LOANS AND LEASES

12 Months Ended

Dec. 31, 2024

Receivables [Abstract]

LOANS AND LEASES

LOANS AND LEASES

Accrued interest receivable on loans and leases, which totaled $128.4 million at December 31, 2024 and $128.6 million at December 31, 2023, is excluded from the estimate of credit losses and assessed separately in other assets in the Consolidated Balance Sheets for both periods and is 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

December 31	2024		2023
(in millions)
Commercial real estate	$	12,705	$	12,305
Commercial and industrial	7,550		7,482
Commercial leases	765		599
Other	144		110
Total commercial loans and leases	21,164		20,496
Direct installment	2,676		2,741
Residential mortgages	7,986		6,640
Indirect installment	739		1,149
Consumer lines of credit	1,374		1,297
Total consumer loans	12,775		11,827
Total loans and leases, net of unearned income	$	33,939	$	32,323

The remaining accretable discount included in the amortized cost of acquired loans was $31.6 million and $42.6 million at December 31, 2024 and 2023, respectively.

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, including construction loans, secured by commercial properties where operational cash flows on owner-occupied properties, including rents paid by stand-alone business customers, or rents received by our borrowers from their tenant(s) on both a property and global basis are the primary default risk drivers;

•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;

•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, including construction loans, for 1-4 family properties where the primary default risk driver is the borrower's employment status and income;

•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.

During 2024, we sold $0.8 billion in indirect auto loans. We recognized a $9.0 million loss during 2024 related to the sales. The related servicing asset was not significant at December 31, 2024. In the fourth quarter of 2023, we transferred $355 million of indirect automobile loans to the held-for-sale portfolio so those loans were not in the indirect installment portfolio balance in Table 5.1 at December 31, 2023.

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

December 31	2024		2023
Commercial real estate:
Percent owner-occupied	29.0	%	29.0	%
Percent non-owner-occupied	71.0		71.0

We have extended credit to certain directors and executive officers and their related interests. These related-party loans were made in the ordinary course of business under normal credit terms and do not involve more than a normal risk of collection.

Following is a summary of the activity for these related-party loans during 2024:

TABLE 5.3

(in millions)
Balance at beginning of period	$	12
New loans	1
Repayments	(8)
Other	1
Balance at end of period	$	6

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 5.4

Rating Category	Definition
Pass	in general, the condition of the borrower and the performance of the loan is satisfactory or better
Special Mention	in general, the condition of the borrower has deteriorated, requiring an increased level of monitoring
Substandard	in general, the condition of the borrower has significantly deteriorated and the performance of the loan could further deteriorate if deficiencies are not corrected
Doubtful	in 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.

The following table summarizes the designated loan rating category by loan class including term loans on an amortized cost basis by origination year and year-to-date gross charge-offs by originating year:

TABLE 5.5

December 31, 2024	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost Basis		Total
(in millions)
COMMERCIAL
Commercial Real Estate:
Risk Rating:
Pass	$	1,405	$	1,661	$	2,025	$	1,984	$	1,200	$	3,235	$	197	$	11,707
Special Mention	1		10		177		52		107		181		37		565
Substandard	2		16		119		43		55		195		3		433
Total commercial real estate	1,408		1,687		2,321		2,079		1,362		3,611		237		12,705
Commercial real estate current period gross charge-offs	—		0.8		1.0		15.0		10.5		11.3		—		38.6
Commercial and Industrial:
Risk Rating:
Pass	1,241		1,079		1,074		647		461		669		1,861		7,032
Special Mention	6		20		57		74		12		63		41		273
Substandard	4		50		11		33		8		59		80		245
Total commercial and industrial	1,251		1,149		1,142		754		481		791		1,982		7,550
Commercial and industrial current period gross charge-offs	0.1		3.9		1.5		1.8		6.0		7.6		—		20.9
Commercial Leases:
Risk Rating:
Pass	331		184		106		60		26		39		—		746
Special Mention	—		1		—		—		—		1		—		2
Substandard	—		6		2		4		5		—		—		17
Total commercial leases	331		191		108		64		31		40		—		765
Commercial leases current period gross charge-offs	—		—		—		—		—		0.3		—		0.3
Other Commercial:
Risk Rating:
Pass	12		62		—		—		—		5		65		144
Total other commercial	12		62		—		—		—		5		65		144
Other commercial current period gross charge-offs	—		—		—		—		—		4.2		—		4.2
Total commercial loans and leases	3,002		3,089		3,571		2,897		1,874		4,447		2,284		21,164

December 31, 2024	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost Basis		Total
(in millions)
CONSUMER
Direct Installment:
Current	346		277		621		683		341		396		—		2,664
Past due	—		1		3		1		1		6		—		12
Total direct installment	346		278		624		684		342		402		—		2,676
Direct installment current period gross charge-offs	—		0.2		0.3		0.2		—		1.1		—		1.8
Residential Mortgages:
Current	1,663		1,478		1,598		1,417		728		1,048		—		7,932
Past due	2		15		6		5		1		25		—		54
Total residential mortgages	1,665		1,493		1,604		1,422		729		1,073		—		7,986
Residential mortgages current period gross charge-offs	0.1		0.6		0.3		0.2		—		1.4		—		2.6
Indirect Installment:
Current	396		24		67		142		49		42		—		720
Past due	1		3		6		6		2		1		—		19
Total indirect installment	397		27		73		148		51		43		—		739
Indirect installment current period gross charge-offs	0.2		1.8		4.5		3.2		0.5		1.6		—		11.8
Consumer Lines of Credit:
Current	8		29		51		13		1		117		1,141		1,360
Past due	—		—		1		1		—		10		2		14
Total consumer lines of credit	8		29		52		14		1		127		1,143		1,374
Consumer lines of credit current period gross charge-offs	—		0.1		0.1		0.1		—		1.3		—		1.6
Total consumer loans	2,416		1,827		2,353		2,268		1,123		1,645		1,143		12,775
Total loans and leases	$	5,418	$	4,916	$	5,924	$	5,165	$	2,997	$	6,092	$	3,427	$	33,939
Total charge-offs	$	0.4	$	7.4	$	7.7	$	20.5	$	17.0	$	28.8	$	—	$	81.8

December 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
(in millions)
COMMERCIAL
Commercial Real Estate:
Risk Rating:
Pass	$	1,508	$	2,133	$	2,298	$	1,449	$	1,131	$	2,711	$	230	$	11,460
Special Mention	10		66		76		136		105		197		5		595
Substandard	5		27		27		13		59		104		15		250
Total commercial real estate	1,523		2,226		2,401		1,598		1,295		3,012		250		12,305
Commercial real estate current period gross charge-offs	0.2		0.4		0.4		0.7		0.2		10.5		—		12.4
Commercial and Industrial:
Risk Rating:
Pass	1,509		1,369		844		575		370		585		1,773		7,025
Special Mention	12		3		56		2		12		35		35		155
Substandard	34		26		62		9		24		58		89		302
Total commercial and industrial	1,555		1,398		962		586		406		678		1,897		7,482
Commercial and industrial current period gross charge-offs	0.1		0.3		1.0		1.0		2.2		46.6		—		51.2
Commercial Leases:
Risk Rating:
Pass	247		134		82		47		24		41		—		575
Special Mention	—		1		—		—		—		1		—		2
Substandard	7		3		4		7		1		—		—		22
Total commercial leases	254		138		86		54		25		42		—		599
Commercial leases current period gross charge-offs	—		—		—		—		—		—		—		—
Other Commercial:
Risk Rating:
Pass	39		—		—		—		—		8		63		110
Total other commercial	39		—		—		—		—		8		63		110
Other commercial current period gross charge-offs	—		—		—		—		—		4.5		—		4.5
Total commercial loans and leases	3,371		3,762		3,449		2,238		1,726		3,740		2,210		20,496

December 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
(in millions)
CONSUMER
Direct Installment:
Current	340		712		784		392		136		364		—		2,728
Past due	—		1		—		1		1		10		—		13
Total direct installment	340		713		784		393		137		374		—		2,741
Direct installment current period gross charge-offs	—		0.2		0.1		0.1		—		0.2		—		0.6
Residential Mortgages:
Current	1,421		1,686		1,516		799		343		819		1		6,585
Past due	3		6		5		3		3		35		—		55
Total residential mortgages	1,424		1,692		1,521		802		346		854		1		6,640
Residential mortgages current period gross charge-offs	—		—		—		—		—		0.7		—		0.7
Indirect Installment:
Current	311		387		238		100		42		49		—		1,127
Past due	2		8		8		2		1		1		—		22
Total indirect installment	313		395		246		102		43		50		—		1,149
Indirect installment current period gross charge-offs	0.4		4.3		3.7		0.6		0.3		1.4		—		10.7
Consumer Lines of Credit:
Current	38		61		14		2		3		117		1,044		1,279
Past due	—		1		1		—		—		13		3		18
Total consumer lines of credit	38		62		15		2		3		130		1,047		1,297
Consumer lines of credit current period gross charge-offs	0.1		—		—		—		—		0.9		—		1.0
Total consumer loans	2,115		2,862		2,566		1,299		529		1,408		1,048		11,827
Total loans and leases	$	5,486	$	6,624	$	6,015	$	3,537	$	2,255	$	5,148	$	3,258	$	32,323
Total charge-offs	$	0.8	$	5.2	$	5.2	$	2.4	$	2.7	$	64.8	$	—	$	81.1

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.

Non-Performing and Past Due

The following table provides an analysis of the aging of loans by class.

TABLE 5.6

(in millions)	30-89 Days Past Due		≥ 90 Days Past Due and Still Accruing		Non- Accrual		Total Past Due		Current		Total Loans and Leases		Non-accrual with No ACL
December 31, 2024
Commercial real estate	$	26	$	—	$	88	$	114	$	12,591	$	12,705	$	24
Commercial and industrial	10		—		52		62		7,488		7,550		19
Commercial leases	1		—		2		3		762		765		—
Other	1		—		2		3		141		144		—
Total commercial loans and leases	38		—		144		182		20,982		21,164		43
Direct installment	8		2		2		12		2,664		2,676		—
Residential mortgages	38		9		7		54		7,932		7,986		—
Indirect installment	16		1		2		19		720		739		—
Consumer lines of credit	8		2		4		14		1,360		1,374		—
Total consumer loans	70		14		15		99		12,676		12,775		—
Total loans and leases	$	108	$	14	$	159	$	281	$	33,658	$	33,939	$	43

(in millions)	30-89 Days Past Due		> 90 Days Past Due and Still Accruing		Non- Accrual		Total Past Due		Current		Total Loans and Leases		Non-accrual with No ACL
December 31, 2023
Commercial real estate	$	21	$	—	$	42	$	63	$	12,242	$	12,305	$	18
Commercial and industrial	9		—		39		48		7,434		7,482		7
Commercial leases	2		—		3		5		594		599		—
Other	1		1		—		2		108		110		—
Total commercial loans and leases	33		1		84		118		20,378		20,496		25
Direct installment	7		1		5		13		2,728		2,741		—
Residential mortgages	38		7		10		55		6,585		6,640		—
Indirect installment	19		1		2		22		1,127		1,149		—
Consumer lines of credit	10		2		6		18		1,279		1,297		—
Total consumer loans	74		11		23		108		11,719		11,827		—
Total loans and leases	$	107	$	12	$	107	$	226	$	32,097	$	32,323	$	25

Following is a summary of non-performing assets:

TABLE 5.7

December 31	2024			2023
(dollars in millions)
Non-accrual loans	$	159		$	107
Total non-performing loans and leases	159			107
Other real estate owned	3			3
Total non-performing assets	$	162		$	110
Asset quality ratios:
Non-performing loans and leases / total loans and leases	0.47		%	0.33		%
Non-performing assets plus 90 days or more past due / total loans and leases plus OREO	0.52			0.38

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 $1.2 million at both December 31, 2024 and December 31, 2023. The recorded investment of residential-secured consumer OREO for which formal foreclosure proceedings are in process at December 31, 2024 and 2023 totaled $10.6 million and $9.4 million, respectively.

Approximately $155.0 million of commercial loans are collateral dependent at December 31, 2024. Repayment is expected to be substantially made through the operation or sale of the collateral on the loan. These loans are primarily secured by business assets or commercial real estate.

Loan Modifications

During the period, there are loans whose contractual terms have been modified in a manner that grants a concession to a borrower experiencing financial difficulties. These modifications typically result from loss mitigation activities and could include a term extension, interest rate reduction, principal forgiveness and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of collateral. Accrued interest receivable on loan modifications totaled $0.2 million and $0.4 million at December 31, 2024 and December 31, 2023, respectively, and is excluded from the amortized cost of loan modifications in the tables that follow.

The following table shows the amortized cost basis at the end of the reporting period of the loans modified during the period to borrowers experiencing financial difficulty, disaggregated by class of financing receivable, type of concession granted and the financial effect of the modifications made to borrowers experiencing financial difficulty:

TABLE 5.8

(dollars in millions)	Amortized Cost Basis		% of Total Class of Financing Receivable		Financial Effect
Twelve Months Ended December 31, 2024
Term Extension
Commercial real estate	$	0.3	—	%	The modified loans had an average increase in term of 7 months, extending the maturity date.
Commercial and industrial	0.1		—		Modifications were made with no material financial effect.
Direct installment	1.5		0.06		The modified loans had an average increase in term of 65 months, extending the maturity date.
Residential mortgages	7.3		0.09		The modified loans had an average increase in term of 70 months, extending the maturity date.
Consumer lines of credit	1.3		0.09		The modified loans had an average increase in term of 221 months, extending the maturity date.
Total	10.5
Rate Reduction
Residential mortgages	0.1		—		Modifications were made with no material financial effect.
Total	0.1
Term Extension and Rate Reduction
Commercial real estate	17.6		0.14		The terms were extended, with a weighted average yield reduction of 190 basis points.
Commercial and industrial	15.5		0.21		The modified loans had an average increase in term of 6 months, at a reduced rate.
Residential mortgages	1.3		0.02		Modifications were made with no material financial effect.
Consumer lines of credit	0.2		0.01		Modifications were made with no material financial effect.
Total	34.6
Balloon Payment
Commercial real estate	0.7		0.01		Modifications were made with no material financial effect.
Consumer lines of credit	0.2		0.03		Modifications were made with no material financial effect.
Total	0.9
Other
Commercial real estate	2.0		0.02		3 to 12 month payment deferrals with no income being earned on these loans.
Commercial and industrial	5.2		0.07		Temporarily lowered monthly payments, 3 to 9 month payment deferral or temporary interest only payments while borrowers were in work-out.
Total	7.2
Total Outstanding Modified	$	53.3

(dollars in millions)	Amortized Cost Basis		% of Total Class of Financing Receivable		Financial Effect
Twelve Months Ended December 31, 2023
Term Extension
Commercial real estate	$	21.5	0.17	%	The modified loans had an average increase in term of 15 months, extending the maturity date.
Commercial and industrial	20.6		0.28		The modified loans had an average increase in term of 34 months, extending the maturity date.
Direct installment	1.7		0.06		The modified loans had an average increase in term of 90 months, extending the maturity date.
Residential mortgages	3.8		0.06		The modified loans had an average increase in term of 91 months, extending the maturity date.
Consumer lines of credit	0.5		0.04		The repayment on the loans modified was extended, lowering the monthly repayment.
Total	48.1
Term Extension and Rate Reduction
Commercial and industrial	0.1		—		The term was extended, with a weighted average yield reduction of 462 basis points.
Direct installment	0.4		0.01		The modified loans had an average increase in term of 319 months, extending the maturity date.
Residential mortgages	0.8		0.01		The term was extended, with a weighted average yield reduction of 267 basis points.
Consumer lines of credit	0.7		0.05		The term was extended, with a weighted average yield reduction of 266 basis points.
Total	2.0
Other
Commercial real estate	8.3		0.07		The modified loans had an average increase in term of 6 months, extending the maturity date.
Direct installment	0.1		—		Multiple modifications were made with no material financial effect.
Residential mortgages	0.1		—		Multiple modifications were made with no material financial effect.
Consumer lines of credit	0.6		0.05		Primarily changed to a payment schedule with a fixed rate reduction of 508 basis points.
Total	9.1
Total Outstanding Modified	$	59.2

Some loan modifications 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. There were no additional funds committed to borrowers whose loans were modified during 2024, compared to $0.1 million during 2023.

Commercial loans over $1.0 million whose terms have been modified may be placed on non-accrual, individually analyzed and measured based on the fair value of the underlying collateral. Our ACL includes specific reserves for commercial loans modified. There were $8.1 million and $5.3 million in specific reserves for commercial loans modified at December 31, 2024 and 2023, respectively, and pooled reserves for individual loans of $1.8 million and $2.0 million for those same periods, respectively, based on loan segment LGD. Upon default, the amount of the recorded investment of the modified loan balance 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 are pooled and measured based on the loan segment LGD. Our ACL included pooled reserves for these classes of loans of $3.4 million and $3.8 million as of December 31, 2024 and 2023, respectively. Upon default of an individual loan, our charge-off policy is followed for that class of loan.

Following is a summary of loans modified in a manner that grants a concession to a borrower experiencing financial difficulties, 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 or in non-accrual and is within 12 months of restructuring.

TABLE 5.9

Amortized cost basis of modified financing receivables that subsequently defaulted:
(in millions)	Term Extension		Term Extension and Rate Reduction		Balloon Payment		Other		Total Outstanding Modified
December 31, 2024
Commercial real estate	$	0.3	$	—	$	0.7	$	5.9	$	6.9
Commercial and industrial	18.4		15.5		—		5.5		39.4
Total commercial loans and leases	18.7		15.5		0.7		11.4		46.3
Direct installment	0.7		—		—		—		0.7
Residential mortgages	4.7		0.4		—		—		5.1
Total consumer loans	5.4		0.4		—		—		5.8
Total	$	24.1	$	15.9	$	0.7	$	11.4	$	52.1

(in millions)	Term Extension		Term Extension and Rate Reduction		Other		Total Outstanding Modified
December 31, 2023
Commercial real estate	$	0.4	$	—	$	5.2	$	5.6
Commercial and industrial	21.5		0.3		—		21.8
Total commercial loans and leases	21.9		0.3		5.2		27.4
Direct installment	0.1		—		—		0.1
Residential mortgages	0.3		0.3		—		0.6
Consumer lines of credit	0.1		—		—		0.1
Total consumer loans	0.5		0.3		—		0.8
Total	$	22.4	$	0.6	$	5.2	$	28.2

We closely monitor the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of our modification efforts. The following table depicts the performance of loans that have been modified in the last 12 months:

TABLE 5.10

Payment status - amortization cost basis:
(in millions)	Current		30-89 Days Past Due		90+ Days Past Due
December 31, 2024
Commercial real estate	$	20.5	$	—	$	—
Commercial and industrial	20.8		—		—
Total commercial loans and leases	41.3		—		—
Direct installment	1.2		0.3		—
Residential mortgages	5.5		1.8		1.5
Consumer lines of credit	1.4		0.3		—
Total consumer loans	8.1		2.4		1.5
Total	$	49.4	$	2.4	$	1.5
(in millions)	Current		30-89 Days Past Due		90+ Days Past Due
December 31, 2023
Commercial real estate	$	20.7	$	9.1	$	—
Commercial and industrial	20.8		—		—
Total commercial loans and leases	41.5		9.1		—
Direct installment	1.9		0.3		—
Residential mortgages	2.8		1.7		0.1
Consumer lines of credit	1.6		0.2		—
Total consumer loans	6.3		2.2		0.1
Total	$	47.8	$	11.3	$	0.1