LEASES

12 Months Ended

Dec. 31, 2023

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 December 31, 2023, we had operating lease right-of-use assets and operating lease liabilities of $184.5 million and $215.3 million, respectively. We have finance lease right-of-use assets and finance lease liabilities of $31.5 million and $32.7 million, respectively.

Our operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of December 31, 2023, 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 $27.8 million in right-of-use assets and $33.0 million in other liabilities. These operating leases are currently expected to commence in 2024 and 2025 with lease terms of up to 20 years. These operating leases include the lease, with a related party, of the future new FNB headquarters building in Pittsburgh, Pennsylvania. During 2023, several floors of the FNB headquarters building have been made available to FNB for the purpose of constructing our office spaces, and we commenced the lease of those floors. 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 11.1


	Twelve Months Ended December 31,
(dollars in millions)	2023		2022		2021
Operating lease cost	$	34	$	30	$	29
Short-term lease cost	—		1		1
Variable lease cost	5		4		3

Finance lease cost	3		1		—
Total lease cost	$	42	$	36	$	33

Other information related to leases is as follows:

TABLE 11.2


	Twelve Months Ended December 31,
(dollars in millions)	2023			2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	29		$	28
Operating cash flows from finance leases	$	1		$	1
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	62		$	9
Finance leases	$	7		$	11
Weighted average remaining lease term (years):
Operating leases	11.10			9.32
Finance leases	19.51			21.00
Weighted average discount rate:
Operating leases	3.6		%	2.5		%
Finance leases	3.2		%	2.6		%

Maturities of lease liabilities were as follows:

TABLE 11.3


(in millions)	Operating Leases		Finance Leases		Total Leases
December 31, 2023
2024	$	32	$	2	$	34
2025	27		2		29
2026	25		2		27
2027	22		2		24
2028	20		2		22
Later years	140		34		174
Total lease payments	266		44		310
Less: imputed interest	(51)		(11)		(62)
Present value of lease liabilities	$	215	$	33	$	248

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 6, “Loans and Leases” in the Notes to Consolidated Financial Statements.

LEASES