BORROWINGS

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

BORROWINGS

BORROWINGS

Following is a summary of short-term borrowings:

TABLE 10.1

(in millions)	September 30, 2023		December 31, 2022
Securities sold under repurchase agreements	$	259	$	317
Federal Home Loan Bank advances	1,665		930
Federal funds purchased	30		—
Subordinated notes	112		125
Total short-term borrowings	$	2,066	$	1,372

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. Of the total short-term FHLB advances, 15.9% had overnight maturities as of September 30, 2023. We did not have any short-term FHLB advances with overnight maturities as of December 31, 2022. At September 30, 2023, $600.0 million, or 36.0%, of the short-term FHLB advances were swapped to fixed rates with various maturities through 2024. This compares to $930.0 million, or 100.0%, as of December 31, 2022.

Following is a summary of long-term borrowings:

TABLE 10.2

(in millions)	September 30, 2023		December 31, 2022
Federal Home Loan Bank advances	$	1,200	$	—
Senior notes	348		648
Subordinated notes	80		70
Junior subordinated debt	73		72
Other subordinated debt	267		303
Total long-term borrowings	$	1,968	$	1,093

During the third quarter of 2022, we completed a debt offering in which we issued $350 million aggregate principal amount of 5.150% fixed-rate senior notes due in 2025. The net proceeds of the debt offering after deducting underwriting discounts and commissions and offering costs were $347.4 million. These proceeds were used for general corporate purposes, which included the repayment of $300 million in 2.200% Senior Notes that matured in February 2023, and may also include investments at the holding company level, capital to support the growth of FNBPA and refinancing of outstanding indebtedness.

During 2022, we assumed $25 million of other subordinated debt and $5 million of junior subordinated debt from the Howard acquisition and $31 million of other subordinated debt from the Union acquisition. During the second quarter of 2023, we called $6 million in other subordinated debt acquired from the Union acquisition and we repurchased and retired $15.0 million in other subordinated debt assumed in a previous acquisition. Additionally, during the third quarter of 2023, $13.6 million in other subordinated debt assumed in a previous acquisition matured and we repurchased and retired $1.0 million in other subordinated debt acquired from the Howard acquisition.

Our banking affiliate has available credit with the FHLB of $10.6 billion, of which $2.9 billion was utilized and included in short-term and long-term borrowings and $700.0 million was utilized for a letter of credit for pledging of public funds as of September 30, 2023. These advances are secured by loans collateralized by residential mortgages, home equity lines of credit, commercial real estate and FHLB stock. The short-term borrowings are scheduled to mature in various amounts periodically during 2023 while the long-term borrowings are scheduled to mature periodically through 2027. Effective interest rates paid on the long-term FHLB advances held during 2023 ranged from 4.23% to 4.88% for the three months ended September 30, 2023. There were no long-term FHLB borrowings during the first nine months of 2022, or as of December 31, 2022. Our banking affiliate has additional unused other wholesale credit availability of $8.6 billion as of September 30, 2023.

The following table provides information relating to our senior notes and other subordinated debt as of September 30, 2023. 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 (5)		Carrying Value		Stated Maturity Date	Interest Rate
Senior Notes:
5.150% Senior Notes due August 25, 2025	$	350	$	347	$	348	8/25/2025	5.150	%
Total senior notes	350		347		348
Other Subordinated Debt:
4.950% Fixed-To-Floating Rate Subordinated Notes due 2029 (1)	120		118		119		2/14/2029	4.950	%
4.875% Subordinated Notes due 2025	100		98		100		10/2/2025	4.875	%
6.000% Fixed-To-Floating Rate Subordinated Notes due December 6, 2028 (2) (4)	25		26		24		12/6/2028	6.000	%
5.000% Fixed-To-Floating Rate Subordinated Note due May 29, 2030 (3) (4)	25		24		24		5/29/2030	5.000	%
Total other subordinated debt	270		266		267
Total	$	620	$	613	$	615

(1) Fixed-to-floating rate until February 14, 2024, at which time the floating rate will be the Benchmark Replacement (three-month CME term SOFR plus a tenor spread adjustment of 26 basis points) plus 240 basis points.

(2) Fixed-to-floating rate until December 6, 2023, at which time the floating rate will be the Benchmark Replacement (three-month CME term SOFR plus a tenor spread adjustment of 26 basis points) plus 302 basis points.

(3) Fixed-to-floating rate until May 29, 2025, at which time the floating rate will be three-month SOFR plus 464 basis points.

(4) Assumed from an acquisition and adjusted to fair value at the time of acquisition.

(5) 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 four 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.

The following table provides information relating to the Trusts as of September 30, 2023:

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	6/15/2036	7.32	%	SOFR + 165 bps
Yadkin Valley Statutory Trust I	25		1		23		12/15/2037	6.99	%	SOFR + 132 bps
FNB Financial Services Capital Trust I	25		1		23		9/30/2035	7.12	%	SOFR + 146 bps
Patapsco Statutory Trust I	5		—		5		12/15/2035	7.15	%	SOFR + 148 bps
Total	$	77	$	3	$	73

The SOFR rate used for the rate reset factors in the above table is the Benchmark Replacement (three-month CME term SOFR plus a tenor spread adjustment of 26 basis points).