in monetary judgments or settlements 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.
•We grow our business, in part, through acquisitions and new strategic initiatives. Risks and uncertainties include those presented by the nature of the business acquired and strategic initiative, including in some cases those associated with our entry into new businesses or new geographic or other markets and risks resulting from our unfamiliarity with those new areas, as well as risks and various uncertainties related to the acquisition transactions themselves, regulatory issues, and the integration of the acquired businesses into FNB after closing. Such risks attendant to the pending FNB-UB Bancorp merger include, but are not limited to:

•The possibility that the anticipated benefits of the transaction, including anticipated cost savings and strategic gains, are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy, competitive factors in the areas where FNB and UB Bancorp do business, or as a result of other unexpected factors or events;
•Completion of the transaction is dependent on the satisfaction of customary closing conditions, including approval by UB Bancorp stockholders, which cannot be assured, and the timing and completion of the transaction is dependent on various factors that cannot be predicted with precision at this point;
•The occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the merger agreement;
•Completion of the transaction is subject to bank regulatory approvals and such approvals may not be obtained in a timely manner or at all or may be subject to conditions which may cause additional significant expense or delay the consummation of the merger transaction;
•Potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction;
•The outcome of any legal proceedings that may be instituted against FNB or UB Bancorp;
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•Subsequent federal legislative and regulatory actions and reforms affecting the financial institutions’ industry may substantially impact the economic benefits of the proposed merger;
•Unanticipated challenges or delays in the integration of UB Bancorp’s business into FNB’s and the conversion of UB Bancorp’s technology systems and customer data may significantly increase the expense associated with the transaction; and
•Other factors that may affect future results of FNB and UB Bancorp, including changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; the impact, extent and timing of technological changes; capital management activities; and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms.
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 of our 2021 Annual Report on Form 10-K, our subsequent 2022 Quarterly Reports on Form 10-Q (including the risk factors and risk management discussions) and our other 2022 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 our SEC filings.

APPLICATION OF CRITICAL ACCOUNTING POLICIES
A description of our critical accounting policies is included in the MD&A section of our 2021 Annual Report on Form 10-K filed with the SEC on February 24, 2022 under the heading “Application of Critical Accounting Policies”. There have been no significant changes in critical accounting policies or the assumptions and judgments utilized in applying these policies since December 31, 2021.

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, provision for credit losses, excluding the initial provision for non-PCD loans associated with the Howard acquisition, average deposits, excluding Howard average deposits, loans and leases, excluding PPP loans and Howard loans as of the acquisition date, loans and leases, excluding PPP loans (average), loans and leases, excluding PPP loans, pre-provision net revenue to average tangible common equity, 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 and branch consolidation costs 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
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to us. These costs are specific to each individual transaction and may vary significantly based on the size and complexity of the transaction.
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 and 2021 periods were calculated using a federal statutory income tax rate of 21%.

FINANCIAL SUMMARY
Net income available to common stockholders for the second quarter of 2022 was $107.1 million or $0.30 per diluted common share, compared to net income available to common stockholders for the second quarter of 2021 of $99.4 million or $0.31 per diluted common share. On an operating basis, earnings per diluted common share (non-GAAP) was $0.31 for the second quarter of 2022, excluding $2.0 million (pre-tax) in merger-related significant items, while the second quarter of 2021 was $0.31, excluding $2.6 million of significant items (pre-tax).
During the second quarter, we grew revenue by 7.5% to a record of $335.8 million, primarily due to an expansion in net interest income driven by benefits from the higher interest rate environment and by overall growth in securities and loans while maintaining solid asset quality. Excluding PPP, average loans and leases (non-GAAP) increased $1.1 billion, or 17.5% annualized, on a linked-quarter basis. Asset quality remains a key focus with proactive risk management and a conservatively underwritten balance sheet producing our solid reserve coverage and net recoveries this quarter of 0.01%.
On June 1, 2022, the Company announced the signing of a definitive merger agreement to acquire Greenville, North Carolina-based UB Bancorp with total assets of $1.2 billion at March 31, 2022, including its wholly owned banking subsidiary, Union Bank, in an all-stock transaction valued at $19.56 per share, or a fully diluted market value of approximately $117 million, based upon the closing stock price of FNB as of Tuesday, May 31, 2022. This merger will further strengthen FNB's North Carolina presence while enhancing its low-cost deposit base.
Income Statement Highlights (Second quarter of 2022 compared to second quarter of 2021, except as noted)
•Net interest income increased $25.8 million, or 11.3%, to $253.7 million primarily due to the benefit of growth in earning assets as well as the rising interest rate environment.
•On a linked-quarter basis net interest income totaled $253.7 million, an increase of $19.6 million, or 8.4%, from the prior quarter total of $234.1 million, primarily due to growth in average earning assets and benefits from the higher interest rate environment, partially offset by decreased contribution from PPP.
•The net interest margin (FTE) (non-GAAP) increased 6 basis points to 2.76%, as the yield on earning assets increased 5 basis points to 3.05%, primarily reflecting the higher yields on variable-rate loans and investment securities partially offset by significant reductions in PPP contributions as the PPP loan portfolio winds down.
•On a linked-quarter basis, the net interest margin (FTE) (non-GAAP) increased 15 basis points to 2.76% as the earning asset yield increased 22 basis points and the cost of funds increased 8 basis points. The total impact of PPP, purchase accounting accretion and higher cash balances on net interest margin was a reduction of 12 basis points, compared to a reduction of 13 basis points in the prior quarter.
•The annualized net charge-offs/(recoveries) to total average loans ratio was (0.01)%, compared to 0.06%, with continued favorable asset quality trends across the loan portfolio.
•The provision for credit losses was $6.4 million, compared to a net benefit of $1.2 million in the prior quarter when excluding $19.1 million of initial provision for non-PCD loans associated with the Howard acquisition (non-GAAP).
•Non-interest income was $82.2 million, an increase of $2.4 million, or 3.0%, driven by strong contributions from capital markets fee income and higher service charges reflecting increased customer activity, partially offset by reduced contributions from mortgage banking due to lower refinance volumes given significantly higher interest rates.
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•The effective tax rate was 20.1%, compared to 19.7%, with the increase driven by higher pre-tax income and state income taxes.
•The efficiency ratio (non-GAAP) improved to 55.2%, compared to 56.8%.
Balance Sheet Highlights (period-end balances, June 30, 2022 compared to December 31, 2021, unless otherwise indicated)
•Period-end total loans and leases, excluding PPP loans and Howard acquired loans as of the January 22, 2022 acquisition date (non-GAAP), increased $2.6 billion, or 11.2%, as commercial loans and leases increased $1.3 billion, or 8.4%, and consumer loans increased $1.3 billion, or 16.4%, as compared to June 30, 2021. PPP loans totaled $85.8 million at June 30, 2022, compared to $1.6 billion as of June 30, 2021.
•Excluding PPP, period-end loans and leases (non-GAAP) increased $1.3 billion, or 19.5% annualized, on a linked-quarter basis, including an increase of $795.0 million in consumer loans and $503.9 million in commercial loans and leases.
•Total average deposits grew $3.2 billion, or 10.5%, from the same prior-year period, led by increases in average non-interest-bearing deposits of $1.7 billion, or 16.9%, and average interest-bearing demand deposits of $1.2 billion, or 8.8%, partially offset by a decrease in average time deposits of $284.4 million, or 8.7%. Average deposit growth reflected organic growth in new and existing customer relationships and inflows from the January 2022 Howard acquisition. Excluding Howard, average deposits (non-GAAP) grew $1.6 billion, or 5.1%, from the same prior-year period.
•The ratio of loans to deposits was 83.8%, compared to 78.7%, as loan growth outpaced deposit growth. Additionally, the funding mix continued to improve with non-interest-bearing deposits growing to 35% of total deposits, compared to 34%.
•Total assets were $41.7 billion, compared to $39.5 billion, an increase of $2.2 billion, or 5.5%, primarily due to organic growth in loans and the Howard acquisition.
•The dividend payout ratio for the second quarter of 2022 was 39.7%, compared to 39.1% for the second quarter of 2021 due to merger-related expenses in the second quarter of 2022.
•The ratio of the ACL to total loans and leases was 1.35%, compared to 1.38% directionally consistent with improved credit metrics. The ACL on loans and leases totaled $378 million at June 30, 2022, compared to $344 million with the increase driven by the growth in total loans outstanding, lower prepayment speed assumptions and the initial ACL related to the Howard acquisition.
•Tangible book value per share (non-GAAP) of $8.10, decreased $0.49, or 5.7%. AOCI reduced the tangible book value per common share by $0.72 as of June 30, 2022, primarily due to the impact of higher interest rates on the fair value of AFS securities, compared to a $0.19 reduction.
•The CET1 regulatory capital ratio decreased to 9.7% from 9.9% with the decline primarily due to an increase in risk-weighted assets from the strong loan growth as cash was deployed to fund new loans.
•During the second quarter of 2022, the Company repurchased 1.1 million shares of common stock at a weighted average share price of $11.77 for a total of $13.0 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. 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.
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TABLE 1
Three Months Ended
June 30,
Quarterly Results Summary20222021
Reported results
Net income available to common stockholders (millions)$107.1 $99.4 
Net income per diluted common share0.30 0.31 
Book value per common share (period-end)15.19 15.43 
Pre-provision net revenue (millions)143.1 125.1 
Common equity tier 1 capital ratio9.7 %9.9 %
Operating results (non-GAAP)
Operating net income available to common stockholders (millions)$108.7 $101.5 
Operating net income per diluted common share0.31 0.31 
Pre-provision net revenue (millions)145.1 127.8 
Average diluted common shares outstanding (thousands)354,687 323,328 
Significant items impacting earnings(1) (millions)
Pre-tax merger-related expenses$(2.0)$— 
After-tax impact of merger-related expenses(1.6)— 
Pre-tax branch consolidation costs— (2.6)
After-tax impact of branch consolidation costs— (2.1)
Total significant items pre-tax$(2.0)$(2.6)
Total significant items after-tax$(1.6)$(2.1)
Capital measures (non-GAAP)
Tangible common equity to tangible assets (period-end)7.25 %7.26 %
Tangible book value per common share (period-end)$8.10 $8.20 
Six Months Ended
June 30,
Year-to-Date Results Summary20222021
Reported results
Net income available to common stockholders (millions)$158.1 $190.6 
Net income per diluted common share0.45 0.59 
Pre-provision net revenue (millions)228.0 246.0 
Operating results (non-GAAP)
Operating net income available to common stockholders (millions)200.7 192.7 
Operating net income per diluted common share0.57 0.59 
Pre-provision net revenue (millions)262.9 248.7 
Average diluted common shares outstanding (thousands)351,835 324,028 
Significant items impacting earnings(1) (millions)
Pre-tax merger-related expenses$(30.7)$— 
After-tax impact of merger-related expenses(24.2)— 
Pre-tax provision expense related to acquisition(19.1)— 
After-tax impact of provision expense related to acquisition(15.1)— 
Pre-tax branch consolidation costs(4.2)(2.6)
After-tax impact of branch consolidation costs(3.3)(2.1)
Total significant items pre-tax$(54.0)$(2.6)
Total significant items after-tax$(42.6)$(2.1)
(1) Favorable (unfavorable) impact on earnings
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Industry Developments
LIBOR and SOFR
The United Kingdom’s Financial Conduct Authority (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 have 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 Alternative Reference Rate Committee (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.
Similarly, 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 of loan operations, information technology, legal, finance and other support functions. The transition team has completed an assessment of tasks needed for the transition, identified contracts that contain LIBOR language, reviewed existing contract language for the presence of appropriate fallback rate language, developed and implemented loan fallback rate language for when LIBOR is retired and identified risks associated with the transition. The transition team has chosen SOFR as the primary replacement index for LIBOR but other credit-sensitive indices are available for the benefit of our customers.
Beginning in September 2020, adjustable rate mortgage loans have been originated with SOFR as the underlying index. Their balance as of June 30, 2022 is approximately $650 million, an increase of $210 million compared to December 31, 2021. We started originating commercial loans utilizing SOFR and other indices in the fourth quarter of 2021. During the first six months of 2022, we originated in excess of $1.6 billion in SOFR indexed loans, including LIBOR loans that transitioned to SOFR during the period. The current balance of commercial loans indexed to SOFR is approximately $1.7 billion.
Our transition team continues to work within the guidelines established by the FCA and ARRC to provide for a smooth transition away from LIBOR. As of June 30, 2022, approximately $9 billion of our loan portfolio consisted of loans whose variable rate index is LIBOR, a decline of $1.4 billion from March 31, 2022.
Lastly, we have approximately $220 million of outstanding FNB issued and acquired debt that uses LIBOR as its base index.
RESULTS OF OPERATIONS

Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021
Net income available to common stockholders for the three months ended June 30, 2022 was $107.1 million or $0.30 per diluted common share, compared to net income available to common stockholders for the three months ended June 30, 2021 of $99.4 million or $0.31 per diluted common share. The results for the second quarter of 2022 reflect revenue of $335.8 million, an increase of $28.2 million, or 9.2%. Additionally, the provision for credit losses was $6.4 million with the increase primarily due to significant loan growth and CECL-related model impacts from lower prepayment speed assumptions in the second quarter of 2022. This compares to a provision benefit of $1.1 million for the second quarter of 2021. Non-interest income for the second quarter of 2022 included increases in service charges and capital markets income of $5.0 million, or 16.7% and $1.5 million, or 21.9%, respectively. Non-interest expense for the second quarter of 2022 increased $10.3 million primarily due to salaries and employee benefits, occupancy and equipment, marketing expense and merger-related costs of $2.0 million.

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Financial highlights are summarized below:
TABLE 2
Three Months Ended
June 30,		$%
(in thousands, except per share data)20222021ChangeChange
Net interest income$253,690 $227,871 $25,819 11.3 %
Provision for credit losses 6,422 (1,126)7,548 — 
Non-interest income82,154 79,772 2,382 3.0 
Non-interest expense192,774 182,500 10,274 5.6 
Income taxes27,506 24,882 2,624 10.5 
Net income109,142 101,387 7,755 7.6 
Less: Preferred stock dividends2,010 2,010 — — 
Net income available to common stockholders$107,132 $99,377 $7,755 7.8 %
Earnings per common share – Basic$0.30 $0.31 $(0.01)(3.2)%
Earnings per common share – Diluted0.30 0.31 (0.01)(3.2)
Cash dividends per common share0.12 0.12 — — 
The following table presents selected financial ratios and other relevant data used to analyze our performance:
TABLE 3
 Three Months Ended
June 30,
 20222021
Return on average equity8.05 %8.14 %
Return on average tangible common equity (2)
15.53 15.85 
Return on average assets1.05 1.06 
Return on average tangible assets (2)
1.14 1.15 
Book value per common share (1)
$15.19 $15.43 
Tangible book value per common share (1) (2)
8.10 8.20 
Equity to assets (1)
13.04 %13.12 %
Average equity to average assets12.98 12.96 
Common equity to assets (1)
12.79 12.84 
Tangible equity to tangible assets (1) (2)
7.52 7.55 
Tangible common equity to tangible assets (1) (2)
7.25 7.26 
Common equity tier 1 capital ratio (1)
9.7 9.9 
Dividend payout ratio39.74 39.09 
(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
 Three Months Ended June 30,
 20222021
(dollars in thousands)Average
Balance		Interest
Income/
Expense		Yield/
Rate		Average
Balance		Interest
Income/
Expense		Yield/
Rate
Assets
Interest-earning assets:
Interest-bearing deposits with banks$2,738,581 $5,033 0.74 %$2,436,958 $659 0.11 %
Taxable investment securities (1)
6,069,239 26,912 1.77 5,071,781 21,295 1.68 
Tax-exempt investment securities (1)(2)
1,000,593 8,524 3.41 1,094,787 9,386 3.43 
Loans held for sale209,544 2,065 3.94 196,455 1,865 3.80 
Loans and leases (2)(3)
27,245,122 240,900 3.54 25,397,396 222,383 3.51 
Total interest-earning assets (2)
37,263,079 283,434 3.05 34,197,377 255,588 3.00 
Cash and due from banks435,111 369,086 
Allowance for credit losses(374,750)(368,243)
Premises and equipment400,652 335,294 
Other assets4,163,546 3,992,672 
Total assets$41,887,638 $38,526,186 
Liabilities
Interest-bearing liabilities:
Deposits:
Interest-bearing demand$15,013,195 10,455 0.28 $13,798,324 4,900 0.14 
Savings3,957,969 597 0.06 3,391,989 175 0.02 
Certificates and other time2,974,360 4,038 0.55 3,258,747 7,090 0.88 
            Total interest-bearing deposits21,945,524 15,090 0.28 20,449,060 12,165 0.24 
Short-term borrowings1,421,706 5,760 1.62 1,700,795 6,676 1.57 
Long-term borrowings712,313 6,238 3.51 954,402 6,134 2.58 
Total interest-bearing liabilities24,079,543 27,088 0.45 23,104,257 24,975 0.43 
Non-interest-bearing demand11,761,183 10,058,181 
Total deposits and borrowings35,840,726 0.30 33,162,438 0.30 
Other liabilities608,999 369,249 
Total liabilities36,449,725 33,531,687 
Stockholders’ equity5,437,913 4,994,499 
Total liabilities and stockholders’ equity$41,887,638 $38,526,186 
Net interest-earning assets$13,183,536 $11,093,120 
Net interest income (FTE) (2)
256,346 230,613 
Tax-equivalent adjustment(2,656)(2,742)
Net interest income$253,690 $227,871 
Net interest spread2.60 %2.57 %
Net interest margin (2)
2.76 %2.70 %
(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 balances include non-accrual loans. Loans and leases consist of average total loans less average unearned income.
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Net Interest Income
Net interest income on an FTE basis (non-GAAP) increased $25.7 million, or 11.2%, from $230.6 million for the second quarter of 2021 to $256.3 million for the second quarter of 2022. Average earning assets of $37.3 billion increased $3.1 billion, or 9.0%, from 2021. In addition to the growth in average earning assets, net interest income benefited from the repricing impact of the higher interest rate environment, which was partially offset by the higher cost of interest-bearing deposit accounts. Average interest-bearing liabilities of $24.1 billion increased $1.0 billion, or 4.2%, from 2021, driven by an increase of $1.5 billion in average interest-bearing deposits which included organic growth in new and existing customer relationships, and inflows from the Howard acquisition, partially offset by a decrease in average borrowings of $521.2 million. Our net interest margin FTE (non-GAAP) increased 6 basis points to 2.76%, as the yield on earning assets increased 5 basis points even with a reduced PPP contribution. The total cost of funds was stable at 0.30%, with a 4 basis point increase in interest-bearing deposit costs.
The following table provides certain information regarding changes in net interest income on an FTE basis (non-GAAP) attributable to changes in the average volumes and yields earned on interest-earning assets and the average volume and rates paid for interest-bearing liabilities for the three months ended June 30, 2022, compared to the three months ended June 30, 2021:
TABLE 5
(in thousands)VolumeRateNet
Interest Income (1)
Interest-bearing deposits with banks$91 $4,283 $4,374 
Securities (2)
3,490 1,265 4,755 
Loans held for sale243 (43)200 
Loans and leases (2)
12,190 6,327 18,517 
Total interest income (2)
16,014 11,832 27,846 
Interest Expense (1)
Deposits:
Interest-bearing demand275 5,280 5,555 
Savings23 399 422 
Certificates and other time(418)(2,634)(3,052)
Short-term borrowings(1,035)119 (916)
Long-term borrowings(1,557)1,661 104 
Total interest expense(2,712)4,825 2,113 
Net change (2)
$18,726 $7,007 $25,733 
 
(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 $283.4 million for the second quarter of 2022, increased $27.8 million, or 10.9%, from the same quarter of 2021, primarily due to the impact of higher short-term interest rates on cash balances and an increase in earning assets of $3.1 billion. The increase in earning assets was primarily driven by a $1.8 billion, or 7.3%, increase in average loans and leases, an increase in average securities of $903.3 million, and a $301.6 million increase in average cash and cash equivalents balances. Excluding PPP loans (non-GAAP), average total loans and leases increased $3.8 billion, or 16.5%, including growth of $2.2 billion in commercial loans and leases ($1.1 billion from Howard) and $1.7 billion in consumer loans ($0.5 billion from Howard). The increase in average commercial loans and leases, excluding PPP (non-GAAP), included $1.4 billion, or 28.3%, in commercial and industrial loans and $723.1 million, or 7.3%, in commercial real estate balances driven by a combination of organic loan origination activity and the Howard acquisition. Commercial loan origination activity was led by the Pittsburgh, Cleveland and North Carolina markets. Average consumer loans increased $1.7 billion, or 21.1%, with a $981.9 million increase in residential mortgages and a $585.5 million increase in direct installment loans driven by strong organic loan origination activity and the Howard acquisition. Additionally, the net increase in the
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securities portfolio was a result of management's strategy to deploy excess liquidity into higher yielding securities, as average securities increased 14.6%. The yield on average earning assets (non-GAAP) increased 5 basis points from 3.00% for the second quarter of 2021 to 3.05% for the second quarter of 2022, primarily reflecting the higher yields on variable-rate loans and investment securities offset by significant reductions in PPP contributions as the PPP loan portfolio winds down.
Interest expense of $27.1 million for the second quarter of 2022 increased $2.1 million, or 8.5%, from the same quarter of 2021, due to an increase in rates paid on average interest-bearing liabilities and growth in average interest-bearing deposits over the same quarter of 2021. Average non-interest-bearing deposits increased $1.7 billion, or 16.9%, and average interest-bearing deposits increased $1.5 billion, or 7.3%. The growth in average deposits reflected organic growth in new and existing customer relationships and inflows from the Howard acquisition. Average short-term borrowings decreased $279.1 million, or 16.4%, primarily reflecting decreases of $200.0 million and $86.2 million in short-term FHLB advances and repurchase agreements, respectively. Average long-term borrowings decreased $242.1 million, or 25.4%, primarily reflecting a decrease of $263.7 million in long-term FHLB advances, partially offset by the addition of Howard's $25.0 million of subordinated debt. The rate paid on interest-bearing liabilities increased 2 basis points from 0.43% to 0.45% for the second quarter of 2022, primarily due to the interest rate actions made by the FOMC and partially offset by management's actions taken to reduce the cost of interest-bearing liabilities.

Provision for Credit Losses
Provision for credit losses is determined based on management’s estimates of the appropriate level of ACL needed to absorb probable life-of-loan losses in the loan and lease portfolio, after giving consideration to charge-offs and recoveries for the period. The following table presents information regarding the provision for credit loss expense and net charge-offs:
TABLE 6
Three Months Ended
June 30,		$%
(dollars in thousands)20222021ChangeChange
Provision for credit losses (on loans and leases)$6,989 $(1,706)$8,695 509.7 %
Provision for unfunded loan commitments
(579)580 (1,159)(199.8)
Provision for credit losses$6,410 $(1,126)$7,536 669.3 %
Net loan charge-offs (recoveries)(381)3,822 (4,203)(110.0)
Net loan charge-offs (recoveries) (annualized) / total average loans and leases(0.01)%0.06 %

Provision for credit losses was $6.4 million during the second quarter of 2022, an increase of $7.5 million, from the same period of 2021. The second quarter of 2022 is comprised of a $7.0 million provision for loans and leases outstanding and a $0.6 million provision benefit for unfunded loan commitments. The net increase reflects significant loan growth and CECL-related model impacts from lower prepayment speed assumptions in the second quarter of 2022. The second quarter of 2022 also reflected net recoveries of $0.4 million, or 0.01% annualized of total average loans, compared to net charge-offs of $3.8 million, or 0.06% annualized, in the second quarter of 2021. For additional information relating to the allowance and provision for credit losses, refer to the Allowance for Credit Losses on Loans and Leases section of this Management’s Discussion and Analysis.

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Non-Interest Income
The breakdown of non-interest income for the three months ended June 30, 2022 and 2021 is presented in the following table:
TABLE 7
Three Months Ended
June 30,		$%
(dollars in thousands)20222021ChangeChange
Service charges$34,693 $29,726 $4,967 16.7 %
Trust services9,713 9,282 431 4.6 
Insurance commissions and fees6,352 6,227 125 2.0 
Securities commissions and fees6,052 5,747 305 5.3 
Capital markets income8,547 7,012 1,535 21.9 
Mortgage banking operations6,120 7,422 (1,302)(17.5)
Dividends on non-marketable equity securities2,770 2,383 387 16.2 
Bank owned life insurance4,043 4,766 (723)(15.2)
Net securities gains48 87 (39)(44.8)
Other3,816 7,120 (3,304)(46.4)
Total non-interest income$82,154 $79,772 $2,382 3.0 %
Total non-interest income increased $2.4 million, or 3.0%, to $82.2 million for the second quarter of 2022, compared to $79.8 million for the second quarter of 2021. The variances in the individual non-interest income items are explained in the following paragraphs.
Service charges of $34.7 million for the second quarter of 2022 increased $5.0 million, or 16.7%, from the same period of 2021, driven by interchange fees, treasury management services and higher customer activity.
Capital markets increased $1.5 million, or 21.9%, with solid contributions from swap fees, international banking, and debt capital markets.
Mortgage banking operations income of $6.1 million for the second quarter of 2022 decreased $1.3 million, or 17.5%, from the same period of 2021, as secondary market revenue and mortgage held-for-sale pipelines declined from higher levels given the sharp increase in mortgage rates in 2022. During the second quarter of 2022, we sold $328.4 million of residential mortgage loans, compared to $526.5 million for the same period of 2021, a decrease of 37.6%.
Bank owned life insurance decreased $0.7 million, or 15.2%, due to higher life insurance claims in the second quarter of 2021 as compared to the second quarter of 2022.
Other non-interest income was $3.8 million and $7.1 million for the second quarter of 2022 and 2021, respectively, with the decline primarily due to strong SBA premium income levels in 2021.


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Non-Interest Expense
The breakdown of non-interest expense for the three months ended June 30, 2022 and 2021 is presented in the following table:
TABLE 8
Three Months Ended
June 30,		$%
(dollars in thousands)20222021ChangeChange
Salaries and employee benefits$103,870 $102,073 $1,797 1.8 %
Net occupancy15,768 16,296 (528)(3.2)
Equipment18,687 17,160 1,527 8.9 
Amortization of intangibles3,549 3,024 525 17.4 
Outside services17,265 18,695 (1,430)(7.6)
Marketing4,628 3,392 1,236 36.4 
FDIC insurance5,295 4,208 1,087 25.8 
Bank shares and franchise taxes3,905 3,576 329 9.2 
Merger-related2,027 — 2,027 — 
Other17,780 14,076 3,704 26.3 
Total non-interest expense$192,774 $182,500 $10,274 5.6 %
Total non-interest expense of $192.8 million for the second quarter of 2022 increased $10.3 million, or 5.6%, from the same period of 2021. Non-interest expense increased $10.9 million, or 6.1%, when excluding significant items of $2.0 million of merger-related expenses in the second quarter of 2022 and $2.6 million of branch consolidation costs in the second quarter of 2021. The variances in the individual non-interest expense items are further explained in the following paragraphs.
Salaries and employee benefits of $103.9 million for the second quarter of 2022 increased $1.8 million, or 1.8%, from the same period of 2021, due primarily to annual merit increases and the acquired Howard expense base.
Net occupancy and equipment of $34.5 million for the second quarter of 2022 increased $1.0 million, or 3.0% from the same period of 2021. On an operating basis, net occupancy and equipment increased $3.1 million, or 10.0%, primarily from technology-related investments and the acquired Howard expense base.
Amortization of intangibles of $3.5 million increased $0.5 million, or 17.4%, primarily due to the amortization of core deposit intangibles from the Howard acquisition.
Marketing expense increased $1.2 million over the same prior-year period due to increased spending on digital advertising and campaigns related to our Physician's First Program.
FDIC insurance of $5.3 million increased $1.1 million, or 25.8%, primarily due to loan growth and balance sheet mix shift.
We recorded $2.0 million in merger-related costs in the second quarter of 2022 relating to the Howard acquisition and the pending UB Bancorp merger.
Other non-interest expense was $17.8 million and $14.1 million for the second quarter of 2022 and 2021, respectively. In the second quarter of 2021, we recorded over $0.5 million in branch consolidation costs and had an increase in business development expense and other operational costs during the current period in other non-interest expense.
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The following table presents non-interest expense excluding significant items for the three months ended June 30, 2022 and 2021:
TABLE 9
Three Months Ended June 30,$%
(dollars in thousands)20222021ChangeChange
Total non-interest expense, as reported $192,774 $182,500 $10,274 5.6 %
Significant items:
   Branch consolidations — (2,644)2,644 
   Merger-related(2,027)— (2,027)
Total non-interest expense, excluding significant items (1)
$190,747 $179,856 $10,891 6.1 %
(1) Non-GAAP

Income Taxes
The following table presents information regarding income tax expense and certain tax rates:
TABLE 10
 Three Months Ended
June 30,
(dollars in thousands)20222021
Income tax expense$27,506 $24,882 
Effective tax rate20.1 %19.7 %
Statutory federal tax rate21.0 21.0 
Both periods’ tax rates are lower than the federal statutory tax rates of 21% due to tax benefits primarily resulting from tax-exempt income on investments and loans, tax credits and income from BOLI. Income tax expense was higher in 2022 due to higher pre-tax earnings and state income taxes.

Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021
Net income available to common stockholders for the first six months of 2022 was $158.1 million or $0.45 per diluted common share, compared to net income available to common stockholders for the first six months of 2021 of $190.6 million or $0.59 per diluted common share. The provision for credit losses for the first six months of 2022 totaled $24.4 million including $19.1 million of initial provision for non-PCD loans associated with the Howard acquisition. This compares to $4.8 million in the first six months of 2021. Non-interest income totaled $160.5 million, a decrease of $2.1 million, or 1.3%, reflecting reduced contributions from mortgage banking due to the increasing interest rate environment, partially offset by strong contributions from wealth management, capital markets and insurance commissions and fees, as well as higher service charges reflecting increased customer activity. Non-interest expense of $420.2 million, increased $52.8 million, or 14.4%, as the first six months of 2022 included merger-related costs of $30.7 million and branch consolidation costs of $4.2 million. The first six months of 2021 included the impact of branch consolidation costs of $2.6 million. On an operating basis, earnings per diluted common share (non-GAAP) was $0.57, compared to $0.59.

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Financial highlights are summarized below:
TABLE 11
Six Months Ended
June 30,		$%
(in thousands, except per share data)20222021ChangeChange
Net interest income$487,766 $450,794 $36,972 8.2 %
Provision for credit losses 24,381 4,785 19,596 409.5 
Non-interest income160,476 162,577 (2,101)(1.3)
Non-interest expense420,200 367,362 52,838 14.4 
Income taxes41,521 46,602 (5,081)(10.9)
Net income162,140 194,622 (32,482)(16.7)
Less: Preferred stock dividends4,020 4,020 — — 
Net income available to common stockholders$158,120 $190,602 $(32,482)(17.0)%
Earnings per common share – Basic$0.45 $0.60 $(0.15)(25.0)%
Earnings per common share – Diluted0.45 0.59 (0.14)(23.7)
Cash dividends per common share0.24 0.24 — — 
The following table presents selected financial ratios and other relevant data used to analyze our performance:
TABLE 12
 Six Months Ended
June 30,
20222021
Return on average equity6.01 %7.88 %
Return on average tangible common equity (2)
11.49 15.41 
Return on average assets0.79 1.03 
Return on average tangible assets (2)
0.87 1.12 
Book value per common share (1)
$15.19 $15.43 
Tangible book value per common share (1) (2)
8.10 8.20 
Equity to assets (1)
13.04 %13.12 %
Average equity to average assets13.11 13.07 
Common equity to assets (1)
12.79 12.84 
Tangible equity to tangible assets (1) (2)
7.52 7.55 
Tangible common equity to tangible assets (1) (2)
7.25 7.26 
Common equity tier 1 capital ratio (1)
9.7 9.9 
Dividend payout ratio53.93 40.86 
(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 13          
 Six Months Ended June 30,
 20222021
(dollars in thousands)Average
Balance		Interest
Income/
Expense		Yield/
Rate		Average
Balance		Interest
Income/
Expense		Yield/
Rate
Assets
Interest-earning assets:
Interest-bearing deposits with banks$2,921,076 $6,540 0.45 %$1,999,580 $1,082 0.11 %
Taxable investment securities (1)
6,000,476 50,697 1.69 4,994,705 43,212 1.73 
Tax-exempt investment securities (1)(2)
1,012,870 17,256 3.41 1,110,902 19,107 3.44 
Loans held for sale234,316 4,457 3.81 180,503 3,358 3.72 
Loans and leases (2) (3)
26,744,743 460,662 3.47 25,424,960 443,160 3.51 
Total interest-earning assets (2)
36,913,481 539,612 2.94 33,710,650 509,919 3.04 
Cash and due from banks422,981 369,474 
Allowance for credit losses(367,611)(369,013)
Premises and equipment389,433 334,310 
Other assets4,148,188 4,033,514 
Total assets$41,506,472 $38,078,935 
Liabilities
Interest-bearing liabilities:
Deposits:
Interest-bearing demand$14,966,600 13,871 0.19 $13,578,936 10,439 0.16 
Savings3,916,724 740 0.04 3,336,465 347 0.02 
Certificates and other time2,959,451 8,164 0.56 3,386,928 16,624 0.99 
            Total interest-bearing deposits21,842,775 22,775 0.21 20,302,329 27,410 0.27 
Short-term borrowings1,465,595 11,562 1.59 1,759,979 13,716 1.57 
Long-term borrowings711,072 12,255 3.48 1,023,337 12,398 2.44 
Total interest-bearing liabilities24,019,442 46,592 0.39 23,085,645 53,524 0.47 
Non-interest-bearing demand11,509,946 9,638,015 
Total deposits and borrowings35,529,388 0.26 32,723,660 0.33 
Other liabilities533,711 377,089 
Total liabilities36,063,099 33,100,749 
Stockholders’ equity5,443,373 4,978,186 
Total liabilities and stockholders’ equity$41,506,472 $38,078,935 
Net interest-earning assets$12,894,039 $10,625,005 
Net interest income (FTE) (2)
493,020 456,395 
Tax-equivalent adjustment(5,254)(5,601)
Net interest income$487,766 $450,794 
Net interest spread2.55 %2.57 %
Net interest margin (2)
2.69 %2.72 %
(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 balances include non-accrual loans. Loans and leases consist of average total loans less average unearned income.
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Net Interest Income
Net interest income on an FTE basis (non-GAAP) totaled $493.0 million, increasing $36.6 million, or 8.0%, as the higher interest rate environment impacted earning asset yields. There was growth in earning assets of $3.2 billion or 9.5%, partially offset by a reduced net interest margin. The net interest margin (FTE) (non-GAAP) declined 3 basis points to 2.69%, primarily reflecting lower yields on commercial loans due to significantly lower PPP accretion and investment securities, combined with the effect of higher average cash balances on the mix of earning assets.
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 six months ended June 30, 2022, compared to the six months ended June 30, 2021:
TABLE 14
(in thousands)VolumeRateNet
Interest Income (1)
Interest-bearing deposits with banks$699 $4,759 $5,458 
Securities (2)
6,853 (1,219)5,634 
Loans held for sale1,181 (82)1,099 
Loans and leases (2)
13,655 3,847 17,502 
Total interest income (2)
22,388 7,305 29,693 
Interest Expense (1)
Deposits:
Interest-bearing demand684 2,748 3,432 
Savings41 352 393 
Certificates and other time(1,335)(7,125)(8,460)
Short-term borrowings(2,587)433 (2,154)
Long-term borrowings(3,766)3,623 (143)
Total interest expense(6,963)31 (6,932)
Net change (2)
$29,351 $7,274 $36,625 
(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 $539.6 million for the first six months of 2022, increased $29.7 million, or 5.8%, from the same period of 2021, resulting from the impact of higher short-term interest rates on interest-bearing deposits with banks and an increase in earning assets of $3.2 billion. The increase in earning assets was primarily driven by a $1.3 billion, or 5.2%, increase in average loans, a $921.5 million increase in average cash and cash equivalents and an increase in average securities of $907.7 million. Excluding PPP loans, average total loans and leases increased $3.3 billion, or 14.4%, including growth of $1.9 billion in commercial loans and leases ($1.0 billion from Howard) and $1.4 billion in consumer loans ($0.5 billion from Howard). The increase in average commercial loans and leases, excluding PPP, included $1.2 billion, or 24.5%, in commercial and industrial loans and $686.4 million, or 6.9%, in commercial real estate balances, driven by a combination of the Howard acquisition and organic loan origination activity. Commercial origination activity was led by the Pittsburgh, Cleveland and North and South Carolina markets. Average consumer loans increased $1.4 billion, or 17.6%, with an increase in residential mortgage loans of $819.7 million, or 24.3%, direct home equity installment loans of $527.1 million, or 25.8%, and indirect installment loans of $47.5 million, or 3.9%, driven by a combination of the Howard acquisition 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 14.9%. For the first six months of 2022, the yield on average earning assets (non-GAAP) decreased 10 basis points to 2.94%, compared to the first six months of 2021, primarily from reduced PPP contribution.
Interest expense of $46.6 million for the first six months of 2022 decreased $6.9 million, or 13.0%, from the same period of 2021, primarily due to a decrease in rates paid, partially offset by an increase in average interest-bearing deposits. The growth
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in average deposits reflected inflows from the Howard acquisition and organic growth in new and existing customer relationships, as well as customer preferences to maintain larger balances in their deposit accounts and shift balances into more liquid accounts. Average interest-bearing deposits increased $1.5 billion, or 7.6%, which reflects the benefit of solid organic growth in customer relationships, the addition of Howard, as well as deposits from PPP funding and government stimulus activities. Average time deposits declined $427.5 million, or 12.6%, 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 $312.3 million, or 30.5%, primarily due to a decrease of $329.3 million in long-term FHLB borrowings, partially offset by the addition of Howard's $25.0 million of subordinated debt. The rate paid on interest-bearing liabilities decreased 8 basis points to 0.39% for the first six months of 2022, compared to the first six months of 2021. Similarly, the cost of interest-bearing deposits declined 6 basis points from 0.27% to 0.21%. These declines were a result of management actions taken to reduce the cost of interest-bearing liabilities given the low interest rate environment in 2021 and strong growth in non-interest-bearing deposits.

Provision for Credit Losses
The following table presents information regarding the provision for credit loss expense and net charge-offs:
TABLE 15
Six Months Ended
June 30,		$%
(dollars in thousands)20222021ChangeChange
Provision for credit losses (on loans and leases)$25,225 $4,359 $20,866 478.7 %
Provision for unfunded loan commitments(919)428 (1,347)(314.7)
Provision for credit losses$24,306 $4,787 $19,519 407.8 %
Net loan charge-offs1,507 10,957 (9,450)(86.2)
Net loan charge-offs (annualized) / total average loans and leases0.01 %0.09 %
Provision for credit losses was $24.3 million for the six months ended June 30, 2022, an increase of $19.5 million, from the same period of 2021. The year-to-date amount for 2022 is comprised of a $25.2 million provision for loans and leases outstanding and a $0.9 million benefit for unfunded loan commitments. The increase reflects $19.1 million of initial provision for non-PCD loans associated with the Howard acquisition and growth in loans outstanding, partially offset by favorable asset quality trends across all loan portfolio credit metrics in 2022. Net loan charge-offs were $1.5 million during the six months ended June 30, 2022, compared to $11.0 million during the six months ended June 30, 2021.

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Non-Interest Income
The breakdown of non-interest income for the six months ended June 30, 2022 and 2021 is presented in the following table:
TABLE 16
Six Months Ended
June 30,		$%
(dollars in thousands)20222021ChangeChange
Service charges$66,208 $57,557 $8,651 15.0 %
Trust services20,062 18,365 1,697 9.2 
Insurance commissions and fees13,957 13,412 545 4.1 
Securities commissions and fees11,743 11,365 378 3.3 
Capital markets income15,674 14,724 950 6.5 
Mortgage banking operations12,787 23,155 (10,368)(44.8)
Dividends on non-marketable equity securities4,920 4,659 261 5.6 
Bank owned life insurance6,685 7,714 (1,029)(13.3)
Net securities gains48 128 (80)(62.5)
Other8,392 11,498 (3,106)(27.0)
Total non-interest income$160,476 $162,577 $(2,101)(1.3)%
Total non-interest income decreased $2.1 million, to $160.5 million for the first six months of 2022, a 1.3% decrease from the same period of 2021. The variances in significant individual non-interest income items are explained in the following paragraphs.
Service charges of $66.2 million for the first six months of 2022 increased $8.7 million, or 15.0%, driven by interchange fees, treasury management services and higher customer activity.
Trust services of $20.1 million for the first six months of 2022 increased $1.7 million, or 9.2%, from the same period of 2021, primarily driven by contributions across the geographic footprint, partially offset by the market value of assets under management decreasing $191.1 million, or 2.5%, to $7.4 billion at June 30, 2022.
Capital markets income of $15.7 million for the first six months of 2022 increased $1.0 million, or 6.5%, from the same period of 2021, with contributions from swap fees, international banking and debt capital markets.
Mortgage banking operations income of $12.8 million for the first six months of 2022 decreased $10.4 million, or 44.8%, from the same period of, 2021 as secondary market revenue and mortgage held-for-sale pipelines declined from elevated levels in 2021 due to the significant increase in interest rates. During the first six months of 2022, we sold $695.4 million of residential mortgage loans, a 33.3% decrease compared to $1.0 billion for the same period of 2021.
Bank owned life insurance of $6.7 million for the first six months of 2022 decreased $1.0 million, or 13.3%, from the same period of 2021, due to higher life insurance claims in the 2021 period.
Other non-interest income was $8.4 million and $11.5 million for the first six months of 2022 and 2021, respectively, with the decline primarily due to strong SBA premium income levels in 2021.

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Non-Interest Expense
The breakdown of non-interest expense for the six months ended June 30, 2022 and 2021 is presented in the following table:
TABLE 17
Six Months Ended
June 30,		$%
(dollars in thousands)20222021ChangeChange
Salaries and employee benefits$216,059 $209,376 $6,683 3.2 %
Net occupancy33,957 32,459 1,498 4.6 
Equipment36,692 34,190 2,502 7.3 
Amortization of intangibles6,776 6,074 702 11.6 
Outside services34,298 35,624 (1,326)(3.7)
Marketing7,884 6,833 1,051 15.4 
FDIC insurance9,869 9,052 817 9.0 
Bank shares and franchise taxes7,932 7,355 577 7.8 
Merger-related30,656 — 30,656 — 
Other36,077 26,399 9,678 36.7 
Total non-interest expense$420,200 $367,362 $52,838 14.4 %
Total non-interest expense of $420.2 million for the first six months of 2022 increased $52.8 million, a 14.4% increase from the same period of 2021. On an operating basis, non-interest expense (non-GAAP) increased $20.6 million, or 5.7%, when excluding significant items of $30.7 million in merger-related costs and $4.2 million in branch consolidation costs in the first six months of 2022, compared to $2.6 million in branch consolidation costs in the first six months of 2021. The variances in the individual non-interest expense items are further explained in the following paragraphs.
Salaries and employee benefits of $216.1 million for the first six months of 2022 increased $6.7 million, or 3.2%, from the same period of 2021, due to normal merit increases, higher production-related commissions and incentives and the acquired Howard expense base.
Net occupancy and equipment expense of $70.6 million for the first six months of 2022 increased $4.0 million, or 6.0%, from the same period of 2021, primarily from technology-related investments and the acquired Howard expense base. Additionally, there were branch consolidation costs of $1.9 million in the first six months of 2022, compared to $2.1 million in the first six months of 2021.
Amortization of intangibles of $6.8 million for the first six months of 2022 increased $0.7 million, or 11.6%, from the same period of 2021, primarily due to additional core deposit intangibles added as a result of the Howard acquisition.
Marketing expense of $7.9 million for the first six months of 2022 increased $1.1 million, or 15.4%, from the same period of 2021, primarily due to increased digital advertising spending and campaigns related to our Physician's First Program.
FDIC insurance of $9.9 million for the first six months of 2022 increased $0.8 million, or 9.0%, from the same period of 2021, as a result of loan growth and a shift in the balance sheet mix.
Bank shares and franchise taxes of $7.9 million for the first six months of 2022 increased $0.6 million, or 7.8%, from the same period of 2021, primarily due to an increase in the bank's capital tax base.
We recorded $30.7 million in merger-related costs for the first six months of 2022 related to the Howard acquisition which closed on January 22, 2022 and the pending UB Bancorp acquisition.
Other non-interest expense was $36.1 million and $26.4 million for the first six months of 2022 and 2021, respectively. There was $2.2 million in branch consolidation costs and an increase in business development expense and other operational costs in the first six months of 2022. Comparatively, we had $0.5 million in branch consolidation costs and a $2.2 million mortgage recourse reserve release in the first six months of 2021.

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The following table presents non-interest expense excluding significant items for the six months ended June 30, 2022 and 2021:
TABLE 18
Six Months Ended
June 30,		$%
(dollars in thousands)20222021ChangeChange
Total non-interest expense, as reported $420,200 $367,362 $52,838 14.4 %
Significant items:
   Branch consolidations (4,178)(2,644)(1,534)
   Merger-related(30,656)— (30,656)
Total non-interest expense, excluding significant items (1)
$385,366 $364,718 $20,648 5.7 %
(1) Non-GAAP

Income Taxes
The following table presents information regarding income tax expense and certain tax rates:
TABLE 19
 Six Months Ended
June 30,
(dollars in thousands)20222021
Income tax expense$41,521 $46,602 
Effective tax rate20.4 %19.3 %
Statutory federal tax rate21.0 21.0 
Both periods’ tax rates are lower than the federal statutory tax rates of 21% due to tax benefits primarily resulting from tax-exempt income on investments and loans, tax credits and income from BOLI. Income tax expense was lower in 2022 due to lower pretax earnings resulting from merger-related expenses from the Howard acquisition. The effective tax rate is higher in 2022 primarily driven by higher state income taxes and nondeductible merger-related expenses resulting from the Howard acquisition.

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FINANCIAL CONDITION
The following table presents our condensed Consolidated Balance Sheets:
TABLE 20
(dollars in millions)June 30,
2022		December 31,
2021		$
Change		%
Change
Assets
Cash and cash equivalents$2,029 $3,493 $(1,464)(41.9)%
Securities7,306 6,889 417 6.1 
Loans held for sale164 295 (131)(44.4)
Loans and leases, net27,666 24,624 3,042 12.4 
Goodwill and other intangibles2,489 2,304 185 8.0 
Other assets2,027 1,908 119 6.2 
Total Assets$41,681 $39,513 $2,168 5.5 %
Liabilities and Stockholders’ Equity
Deposits$33,480 $31,726 $1,754 5.5 %
Borrowings2,103 2,218 (115)(5.2)
Other liabilities662 419 243 58.0 
Total Liabilities36,245 34,363 1,882 5.5 
Stockholders’ Equity5,436 5,150 286 5.6 
Total Liabilities and Stockholders’ Equity$41,681 $39,513 $2,168 5.5 %
The increase in assets, liabilities and stockholders' equity is primarily due to the Howard acquisition.

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; 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 21
June 30,
2022		December 31,
2021		$
Change		%
Change
(in millions)
Commercial real estate$10,787 $9,899 $888 9.0 %
Commercial and industrial6,564 5,977 587 9.8 
Commercial leases504 495 9 1.8 
Other136 94 42 44.7 
Total commercial loans and leases17,991 16,465 1,526 9.3 
Direct installment2,769 2,376 393 16.5 
Residential mortgages4,595 3,654 941 25.8 
Indirect installment1,384 1,227 157 12.8 
Consumer lines of credit1,305 1,246 59 4.7 
Total consumer loans10,053 8,503 1,550 18.2 
Total loans and leases$28,044 $24,968 $3,076 12.3 %
The commercial and industrial category includes PPP loans totaling $85.8 million, net of unamortized net deferred fees of $2.2 million at June 30, 2022, compared to $336.6 million at December 31, 2021.
Non-Performing Assets
Following is a summary of non-performing assets:
TABLE 22
(in millions)June 30,
2022		December 31,
2021		$
Change		%
Change
Commercial real estate$49 $48 $1 2.1 %
Commercial and industrial10 15 (5)(33.3)
Commercial leases1 1 — — 
Other— — — — 
Total commercial loans and leases60 64 (4)(6.3)
Direct installment7 7 — — 
Residential mortgages17 10 7 70.0 
Indirect installment2 2 — — 
Consumer lines of credit6 5 1 20.0 
Total consumer loans32 24 8 33.3 
Total non-performing loans and leases92 88 4 4.5 
Other real estate owned10 8 2 25.0 
Non-performing assets$102 $96 $6 6.3 %
Non-performing assets increased $5.8 million, from $96.2 million at December 31, 2021 to $101.9 million at June 30, 2022. This reflects an increase of $4.6 million in non-performing loans and leases and an increase of $1.2 million in OREO. The increase in non-performing loans was driven by the acquisition of the Howard Bank portfolio.
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Troubled Debt Restructured Loans
Following is a summary of accruing and non-accrual TDRs, by class:

TABLE 23
(in millions)AccruingNon-
Accrual		Total
June 30, 2022
Commercial real estate$5 $24 $29 
Commercial and industrial1 1 2 
Total commercial loans 6 25 31 
Direct installment20 3 23 
Residential mortgages31 4 35 
Consumer lines of credit5 1 6 
Total consumer loans56 8 64 
Total TDRs$62 $33 $95 
December 31, 2021
Commercial real estate$6 $21 $27 
Commercial and industrial— 1 1 
Total commercial loans 6 22 28 
Direct installment21 4 25 
Residential mortgages27 5 32 
Consumer lines of credit6 1 7 
Total consumer loans54 10 64 
Total TDRs$60 $32 $92 

Allowance for Credit Losses on Loans and Leases
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 June 30, 2022 and December 31, 2021, we utilized a third-party consensus macroeconomic forecast reflecting the current and projected macroeconomic environment. For our ACL calculation at June 30, 2022, the macroeconomic variables that we utilized included, but were not limited to: (i) the purchase only Housing Price Index, which reflects growth of 6.0% over our R&S forecast period, (ii) a Commercial Real Estate Price Index, which reflects growth of 11.4% over our R&S forecast period, (iii) S&P Volatility, which increases 2.3% in 2022 and decreases 8.6% in 2023 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.
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Following is a summary of certain ratios related to the ACL and loans and leases:
TABLE 24
Six Months Ended
June 30,
20222021
Net loan charge-offs (annualized) by category to average loans:
Commercial real estate— %0.02 %
Commercial and industrial— 0.05 
Other commercial— 0.01 
Indirect installment0.01 0.01 
Net loan charge-offs (annualized)/average loans0.01 %0.09 %
Allowance for credit losses/total loans and leases1.35 %1.42 %
Allowance for credit losses/non-performing loans408.92 %278.20 %
The ACL on loans and leases of $378.0 million at June 30, 2022 increased $33.7 million, or 9.8%, from December 31, 2021 with the increase primarily driven by the initial ACL related to the Howard acquisition. Our ending ACL coverage ratio at June 30, 2022 was 1.35%, compared to 1.38% at December 31, 2021. Total provision for credit losses for the six months ended June 30, 2022 was $24.4 million, compared to $4.8 million for the first six months ended June 30, 2021 reflecting $19.1 million of initial provision for non-PCD loans associated with the Howard acquisition in the first quarter of 2022. Net charge-offs were $1.5 million for the six months ended June 30, 2022, compared to $11.0 million for the six months ended June 30, 2021, with both periods well below historical levels. The ACL as a percentage of non-performing loans for the total portfolio increased from 392% as of December 31, 2021 to 409% as of June 30, 2022.
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 25
(in millions)June 30,
2022		December 31,
2021		$
Change		%
Change
Non-interest-bearing demand$11,716 $10,789 $927 8.6 %
Interest-bearing demand14,739 14,409 330 2.3 
Savings3,982 3,669 313 8.5 
Certificates and other time deposits3,043 2,859 184 6.4 
Total deposits$33,480 $31,726 $1,754 5.5 %
Total deposits increased $1.8 billion, or 5.5%, from December 31, 2021, primarily as a result of growth in non-interest-bearing and interest-bearing demand balances due to the Howard acquisition as well as an expansion of customer relationships and higher customer balances. Customer preferences had shifted to more liquid accounts, however, customers' preferences are beginning to shift back to certificates of deposits as interest rates increase. The deposit growth helped us eliminate overnight borrowings and reduce higher-cost short-term FHLB borrowings and their related swaps and provide cash to be used for funding loan growth.

Capital Resources and Regulatory Matters
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
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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 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.
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. 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.
FNB and FNBPA are subject to various regulatory capital requirements administered by the federal banking agencies (see discussion under “Enhanced Regulatory Capital Standards”). Quantitative measures established by regulators to ensure capital adequacy require FNB and FNBPA to maintain minimum amounts and ratios of total, tier 1 and CET1 capital (as defined in the regulations) to risk-weighted assets (as defined) and a minimum leverage ratio (as defined). Failure to meet minimum capital requirements could lead to initiation of certain mandatory, and possibly additional discretionary actions, by regulators that, if undertaken, could have a direct material effect on our Consolidated Financial Statements, dividends and future business and corporate strategies. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, FNB and FNBPA must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. FNB’s and FNBPA’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
At June 30, 2022, the capital levels of both FNB and FNBPA exceeded all regulatory capital requirements and their regulatory capital ratios were above the minimum levels required to be considered “well-capitalized” for regulatory purposes.
In December 2018, the FRB and other U.S. banking agencies approved a rule to address the impact of CECL on regulatory capital by allowing BHCs and banks, including FNB, the option to phase in the day-one impact of CECL over a three-year period. In March 2020, the FRB and other U.S. banking agencies issued a final rule that became effective on March 31, 2020, and provides BHCs and banks with an alternative option to temporarily delay the impact of CECL, relative to the incurred loss methodology for the ACL, on regulatory capital. We have elected this alternative option instead of the one described in the December 2018 rule. As a result, under the final rule, we delayed recognizing the estimated impact of CECL on regulatory capital until after a two-year deferral period, which for us extended through December 31, 2021. Beginning on January 1, 2022, we will be required to phase in 25% of the previously deferred capital impact of CECL, with an additional 25% to be phased in at the beginning of each subsequent year until fully phased in by the first quarter of 2025. Under the final rule, the estimated impact of CECL on regulatory capital that we will defer and later phase in is calculated as the entire day-one impact at adoption plus 25% of the subsequent change in the ACL during the two-year deferral period. As of June 30, 2022, the total deferred impact on CET1 capital related to our adoption of CECL was approximately $51.6 million, or 16 basis points, which will continue to be reduced by approximately $17.2 million annually.
In this unprecedented economic and uncertain environment, we frequently run stress tests for a variety of economic situations, including severely adverse scenarios that have economic conditions like the current conditions. Under these scenarios, the results of these stress tests indicate that our regulatory capital ratios would remain above the regulatory requirements and we would be able to maintain appropriate liquidity levels, demonstrating our expected ability to continue to support our constituencies under stressful financial conditions.
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Following are the capital amounts and related ratios for FNB and FNBPA:
TABLE 26
 Actual
Well-Capitalized
Requirements (1)
Minimum Capital
Requirements plus Capital Conservation Buffer
(dollars in millions)AmountRatioAmountRatioAmountRatio
As of June 30, 2022
F.N.B. Corporation
Total capital$3,892 12.00 %$3,242 10.00 %$3,404 10.50 %
Tier 1 capital3,259 10.05 1,945 6.00 2,756 8.50 
Common equity tier 13,152 9.72 n/an/a2,270 7.00 
Leverage3,259 8.22 n/an/a1,587 4.00 
Risk-weighted assets32,422 
FNBPA
Total capital4,081 12.62 %3,234 10.00 %3,396 10.50 %
Tier 1 capital3,430 10.61 2,587 8.00 2,749 8.50 
Common equity tier 13,350 10.36 2,102 6.50 2,264 7.00 
Leverage3,430 8.66 1,980 5.00 1,584 4.00 
Risk-weighted assets32,343 
As of December 31, 2021
F.N.B. Corporation
Total capital$3,531 12.18 %$2,899 10.00 %$3,044 10.50 %
Tier 1 capital2,984 10.29 1,739 6.00 2,464 8.50 
Common equity tier 12,877 9.92 n/an/a2,029 7.00 
Leverage2,984 7.99 n/an/a1,493 4.00 
Risk-weighted assets28,991 
FNBPA
Total capital3,695 12.77 %2,893 10.00 %3,038 10.50 %
Tier 1 capital3,098 10.71 2,314 8.00 2,459 8.50 
Common equity tier 13,018 10.43 1,880 6.50 2,025 7.00 
Leverage3,098 8.31 1,864 5.00 1,491 4.00 
Risk-weighted assets28,930 
(1) Reflects the well-capitalized standard under Regulation Y for F.N.B. Corporation and the prompt corrective action framework for FNBPA.

In accordance with Basel III Capital Rules, the minimum capital requirements plus capital conservation buffer, which are presented for each period above, represent the minimum requirements needed to avoid limitations on distributions of dividends and certain discretionary bonus payments.
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act)
The Dodd-Frank Act broadly affects the financial services industry by establishing a framework for systemic risk oversight, creating a resolution authority for institutions determined to be systemically important, mandating higher capital and liquidity requirements, requiring banks to pay increased fees to regulatory agencies and containing numerous other provisions aimed at strengthening the sound operation of the financial services sector that significantly change the system of regulatory oversight as described in more detail under Part I, Item 1, “Business - Government Supervision and Regulation” included in our 2021 Annual Report on Form 10-K as filed with the SEC on February 24, 2022.

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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.
FNBPA generates liquidity from its normal business operations. 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 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 June 30, 2022 was $257.7 million, down $37.7 million from year-end, due primarily to $42.8 million in share repurchases. Management has utilized various strategies to ensure sufficient cash on hand is available to meet the parent's funding needs.
Two metrics that are used to gauge the adequacy of the parent company’s cash position are the Liquidity Coverage Ratio (LCR) and Months of Cash on Hand (MCH). 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 27
June 30,
2022		December 31,
2021		Internal
Limit
Liquidity coverage ratio 2.6 times2.4 times> 1 time
Months of cash on hand 13.5 months16.9 months> 12 months
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.  We have also increased customer deposit relationships due to the success of the PPP. This past quarter we also commenced the roll-out of the new digital eStore kiosks in all FNB branches. Total deposits increased $1.8 billion, or 5.5%, from December 31, 2021, primarily as a result of growth in non-interest-bearing and interest-bearing demand balances due to the Howard acquisition, as well as an expansion of customer relationships. Customer preferences continued to shift away from higher rate certificates of deposit to lower yielding, more liquid products, however, customers' preferences are beginning to shift back to time deposits as interest rates increase. Our liquidity position enabled us to eliminate Howard's overnight borrowings and retire $200 million of higher-cost FHLB borrowings. We continue to have success growing total non-interest-bearing demand deposit accounts as they rose $926.5 million, or 8.6%, and now represent 35.0% of total deposits, up from 34.0% as December 31, 2021. Further, interest-bearing demand deposits increased $330.3 million, or 2.3% and savings account balances increased $313.4 million, or 8.5%. Time deposits increased $184.2 million, or 6.4% as a result of the Howard acquisition and customers' preferences beginning to shift back to time deposits as interest rates increase.
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Our cash balances held at the FRB decreased $1.5 billion from December 31, 2021 to $1.5 billion at June 30, 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 June 30, 2022, we have $2.5 billion of cash and salable unpledged government and agency securities to total assets, or 6.1%. 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 28
(dollars in millions)June 30,
2022		December 31,
2021
Unused wholesale credit availability$15,717 $14,681 
Unused wholesale credit availability as a % of FNBPA assets37.8 %37.2 %
Salable unpledged government and agency securities$996 $836 
Salable unpledged government and agency securities as a % of FNBPA assets2.4 %2.1 %
Cash and salable unpledged government and agency securities as a % of FNBPA assets6.1 %9.8 %
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 June 30, 2022 compares the difference between our cash flows from existing earning assets and interest-bearing liabilities 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 7.1% as of June 30, 2022, compared to 11.3% as of December 31, 2021. Management calculates this ratio at least quarterly and it is reviewed monthly by ALCO. The change in the twelve-month cumulative gap to total assets is primarily related to the deployment of cash into loans and securities.
TABLE 29
(dollars in millions)Within
1 Month		2-3
Months		4-6
Months		7-12
Months		Total
1 Year
Assets
Loans$809 $1,450 $1,727 $3,175 $7,161 
Investments1,660 155 213 438 2,466 
2,469 1,605 1,940 3,613 9,627 
Liabilities
Non-maturity deposits305 610 917 1,831 3,663 
Time deposits233 426 588 1,019 2,266 
Borrowings110 18 25 578 731 
648 1,054 1,530 3,428 6,660 
Period Gap (Assets - Liabilities)$1,821 $551 $410 $185 $2,967 
Cumulative Gap$1,821 $2,372 $2,782 $2,967 
Cumulative Gap to Total Assets4.4 %5.7 %6.7 %7.1 %
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.

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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 fall, while certain depositors can redeem their certificates of deposit early, which may be with or without penalty, when rates rise.
We use an asset/liability model to measure our interest rate risk. Interest rate risk measures we utilize include earnings simulation, EVE and gap analysis. Gap analysis and EVE are static measures that do not incorporate assumptions regarding future business. Gap analysis, while a helpful diagnostic tool, displays cash flows for only a single rate environment. EVE’s long-term horizon helps identify changes in optionality and longer-term positions. However, EVE’s liquidation perspective does not translate into the earnings-based measures that are the focus of managing and valuing a going concern. Net interest income simulations explicitly measure the exposure to earnings from changes in market rates of interest. In these simulations, our current financial position is combined with assumptions regarding future business to calculate net interest income under various hypothetical rate scenarios. The ALCO reviews earnings simulations over multiple years under various interest rate scenarios on a periodic basis. 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 June 30, 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 30
(dollars in millions)Within
1 Month		2-3
Months		4-6
Months		7-12
Months		Total
1 Year
Assets
Loans$12,662 $1,042 $991 $1,831 $16,526 
Investments1,670 163 325 426 2,584 
14,332 1,205 1,316 2,257 19,110 
Liabilities
Non-maturity deposits9,993 — — — 9,993 
Time deposits362 425 586 1,014 2,387 
Borrowings412 611 6 308 1,337 
10,767 1,036 592 1,322 13,717 
Off-balance sheet(650)530 — (230)(350)
Period Gap (assets – liabilities + off-balance sheet)$2,915 $699 $724 $705 $5,043 
Cumulative Gap$2,915 $3,614 $4,338 $5,043 
Cumulative Gap to Assets7.9 %9.7 %11.7 %13.6 %
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The twelve-month cumulative repricing gap to total assets was 13.6% and 21.6% as of June 30, 2022 and December 31, 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 June 30, 2022, compared to December 31, 2021, is primarily related to the deployment of cash into loans and investment securities.
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.
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 June 30, 2022. Using a static Balance Sheet structure, the measures do not reflect management's potential counteractions.
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 31
June 30,
2022		December 31,
2021		ALCO
Limits
Net interest income change (12 months):
+ 300 basis points14.0 %21.6 %n/a
+ 200 basis points9.4 14.4 (5.0)%
+ 100 basis points4.8 7.0 (5.0)
- 100 basis points(4.0)(2.4)(5.0)
Economic value of equity:
+ 300 basis points(0.2)6.6 (25.0)
+ 200 basis points0.4 5.8 (15.0)
+ 100 basis points0.5 3.8 (10.0)
- 100 basis points(5.4)(9.5)(10.0)
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. Assuming a static Balance Sheet, a +100 basis point Rate Ramp increases net interest income (12 months) by 2.7% at June 30, 2022 and 3.6% at December 31, 2021. For a +200 basis point Rate Ramp, net interest income (12 months) increases by 5.3% at June 30, 2022 and 7.6% at December 31, 2021. The corresponding metrics for a minus 100 basis point Rate Ramp are (0.3)% and (0.5)% at June 30, 2022 and December 31, 2021, respectively. Deposit rate assumptions are floored at zero in the negative scenarios.
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 income due to the increase in the loan indices, are the primary factors of the change in the percentage sensitivity since December. Our balance sheet is positioned to benefit from the FOMC increases of the Federal Funds rate on June 16, 2022 and July 27, 2022 and the future increases currently priced into the market.
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 utilizes various tactics to achieve our desired interest rate risk (IRR) position. In response to the change in interest rates, management was proactive in managing our IRR position. As mentioned earlier, we were successful in growing our transaction deposits which provides funding that is less interest rate-sensitive than short-term time deposits and wholesale borrowings. Also, we were able to control rates on deposit products focusing on operational accounts and to opportunistically
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deploy cash into higher yielding customer loans. 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. 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 59.2% of total net loans and leases as of June 30, 2022 and 61.3% as of December 31, 2021. The acquisition of Howard was the primary driver of the decline of this metric. As of June 30, 2022, the commercial swaps totaled $5.3 billion of notional principal, with $613.0 million in original notional swap principal originated during the first six months of 2022. In 2021, we executed $1.0 billion in receive fixed/pay floating 1-month LIBOR interest rate swaps with a remaining average life of 2.8 years as a hedge to additional asset sensitivity. For additional information regarding interest rate swaps, see Note 11, "Derivative Instruments and Hedging Activities" in the Notes to the Consolidated Financial Statements in this Report. The investment portfolio is also used, in part, to manage our IRR position.
We recognize that all asset/liability models have some inherent shortcomings. Asset/liability models require certain assumptions to be made, such as prepayment rates on interest-earning assets and repricing impact on non-maturity deposits, which may differ from actual experience. These business assumptions are based upon our experience, business plans, economic and market trends and available industry data. While management believes that its methodology for developing such assumptions is reasonable, there can be no assurance that modeled results will be achieved. Furthermore, the metrics are based upon the 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'
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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:
•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 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 circumstance. 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
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•assess appropriately the quality of our enterprise-wide risk management process.
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 32
Operating net income available to common stockholders
Three Months Ended
June 30,		Six Months Ended
June 30,
(in thousands)2022202120222021
Net income available to common stockholders$107,132 $99,377 $158,120 $190,602 
Merger-related expense2,027 — 30,656 — 
Tax benefit of merger-related expense(426)— (6,438)— 
Provision expense related to acquisition— — 19,127 — 
Tax benefit of provision expense related to acquisition— — (4,017)— 
Branch consolidation costs— 2,644 4,178 2,644 
Tax benefit of branch consolidation costs— (555)(877)(555)
Operating net income available to common stockholders (non-GAAP)$108,733 $101,466 $200,749 $192,691 
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 and branch consolidation costs 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.

TABLE 33
Operating earnings per diluted common share
Three Months Ended
June 30,		Six Months Ended
June 30,
 2022202120222021
Net income per diluted common share$0.30 $0.31 $0.45 $0.59 
Merger-related expense0.01 — 0.09 — 
Tax benefit of merger-related expense— — (0.02)— 
Provision expense related to acquisition— — 0.05 — 
Tax benefit of provision expense related to acquisition— — (0.01)— 
Branch consolidation costs— 0.01 0.01 0.01 
Tax benefit of branch consolidation costs— — — — 
Operating earnings per diluted common share (non-GAAP)$0.31 $0.31 $0.57 $0.59 

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TABLE 34
Return on average tangible common equity
 Three Months Ended
June 30,		Six Months Ended
June 30,
(dollars in thousands)2022202120222021
Net income available to common stockholders (annualized)$429,704 $398,600 $318,861 $384,364 
Amortization of intangibles, net of tax (annualized)11,247 9,581 10,795 9,677 
Tangible net income available to common stockholders (annualized) (non-GAAP)$440,951 $408,181 $329,656 $394,041 
Average total stockholders’ equity$5,437,913 $4,994,499 $5,443,373 $4,978,186 
Less: Average preferred stockholders' equity(106,882)(106,882)(106,882)(106,882)
Less: Average intangible assets (1)
(2,490,899)(2,311,953)(2,467,776)(2,313,474)
Average tangible common equity (non-GAAP)$2,840,132 $2,575,664 $2,868,715 $2,557,830 
Return on average tangible common equity (non-GAAP)15.53 %15.85 %11.49 %15.41 %
(1) Excludes loan servicing rights.

TABLE 35
Return on average tangible assets
 Three Months Ended
June 30,		Six Months Ended
June 30,
(dollars in thousands)2022202120222021
Net income (annualized)$437,767 $406,663 $326,967 $392,469 
Amortization of intangibles, net of tax (annualized)11,247 9,581 10,795 9,677 
Tangible net income (annualized) (non-GAAP)$449,014 $416,244 $337,762 $402,146 
Average total assets$41,887,638 $38,526,186 $41,506,472 $38,078,935 
Less: Average intangible assets (1)
(2,490,899)(2,311,953)(2,467,776)(2,313,474)
Average tangible assets (non-GAAP)$39,396,739 $36,214,233 $39,038,696 $35,765,461 
Return on average tangible assets (non-GAAP)1.14 %1.15 %0.87 %1.12 %
(1) Excludes loan servicing rights.

TABLE 36
Tangible book value per common share
June 30, 2022June 30, 2021
(dollars in thousands, except per share data)
Total stockholders’ equity$5,436,067 $5,036,410 
Less: Preferred stockholders’ equity(106,882)(106,882)
Less: Intangible assets (1)
(2,489,244)(2,310,453)
Tangible common equity (non-GAAP)$2,839,941 $2,619,075 
Ending common shares outstanding350,725,378 319,465,156 
Tangible book value per common share (non-GAAP)$8.10 $8.20 
(1) Excludes loan servicing rights.

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TABLE 37
Tangible equity to tangible assets (period-end)
June 30, 2022June 30, 2021
(dollars in thousands)
Total stockholders' equity$5,436,067 $5,036,410 
Less:  Intangible assets (1)
(2,489,244)(2,310,453)
Tangible equity (non-GAAP)$2,946,823 $2,725,957 
Total assets$41,680,903 $38,405,693 
Less:  Intangible assets (1)
(2,489,244)(2,310,453)
Tangible assets (non-GAAP)$39,191,659 $36,095,240 
Tangible equity / tangible assets (period-end) (non-GAAP)7.52 %7.55 %
(1) Excludes loan servicing rights.

TABLE 38
Tangible common equity / tangible assets (period-end)
June 30, 2022June 30, 2021
(dollars in thousands)
Total stockholders' equity$5,436,067 $5,036,410 
Less:  Preferred stockholders' equity(106,882)(106,882)
Less:  Intangible assets (1)
(2,489,244)(2,310,453)
Tangible common equity (non-GAAP)$2,839,941 $2,619,075 
Total assets$41,680,903 $38,405,693 
Less:  Intangible assets (1)
(2,489,244)(2,310,453)
Tangible assets (non-GAAP)$39,191,659 $36,095,240 
Tangible common equity / tangible assets (period-end) (non-GAAP)7.25 %7.26 %
(1) Excludes loan servicing rights.
TABLE 39
Loans and leases, excluding PPP loans (period-end)
(dollars in thousands)June 30, 2022March 31, 2022June 30, 2021
Loans and leases$28,044,139 $26,839,069 $25,110,528 
Less:  PPP loans outstanding(85,837)(179,644)(1,551,284)
Loans and leases, excluding PPP loans outstanding (non-GAAP)$27,958,302 $26,659,425 $23,559,244 
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TABLE 40
Provision for credit losses, excluding the initial provision for non-PCD loans associated with the Howard acquisition
Three Months Ended March 31,
2022
(dollars in thousands)
Provision for credit losses$17,959 
Less: Initial provision for non-PCD loans associated with the Howard acquisition(19,127)
Provision for credit losses, excluding the initial provision for non-PCD loans associated with the Howard acquisition (non-GAAP)$(1,168)
TABLE 41
Deposits, excluding Howard deposits (average)
Three Months Ended
June 30,
(Dollars in thousands)20222021
Deposits$33,706,707 $30,507,241 
Less: Howard deposits(1,630,100)— 
Deposits, excluding Howard deposits (non-GAAP)$32,076,607 $30,507,241 
TABLE 42
Loans and leases, excluding PPP loans and Howard loans as of the acquisition date (period-end)
(Dollars in thousands)June 30, 2022June 30, 2021
Loans and leases$28,044,139 $25,110,528 
Less: PPP loans outstanding(85,837)(1,551,284)
Less: Howard loans as of the acquisition date, excluding PPP loans outstanding(1,767,564)— 
Loans and leases, excluding PPP loans and Howard loans as of the acquisition date (non-GAAP)$26,190,738 $23,559,244 
TABLE 43
Loans and leases, excluding PPP loans (average)
Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
(Dollars in thousands)
Loans and leases$27,245,122 $25,397,396 $26,744,743 $25,424,960
Less: PPP loans outstanding(126,391)(2,125,609)(189,017)(2,205,629)
Loans and leases, excluding PPP loans (non-GAAP)$27,118,731 $23,271,787 $26,555,726 $23,219,331

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Key Performance Indicators
TABLE 44
Pre-provision net revenue to average tangible common equity
Three Months Ended
June 30,		Six Months Ended
June 30,
(dollars in thousands)2022202120222021
Net interest income$253,690 $227,871 $487,766 $450,794 
Non-interest income82,154 79,772 160,476 162,577 
Less: Non-interest expense(192,774)(182,500)(420,200)(367,362)
Pre-provision net revenue (as reported)$143,070 $125,143 $228,042 $246,009 
Pre-provision net revenue (as reported) (annualized) $573,852 $501,947 $459,863 $496,095 
Adjustments:
Add: Merger-related expense (non-interest expense)2,027 — 30,656 — 
Add: Branch consolidation costs (non-interest expense)— 2,644 4,178 2,644 
Pre-provision net revenue (operating) (non-GAAP)$145,097 $127,787 $262,876 $248,653 
Pre-provision net revenue (operating) (annualized)
(non-GAAP)		$581,982 $512,552 $530,108 $501,427 
Average total shareholders’ equity$5,437,913 $4,994,499 $5,443,373 $4,978,186 
Less: Average preferred shareholders’ equity(106,882)(106,882)(106,882)(106,882)
Less: Average intangible assets (1)
(2,490,899)(2,311,953)(2,467,776)(2,313,474)
Average tangible common equity (non-GAAP)$2,840,132 $2,575,664 $2,868,715 $2,557,830 
Pre-provision net revenue (reported) / average tangible common equity (non-GAAP)20.21 %19.49 %16.03 %19.40 %
Pre-provision net revenue (operating) / average tangible common equity (non-GAAP)20.49 %19.90 %18.48 %19.60 %
(1) Excludes loan servicing rights.

TABLE 45
Efficiency ratio
 Three Months Ended
June 30,		Six Months Ended
June 30,
(dollars in thousands)2022202120222021
Non-interest expense$192,774 $182,500 $420,200 $367,362 
Less: Amortization of intangibles(3,549)(3,024)(6,776)(6,074)
Less: OREO expense(433)(499)(748)(1,285)
Less: Merger-related expense(2,027)— (30,656)— 
Less: Branch consolidation costs— (2,644)(4,178)(2,644)
Adjusted non-interest expense$186,765 $176,333 $377,842 $357,359 
Net interest income$253,690 $227,871 $487,766 $450,794 
Taxable equivalent adjustment2,656 2,742 5,254 5,601 
Non-interest income82,154 79,772 160,476 162,577 
Less: Net securities gains(48)(87)(48)(128)
Adjusted net interest income (FTE) + non-interest income$338,452 $310,298 $653,448 $618,844 
Efficiency ratio (FTE) (non-GAAP)55.18 %56.83 %57.82 %57.75 %
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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information called for by this item is provided in the Market Risk section of "MD&A," which is included in Item 2 of this Report, and is incorporated herein by reference.

ITEM 4.    CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. FNB’s management, with the participation of our principal executive and financial officers, evaluated our disclosure controls and procedures (as defined in Rules 13a–15(e) and 15d–15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our management, including the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO), concluded that, as of the end of the period covered by this quarterly report, our disclosure controls and procedures were effective as of such date at the reasonable assurance level as discussed below to ensure that information required to be disclosed by us in the reports we file under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS. FNB’s management, including the CEO and the CFO, does not expect that our disclosure controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within FNB have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. In addition, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls.
CHANGES IN INTERNAL CONTROLS. The CEO and the CFO have evaluated the changes to our internal controls over financial reporting that occurred during our fiscal quarter ended June 30, 2022, as required by paragraph (d) of Rules 13a–15 and 15d–15 under the Securities Exchange Act of 1934, as amended, and have concluded that there were no such changes that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS
The information required by this Item is set forth in the “Other Legal Proceedings” discussion in Note 12, "Commitments, Credit Risk and Contingencies" of the Notes to the Consolidated Financial Statements, which is incorporated herein by reference in response to this Item.

ITEM 1A.    RISK FACTORS
For information regarding risk factors that could affect our results of operations, financial condition and liquidity, see the risk factors disclosed in the “Risk Factors” section of our 2021 Annual Report on Form 10-K.

The risk factors below relate to the recently announced acquisition of UB Bancorp, and its wholly-owned subsidiary, Union Bank, and are in addition to the risk factors previously disclosed in our 2021 Annual Report on Form 10-K.

Combining FNB and UB Bancorp may be more difficult, costly or time-consuming than expected, and the anticipated benefits and cost savings of the merger with UB Bancorp may not be realized.

FNB and UB Bancorp have operated and, until the completion of the merger, will continue to operate, independently from each other. The success of the merger, including anticipated benefits and cost savings, will depend, in part, on our ability to successfully combine and integrate the businesses of FNBPA and UB Bancorp, along with the timely and successful core data system conversion, within our projected timeframe in a manner that permits growth opportunities, continued seamless operations and does not materially disrupt existing customer relationships or result in decreased revenues due to loss of customers.

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A number of factors could affect our ability to successfully combine our business with the business of UB Bancorp. Key employees of UB Bancorp, whose services will be needed to complete the integration process, may elect to terminate their employment as a result of, or in anticipation of, the merger. The integration process itself could be disruptive to our ongoing businesses, causing loss of momentum in one or more of our businesses or inconsistencies or changes in standards, practices, business models, controls, procedures and policies that could adversely affect our ability to maintain relationships with customers and employees. If we encounter significant difficulties in the integration process, the anticipated benefits of the merger may not be realized fully, or at all, or may take longer to realize than expected. Failure to achieve the anticipated benefits of the merger in the timeframes projected by us could result in increased costs and decreased revenues. This could have a dilutive effect on the combined company’s proforma earnings per share.

Our ability to complete the merger is subject to the satisfaction (or waiver by the parties) of the closing conditions set forth in the merger agreement, some of which are outside of the parties’ control.

The merger agreement contains a number of conditions that must be fulfilled in order to complete the merger. Those conditions include: approval of adoption of the merger agreement and the merger by UB Bancorp shareholders, receipt of all required regulatory approvals, absence of any law, statute or regulation, or any order, injunction or other legal restraint or prohibition preventing the completion of the merger, effectiveness of the registration statement for the merger proxy statement/prospectus, the accuracy of the representations and warranties of both parties (subject to applicable materiality qualifiers), and the performance, in all material respects, by both parties of their respective covenants and agreements. There can be no assurance that the conditions to the completion of the merger will be fulfilled or that the merger will be completed.

Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or cannot be met.

Before the merger between FNB and UB Bancorp and the merger between their bank subsidiaries may be completed, various approvals must be obtained from bank regulatory agencies and other governmental authorities. These governmental entities may not grant approval of either the merger or the bank merger, may engage in an extended regulatory review process, or may impose conditions on the granting of their approvals. The regulatory delays, conditions or changes they impose, as well as the process of obtaining regulatory approvals, could have the effect of delaying completion of the merger or of imposing additional costs or limitations on us following the merger. We may elect not to consummate the merger if, in connection with any regulatory approval required to consummate the merger, any governmental or regulatory entity imposes a restriction, requirement or condition on us that, individually or in the aggregate, would be reasonably likely to have a material and adverse effect on us and our subsidiaries, taken as a whole, after giving effect to the merger. As a result, there can be no assurance that the desired regulatory approvals for the merger will be obtained or that the merger will be completed.

We will be subject to business uncertainties while the merger is pending, which could result in loss of key employees or customers.

Uncertainties about the effect of the merger on employees and customers may have an adverse effect on us. These uncertainties may impair our ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with us to consider changing their existing business relationships with us or cause UB Bancorp customers to seek another financial services provider. Retention of certain UB Bancorp employees may be challenging during the pendency of the merger, as certain employees may experience uncertainty about their future roles. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the business, our business could be negatively impacted.

If the merger is not completed, we will have incurred substantial expenses without realizing the expected benefits of the merger.

We will incur substantial expenses in connection with the proposed merger with UB Bancorp, which are charged to earnings as incurred. If the merger is not completed, these expenses will still be charged to earnings even though we would not have realized the expected benefits of the merger. There can be no assurance that the merger will be completed.

Termination of the merger agreement could have a negative impact on our prospects and stock price.

The merger agreement contains a number of provisions that could permit either or both parties to abandon the merger and terminate the merger agreement. If the merger agreement is terminated, there may be various adverse consequences to us. For example, since certain matters relating to the merger (including business integration and data system conversion planning) will require substantial commitments of time and resources by our management team, our businesses may be adversely affected by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the
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anticipated benefits of completing the merger. Additionally, if the merger agreement is terminated, the market price of our common stock could decline to the extent that the current market prices reflect a market assumption that the merger will be
completed.

We may not be able to compete successfully in UB Bancorp’s market area.

Our success in UB Bancorp’s markets will depend, in part, on our ability to successfully offer products and services to consumers, that UB Bancorp does not currently offer, such as larger and more complex commercial loan financing transactions and syndications, trust services, SBA loans, investment advisory, foreign exchange services, derivatives, asset-based lending, lease financing, debt and equity capital markets, wealth management, insurance brokerage, securities brokerage and investment advisory and private lending. This business strategy will require us to attract and retain qualified and experienced personnel to support those products and services. We could lose existing customers or fail to acquire new customers in this market.

The merger may not be accretive, and may be dilutive, to our earnings per share, which may negatively affect the market price of our common stock.

We currently expect the merger to be accretive to earnings per share in the first full calendar year after closing (excluding one-time charges). This expectation, however, is based on preliminary estimates which may materially change, including the currently expected timing of the merger. We may encounter additional transaction- and integration-related costs or other factors such as a delay in the closing of the merger, may fail to realize all the benefits anticipated in the merger or may be subject to other factors that affect preliminary estimates or our ability to realize operational efficiencies. Any of these factors could cause a decrease in our earnings per share or decrease or delay the expected accretive effect of the merger and contribute to a decrease in the price of our common stock.

Our decisions regarding the credit risk associated with Union Bank’s loan portfolio could be incorrect and our credit mark may be inadequate, which may adversely affect the financial condition and results of operations of the combined company after the closing of the merger.

Before signing the merger agreement, we conducted extensive due diligence on a significant portion of the Union Bank loan portfolio. However, our review did not encompass every loan in the Union Bank loan portfolio. In accordance with customary industry practices, we evaluated the Union Bank loan portfolio based on various factors including, among other things, historical loss experience, economic risks associated with each loan category, volume and types of loans, trends in classification, volume and trends in delinquencies and non-accruals, and general economic conditions, both local and national. In this process, our management made various assumptions and judgments about the collectability of the loan portfolio, including the creditworthiness and financial condition of the borrowers, the value of the real estate, which is obtained from independent appraisers, other assets serving as collateral for the repayment of the loans, the existence of any guarantees and indemnifications and the economic environment in which the borrowers operate. In addition, the effects of probable decreases in expected principal cash flows on the Union Bank loans were considered as part of our evaluation. If our assumptions and judgments turn out to be incorrect, including as a result of the fact that our due diligence review did not cover each individual loan, our estimated credit mark against the Union Bank loan portfolio in total may be insufficient to cover actual loan losses after the merger is completed, and adjustments may be necessary to allow for different economic conditions or adverse developments in the Union Bank loan portfolio. Additionally, deterioration in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside our or UB Bancorp’s control, may require an increase in the provision for credit losses. Material additions to the credit mark and/or ACL would materially decrease our net income and could result in extra regulatory scrutiny and possibly supervisory action.
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ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table provides information regarding FNB's purchases of our common stock during the quarter ended June 30, 2022. In April 2022, our Board of Directors authorized an additional $150 million available to repurchase shares of our common stock.
PeriodTotal number of shares purchased Average price paid per shareTotal number of shares purchased as part of publicly announced plans or programs
Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (1)
April 1 - April 30, 2022335,000 $11.90 335,000 $184,603,713 
May 1 - May 31, 2022766,100 11.72 766,100 175,615,783 
Total1,101,100 $11.77 1,101,100 
(1) The number shown represents, as of the end of each period, the approximate dollar value of Common Stock that may yet be purchased under publicly-announced share repurchase authorizations. The shares may be purchased, from time-to-time, depending on market conditions.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES
NONE

ITEM 4.    MINE SAFETY DISCLOSURES
Not Applicable.

ITEM 5.    OTHER INFORMATION
NONE
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ITEM 6.    EXHIBITS
Exhibit Index
Exhibit NumberDescription
10.1
10.2
31.1.
31.2.
32.1.
32.2.
101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document (filed herewith).
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).
101.LABInline XBRL Taxonomy Extension Label Linkbase Document (filed herewith).
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).
104Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
  F.N.B. Corporation
Dated: August 5, 2022 /s/ Vincent J. Delie, Jr.
  Vincent J. Delie, Jr.
  Chairman, President and Chief Executive Officer
  (Principal Executive Officer)
Dated: August 5, 2022 /s/ Vincent J. Calabrese, Jr.
  Vincent J. Calabrese, Jr.
  Chief Financial Officer
  (Principal Financial Officer)
Dated: August 5, 2022 /s/ James L. Dutey
  James L. Dutey
  Corporate Controller
  (Principal Accounting Officer)
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