FNB CORP/PA/FNB
FNB CORP/PA/ Income Taxes Disclosure
INCOME TAXES
Income Tax Expense
Federal and state income tax expense consist of the following:
TABLE 19.1
| Year Ended December 31 | 2025 | 2024 | 2023 | ||||||||||||||
| (in millions) | |||||||||||||||||
| Current income taxes: | |||||||||||||||||
| Federal taxes | $ | 48 | $ | 39 | $ | 93 | |||||||||||
| State taxes | 10 | 6 | 12 | ||||||||||||||
| Total current income taxes | 58 | 45 | 105 | ||||||||||||||
| Deferred income taxes: | |||||||||||||||||
| Federal taxes | 43 | 41 | (8) | ||||||||||||||
| State taxes | 3 | 4 | 2 | ||||||||||||||
| Total deferred income taxes | 46 | 45 | (6) | ||||||||||||||
| Total income taxes | $ | 104 | $ | 90 | $ | 99 | |||||||||||
The FASB issued ASU 2023-09, Income Taxes: Improvements to Income Tax Disclosures, which requires us to disclose additional categories of information about federal, state and foreign income taxes in the rate reconciliation table, effective for annual periods beginning after December 15, 2024. Additionally, this guidance requires us to provide more details regarding reconciling items in specific categories and provide disaggregation of those categories based on a quantitative threshold equal to 5% or more of the amount determined by multiplying pretax income by the applicable statutory rate.
The following table for the year ended December 31, 2025 is presented using both percentages and reporting currency amounts. The disclosure is presented only for the current year, as the FASB does not require retroactive application or comparative disclosure for prior periods.
TABLE 19.2
| Year Ended December 31 | 2025 | ||||||||||
| (dollars in millions) | Amount | Percent | |||||||||
| Statutory federal tax rate | $ | 141 | 21.0 | % | |||||||
| State and local income taxes, net of federal income tax effect | 10 | 1.6 | |||||||||
| Tax credits: | |||||||||||
| Renewable energy investment tax credits | (37) | (5.6) | |||||||||
| LIHTC | (21) | (3.2) | |||||||||
| Other tax credits | (5) | (0.7) | |||||||||
| Non-taxable or non-deductible items: | |||||||||||
| Tax-exempt interest | (9) | (1.3) | |||||||||
| Cash surrender value on BOLI | (4) | (0.6) | |||||||||
| Tax credit cost amortization, net of tax benefits | 20 | 2.9 | |||||||||
| FDIC premium disallowance | 7 | 1.1 | |||||||||
| Other non-taxable or non-deductible items | 3 | 0.4 | |||||||||
| Other | (1) | (0.1) | |||||||||
| Total income taxes / effective tax rate | $ | 104 | 15.5 | % | |||||||
The following table provides a reconciliation between the statutory tax rate and the actual effective tax rate:
TABLE 19.3
| Year Ended December 31 | 2024 | 2023 | |||||||||
| Statutory federal tax rate | 21.0 | % | 21.0 | % | |||||||
| State taxes, net of federal benefit | 1.5 | 1.9 | |||||||||
| Tax-exempt interest | (1.5) | (1.6) | |||||||||
| Cash surrender value on BOLI | (0.6) | (0.5) | |||||||||
| Tax credits | (9.0) | (7.3) | |||||||||
| Tax credit cost amortization, net of tax benefits | 3.2 | 2.3 | |||||||||
| FDIC premium disallowance | 1.3 | 1.0 | |||||||||
| Other items | 0.4 | 0.1 | |||||||||
| Effective tax rate | 16.3 | % | 16.9 | % | |||||||
The effective tax rates in 2025, 2024 and 2023, respectively, were lower than the 21% statutory federal tax rate primarily due to the tax benefits resulting from investment, historic and new market tax credits, tax-exempt income on investments and loans and income from BOLI. For the years ended December 31, 2025, 2024 and 2023, we recognized net investment tax credits, under Internal Revenue Code (IRC) section 48, of $37.2 million, $28.4 million and $23.7 million, respectively, from renewable energy projects using the flow-through method of accounting for income tax credits.
For 2025, our state income tax expense was primarily attributable to operations in the jurisdictions of Maryland and North Carolina, which together accounted for more than 50.0% of the total state income tax rate impact and related expense for the year.
We have no foreign operations and accordingly have no foreign income tax expense.
Income Taxes Paid
As part of the ASU 2023-09 related income tax disclosure updates, we are required to disclose income taxes paid (net of refunds received), disaggregated by jurisdiction when payments to any individual jurisdiction equal or exceed 5% of total income taxes paid.
In accordance with the transition guidance in ASU 2023-09, we have adopted the new disclosure requirements for the fiscal year ending December 31, 2025. The disclosure is presented only for the current year, as the FASB does not require retroactive application or comparative disclosure for prior periods.
We have elected to include the income taxes paid disclosure within this footnote. We do not pay any foreign income taxes. The amounts disclosed below include only income taxes accounted for under ASC 740 and exclude taxes not based on income, such as the Pennsylvania Bank Shares Tax and the Ohio Financial Institution Tax.
Net income tax refunds totaled $22.6 million for the year ended December 31, 2025 and are disaggregated by jurisdiction as follows:
TABLE 19.4
| (in millions) | Amount Paid | ||||
| Jurisdiction | |||||
| Federal | $ | (33) | |||
| State | |||||
| Maryland | 4 | ||||
| North Carolina | 3 | ||||
| Other | 3 | ||||
| Total state | 10 | ||||
| Total income taxes paid (refunded) | $ | (23) | |||
The Federal amount reflects refunds received in 2025 related to prior year tax filings and a prior acquisition, which exceeded current year federal tax payments.
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. DTAs and DTLs 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.
Other
On July 4, 2025, the One Big Beautiful Bill (the Act) was signed into law in the U.S. We are currently evaluating income tax implications of the Act. We do not expect the Act to have a material impact on our Consolidated Financial Statements.
The following table presents the tax effects of significant temporary differences that give rise to federal and state DTAs and DTLs:
TABLE 19.5
| December 31 | 2025 | 2024 | |||||||||
| (in millions) | |||||||||||
| Deferred tax assets: | |||||||||||
| Allowance for credit losses | $ | 98 | $ | 95 | |||||||
| Discounts on loans acquired in a business combination | 6 | 8 | |||||||||
| Net operating loss/tax credit carryforwards | 40 | 44 | |||||||||
| Deferred compensation | 19 | 17 | |||||||||
| Securities impairment | 2 | 2 | |||||||||
| Lease liability | 66 | 68 | |||||||||
| Net unrealized securities losses | 10 | 39 | |||||||||
| Other | 20 | 22 | |||||||||
| Total | 261 | 295 | |||||||||
| Valuation allowance | (31) | (34) | |||||||||
| Total deferred tax assets | 230 | 261 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Loan costs | (16) | (13) | |||||||||
| Depreciation | (29) | (16) | |||||||||
| Prepaid expenses | (2) | (2) | |||||||||
| Amortizable intangibles | (13) | (16) | |||||||||
| Pension and other defined benefit plans | (17) | (13) | |||||||||
| Equipment financing | (98) | (68) | |||||||||
| Mortgage servicing rights | (16) | (16) | |||||||||
| Lease ROU asset | (55) | (58) | |||||||||
| Other | (1) | (1) | |||||||||
| Total deferred tax liabilities | (247) | (203) | |||||||||
| Net deferred tax assets (liabilities) | $ | (17) | $ | 58 | |||||||
We establish a valuation allowance when it is more likely than not that we will not be able to realize the benefit of the DTAs or when future deductibility is uncertain. Periodically, the valuation allowance is reviewed and adjusted based on management’s assessment of realizable DTAs. As of December 31, 2025, the valuation allowance of $30.8 million primarily includes unused state net operating loss carryforwards expiring from 2026 to 2045. We anticipate that neither the state net operating loss nor the other net DTAs at certain of our subsidiaries will be utilized and, as such, have recorded a valuation allowance against the DTAs related to these items.
As of December 31, 2025, we had approximately $53.3 million of federal net operating loss and built-in loss carryforwards from acquired companies. The utilization of these tax attributes is subject to annual limitations under Section 382 of the Internal Revenue Code, or a similar state-level statute, which will cause the utilization of these attributes to be deferred over a number of years, not to exceed beyond 2038. We have determined that we will likely have sufficient taxable income in the years during which these tax attributes are available to be utilized and, consequently, have determined that no additional valuation allowance against the recorded DTA is warranted.
Uncertain Tax Positions
We account for uncertainties in income taxes in accordance with ASC 740, Income Taxes. At December 31, 2025 and 2024, we have approximately $6.3 million and $5.4 million, respectively, of unrecognized tax benefits related to uncertain tax positions. As of December 31, 2025, $6.7 million of these net tax benefits, including accrued interest, would affect the effective tax rate if recognized. We recognize potential accrued interest and penalties related to unrecognized tax benefits in income tax expense.
To the extent interest is not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision. A tabular reconciliation of the unrecognized tax benefits is not presented as the impact of changes to uncertain tax positions on our income tax expense was immaterial.
We file numerous income tax returns in the U.S. federal jurisdiction and in several state jurisdictions. We are no longer subject to U.S. federal income tax examinations for years prior to 2022. With limited exception, we are no longer subject to state income tax examinations for years prior to 2022. We do not anticipate a material reduction in the unrecognized tax benefit within the next twelve months from the expiration of statutes of limitations which would result in a reduction in income taxes.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 26, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Feb 26, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.