Company Quick10K Filing
Quick10K
FNB
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$12.46 324 $4,040
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
8-K 2019-02-11 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-02-06 Regulation FD, Exhibits
8-K 2019-01-22 Earnings, Exhibits
8-K 2018-10-23 Earnings, Exhibits
8-K 2018-07-24 Earnings, Exhibits
8-K 2018-06-07 Other Events, Exhibits
8-K 2018-05-29 Other Events, Exhibits
8-K 2018-05-16 Shareholder Vote
8-K 2018-04-24 Earnings, Exhibits
8-K 2018-04-02 Officers, Exhibits
8-K 2018-01-23 Earnings, Exhibits
FITB Fifth Third Bancorp
BPOP Popular
CBU Community Bank System
WAFD Washington Federal
TRST Trustco Bank N Y
MCBC Macatawa Bank
BLMT BSB Bancorp
TRCB Two River Bancorp
HWBK Hawthorn Bancshares
MYFW First Western Financial
FNB 2018-09-30
Part I - Financial Information
Item 1. Financial Statements
Note 1. Summary of Significant Accounting Policies
Note 2. New Accounting Standards
Note 3. Mergers and Acquisitions
Note 4. Securities
Note 5. Loans and Leases
Note 6. Allowance for Credit Losses
Note 7. Loan Servicing
Note 8. Borrowings
Note 9. Derivative Instruments and Hedging Activities
Note 10. Commitments, Credit Risk and Contingencies
Note 11. Stock Incentive Plans
Note 12. Retirement Plans
Note 13. Income Taxes
Note 14. Other Comprehensive Income
Note 15. Earnings per Common Share
Note 16. Cash Flow Information
Note 17. Business Segments
Note 18. Fair Value Measurements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 fnb10-qex311q32018.htm
EX-31.2 fnb10-qex312q32018.htm
EX-32.1 fnb10-qex321q32018.htm
EX-32.2 fnb10-qex322q32018.htm

FNB Earnings 2018-09-30

FNB 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 fnb10-qq32018.htm 10-Q Document

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 September 30, 2018
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)
 
 
 
Pennsylvania
25-1255406
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
One North Shore Center, 12 Federal Street, Pittsburgh, PA
15212
(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
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  ☒
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.
Class
Outstanding at

October 31, 2018
Common Stock, $0.01 Par Value
324,296,105

Shares




F.N.B. CORPORATION
FORM 10-Q
September 30, 2018
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.
 
 
 
 


2


Glossary of Acronyms and Terms
AFS
Available for sale
ALCO
Asset/Liability Committee
AOCI
Accumulated other comprehensive income
ASC
Accounting Standards Codification
ASU
Accounting Standards Update
BOLI
Bank owned life insurance
Basel III
Basel III Capital Rules
EVE
Economic value of equity
FDIC
Federal Deposit Insurance Corporation
FHLB
Federal Home Loan Bank
FNB
F.N.B. Corporation
FNBPA
First National Bank of Pennsylvania
FRB
Board of Governors of the Federal Reserve System
FTE
Fully taxable equivalent
FVO
Fair value option
GAAP
U.S. generally accepted accounting principles
HTM
Held to maturity
IRLC
Interest rate lock commitments
LCR
Liquidity Coverage Ratio
LIBOR
London Inter-bank Offered Rate
MCH
Months of Cash on Hand
MSR
Mortgage servicing rights
OCC
Office of the Comptroller of the Currency
OREO
Other real estate owned
OTTI
Other-than-temporary impairment
Regency
Regency Finance Company
SBA
Small Business Administration
SEC
Securities and Exchange Commission
TCJA
Tax Cuts and Jobs Act of 2017
TDR
Troubled debt restructuring
TPS
Trust preferred securities
UST
U.S. Department of the Treasury
YDKN
Yadkin Financial Corporation


3


PART I – FINANCIAL INFORMATION
 
ITEM 1.    FINANCIAL STATEMENTS

F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Dollars in thousands, except share and per share data
 
September 30,
2018
 
December 31,
2017
 
(Unaudited)
 
 
Assets
 
 
 
Cash and due from banks
$
397,268

 
$
408,718

Interest bearing deposits with banks
40,585

 
70,725

Cash and Cash Equivalents
437,853

 
479,443

Securities available for sale
3,298,894

 
2,764,562

Debt securities held to maturity (fair value of $3,032,947 and $3,218,379)
3,206,345

 
3,242,268

Loans held for sale (includes $24,943 and $56,458 measured at fair value) (1)
42,083

 
92,891

Loans and leases, net of unearned income of $4,926 and $50,680
21,839,403

 
20,998,766

Allowance for credit losses
(177,881
)
 
(175,380
)
Net Loans and Leases
21,661,522

 
20,823,386

Premises and equipment, net
323,244

 
336,540

Goodwill
2,249,541

 
2,249,188

Core deposit and other intangible assets, net
80,290

 
92,075

Bank owned life insurance
533,991

 
526,818

Other assets
783,832

 
810,464

Total Assets
$
32,617,595

 
$
31,417,635

Liabilities
 
 
 
Deposits:
 
 
 
Non-interest-bearing demand
$
6,018,852

 
$
5,720,030

Interest-bearing demand
9,519,704

 
9,571,038

Savings
2,513,679

 
2,488,178

Certificates and other time deposits
5,447,751

 
4,620,479

Total Deposits
23,499,986

 
22,399,725

Short-term borrowings
3,679,380

 
3,678,337

Long-term borrowings
627,049

 
668,173

Other liabilities
286,316

 
262,206

Total Liabilities
28,092,731

 
27,008,441

Stockholders’ Equity
 
 
 
Preferred stock - $0.01 par value; liquidation preference of $1,000 per share
 
 
 
Authorized – 20,000,000 shares
 
 
 
Issued – 110,877 shares
106,882

 
106,882

Common stock - $0.01 par value
 
 
 
Authorized – 500,000,000 shares
 
 
 
Issued – 326,081,395 and 325,095,055 shares
3,263

 
3,253

Additional paid-in capital
4,046,168

 
4,033,567

Retained earnings
516,865

 
367,658

Accumulated other comprehensive loss
(126,840
)
 
(83,052
)
Treasury stock – 1,806,209 and 1,629,915 shares at cost
(21,474
)
 
(19,114
)
Total Stockholders’ Equity
4,524,864

 
4,409,194

Total Liabilities and Stockholders’ Equity
$
32,617,595

 
$
31,417,635

 
(1)
Amount represents loans for which we have elected the fair value option. See Note 18.
See accompanying Notes to Consolidated Financial Statements (unaudited)

4


F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Dollars in thousands, except per share data
Unaudited
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2018
 
2017
 
2018
 
2017
Interest Income
 
 
 
 
 
 
 
Loans and leases, including fees
$
259,744

 
$
232,834

 
$
756,733

 
$
622,554

Securities:
 
 
 
 
 
 
 
Taxable
30,467

 
24,763

 
86,341

 
72,258

Tax-exempt
7,259

 
5,597

 
20,813

 
13,675

Dividends

 

 

 
85

Other
345

 
320

 
972

 
669

Total Interest Income
297,815

 
263,514

 
864,859

 
709,241

Interest Expense
 
 
 
 
 
 
 
Deposits
38,175

 
18,987

 
95,693

 
47,480

Short-term borrowings
19,576

 
14,387

 
53,192

 
32,020

Long-term borrowings
5,277

 
4,909

 
15,727

 
13,343

Total Interest Expense
63,028

 
38,283

 
164,612

 
92,843

Net Interest Income
234,787

 
225,231

 
700,247

 
616,398

Provision for credit losses
15,975

 
16,768

 
46,024

 
44,374

Net Interest Income After Provision for Credit Losses
218,812

 
208,463

 
654,223

 
572,024

Non-Interest Income
 
 
 
 
 
 
 
Service charges
31,922

 
32,212

 
93,113

 
88,883

Trust services
6,395

 
5,748

 
19,312

 
17,210

Insurance commissions and fees
5,001

 
5,029

 
14,703

 
14,517

Securities commissions and fees
4,491

 
4,038

 
13,336

 
11,548

Capital markets income
5,100

 
2,822

 
16,168

 
11,673

Mortgage banking operations
5,962

 
5,437

 
17,431

 
14,400

Bank owned life insurance
4,399

 
3,123

 
10,761

 
8,368

Net securities gains

 
2,777

 
31

 
5,895

Other
11,564

 
4,965

 
22,371

 
14,851

Total Non-Interest Income
74,834

 
66,151

 
207,226

 
187,345

Non-Interest Expense
 
 
 
 
 
 
 
Salaries and employee benefits
89,535

 
82,383

 
277,532

 
240,860

Net occupancy
14,219

 
13,723

 
45,936

 
39,132

Equipment
13,593

 
13,711

 
41,241

 
35,761

Amortization of intangibles
3,805

 
4,805

 
11,834

 
12,716

Outside services
17,176

 
15,439

 
48,946

 
41,965

FDIC insurance
8,821

 
9,183

 
26,822

 
23,946

Bank shares and franchise taxes
3,237

 
2,814

 
9,929

 
8,536

Merger-related

 
1,381

 

 
55,459

Other
20,343

 
20,304

 
62,585

 
56,637

Total Non-Interest Expense
170,729

 
163,743

 
524,825

 
515,012

Income Before Income Taxes
122,917

 
110,871

 
336,624

 
244,357

Income taxes
22,154

 
33,178

 
63,893

 
69,279

Net Income
100,763

 
77,693

 
272,731

 
175,078

Preferred stock dividends
2,010

 
2,010

 
6,030

 
6,030

Net Income Available to Common Stockholders
$
98,753

 
$
75,683

 
$
266,701

 
$
169,048

Earnings per Common Share
 
 
 
 
 
 
 
Basic
$
0.30

 
$
0.23

 
$
0.82

 
$
0.57

Diluted
$
0.30

 
$
0.23

 
$
0.82

 
$
0.57

Cash Dividends per Common Share
$
0.12

 
$
0.12

 
$
0.36

 
$
0.36

See accompanying Notes to Consolidated Financial Statements (unaudited)

5


F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Dollars in thousands
Unaudited
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2018
 
2017
 
2018
 
2017
Net income
 
$
100,763

 
$
77,693

 
$
272,731

 
$
175,078

Other comprehensive (loss) income:
 
 
 
 
 
 
 
 
Securities available for sale:
 
 
 
 
 
 
 
 
Unrealized (losses) gains arising during the period, net of tax (benefit) expense of $(3,502), $724, $(14,492) and $4,503
 
(12,310
)
 
1,288

 
(50,970
)
 
8,027

Reclassification adjustment for gains included in net income, net of tax expense of $0, $215, $7 and $223
 

 
(384
)
 
(24
)
 
(398
)
Derivative instruments:
 
 
 
 
 
 
 
 
Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $396, $76, $1,989 and $(1,265)
 
1,391

 
136

 
6,991

 
(2,254
)
Reclassification adjustment for (gains) losses included in net income, net of tax expense (benefit) of $141, $(44), $346 and $45
 
(495
)
 
78

 
(1,216
)
 
(81
)
Pension and postretirement benefit obligations:
 
 
 
 
 
 
 
 
Unrealized gains arising during the period, net of tax expense of $130, $535, $404 and $987 
 
459

 
955

 
1,431

 
1,765

Other Comprehensive (Loss) Income
 
(10,955
)
 
2,073

 
(43,788
)
 
7,059

Comprehensive Income
 
$
89,808

 
$
79,766

 
$
228,943

 
$
182,137

See accompanying Notes to Consolidated Financial Statements (unaudited)


6


F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Dollars in thousands, except per share data
Unaudited
 
 
Preferred
Stock
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Treasury
Stock
 
Total
Balance at January 1, 2017
$
106,882

 
$
2,125

 
$
2,234,366

 
$
304,397

 
$
(61,369
)
 
$
(14,784
)
 
$
2,571,617

Comprehensive income
 
 
 
 
 
 
175,078

 
7,059

 
 
 
182,137

Dividends declared:
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
 
 
 
 
 
 
(6,030
)
 
 
 
 
 
(6,030
)
Common stock: $0.36/share
 
 
 
 
 
 
(103,584
)
 
 
 
 
 
(103,584
)
Issuance of common stock
 
 
10

 
5,178

 
 
 
 
 
(4,313
)
 
875

Issuance of common stock - acquisitions
 
 
1,116

 
1,782,308

 
 
 
 
 
 
 
1,783,424

Assumption of warrant due to acquisition
 
 
 
 
1,394

 
 
 
 
 
 
 
1,394

Restricted stock compensation
 
 
 
 
6,088

 
 
 
 
 
 
 
6,088

Balance at September 30, 2017
$
106,882

 
$
3,251

 
$
4,029,334

 
$
369,861

 
$
(54,310
)
 
$
(19,097
)
 
$
4,435,921

Balance at January 1, 2018
$
106,882

 
$
3,253

 
$
4,033,567

 
$
367,658

 
$
(83,052
)
 
$
(19,114
)
 
$
4,409,194

Comprehensive income (loss)
 
 
 
 
 
 
272,731

 
(43,788
)
 
 
 
228,943

Dividends declared:
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
 
 
 
 
 
 
(6,030
)
 
 
 
 
 
(6,030
)
Common stock: $0.36/share
 
 
 
 
 
 
(117,494
)
 
 
 
 
 
(117,494
)
Issuance of common stock
 
 
10

 
5,291

 
 
 
 
 
(2,360
)
 
2,941

Restricted stock compensation
 
 
 
 
7,310

 
 
 
 
 
 
 
7,310

Balance at September 30, 2018
$
106,882

 
$
3,263

 
$
4,046,168

 
$
516,865

 
$
(126,840
)
 
$
(21,474
)
 
$
4,524,864

See accompanying Notes to Consolidated Financial Statements (unaudited)


7


F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in thousands
Unaudited
 
 
Nine Months Ended
September 30,
 
2018
 
2017
Operating Activities
 
 
 
Net income
$
272,731

 
$
175,078

Adjustments to reconcile net income to net cash flows provided by operating activities:
 
 
 
Depreciation, amortization and accretion
82,074

 
60,349

Provision for credit losses
46,024

 
44,374

Deferred tax expense
28,867

 
36,706

Net securities gains
(31
)
 
(5,895
)
Tax benefit of stock-based compensation
(378
)
 
(735
)
Loans originated for sale
(864,757
)
 
(787,957
)
Loans sold
933,183

 
709,323

Gain on sale of loans
(17,618
)
 
(10,583
)
Net change in:
 
 
 
Interest receivable
(8,259
)
 
(10,104
)
Interest payable
6,679

 
938

Bank owned life insurance
(7,204
)
 
(8,100
)
Other, net
45,530

 
(78,095
)
Net cash flows provided by operating activities
516,841

 
125,299

Investing Activities
 
 
 
Net change in loans and leases
(1,054,971
)
 
(886,944
)
Securities available for sale:
 
 
 
Purchases
(1,029,263
)
 
(1,042,784
)
Sales

 
786,762

Maturities
421,666

 
404,618

Debt securities held to maturity:
 
 
 
Purchases
(244,367
)
 
(842,020
)
Sales

 
57,050

Maturities
275,788

 
309,075

Purchase of bank owned life insurance
(39
)
 
(25,102
)
Increase in premises and equipment
(19,267
)
 
(46,781
)
Net cash received in business combinations and divestitures
141,082

 
196,964

Other, net
70

 

Net cash flows used in investing activities
(1,509,301
)
 
(1,089,162
)
Financing Activities
 
 
 
Net change in:
 
 
 
Demand (non-interest bearing and interest bearing) and savings accounts
272,989

 
384,103

Time deposits
830,662

 
306,745

Short-term borrowings
1,043

 
573,102

Proceeds from issuance of long-term borrowings
26,612

 
96,917

Repayment of long-term borrowings
(67,163
)
 
(150,420
)
Net proceeds from issuance of common stock
10,251

 
6,963

Cash dividends paid:
 
 
 
Preferred stock
(6,030
)
 
(6,030
)
Common stock
(117,494
)
 
(103,584
)
Net cash flows provided by financing activities
950,870

 
1,107,796

Net Increase (Decrease) in Cash and Cash Equivalents
(41,590
)
 
143,933

Cash and cash equivalents at beginning of period
479,443

 
371,407

Cash and Cash Equivalents at End of Period
$
437,853

 
$
515,340

See accompanying Notes to Consolidated Financial Statements (unaudited)

8


F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2018
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 only 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 six states. Through FNBPA, we have over 150 years of serving the financial and banking needs of our customers. We hold a significant retail deposit market share in attractive markets including: Pittsburgh, Pennsylvania; Baltimore, Maryland; Cleveland, Ohio; and Charlotte, Raleigh-Durham and the Piedmont Triad (Winston-Salem, Greensboro and High Point) in North Carolina. As of September 30, 2018, we had 397 banking offices throughout Pennsylvania, Ohio, Maryland, West Virginia, North Carolina and South Carolina. 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. Commercial banking solutions include corporate banking, small business banking, investment real estate financing, 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 fiduciary and brokerage services, 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 the Financial Statements 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 and F.N.B. Capital Corporation, LLC, and include results for each of these entities in the accompanying Consolidated Financial Statements.
The accompanying 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 U.S. generally accepted accounting principles. All significant intercompany balances and transactions have been eliminated. Certain prior period amounts have been reclassified to conform to the current period presentation. Such reclassifications had no impact on our net income and stockholders’ equity. Events occurring subsequent to the date of the September 30, 2018 Balance Sheet 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 Securities and Exchange Commission.
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 Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto included in FNB’s 2017 Annual Report on Form 10-K filed with the SEC on February 28, 2018. For a detailed description of our significant accounting policies, see Note 1 "Summary of Significant Accounting Policies" in the 2017 Form 10-K. The accounting policies presented below have been added or amended for newly material items or the adoption of new accounting standards.
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. Actual results could materially differ from those estimates. Material estimates that are particularly susceptible to significant changes include the allowance for credit losses, accounting for acquired loans, fair value of financial instruments, goodwill and other intangible assets, income taxes and deferred tax assets and litigation.

9


Revenue from Contracts with Customers
We earn certain revenues from contracts with customers. These revenues are recognized when control of the promised services is transferred to the customers in an amount that reflects the consideration we expect to be entitled to in an exchange for those services.
In determining the appropriate revenue recognition for our contracts with customers, we consider whether the contract has commercial substance and is approved by both parties with identifiable contractual rights, payment terms, and the collectability of consideration is probable. Generally, we satisfy our performance obligations upon the completion of services at the amount to which we have the right to invoice or charge under contracts with an original expected duration of one year or less. We apply this guidance on a portfolio basis to contracts with similar characteristics and for which we believe the results would not differ materially from applying this guidance to individual contracts.
Our services provided under contracts with customers are transferred at the point in time when the services are rendered. Generally, we do not defer incremental direct costs to obtain contracts with customers that would be amortized in one year or less under the practical expedient. These costs are recognized as expense, primarily salary and benefit expense, in the period incurred.
Deposit Services. We recognize revenue on deposit services based on published fees for services provided. Demand and savings deposit customers have the right to cancel their depository arrangements and withdraw their deposited funds at any time without prior notice. When services involve deposited funds that can be retrieved by customers without penalties, we consider the service contract term to be day-to-day, where each day represents the renewal of the contract. The contract does not extend beyond the services performed and revenue is recognized at the end of the contract term (daily) as the performance obligation is satisfied.
No deposit services fees exist for long-term deposit products beyond early withdrawal penalties, which are earned on these products at the time of early termination.
Revenue from deposit services fees are reduced where we have a history of waived or reduced fees by customer request or due to a customer service issue, by historical experience, or another acceptable method in the same period as the related revenues. Revenues from deposit services are reported in the Consolidated Statements of Income as service charges and in the Community Banking segment as non-interest income.
Wealth Management Services. Wealth advisory and trust services are provided on a month-to-month basis and invoiced as services are rendered. Fees are based on a fixed amount or a scale based on the level of services provided or assets under management. The customer has the right to terminate their services agreement at any time. We determine the value of services performed based on the fee schedule in effect at the time the services are performed. Revenues from wealth advisory and trust services are reported in the Consolidated Statements of Income as trust services and securities commissions and fees, and in the Wealth segment as non-interest income.
Insurance Services. Insurance services include full-service insurance brokerage services offering numerous lines of commercial and personal insurance through major carriers to businesses and individuals within our geographic markets. We recognize revenue on insurance contracts in effect based on contractually specified commission payments on premiums that are paid by the customer to the insurance carrier. Contracts are cancellable at any time and we have no performance obligation to the customers beyond the time the insurance is placed into effect. Revenues from insurance services are reported in the Consolidated Statements of Income as insurance commissions and fees, and in the Insurance segment as non-interest income.
Debt Securities                            
Debt securities comprise a significant portion of our Consolidated Balance Sheets. Such securities can be classified as trading, HTM or AFS. As of September 30, 2018 and 2017, we did not hold any trading debt securities.
Debt securities HTM are the securities that management has the positive intent and ability to hold until their maturity. Such securities are carried at cost, adjusted for related amortization of premiums and accretion of discounts through interest income from securities, and subject to evaluation for OTTI.
Debt securities that are not classified as trading or HTM are classified as AFS. Such securities are carried at fair value with net unrealized gains and losses deemed to be temporary and OTTI attributable to non-credit factors reported separately as a component of other comprehensive income, net of tax.

10


We evaluate our debt securities in a loss position for OTTI on a quarterly basis at the individual security level based on our intent to sell. If we intend to sell the debt security or it is more likely than not we will be required to sell the security before recovery of its amortized cost basis, OTTI must be recognized in earnings equal to the entire difference between the investments’ amortized cost basis and its fair value. If we do not intend to sell the debt security and it is not more likely than not that we will be required to sell the security before recovery of its amortized cost basis, OTTI must be separated into the amount representing credit loss and the amount related to all other market factors. The amount related to credit loss will be recognized in earnings. The amount related to other market factors will be recognized in other comprehensive income, net of applicable taxes.
We perform our OTTI evaluation process in a consistent and systematic manner and include an evaluation of all available evidence. This process considers factors such as length of time and anticipated recovery period of the impairment, recent events specific to the issuer and recent experience regarding principal and interest payments.
Low Income Housing Tax Credit (LIHTC) Partnerships
We invest in various affordable housing projects that qualify for LIHTCs. The net investments are recorded in other assets on the Consolidated Balance Sheets. These investments generate a return through the realization of federal tax credits. We use the proportional amortization method to account for a majority of our investments in these entities. LIHTCs that do not meet the requirements of the proportional amortization method are recognized using the equity method. Our net investment in LIHTCs was $35.7 million and $20.9 million at September 30, 2018 and December 31, 2017, respectively. Our unfunded commitments in LIHTCs were $46.6 million and $67.2 million at September 30, 2018 and December 31, 2017, respectively.
Cloud Computing Arrangements
We evaluate fees paid for cloud computing arrangements to determine if those arrangements include the purchase of or license to use software that should be accounted for separately as internal-use software. If a contract includes the purchase or license to use software that should be accounted for separately as internal-use software, the contract is amortized over the software’s identified useful life in amortization of intangibles. For contracts that do not include a software license, the contract is accounted for as a service contract with fees paid recorded in other non-interest expense.
In the third quarter of 2018, we early adopted, on a prospective basis, ASU 2018-15 (See Note 2) which allows for implementation costs for activities performed in cloud computing arrangements that are a service contract to be accounted for under the internal-use software guidance which allows for certain implementation costs to be capitalized depending on the nature of the costs and the project stage. Prior to the adoption of ASU 2018-15 all implementation costs for cloud computing arrangements that were a service contract were expensed as incurred.
NOTE 2.    NEW ACCOUNTING STANDARDS
The following table summarizes accounting pronouncements issued by the Financial Accounting Standards Board that we recently adopted or will be adopting in the future.
TABLE 2.1
Standard
 
Description
 
Required Date of Adoption
 
Financial Statements Impact
Cloud Computing Arrangement
 
 
 
 
ASU 2018-15, Intangibles -
Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract
 
This Update aligns the requirements for capitalizing implementation costs of a hosting arrangement that is a service contract with that of internal-use software.
 
January 1, 2020

Early adoption is permitted.

 
We early adopted this Update in the third quarter of 2018 by a prospective application method. The adoption of this Update did not have a material effect on our Consolidated Financial Statements.

11


Standard
 
Description
 
Required Date of Adoption
 
Financial Statements Impact
Derivative and Hedging Activities
 
 
 
 
ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities
 
This Update improves the financial reporting of hedging to better align with a company’s risk management activities. In addition, this Update makes certain targeted improvements to simplify the application of the current hedge accounting guidance.
 
January 1, 2019
Early adoption is permitted.
 
This Update is to be applied using a modified retrospective method. The presentation and disclosure guidance are applied prospectively. We are currently assessing the potential impact to our Consolidated Financial Statements.
Securities
 
 
 
 
 
 
ASU 2017-08, Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities
 
This Update shortens the amortization period for the premium on certain purchased callable securities to the earliest call date. The accounting for purchased callable debt securities held at a discount does not change.
 
January 1, 2019
Early adoption is permitted.
 
This Update is to be applied using a modified retrospective transition method. The adoption of this Update is not expected to have a material effect on our Consolidated Financial Statements.

Retirement Benefits
 
 
 
 
 
 
ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
 
This Update requires that an employer disaggregate the service cost component from the other components of net benefit cost. The amendments also provide explicit guidance on how to present the service cost component and the other components of net benefit cost in the Income Statement and allows only the service cost component of net benefit cost to be eligible for capitalization.
 
January 1, 2018
 
We adopted this Update in the first quarter of 2018 by a retrospective transition method. The adoption of this Update did not have a material effect on our Consolidated Financial Statements.

Statement of Cash Flows
 
 
 
 
 
 
ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)
 
This Update adds or clarifies guidance on eight cash flow issues.
 
January 1, 2018
 
We adopted this Update in the first quarter of 2018 by retrospective application. The adoption of this Update did not have a material effect on our Consolidated Financial Statements.


12


Standard
 
Description
 
Required Date of Adoption
 
Financial Statements Impact
Credit Losses
 
 
 
 
 
 
ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
 
This Update replaces the current incurred loss impairment methodology with a methodology that reflects current expected credit losses (commonly referred to as CECL) for most financial assets measured at amortized cost and certain other instruments, including loans, HTM debt securities, net investments in leases and off-balance sheet credit exposures. CECL requires loss estimates for the remaining life of the financial asset at the time the asset is originated or acquired, considering historical experience, current conditions and reasonable and supportable forecasts. In addition, the Update will require the use of a modified AFS debt security impairment model and eliminate the current accounting for purchased credit impaired loans and debt securities.
 
January 1, 2020
Early adoption is permitted for fiscal years beginning after December 15, 2018
 
This Update is to be applied using a cumulative-effect adjustment to retained earnings. The CECL model is a significant change from existing GAAP and may result in a material change to our accounting for financial instruments and regulatory capital. We have created a cross-functional steering committee to govern implementation as we continue to review and enhance our business processes, information systems and controls to support recognition and disclosures under this Update including designing and building the models that will be used to calculate the expected credit losses. The impact of this Update will be dependent on the portfolio composition, credit quality and forecasts of economic conditions at the time of adoption.
Extinguishments of Liabilities
 
 
 
 
 
 
ASU 2016-04, Liabilities - Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products (a consensus of the Emerging Issues Task Force)
 
This Update requires entities that sell prepaid stored-value products redeemable for goods, services or cash at third-party merchants to recognize breakage.
 
January 1, 2018
 
We adopted this Update in the first quarter of 2018. The adoption of this Update did not have a material effect on our Consolidated Financial Statements.
Leases
 
 
 
 
 
 
ASU 2016-02, Leases (Topic 842)

ASU 2018-10, Codification Improvements to Topic 842, Leases
ASU 2018-11, Leases (Topic 842), Targeted Improvements

 
These Updates require lessees to put most leases on their Balance Sheets but recognize expenses in the Income Statement similar to current accounting. In addition, the Update changes the guidance for sale-leaseback transactions, initial direct costs and lease executory costs for most entities. All entities will classify leases to determine how to recognize lease related revenue and expense.
 
January 1, 2019
Early adoption is permitted.
 
These Updates are to be applied using a modified retrospective application including a number of optional practical expedients. We are in the process of classifying our existing lease portfolios, implementing a software solution, and assessing the potential impact to our Consolidated Financial Statements. We do not believe this update will materially impact our consolidated net income.

13


Standard
 
Description
 
Required Date of Adoption
 
Financial Statements Impact
Financial Instruments – Recognition and Measurement
 
 
 
 
ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities
 
This Update amends the presentation and accounting for certain financial instruments, including liabilities measured at fair value under the FVO, and equity investments. The guidance also updates fair value presentation and disclosure requirements for financial instruments measured at amortized cost.
 
January 1, 2018
 
We adopted this Update in the first quarter of 2018 by a cumulative-effect adjustment. The adoption of this Update did not have a material effect on our Consolidated Financial Statements. During the first quarter of 2018, we transferred marketable equity securities totaling $1.1 million from securities AFS to other assets.
Revenue Recognition
 
 
 
 
 
 
ASU 2014-09, Revenue from Contracts with Customers (Topic 606)
 
This Update modifies the guidance used to recognize revenue from contracts with customers for transfers of goods and services and transfers of nonfinancial assets, unless those contracts are within the scope of other guidance. The guidance also requires new qualitative and quantitative disclosures about contract balances and performance obligations.
 
January 1, 2018
 
We adopted this Update in the first quarter of 2018 under the modified retrospective method. The adoption of this Update did not have a material effect on our Consolidated Financial Statements.

NOTE 3.    MERGERS AND ACQUISITIONS
Yadkin Financial Corporation
On March 11, 2017, we completed our acquisition of YDKN, a bank holding company based in Raleigh, North Carolina. YDKN’s banking affiliate, Yadkin Bank, was merged into FNBPA on March 11, 2017. YDKN’s results of operations have been included in our Consolidated Statements of Income since that date. The acquisition enabled us to enter several North Carolina markets, including Raleigh, Charlotte and the Piedmont Triad, which is comprised of Winston-Salem, Greensboro and High Point. We also completed the core systems conversion activities during the first quarter of 2017.
On the acquisition date, the fair values of YDKN included $6.8 billion in assets, of which there was $5.1 billion in loans, and $5.2 billion in deposits. The acquisition was valued at $1.8 billion based on the acquisition date FNB common stock closing price of $15.97 and resulted in FNB issuing 111,619,622 shares of our common stock in exchange for 51,677,565 shares of YDKN common stock. Under the terms of the merger agreement, shareholders of YDKN received 2.16 shares of FNB common stock for each share of YDKN common stock and cash in lieu of fractional shares. YDKN’s fully vested and outstanding stock options were converted into options to purchase and receive FNB common stock. In conjunction with the acquisition, we assumed a warrant that was issued by YDKN to the UST under the Capital Purchase Program. Based on the exchange ratio, this warrant, which expires in 2019, was converted into a warrant to purchase up to 207,320 shares of FNB common stock with an exercise price of $9.63.
The acquisition of YDKN constituted a business combination and has been accounted for using the acquisition method of accounting, and accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at estimated fair value on the acquisition date. The determination of estimated fair values required management to make certain estimates about discount rates, future expected cash flows, market conditions, and other future events that are highly subjective in nature and may require adjustments, which can be updated for up to a year following the acquisition. Any adjustments to fair values and related adjustments to goodwill were recorded within the 12-month period.


14


NOTE 4.    SECURITIES
The amortized cost and fair value of securities are as follows:
TABLE 4.1
 
(in thousands)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
 Value
Securities Available for Sale:
 
 
 
 
 
 
 
September 30, 2018
 
 
 
 
 
 
 
U.S. government agencies
$
163,752

 
$
36

 
$
(788
)
 
$
163,000

U.S. government-sponsored entities
362,967

 

 
(6,700
)
 
356,267

Residential mortgage-backed securities:
 
 
 
 
 
 
 
Agency mortgage-backed securities
1,540,049

 
356

 
(56,585
)
 
1,483,820

Agency collateralized mortgage obligations
1,083,989

 

 
(37,508
)
 
1,046,481

Commercial mortgage-backed securities
228,957

 

 
(2,182
)
 
226,775

States of the U.S. and political subdivisions
20,782

 

 
(101
)
 
20,681

Other debt securities
1,950

 

 
(80
)
 
1,870

Total debt securities available for sale
$
3,402,446

 
$
392

 
$
(103,944
)
 
$
3,298,894

December 31, 2017
 
 
 
 
 
 
 
U.S. government-sponsored entities
$
347,767

 
$
52

 
$
(3,877
)
 
$
343,942

Residential mortgage-backed securities:
 
 
 
 
 
 
 
Agency mortgage-backed securities
1,615,168

 
1,225

 
(17,519
)
 
1,598,874

Agency collateralized mortgage obligations
813,034

 

 
(18,077
)
 
794,957

Non-agency collateralized mortgage obligations
1

 

 

 
1

States of the U.S. and political subdivisions
21,151

 
6

 
(64
)
 
21,093

Other debt securities
4,913

 

 
(243
)
 
4,670

Total debt securities
2,802,034

 
1,283

 
(39,780
)
 
2,763,537

Equity securities
587

 
438

 

 
1,025

Total securities available for sale
$
2,802,621

 
$
1,721

 
$
(39,780
)
 
$
2,764,562


15


(in thousands)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
 Value
Debt Securities Held to Maturity:
 
 
 
 
 
 
 
September 30, 2018
 
 
 
 
 
 
 
U.S. Treasury
$
500

 
$
95

 
$

 
$
595

U.S. government agencies
1,987

 
58

 

 
2,045

U.S. government-sponsored entities
230,011

 

 
(6,170
)
 
223,841

Residential mortgage-backed securities:
 
 
 
 
 
 
 
Agency mortgage-backed securities
1,078,270

 
225

 
(40,969
)
 
1,037,526

Agency collateralized mortgage obligations
797,940

 
219

 
(37,797
)
 
760,362

Commercial mortgage-backed securities
76,818

 
1

 
(1,864
)
 
74,955

States of the U.S. and political subdivisions
1,020,819

 

 
(87,196
)
 
933,623

Total debt securities held to maturity
$
3,206,345

 
$
598

 
$
(173,996
)
 
$
3,032,947

December 31, 2017
 
 
 
 
 
 
 
U.S. Treasury
$
500

 
$
134

 
$

 
$
634

U.S. government-sponsored entities
247,310

 
93

 
(4,388
)
 
243,015

Residential mortgage-backed securities:
 
 
 
 
 
 
 
Agency mortgage-backed securities
1,219,802

 
3,475

 
(9,058
)
 
1,214,219

Agency collateralized mortgage obligations
777,146

 
32

 
(20,095
)
 
757,083

Commercial mortgage-backed securities
80,786

 
414

 
(575
)
 
80,625

States of the U.S. and political subdivisions
916,724

 
13,209

 
(7,130
)
 
922,803

Total debt securities held to maturity
$
3,242,268

 
$
17,357

 
$
(41,246
)
 
$
3,218,379


Gross gains and gross losses were realized on securities as follows:
TABLE 4.2
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(in thousands)
2018
 
2017
 
2018
 
2017
Gross gains
$

 
$
2,834

 
$
31

 
$
6,845

Gross losses

 
(57
)
 

 
(950
)
Net gains
$

 
$
2,777

 
$
31

 
$
5,895












16


As of September 30, 2018, the amortized cost and fair value of debt securities, by contractual maturities, were as follows:
TABLE 4.3
 
Available for Sale
 
Held to Maturity
(in thousands)
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
Due in one year or less
$
121,270

 
$
120,729

 
$
40,450

 
$
40,308

Due from one to five years
258,824

 
252,577

 
202,164

 
195,882

Due from five to ten years
57,811

 
57,603

 
109,606

 
105,281

Due after ten years
111,546

 
110,909

 
901,097

 
818,633

 
549,451

 
541,818

 
1,253,317

 
1,160,104

Residential mortgage-backed securities:
 
 
 
 
 
 
 
Agency mortgage-backed securities
1,540,049

 
1,483,820

 
1,078,270

 
1,037,526

Agency collateralized mortgage obligations
1,083,989

 
1,046,481

 
797,940

 
760,362

Commercial mortgage-backed securities
228,957

 
226,775

 
76,818

 
74,955

Total debt securities
$
3,402,446

 
$
3,298,894

 
$
3,206,345

 
$
3,032,947

Maturities may differ from contractual terms because borrowers may have the right to call or prepay obligations with or without penalties. Periodic 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 thousands)
September 30,
2018
 
December 31,
2017
Securities pledged (carrying value):
 
 
 
To secure public deposits, trust deposits and for other purposes as required by law
$
3,912,575

 
$
3,491,634

As collateral for short-term borrowings
282,682

 
263,756

Securities pledged as a percent of total securities
64.5
%
 
62.5
%






















17


Following are summaries of the fair values and unrealized losses of temporarily impaired debt securities, segregated by length of impairment. The unrealized losses reported below are generally due to the higher interest rate environment.

TABLE 4.5
 
Less than 12 Months
 
12 Months or More
 
Total
(dollars in thousands)
#
 
Fair
 Value
 
Unrealized
Losses
 
#
 
Fair
 Value
 
Unrealized
Losses
 
#
 
Fair
 Value
 
Unrealized
Losses
Debt Securities Available for Sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government agencies
18

 
$
137,530

 
$
(788
)
 

 
$

 
$

 
18

 
$
137,530

 
$
(788
)
U.S. government-sponsored entities
6

 
136,678

 
(1,292
)
 
11

 
219,589

 
(5,408
)
 
17

 
356,267

 
(6,700
)
Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency mortgage-backed securities
40

 
666,851

 
(20,289
)
 
48

 
807,826

 
(36,296
)
 
88

 
1,474,677

 
(56,585
)
Agency collateralized mortgage obligations
17

 
568,169

 
(11,501
)
 
39

 
448,336

 
(26,007
)
 
56

 
1,016,505

 
(37,508
)
Commercial mortgage-backed securities
6

 
226,775

 
(2,182
)
 

 

 

 
6

 
226,775

 
(2,182
)
States of the U.S. and political subdivisions
7

 
11,672

 
(80
)
 
2

 
2,028

 
(21
)
 
9

 
13,700

 
(101
)
Other debt securities

 

 

 
1

 
1,870

 
(80
)
 
1

 
1,870

 
(80
)
Total temporarily impaired debt securities AFS
94

 
$
1,747,675

 
$
(36,132
)
 
101

 
$
1,479,649

 
$
(67,812
)
 
195

 
$
3,227,324

 
$
(103,944
)
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government-sponsored entities
7

 
$
106,809

 
$
(363
)
 
10

 
$
201,485

 
$
(3,514
)
 
17

 
$
308,294

 
$
(3,877
)
Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency mortgage-backed securities
43

 
976,738

 
(7,723
)
 
28

 
473,625

 
(9,796
)
 
71

 
1,450,363

 
(17,519
)
Agency collateralized mortgage obligations
14

 
409,005

 
(6,231
)
 
33

 
335,452

 
(11,846
)
 
47

 
744,457

 
(18,077
)
States of the U.S. and political subdivisions
7

 
11,254

 
(55
)
 
1

 
879

 
(9
)
 
8

 
12,133

 
(64
)
Other debt securities

 

 

 
3

 
4,670

 
(243
)
 
3

 
4,670

 
(243
)
Total temporarily impaired debt securities AFS
71

 
$
1,503,806

 
$
(14,372
)
 
75

 
$
1,016,111

 
$
(25,408
)
 
146

 
$
2,519,917

 
$
(39,780
)

18


 
Less than 12 Months
 
12 Months or More
 
Total
(dollars in thousands)
#
 
Fair
 Value
 
Unrealized
Losses
 
#
 
Fair
 Value
 
Unrealized
Losses
 
#
 
Fair
 Value
 
Unrealized
Losses
Debt Securities Held to Maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government-sponsored entities
3

 
$
39,696

 
$
(315
)
 
10

 
$
184,145

 
$
(5,855
)
 
13

 
$
223,841

 
$
(6,170
)
Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency mortgage-backed securities
66

 
609,169

 
(20,754
)
 
29

 
417,024

 
(20,215
)
 
95

 
1,026,193

 
(40,969
)
Agency collateralized mortgage obligations
15

 
307,031

 
(9,673
)
 
38

 
416,467

 
(28,124
)
 
53

 
723,498

 
(37,797
)
Commercial mortgage-backed securities
7

 
52,471

 
(1,184
)
 
4

 
21,371

 
(680
)
 
11

 
73,842

 
(1,864
)
States of the U.S. and political subdivisions
278

 
810,893

 
(60,672
)
 
42

 
122,730

 
(26,524
)
 
320

 
933,623

 
(87,196
)
Total temporarily impaired debt securities HTM
369

 
$
1,819,260

 
$
(92,598
)
 
123

 
$
1,161,737

 
$
(81,398
)
 
492

 
$
2,980,997

 
$
(173,996
)
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government-sponsored entities
4

 
$
54,790

 
$
(239
)
 
10

 
$
185,851

 
$
(4,149
)
 
14

 
$
240,641

 
$
(4,388
)
Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency mortgage-backed securities
36

 
648,485

 
(4,855
)
 
11

 
183,989

 
(4,203
)
 
47

 
832,474

 
(9,058
)
Agency collateralized mortgage obligations
14

 
275,290

 
(1,701
)
 
35

 
473,257

 
(18,394
)
 
49

 
748,547

 
(20,095
)
Commercial mortgage-backed securities
3

 
26,399

 
(123
)
 
2

 
19,443

 
(452
)
 
5

 
45,842

 
(575
)
States of the U.S. and political subdivisions
16

 
56,739

 
(933
)
 
37

 
121,536

 
(6,197
)
 
53

 
178,275

 
(7,130
)
Total temporarily impaired debt securities HTM
73

 
$
1,061,703

 
$
(7,851
)
 
95

 
$
984,076

 
$
(33,395
)
 
168

 
$
2,045,779

 
$
(41,246
)
We do not intend to sell the debt securities and it is not more likely than not that we will be required to sell the securities before recovery of their amortized cost basis.
Other-Than-Temporary Impairment
We evaluate our investment securities portfolio for OTTI on a quarterly basis. Impairment is assessed at the individual security level. We consider an investment security impaired if the fair value of the security is less than its cost or amortized cost basis. We did not recognize any OTTI losses on securities for the nine months ended September 30, 2018 or 2017.
States of the U.S. and Political Subdivisions
Our municipal bond portfolio with a carrying amount of $1.0 billion as of September 30, 2018 is highly rated with an average entity-specific rating of AA and 100% of the portfolio rated A or better, while 99% have stand-alone ratings of A or better. All of the securities in the municipal portfolio except one are general obligation bonds. Geographically, municipal bonds support our primary footprint as 65% of the securities are from municipalities located throughout Pennsylvania, Ohio, Maryland, North Carolina and South Carolina. The average holding size of the securities in the municipal bond portfolio is $3.1 million. In addition to the strong stand-alone ratings, 64% of the municipalities have some formal credit enhancement insurance that strengthens the creditworthiness of their issue. Management reviews the credit profile of each issuer on a quarterly basis.


19


NOTE 5.    LOANS AND LEASES
Following is a summary of loans and leases, net of unearned income:
TABLE 5.1
(in thousands)
Originated
Loans and
Leases
 
Acquired
Loans
 
Total
Loans and
Leases
September 30, 2018
 
 
 
 
 
Commercial real estate
$
5,978,629

 
$
2,867,111

 
$
8,845,740

Commercial and industrial
3,892,822

 
470,635

 
4,363,457

Commercial leases
346,579

 

 
346,579

Other
34,732

 

 
34,732

Total commercial loans and leases
10,252,762

 
3,337,746

 
13,590,508

Direct installment
1,670,964

 
107,159

 
1,778,123

Residential mortgages
2,457,380

 
527,282

 
2,984,662

Indirect installment
1,880,487

 
162

 
1,880,649

Consumer lines of credit
1,116,376

 
489,085

 
1,605,461

Total consumer loans
7,125,207

 
1,123,688

 
8,248,895

Total loans and leases, net of unearned income
$
17,377,969

 
$
4,461,434

 
$
21,839,403

December 31, 2017
 
 
 
 
 
Commercial real estate
$
5,174,783

 
$
3,567,081

 
$
8,741,864

Commercial and industrial
3,495,247

 
675,420

 
4,170,667

Commercial leases
266,720

 

 
266,720

Other
17,063

 

 
17,063

Total commercial loans and leases
8,953,813

 
4,242,501

 
13,196,314

Direct installment
1,755,713

 
149,822

 
1,905,535

Residential mortgages
2,036,226

 
666,465

 
2,702,691

Indirect installment
1,448,268

 
165

 
1,448,433

Consumer lines of credit