Good morning, and welcome to the F.N.B. Corporation's Second Quarter 2021 Earnings Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, today's event is being recorded. I would now like to turn the conference over to Lisa Constantine, Investor Relations. Ms. Constantine, please go ahead.

Thank you. Good morning, everyone, and welcome to our earnings call. This conference call of F.N.B. Corporation and the reports it files with the Securities and Exchange Commission often contain forward-looking statements and non-GAAP financial measures. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP. Reconciliations of GAAP to non-GAAP operating measures to the most directly comparable GAAP financial measures are included in our presentation materials and in our earnings release. Please refer to these non-GAAP and forward-looking statement disclosures contained in our related materials, reports and registration statements filed with the Securities and Exchange Commission and available on our corporate website. A replay of this call will be available until July 27, and the webcast link will be posted to the About Us, Investor Relations and Shareholder Services section of our corporate website. I will now turn the call over to Vince Delie, Chairman, President and CEO.

Thank you, and welcome to our earnings call. Joining me today are Vince Calabrese, our Chief Financial Officer; and Gary Guerrieri, our Chief Credit Officer. First, I will provide a short review of the second quarter financial results. Then I'll cover recent performance trends of our key business lines before turning the call over to Gary and Vince for their remarks. Lastly, I'll wrap up the call by discussing the key consideration of last week's merger announcement with Howard Bancorp Inc. FNB second quarter earnings per share totaled $0.31, representing an 11% increase on a linked-quarter basis. Operating net income reached a record $101 million and total revenue increased to $308 million. Our performance resulted in a return on tangible common equity of 16% and growth in tangible book value per share to $8.20, an increase of $0.19 or 2%. The quarter's efficiency ratio of 56.8% improved due to the benefit of increased revenue and continued expense discipline as we achieved the 2021 operating cost savings goal of $20 million. Our company remains well capitalized with an estimated CET1 ratio of 10.02% for the second quarter. Second quarter revenue was supported by record wealth management revenues and strong contributions across a number of segments, including insurance, mortgage banking, capital markets and SBA lending. Many of these areas have continued to benefit from our expansion into higher growth markets. On a year-to-date basis, wealth management revenues increased over $6 million, as total wealth management and insurance revenues increased 26% and 8%, respectively. Looking at the balance sheet on an annualized linked-quarter basis, FNB demonstrated strong fundamental performance as we saw a pickup in lending activity that translated into a significant spot loan growth of 9% when excluding the impact of PPP loan. On a spot basis, total deposits were flat with seasonal outflows and a decline in time deposit balance. Non-interest-bearing deposits grew to $10.2 billion at June 30 and now comprise a third of total deposits. This brings our loan-to-deposit ratio to 82.4%, providing FNB with ample liquidity and a favorable funding mix moving forward. Diving deeper into the Wholesale Bank's performance this quarter, we are encouraged that commercial loan activity has begun to pick up across the footprint and pipelines are healthy entering the second half of the year. We have significant opportunities within the commercial pipelines in the Carolinas, Pittsburgh and Mid-Atlantic markets, which reached the highest level in the last two years. Additionally, strength in the total near-term pipeline gives us optimism for a strong second half for commercial loan origination. Consistent with our comments on the April call, activity levels around commercial pipelines as well as consumers are encouraging given our goal to reach mid single-digit loan growth on a spot basis by the end of the year. However, I'll note that commercial line utilization rates remain well below historical levels. We are optimistic that utilization rates could move higher in the second half of this year as remaining PPP loans are processed through the forgiveness period and the U.S. economy begins to accelerate as the supply chain for many industries improves. As we discussed on the prior call, our mortgage banking business continues to see near record production volumes; however, gain-on-sale margins contracted across the industry during the quarter reflecting the current market conditions. In addition to mortgage banking, the overall consumer pipelines have grown significantly since the beginning of the year. We have begun to experience lending growth across the consumer product set. As economic activity has begun to pick up, we are experiencing increased loan demand in commercial and consumer banking and favorable credit trends. With that, I'll turn the call over to Gary so he can provide additional detail on asset quality.

Thank you, Vince, and good morning, everyone. Our results for the second quarter were favorable and we are very pleased with our credit portfolios position moving into the second half of the year. Delinquency and non-performing levels decreased meaningfully during the quarter and our net losses remained low. Positive momentum of the broader economy and continued reopening of businesses have further contributed to the favorable results for the quarter, particularly as some borrowers in the more sensitive industries and asset classes begin to show signs of recovery. I'll cover that in greater detail later in my remarks. But first, let's walk through our credit results for the second quarter and review some of those highlights. The level of delinquency, excluding PPP balances ended June at 80 basis points, a 9 basis point improvement linked-quarter, which was driven by broad improvements across all portfolios, notably commercial and 1-4 family. The level of non-performing loans (NPLs) and other real estate owned (OREO) also improved to end the quarter at 58 basis points, representing a 14 basis point decrease from the prior quarter's ex-PPP level. Our NPLs decreased meaningfully down nearly $30 million during the quarter, which was driven primarily by a $21 million reduction in the commercial portfolio, including the resolution of a credit that was previously reserved for. Net charge-offs for the quarter were very low at $3.8 million or 6 basis points annualized, while year-to-date net charge-offs remained at a very solid 9 bps annualized. Non-GAAP net charge-offs, excluding PPP balances were 7 bps and 10 bps for the quarter and year, respectively. We recognized a $1.1 million net benefit in provision this quarter following broadly improving economic activity and positive credit quality results through June, resulting in a stable reserve position at 1.42%, while the ex-PPP reserve stands at 1.51%. NPL coverage also remains very favorable at 278% due to reduced NPL levels during the quarter. Our total ending reserve position inclusive of acquired unamortized discounts totals 1.58%. I'd now like to provide some additional color on our loan portfolio and give an overview of our approach to underwriting and managing risk as lending markets remain highly competitive. Looking quickly on loan deferrals, we ended June at a level of 0.7% of our core loan portfolio with these levels continuing to decline as new requests have essentially ceased and borrowers returned to contractual payment schedules. Our banking teams have also remained actively engaged with our commercial customers to stay apprised of how the broader economy and emerging trends are affecting their operations, including the impact of supply chain disruptions, labor shortages and the general future outlook for their respective industries. These factors are all taken into careful consideration during our underwriting and credit approval processes, which is consistent with our overall credit philosophy. We were successful in closing a number of high-quality lending opportunities in the quarter with strong borrowers that fit within our desired credit profile and we will continue to approach transactions in this manner to help us meet our growth targets while maintaining our desired risk profile. In closing, we had a successful quarter marked by solid credit results and loan losses, which has us favorably positioned moving into the second half of the year. We made significant progress working down rated credits as indicated by a 15% reduction in classifieds, reflecting the tireless efforts put forth by our workout teams to reduce exposure to more sensitive industries and take risk off the table as economic conditions continue to improve. As we look ahead to new lending opportunities, our core credit principles that have served us well throughout economic cycles remain front and center in all credit decisions we make including consistent and disciplined underwriting across the footprint, attentive and timely management of risk, and proactive portfolio management to further position us for the quarters ahead. I'll now turn the call over to Vince Calabrese, our Chief Financial Officer for his remarks.

Thanks, Gary, and good morning. Today, I will discuss our financial results and current expectations. As noted on Slide 5, first quarter EPS increased to $0.31, up significantly from the prior and year-ago quarters. Looking at highlights for the quarter, on an operating basis, net income available to common stockholders increased $18.3 million or 22% to a record $101.5 million as total revenue increased $2.1 million or 0.7%. Operating expenses were well controlled, down $5 million linked-quarter. We saw a negative provision for credit losses due to the improved credit metrics that Gary just discussed. Linked-quarter growth and operating PPNR of $7 million or 6% reflects the company's strong performance in the quarter even without provision benefit. Now turning to Slide 7 to review the balance sheet. Period-end loan balances excluding PPP increased $515 million or 9.1% annualized on a linked-quarter basis. Through organic growth with strong contributions from both the commercial and consumer segments, the economy continues to rebound. On an average balance basis, total loans decreased $56 million reflecting accelerated PPP forgiveness during the second quarter. On the deposit side, average deposits increased $1.1 billion or 3.9% to over $30 billion, a record high with non-interest bearing deposits comprising 33% of total deposits. On a spot basis, deposits were relatively flat, even with the managed decline in higher cost time deposits. Focusing on Slide 8. Net interest income increased $5 million to $227.9 million as the PPP contribution increased $2.2 million to $25 million, which was offset by a $1.9 million decreased contribution of purchase accounting accretion to $5.0 million. The underlying net interest income trends improved due to a more favorable balance sheet mix and our continued focus on reducing deposit costs in the lower interest rate environment, which was evidenced by our total cost of interest bearing deposits declining 7 basis points to 24 basis points. Reported net interest margin decreased 5 basis points to 2.70% as earning asset yield declined 9 basis points, which was partially offset by the 6 basis point reduction in the cost of funds. The yield on total loans and leases remain stable at 3.51%. When excluding the higher cash balances, purchase accounting accretion and PPP impacts, the underlying net interest margin would be 2.71%, representing a 1 basis point increase compared to the first quarter 2021 and the second consecutive quarter of improving underlying net interest margin. Let's now look at non-interest income and expense on Slides 9 and 10. Non-interest income totaled $80 million decreasing $3 million from record levels last quarter. We achieved record wealth management revenue of $15 million through contributions across the geographic footprint and positive market impacts on assets under management. SBA volume and average size of transactions increased during the quarter, driving SBA premium revenues to $2.6 million almost double the prior quarter. Pipelines in this business remain solid and we expect near-term SBA premium revenues to be strong. Mortgage banking operations income decreased $8.3 million as gain-on-sale margins tightened meaningfully in the second quarter 2021 throughout the industry. Held-for-sale pipeline declined significantly from elevated levels and the benefit for mortgage servicing rights impairment valuation recovery was $2.2 million lower than last quarter. Non-interest expense decreased $2.4 million linked-quarter on a reported basis. When excluding $2.6 million of branch consolidation costs in the quarter, non-interest expense decreased $5 million or 2.7%. On an operating basis, salaries and employee benefits decreased $5.3 million or 4.9%, primarily related to the timing of normal annual long-term stock awards recognized in the first quarter each year. Outside services expenses increased $1.8 million reflecting increases from third-party technology providers, legal costs, and other consulting engagements. We are very pleased with this quarter's results with record operating net income, accelerating sequential loan growth, strong revenue growth, solid credit quality metrics and continued growth in tangible book value per share, increasing $0.19 per share to $8.20. Now turning to our outlook for the third quarter of 2021. Excluding PPP contribution, we would expect net interest income to be up slightly in the third quarter compared to the second quarter. The level of PPP contribution will be a direct function of the modest forgiveness process during the quarter. Our current thinking is that we will see around $500 million of forgiveness in the third quarter, which would translate into a $79 million reduction in net interest income contribution from PPP loans. However, if the SBA approves forgiveness closer to second quarter levels, the reduction in PPP contribution would be smaller. We expect non-interest income to be in the high $70 million area given the diversified nature of our non-interest income revenue streams. We expect non-interest expense to be flattish compared to operating expenses in the second quarter. Our provision for loan losses remains dependent on the level of loan origination activity and we are encouraged by the favorable credit trends observed during the first half of 2021. Regarding our full-year assumptions, our loan growth, total revenue, and non-interest expense assumptions remain unchanged with current deposit growth reflecting the benefit of additional government stimulus as we continue to see increased liquidity and a loan-to-deposit ratio below historical levels. With that, I will turn the call back to Vince.

Thanks, Vince. I'd like to provide an update on the pending Howard acquisition. We are excited to begin the integration process with the Howard team. We are confident that our established leadership in the Mid-Atlantic market will work well with the talented bankers at Howard. We share a deep culture of client and community service, which should allow for a seamless transition in the coming months for all of our stakeholders. We also expect the conversion and integration to run smoothly as both organizations operate on common core systems. As discussed previously, our decision to selectively enter higher growth markets through a combination of de novo locations, loan production offices and strategic acquisitions has FNB well positioned today. With the Howard merger, we will grow to the number six deposit share in the Baltimore MSA, while adding meaningful customer density to the Mid-Atlantic region, which covers Maryland, Washington D.C. and Northern Virginia. Our long-term strategy is to best position our company in the markets where we have the ability to grow loans, low-cost deposits and fee income organically through increasing our market share over the long-term and expanding the universe of clients and prospects. If you look at our market expansion strategy in the Mid-Atlantic, our four acquisitions since 2013 came in at a lower relative acquisition cost with a weighted average price to tangible book of 1.5x. Our growth strategy in the Mid-Atlantic region provided access to a population of 10 million and more than 300,000 businesses with revenue greater than 100,000. Since the end of 2015, our compounded annual organic loan growth for FNB in Maryland is 15%. Furthermore, as a company overall, we have nearly doubled our annual non-interest income since 2015 from $162 million to $294 million, most of which has to do with our investment in products and services, but also bringing those capabilities into our expansion markets and broadening our client relationships. Therefore, we are very excited about our long-term potential for growth as we offer our deep product suite to Howard's customer base. Looking specifically at some of the transaction highlights. The Howard franchise increases FNB Baltimore deposits by $1.7 billion to $3.5 billion on a pro forma basis, while creating a combined organization of more than $41 billion in total assets. Additionally, the transaction carries lower execution risk given the end market synergies. We view the transaction as financially attractive with a 4% EPS accretion with fully phased-in cost savings and enhanced pro forma profitability metrics, which included 200 basis point improvement in the efficiency ratio and an internal rate of return greater than 25%. Consistent with our approach to capital management, the transaction is expected to be neutral to CET1 at closing and includes minimal tangible book value dilution of 2%. As I noted earlier, our tangible book value growth this quarter alone was 2%, essentially earning the tangible book value dilution back in one quarter. Our M&A strategy hasn't changed from what we said in the last couple of quarters. First and foremost, our focus is on organic growth. But if opportunities arise, where the target is in market, has potential for significant cost savings and carries low execution risk with minimal tangible book value dilution, the potential acquisition becomes worthy of evaluation. We are excited about the opportunities in front of us as our organization continues to flourish and evolve as a more diversified financial institution. Last month, we were honored to be named as the Top Workplace in Northeast Ohio for the 7th consecutive year and our 30th Workplace recognition overall, which are based solely on employee feedback. In closing, we are focused on continuing our commitment to advance our market position by gaining scale and operational efficiency and by cultivating a great culture and meaningful lasting relationships with our clients and communities while simultaneously creating value for our shareholders. With that, I will turn the call over to the operator for questions.

Yes. Thank you. At this time, we will begin the question-and-answer session. And this morning's first question comes from Frank Schiraldi with Piper Sandler.

Good morning. Just on loan growth. I just want to make sure I understand the mid single-digit growth expectation or guide for 2021. Does that assume, Vince, that line utilization rates remain at the low levels they are now, and then there could be upside if that moves higher? Is that the messaging?

Yes.

Okay. And then on the other side of the coin, the thing I worry about a little bit is, I know you guys have always had such a strong credit function, there's so much liquidity out there, presumably chasing loans that I would imagine companies, banks could get more aggressive on price in terms and - pricing in terms and good banks could find themselves on the sidelines to some degree. So I just wonder if you're seeing evidence of that in the marketplace in terms of tighter pricing, tighter terms and just your general thoughts there?

Frank, I'll try to tackle the initial response and then I'll turn it over to Gary, as he sees the other trends relative to credit pricing more than I do. But I can tell you, we have 10 regions. If you look at the breakdown of the growth by region, Pittsburgh has a huge portfolio. They were up about 3%. Our capital region, which is Harrisburg, Scranton, Lancaster and Redding, they were up just almost 5%. South Carolina, which is Charleston, principally, they were up 15%. South Raleigh was up approximately 4%. That was a pretty decent-sized portfolio. And then we saw some growth in Builder Finance and in our SBA portfolio. So I think that we have enough granularity, and that was the strategy from day one was to not be dependent on a single geography where adverse selection kicks in and market trends move in the wrong direction, we end up booking assets that come back to haunt us. As you know, from your long history with this company, we are very conservative. Many of the moves that we made leading into the current situation, we were very proactive in discarding what we considered to be risky asset classes because we thought we were in the late term of the cycle even before the pandemic. So I think we're very well positioned from a credit perspective. I think we're proven. We don't have to make any bones about it. We performed exceptionally well. In fact, I would argue that without stimulus, many of our peers might have had more substantial credit problems because of concentration in certain industries, which we don't have. So I think that given everything that we've designed within our company, it's all working pretty well and I would suspect that those pipelines, it's going to vary from market to market and some markets are irrational, and we're going to back away, but we can lean in, in other areas to pick up the slack. Go ahead, Gary. I'll let you talk about the trends which you're seeing.

Yes. Frank, in terms of the competitive nature of it, it surely is that we're going to pick our spots with our clients and we'll compete from a pricing standpoint as we have. We've seen during the quarter some great high-quality opportunities with some really strong clients, as I mentioned in my remarks. We're seeing more and more of those opportunities. There's some M&A activity going on and we'll continue to play in that space and pick our spots. The other thing we are seeing is it's a very good time to get rid of some assets that we don't want on the balance sheet for the long-term. Banks are very aggressive in that space right now. And it's one of the reasons why we were able to upgrade some credits and more importantly, get rid of some of those credits that we didn't want during the quarter, which helped that classified number come down significantly. We do also expect that to continue as we roll into Q3. So hopefully, we get some additional benefit there. But we'll be opportunistic to pick our spots and take care of our clients as we do each and every day.

Okay. Great. And then one last one, if I could, just in terms of M&A. Certainly, Howard does fit the bill of what you've been talking about for the last few quarters, Vince, in terms of the potential strategy or what you look for in a partner. Just wondering, I guess maybe you never say never, but just wondering your thoughts on, could you see something more expansionary larger on the M&A side or is that kind of largely off the table for you guys, just given what you are able to do on the organic side?

Well, I think we're still focusing on organic growth. Opportunistically, there may be opportunities that come up. We're going to be keenly focused on tangible book value dilution as the governor. So as that kind of moves out certain transactions, right. Unless we can get substantial cost take out and it fits strategically and is active to our organic growth strategy, I would hold it out. If it works within our strategy and I said it pretty clearly, I thought in the prepared comments, we're going to look for those metrics that drive returns for shareholders and fits into our strategy, which I think we've executed extraordinarily well. I reflect back to 2017. I don't think there's been a quarter where we missed what our forecasting has been. So I think our employees have done an exceptional job integrating those companies. We've done a phenomenal job growing non-interest income. I mentioned that on the call, it's more than double, almost all organic and again, it's the execution of our strategy against the market expansion and the accumulation of companies that we brought on through our acquisitions and through organic growth. So that continues to bode well for us. And I think we've got a lot of work to do on the digital front to continue to improve our interface and we continue to drive activity from a technology perspective and that's very exciting. So I think when you look at all of that, that's pretty much our M&A strategy. I think I've reinforced it in the script and hopefully that's clear enough for everybody.

Yes. That's great. Thank you. Thanks for all the color. That’s all I have.

Thank you. Yes. Appreciate it. Thanks, Frank.

Thank you. And the next question comes from Michael Perito with KBW.

Hey, good morning.

Good morning, Mike.

Good morning, Mike.

A couple of questions from me. Just on the unchanged revenue guide, I think, approximately $1.2 billion for the full-year. It seems like you're actually tracking a little ahead of that to start through the first six months here and I'm just curious outside of what's likely some conservatism around PPP forgiveness, I imagine, in terms of the timing of when that recognizes. Is there anything else in the back half of the year that we should be mindful of from a revenue perspective? Like, for example, the recent wealth production has been strong, is there some likes for normalization there or anything else that could potentially kind of slow the trajectory you're on from a revenue standpoint in the back half of the year?

Well, I think, we're being conservative because we're in uncharted territory here. I mean, I want to be optimistic. I'm an optimistic person. You guys have accused me of that many times. I tried to stay positive, but I also know that there are quite a few unknowns out there. The changes that have gone on with the pandemic, it really turned some things upside down. So I think can we achieve greater loan growth and increases in outstanding balances in the loan portfolio? Absolutely, but the supply chain needs to be corrected. There are a number of issues, particularly in the C&I segment with companies that can't meet full production quotas because they can't get supplies. Their commodity price increases that haven't been reflected in revolver balances because they can't get the product or they're unwilling to take the risk on price volatility in the current market. So there are quite a few unknowns out there. Inflation, what will inflation do? When you look at the mortgage business, gain-on-sale margins came in fairly substantially. We signaled that on the last call, somebody had asked, and we had indicated that we saw that they were coming in and they've been varying. So there is some volatility in the pricing there too because of the changes in the 10-year interest rate in particular, so there's quite a bit out there that makes it difficult to forecast. Having said all of that, I think the activity has picked up, the pipelines are up substantially. It's the best pipelines we've had in consumer small business and middle market banking in a number of years. And I'm hopeful that we can execute and turn that around. When you look at non-interest income, I think one of the benefits of having such a diverse base fee-based businesses is when one is up – when one is down the other one is up. So SBA is really up fairly significantly. Wealth had a big leap because of some organic growth that we experienced and improvement in net asset values because of market conditions. That all offsets the mortgage decline. So I think and I can tell you from a capital markets perspective, we probably would have been a little more conservative looking into the future, but I think with the 10-year at about $1.18 right now, there is now an opportunity for people to continue to fix. The rates to derivatives fee income looks like it's still hanging in there pretty solidly. We've got some great syndications opportunities in our debt capital markets platform that we launched. We've already seen three or four deals that we participated in. So that's all exciting, but again, it's very difficult to forecast in this environment.

Yes. No, that makes sense. Appreciate the color. Maybe a question on the kind of the liquidity position in the margin from here. I mean, you guys continue to grow deposits, which I imagine is a good indicator of kind of overall customer growth in this quarter, particularly, but with a lot of the stimulus playing out over the last two quarters. But just curious how you guys are thinking about the cash position, pace of deployment in the bond book and/or conversely sitting heavier in cash and hoping that the loan growth kind of materializes and maybe there's some normalization in deposits if the economy continues to recover? Just any thoughts there?

Yes. I would say this on the investment portfolio side. I mean, our plan from here is to reinvest cash flows coming off the portfolio. We're not looking to increase the size of it. I mean, during the second quarter, we opportunistically reinvested 110% of cash flows. So we grew the portfolio a little bit. There were some opportunities in April, in late June. Our plan from here to the rest of the year, we just think to reinvest about $125 million to $150 million a month and kind of put that to work. The reinvestment rates in the second quarter were at $1.21. Rates compared today were down to $1 and could go even sub-$1. So we'll pause when it doesn't make sense to do that. So investment strategy is pretty much intact and then the level of cash on the balance sheet that we have – the main focus area is going to deploy that in loan origination, on the loan growth in the second half of the year. As Vince said, there's a lot of opportunities there throughout the market and then there is opportunity to use some of the cash too once we close the transaction. There's some borrowings and some deposit classes that would make sense to kind of use some of our cash there too. So that's kind of a high-level plan as far as the cash position.

Got it. Helpful. And then just one last question for me, just regarding Howard. I appreciate the additional color. Looking at Howard's recent results, it seemed like over the last quarter or two particularly, they'd start to really show some good organic growth despite everything going on and after some initial slowdown after their transaction with First Mariner. I'm just curious, I mean – I imagine that's a kind of a critical piece of this for you guys as you mentioned, trying to be additive to your Baltimore growth. I'm just curious if you have any color you can provide on kind of the retention of that lending team and how you kind of expect them to fit into your already growing operation in the greater Baltimore region?

That's a great question and I'm happy to answer it. I think when we first set out to do due diligence on Howard. We know what we would find and as we dug deeper into the information, we became extremely confident with the quality of the people and the quality of the portfolio. And I think this is one of the lowest credit marks we've had, believe me Gary and his team do a fairly extensive job, Tom, Fisher, Gary, the whole team evaluating risk within those targets. We're very seasoned at doing the acquisitions and many of us have been here for a number of years. I've personally been here for I think 15 or 17, I don't remember. But there's a quite a bit of due diligence that goes on. We were very impressed with the people, with the culture, with Mary Ann's leadership. I know the company has struggled a little bit, but when you look at the opportunity for us, just in the DDA accounts, we had 40,000 customers in the Baltimore market. With our data analytics teams, with our digital strategy on the consumer side that provide substantial benefit. If you look at the opportunities from a mortgage lending perspective in the market, it's been a big contributor to our success. In the Mid-Atlantic region in total, they are in mortgage banking that provides us with a tremendous amount of opportunity and the consumer segment relative to mortgage banking. If you look at commercial banking, their legal lending limit was relatively small, while they have a really, we think, a pretty solid customer base. They don't offer derivatives. They don't offer international banks. They don't offer as many treasury management services as we offer. So there's a substantial opportunity, which by the way, this has not all been modeled. We think over time, just like we did with the rest of the company with non-interest income growth, we have an opportunity with that portfolio and Gary, I don't know if you want to talk about the credit due diligence or we evaluated the opportunity.

Yes. The due diligence work that the team does and as Vince mentioned, it's a deep team. The group has done many of these transactions. We totally reunderwrote 80% of the commercial loan book at Howard and it checked out very, very nicely. Vince mentioned the credit mark at 1.7%. We also reviewed 20% of the retail book with the underwriting there, evidence of lower risk underwriting, so felt very comfortable really across the books. The philosophy around the commercial underwriting was very similar to ours. So again, a lot of good work done there, felt very comfortable with the credit mark and the work that the team has done at Howard. So we feel it's a very good match from a cultural standpoint.

And we also from a leadership perspective have strong leadership in Baltimore. Baltimore has been a double-digit performer for us from an organic perspective; we've grown 15% per year since 2013 there. So we have a very strong team. They have very good people. I'd say, our focus is probably a little bit further up market. Their focus is middle market and small business. It fits in very well for us. So there's plenty of opportunities for their bankers to join our team and benefit plus we are keeping the Credit Officer. So he will be one of the Senior Credit Officers in the marketplace because there is confidence. The management team will be there tomorrow. So we will have a meeting with the bankers tomorrow. We're very excited about that and I think that we'll be able to convey some of the things we've said today to those individuals. And I think they'll be excited about the opportunities for them to cross-sell additional products and services and to serve their clients. I don't remember if you've asked me anything else, but I will tell you that we're very excited about the opportunity to double our deposit share in Baltimore. There are a number of large players there at number six deposit share with $3.5 billion, I think we nearly doubled number seven. So and then it moves up fairly dramatically from there. So having that additional scale in Baltimore, in the Mid-Atlantic region is critically important. So look what it did for us in Pittsburgh, it substantially accelerated our ability to go after middle market opportunities and grow organically in Pittsburgh. And I think the same will happen there.

Got it. Helpful. Yes, I think the only other element was just kind of the actual formal retention of lenders, but it sounds like that's still being sorted out.

And we are still working through that. Believe me, we've allocated substantial retention. We have a process that we use to evaluate talent and flight risk. We've done this a number of times. I would say, despite what everybody believes, we've done a pretty good job of retaining who we wanted to retain throughout our history of acquisition. So I can't say any more than that, I think.

Understood. Thanks for the color there. And then just returning to the mortgage side just for a quick question. There was about a 5% linked-quarter growth there and so can we assume that was due to holding the production on the books?

Yes, that's just the nature of the loans that we originated during the quarter. So yes, that's all I think. It's just from origination activity.

Yes, in terms of the growth that you are seeing in the auto space, that's kind of seasonally driven. The dealers are having trouble with new vehicles from that standpoint. That's a smaller part of our business, but it's impacting activity there.

Thank you, and good morning, everyone. I'd like to provide some additional color on our loan portfolio and give an overview of our approach to underwriting and managing risk as lending markets remain highly competitive. Looking quickly on loan deferrals, we ended June at a level of 0.7% of our core loan portfolio with these levels continuing to decline as new requests have essentially ceased and borrowers returned to contractual payment schedules. Our banking teams have also remained actively engaged with our commercial customers to stay apprised of how the broader economy and emerging trends are affecting their operations, including the impact of supply chain disruptions, labor shortages and the general future outlook for their respective industries. These factors are all taken into careful consideration during our underwriting and credit approval processes, which is consistent with our overall credit philosophy. We were successful in closing a number of high-quality lending opportunities in the quarter with strong borrowers that fit within our desired credit profile and we will continue to approach transactions in this manner to help us meet our growth targets while maintaining our desired risk profile. In closing, we had a successful quarter marked by solid credit results and loan losses, which has us favorably positioned moving into the second half of the year.

Great and then one final one from me. With regards to Howard acquisition, could you give us some details on the accretion that you expect to recognize and the timeframe over which you expect to recognize that?

Yes, I can touch on that. So when you net credit mark accretion with the loan mark accretion and some of the smaller items, I mean it really only totals to about 20 basis points of 4% accretion. So on a kind of more cash accretion basis, you're looking at 3.8% total accretion. Now, in terms of over what time frame and we assume a five-year life of the loan portfolio and that's pretty much accreted straight line. So on a net basis, it's relatively small and less than like $1 million. Appreciate it.

Thanks for the call, everyone. I appreciate the time.

Thank you. Appreciate it.

Thank you. And this concludes our question-and-answer session. I would like to return the call to Vince Delie for any closing comments.

I'd like to thank everybody for calling and we had great questions, very detailed questions. It was a solid quarter. I'd like to congratulate the team. I think everybody in the field really stepped up in managing expenses, taking redundant costs out of the company was a focus, growing the loan portfolio was a focus. And that's all of that takes a tremendous amount of work. And I'd like to thank our team for everything they've done and they've really stepped up and it shows in the quarter. So thank you for your support and the questions, great detailed questions today. Thank you.

Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines.