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First Citizens BancShares
FCNCA
#990
Rank
NZ$43.23 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
NZ$3,795
Share price
0.67%
Change (1 day)
22.24%
Change (1 year)
๐Ÿฆ Banks๐Ÿ’ณ Financial services
Categories
  1. First Citizens BancShares
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2026 Q2

First Citizens BancShares - 10-Q quarterly report FY2026 Q2


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________
FORM 10-Q
____________________________________________________
☒
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2026
or
☐Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number: 001-16715
First Citizens BancShares, Inc.
(Exact name of Registrant as specified in its charter)
Delaware56-1528994
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification Number)
4300 Six Forks RoadRaleighNorth Carolina27609
(Address of principal executive offices)(Zip code)
(919)716-7000
(Registrant’s telephone number, including area code)
____________________________________________________

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, Par Value $1FCNCA
Nasdaq Global Select Market
Depositary Shares, Each Representing a 1/40th Interest in a Share of 5.375% Non-Cumulative Perpetual Preferred Stock, Series AFCNCP
Nasdaq Global Select Market
5.625% Non-Cumulative Perpetual Preferred Stock, Series CFCNCO
Nasdaq Global Select Market
Depositary Shares, Each Representing a 1/40th Interest in a Share of 6.625% Non-Cumulative Perpetual Preferred Stock, Series EFCNCNNasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934:
Class B Common Stock, Par Value $1

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 the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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 ☒

Class A Common Stock—10,287,935 shares
Class B Common Stock—1,005,185 shares
(Number of shares outstanding, by class, as of August 3, 2026)





CONTENTS
Page
PART I—FINANCIAL INFORMATION
Item 1.
4
4
5
6
7
9
11
Item 2.
56
Item 3.
108
Item 4.
108
​
PART II—OTHER INFORMATION
Item 1.
109
Item 1A.
109
Item 2.
109
Item 5.
109
Item 6.
110
Signatures
111

2

GLOSSARY OF ABBREVIATIONS AND ACRONYMS
The following is a list of select abbreviations and acronyms used throughout this document. You may find it helpful to refer back to this table.

AcronymDefinitionAcronymDefinition
ACLAllowance for Credit LossesLGDLoss Given Default
ALLLAllowance for Loan and Lease LossesLOCOMLower of Cost or Fair Value
AOCIAccumulated Other Comprehensive IncomeLPLimited Partner
ASCAccounting Standards CodificationMD&AManagement’s Discussion and Analysis
ASUAccounting Standards UpdateMSRsMortgage Servicing Rights
BHCBank Holding CompanyNDFINon-Depository Financial Institution
bp or bpsBasis point(s); 1 bp = 0.01%NIINet Interest Income
CET1Common Equity Tier 1 Risk-based CapitalNII SensitivityNet Interest Income Sensitivity
DPADeferred Purchase AgreementNIMNet Interest Margin
DTAsDeferred Tax AssetsOREOOther Real Estate Owned
ETREffective Income Tax RatePAAPurchase Accounting Accretion or Amortization
EVE SensitivityEconomic Value of Equity SensitivityPAMProportional Amortization Method
FCBFirst-Citizens Bank & Trust CompanyPCAPrompt Corrective Action
FDICFederal Deposit Insurance CorporationPCDPurchased Credit Deteriorated
Federal ReserveBoard of Governors of the Federal Reserve SystemPDProbability of Obligor Default
FHLBFederal Home Loan BankPSLPurchased Seasoned Loan
FRBFederal Reserve BankROURight of Use
GAAPUnited States Generally Accepted Accounting PrinciplesSBASmall Business Administration
GDPGross Domestic ProductSOFRSecured Overnight Financing Rate
HLBVMHypothetical Liquidation at Book Value MethodSRPShare Repurchase Program
HPIHome Price IndexUPBUnpaid Principal Balance
HQLSHigh-Quality Liquid SecuritiesVIEVariable Interest Entity
ISDAInternational Swaps and Derivatives Association

3

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.
First Citizens BancShares, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)


dollars in millions, except share dataJune 30, 2026December 31, 2025
Assets
Cash and due from banks$1,519 $801 
Interest-earning deposits at banks21,132 19,801 
Securities purchased under agreements to resell737 232 
Investment in marketable equity securities (cost of $95 at June 30, 2026 and $83 at December 31, 2025)
156 127 
Investment securities available for sale (cost of $34,510 at June 30, 2026 and $31,952 at December 31, 2025)
33,983 31,790 
Investment securities held to maturity (fair value of $8,214 at June 30, 2026 and $8,491 at December 31, 2025)
9,418 9,647 
Assets held for sale93 804 
Loans and leases151,034 147,930 
Allowance for loan and lease losses(1,484)(1,566)
Loans and leases, net of allowance for loan and lease losses149,550 146,364 
Operating lease equipment, net9,755 9,621 
Premises and equipment, net2,523 2,447 
Goodwill346 346 
Other intangible assets, net171 195 
Other assets7,459 7,523 
Total assets$236,842 $229,698 
Liabilities
Deposits:
Noninterest-bearing$42,475 $40,653 
Interest-bearing130,952 120,925 
Total deposits173,427 161,578 
Credit balances of factoring clients1,339 1,148 
Borrowings:
Short-term borrowings152 224 
Long-term borrowings32,036 35,784 
Total borrowings32,188 36,008 
Other liabilities7,988 8,726 
Total liabilities214,942 207,460 
Stockholders’ equity
Preferred stock - $0.01 par value (20,000,000 shares authorized at June 30, 2026 and December 31, 2025)
1,765 1,375 
Common stock:
Class A - $1 par value (32,000,000 shares authorized at June 30, 2026 and December 31, 2025; 10,385,222 and 11,133,974 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively)
10 11 
Class B - $1 par value (2,000,000 shares authorized and 1,005,185 shares issued and outstanding at June 30, 2026 and December 31, 2025)
1 1 
Retained earnings20,354 20,768 
Accumulated other comprehensive (loss) income(230)83 
Total stockholders’ equity21,900 22,238 
Total liabilities and stockholders’ equity$236,842 $229,698 
See accompanying Notes to the Unaudited Consolidated Financial Statements.
4

First Citizens BancShares, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)

Three Months Ended June 30,Six Months Ended June 30,
dollars in millions, except share and per share data2026202520262025
Interest income
Loans and leases$2,253 $2,270 $4,459 $4,506 
Investment securities401 419 785 833 
Deposits at banks197 256 393 501 
Total interest income2,851 2,945 5,637 5,840 
Interest expense
Deposits881 894 1,714 1,787 
Borrowings314 356 646 695 
Total interest expense1,195 1,250 2,360 2,482 
Net interest income1,656 1,695 3,277 3,358 
(Benefit) provision for credit losses(10)115 62 269 
Net interest income after provision for credit losses1,666 1,580 3,215 3,089 
Noninterest income
Rental income on operating lease equipment280 272 561 542 
Lending-related fees73 69 142 135 
Deposit fees and service charges74 59 144 117 
Client investment fees59 52 112 105 
Wealth management services62 55 121 111 
International fees36 33 71 65 
Factoring commissions18 18 35 35 
Cardholder services, net38 41 76 82 
Merchant services, net13 13 26 27 
Insurance commissions13 14 26 28 
Fair value adjustment on marketable equity securities, net15 2 18 (3)
Gain on sale of leasing equipment, net14 8 25 13 
Loss on extinguishment of debt(7)— (15)— 
Other noninterest income 88 42 126 56 
Total noninterest income776 678 1,468 1,313 
Noninterest expense
Depreciation on operating lease equipment101 100 202 198 
Maintenance and other operating lease expenses67 55 132 113 
Personnel cost844 810 1,713 1,628 
Net occupancy expense59 61 119 119 
Equipment expense141 131 277 267 
Professional fees26 30 50 55 
Third-party processing fees100 63 193 126 
FDIC insurance expense39 38 77 76 
Marketing expense45 32 75 64 
Acquisition-related expenses8 38 13 80 
Intangible asset amortization11 13 24 28 
Other noninterest expense110 129 212 239 
Total noninterest expense1,551 1,500 3,087 2,993 
Income before income taxes891 758 1,596 1,409 
Income tax expense219 183 390 351 
Net income$672 $575 $1,206 $1,058 
Preferred stock dividends32 14 58 29 
Net income available to common stockholders$640 $561 $1,148 $1,029 
Earnings per common share
Basic and diluted$55.52 $42.36 $97.95 $76.73 
Weighted average common shares outstanding
Basic and diluted11,535,79213,237,22611,729,27113,405,295
See accompanying Notes to the Unaudited Consolidated Financial Statements.
5

First Citizens BancShares, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)


Three Months Ended June 30,Six Months Ended June 30,
dollars in millions2026202520262025
Net income$672 $575 $1,206 $1,058 
Other comprehensive (loss) income, net of tax
Net unrealized (loss) gain on securities available for sale(133)89 (272)328 
Net change in defined benefit pension items(3)(3)(5)(3)
Net unrealized (loss) gain on cash flow hedge derivatives(22)(1)(36)6 
Other comprehensive (loss) income, net of tax$(158)$85 $(313)$331 
Total comprehensive income$514 $660 $893 $1,389 
See accompanying Notes to the Unaudited Consolidated Financial Statements.


6

First Citizens BancShares, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

Three Months Ended
dollars in millions, except per share dataPreferred StockClass A Common StockClass B Common StockAdditional Paid in CapitalRetained EarningsAccumulated Other Comprehensive (Loss) Income Total Stockholders' Equity
Balance at March 31, 2026$1,765 $11 $1 $— $20,343 $(72)$22,048 
Net income— — — — 672 — 672 
Other comprehensive loss, net of tax— — — — — (158)(158)
Repurchased 298,907 shares of Class A common stock
— (1)— — (606)— (607)
Cash dividends declared ($2.10 per common share):
Class A common stock— — — — (21)— (21)
Class B common stock— — — — (2)— (2)
Preferred stock dividends declared:
Series A— — — — (4)— (4)
Series B— — — — (6)— (6)
Series C— — — — (3)— (3)
Series D— — — — (9)— (9)
Series E— — — — (10)— (10)
Balance at June 30, 2026$1,765 $10 $1 $— $20,354 $(230)$21,900 
Balance at March 31, 2025$881 $12 $1 $1,798 $19,802 $(199)$22,295 
Net income— — — — 575 — 575 
Other comprehensive income, net of tax— — — — — 85 85 
Repurchased 338,959 shares of Class A common stock
— — — (619)— — (619)
Cash dividends declared ($1.95 per common share):
Class A common stock— — — — (24)— (24)
Class B common stock— — — — (2)— (2)
Preferred stock dividends declared:
Series A— — — — (4)— (4)
Series B— — — — (7)— (7)
Series C— — — — (3)— (3)
Balance at June 30, 2025$881 $12 $1 $1,179 $20,337 $(114)$22,296 
7

Six Months Ended
dollars in millions, except share dataPreferred StockClass A Common StockClass B Common StockAdditional Paid in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss) Total Stockholders' Equity
Balance at December 31, 2025$1,375 $11 $1 $— $20,768 $83 $22,238 
Net income— — — — 1,206 — 1,206 
Other comprehensive loss, net of tax— — — — — (313)(313)
Issuance of Series E preferred stock390 — — — — — 390 
Repurchased 748,752 shares of Class A common stock
— (1)— — (1,514)— (1,515)
Cash dividends declared ($4.20 per common share):
Class A common stock— — — — (44)— (44)
Class B common stock— — — — (4)— (4)
Preferred stock dividends declared:
Series A— — — — (9)— (9)
Series B— — — — (13)— (13)
Series C— — — — (6)— (6)
Series D— — — — (20)— (20)
Series E— — — — (10)— (10)
Balance at June 30, 2026$1,765 $10 $1 $— $20,354 $(230)$21,900 
Balance at December 31, 2024$881 $13 $1 $2,417 $19,361 $(445)$22,228 
Net income— — — — 1,058 — 1,058 
Other comprehensive income, net of tax— — — — — 331 331 
Repurchased 641,642 shares of Class A common stock
— (1)— (1,238)— — (1,239)
Cash dividends declared ($3.90 per common share):
Class A common stock— — — — (49)— (49)
Class B common stock— — — — (4)— (4)
Preferred stock dividends declared:
Series A— — — — (9)— (9)
Series B— — — — (14)— (14)
Series C— — — — (6)— (6)
Balance at June 30, 2025$881 $12 $1 $1,179 $20,337 $(114)$22,296 
See accompanying Notes to the Unaudited Consolidated Financial Statements.
8

First Citizens BancShares, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
                                                                                                                                                                                                                                                             Six Months Ended June 30,
dollars in millions20262025
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$1,206 $1,058 
Adjustments to reconcile net income to cash provided by operating activities:
Provision for credit losses62 269 
Deferred tax expense (benefit)79 (74)
Depreciation, amortization, and accretion, net336 193 
Fair value adjustment on marketable equity securities, net(18)3 
Gain on sale of loans, net(8)(4)
Gain on sale of operating lease equipment, net(25)(13)
(Gain) loss on other real estate owned, net(2)7 
Loss on extinguishment of debt15 — 
Origination of loans held for sale(681)(678)
Proceeds from sale of loans held for sale911 771 
Impairment of premises and equipment and other assets1 5 
Net change in other assets(183)(241)
Net change in other liabilities(447)(290)
Other operating activities(31)(49)
Net cash provided by operating activities1,215 957 
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in interest-earning deposits at banks(1,331)(4,820)
Purchases of investment securities available for sale(8,685)(2,910)
Proceeds from maturities of investment securities available for sale2,806 2,972 
Proceeds from sales of investment securities available for sale3,427 1,196 
Purchases of investment securities held to maturity(100)(218)
Proceeds from maturities of investment securities held to maturity341 282 
Net increase in securities purchased under agreements to resell(505)(142)
Net increase in loans(3,968)(1,320)
Proceeds from sales of loans1,265 146 
Net increase in credit balances of factoring clients181 127 
Purchases of operating lease equipment(382)(385)
Proceeds from sales of operating lease equipment146 124 
Purchases of premises and equipment(243)(229)
Proceeds from sales of other real estate owned26 10 
Other investing activities(267)(272)
Net cash used in investing activities(7,289)(5,439)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in time deposits3,891 (2,010)
Net increase in demand and other interest-bearing deposits7,955 6,885 
Net (decrease) increase in securities sold under agreements to repurchase(72)104 
Repayment of long-term borrowings(5,005)(352)
Net proceeds from issuance of long-term borrowings1,244 1,242 
Issuance of Series E preferred stock390 — 
Repurchase of Class A common stock(1,505)(1,231)
Cash dividends paid(106)(82)
Other financing activities— 1 
Net cash provided by financing activities6,792 4,557 
Change in cash and due from banks718 75 
Cash and due from banks at beginning of period801 814 
Cash and due from banks at end of period$1,519 $889 
9

Six Months Ended June 30,
dollars in millions20262025
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest$2,263 $2,422 
Income taxes168 171 
Significant non-cash investing and financing activities:
Transfers of loans to other real estate15 54 
Transfer of assets from held for investment to held for sale862 286 
Transfer of assets from held for sale to held for investment55 — 
Retained interests in a securitization18 — 
Commitments extended during the period on affordable housing investment credits32 197 
See accompanying Notes to the Unaudited Consolidated Financial Statements.

10


First Citizens BancShares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

Nature of Operations
First Citizens BancShares, Inc. (the “Parent Company” and, when including all of its subsidiaries on a consolidated basis, “we,” “us,” “our,” “BancShares”) is a financial holding company organized under the laws of Delaware that conducts operations through its banking subsidiary, First-Citizens Bank & Trust Company (“FCB”), which is headquartered in Raleigh, North Carolina. BancShares operates a network of branches and offices, predominantly located in the Southeast, Mid-Atlantic, Midwest and Western United States. BancShares provides various types of commercial and consumer banking services, including lending, leasing, and wealth management services. Deposit services include checking, savings, money market, and time deposit accounts.

BASIS OF PRESENTATION

Principles of Consolidation and Basis of Presentation
These consolidated financial statements and notes thereto are presented in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations, and cash flow activity required in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, all normal recurring adjustments necessary for a fair presentation of the consolidated financial position and consolidated results of operations have been made. The unaudited interim consolidated financial statements included in this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). Interim results are not necessarily indicative of results for a full year.

The consolidated financial statements of BancShares include the accounts of BancShares and its subsidiaries, certain partnership interests, and variable interest entities (“VIEs”) where BancShares is the primary beneficiary, if applicable. VIEs are legal entities that either do not have sufficient equity to finance their activities without the support from other parties or whose equity investors lack a controlling financial interest. All significant intercompany accounts and transactions are eliminated upon consolidation. Assets held in agency or fiduciary capacity are not included in the consolidated financial statements.

Refer to Note 9—Variable Interest Entities for additional information regarding VIEs.

Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions based on available information. These estimates and assumptions impact the amounts reported in the consolidated financial statements and accompanying notes and the disclosures provided, and actual results could differ from those estimates. The significant estimate related to the determination of the allowance for loan and lease losses (“ALLL”) is considered a critical accounting estimate.


11


SIGNIFICANT ACCOUNTING POLICIES

Significant accounting policies are described in the 2025 Form 10-K. There were no material changes to these policies during the six months ended June 30, 2026, other than as described below:

Loan Sales and Securitizations
We periodically sell loans, or transfer loans in securitizations. We recognize the sale or transfer of loans when they are legally isolated from our creditors and the other appropriate accounting criteria are met, including the requirements of Accounting Standards Codification (“ASC”) 860, Transfers and Servicing.

In a securitization, financial assets are transferred into special purpose trusts or entities which could be VIEs. BancShares evaluates whether it will consolidate any VIEs in accordance with ASC 810, Consolidation, which includes an assessment of whether BancShares is the primary beneficiary because it has the power to direct activities that most significantly impact the economic performance of the VIE (“Significant VIE Power”), and bears the obligation to absorb losses of, or holds the right to receive benefits from the VIE that could be potentially significant to the VIE (“Significant VIE Exposure”). If BancShares does not consolidate the purchaser of the loans or the transferee, the loans are removed from the Consolidated Balance Sheets and a gain or loss is recognized in the Consolidated Statements of Income when the sale or securitization transaction is completed. Refer to Note 9—Variable Interest Entities for further discussion.

We may retain the servicing for loans sold, or loans transferred in a securitization. We recognize the servicing assets as further discussed in Note 1—Significant Accounting Policies and Basis of Presentation of our 2025 Form 10-K.

We may retain a portion of the debt securities issued in a securitization (“Retained Interests”). Retained Interests with high credit quality (i.e. generally a credit rating equivalent of AAA or AA) are accounted for in accordance with ASC 320, Investments—Debt Securities as further discussed in Note 1—Significant Accounting Policies and Basis of Presentation of our 2025 Form 10-K. Interest income is recognized based on contractual terms. When changes in prepayments occur, a cumulative catch-up adjustment is recognized in current period earnings for the difference between interest income previously recognized and the amount that would have been recognized under the updated yield since inception. The effective yield is not prospectively adjusted.

Retained Interests that are not of high credit quality are subject to ASC 320, Investments—Debt Securities and ASC 325-40, Beneficial Interests in Securitized Financial Assets. Interest income is recognized based on expected cash flows. Changes in expected prepayments and other noncredit-related cash flows are recognized through prospective yield adjustments. Increases in expected credit losses are recognized through the provision for credit losses with a corresponding increase to the allowance for credit losses (“ACL”). For available for sale Retained Interests, the ACL is limited to the amount by which amortized cost exceeds fair value. Accordingly, any portion of a credit-related decline in expected cash flows that cannot be recognized through the ACL is reflected prospectively as a reduction in yield. Decreases in expected credit losses are recognized through reductions in the ACL and provision for credit losses, not to exceed the amount of the previously recorded ACL, and any further credit-related improvement in expected cash flows increases the prospective yield.

Refer to Note 3—Investment Securities for further discussion.

Newly Adopted Accounting Standards

As of January 1, 2026, BancShares adopted the following Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board:

ASU 2025-08—Financial Instruments — Credit Losses (Topic 326): Purchased Loans, Issued November 2025
Under this ASU, purchased seasoned loans (“PSLs” as described below) must be recognized at the purchase price, plus the ALLL at the acquisition date (the “Gross-Up Approach”). Since the ALLL at the acquisition date is established through the Gross-Up Approach, there is no corresponding increase to the provision for loan and lease losses (“Day 2 Provision for Loan and Lease Losses”).

Prior to this ASU, the Gross-Up Approach was only permitted for purchased credit deteriorated (“PCD”) loans, while the initial ALLL for Non-PCD loans was established through the Day 2 Provision for Loan and Lease Losses. Under this ASU, the Gross-Up Approach applies to PCD loans and the following Non-PCD loans which qualify as PSLs: (i) non-credit card loans acquired in a business combination and (ii) non-credit card loans purchased more than 90 days after origination in a non-business combination transaction, provided the acquirer was not involved in the original lending. This ASU specifically excludes credit card loans from the definition of PSLs. This ASU is required to be applied prospectively upon adoption.
12


We early adopted this ASU as of January 1, 2026 (the “Adoption Date”) on a prospective basis. For PSLs acquired on or after the Adoption Date, this ASU could reduce the Day 2 Provision for Loan and Lease Losses, and the subsequent credit-related loan purchase accounting accretion or amortization that was prevalent for Non-PCD loans acquired prior to the Adoption Date. This ASU did not have a material impact on our consolidated financial statements or related disclosures for the six month period ended June 30, 2026.

ASU 2025-05—Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, Issued July 2025

This ASU provides an optional practical expedient which permits an entity to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset when estimating the ALLL for accounts receivable.

We adopted this ASU as of January 1, 2026. We did not elect the optional practical expedient and adoption of this ASU did not impact our consolidated financial statements or disclosures.


NOTE 2 — BUSINESS COMBINATIONS

Pending Branch Acquisition
On October 16, 2025, FCB announced that it had entered into an agreement to acquire 138 branches from BMO Bank N.A. located throughout the Midwest, Great Plains and West regions of the U.S. (the “BMO Branch Acquisition”). We expect to assume approximately $5.3 billion in deposits and acquire approximately $700 million in loans. We expect the transaction to be completed during the third quarter of 2026.

SVBB Acquisition
On March 27, 2023, FCB acquired substantially all loans and certain other assets and assumed all customer deposits and certain other liabilities of Silicon Valley Bridge Bank, N.A. from the Federal Deposit Insurance Corporation (the “FDIC” and such transaction, the “SVBB Acquisition”) and FCB issued a five-year $36.07 billion note payable to the FDIC, maturing March 27, 2028, which was amended and restated on November 20, 2023 (the “Purchase Money Note”) and is collateralized by certain loans. Refer to Note 10—Borrowings for the outstanding carrying value of the Purchase Money Note.

13


NOTE 3 — INVESTMENT SECURITIES

The following tables include the amortized cost and fair value of investment securities:

Amortized Cost and Fair Value - Investment Securities
dollars in millions June 30, 2026December 31, 2025
Gross UnrealizedGross Unrealized
Amortized CostGainsLossesFair ValueAmortized CostGainsLossesFair Value
Investment securities available for sale
U.S. Treasury$13,365 $6 $(51)$13,320 $10,624 $50 $(1)$10,673 
Government agency34 — (1)33 44 — (1)43 
Residential mortgage-backed securities17,804 71 (375)17,500 17,683 263 (323)17,623 
Commercial mortgage-backed securities3,145 7 (180)2,972 3,444 28 (173)3,299 
Corporate bonds132 — (4)128 145 — (5)140 
Municipal bonds12 — — 12 12 — — 12 
Other18 — — 18 — — — — 
Total investment securities available for sale$34,510 $84 $(611)$33,983 $31,952 $341 $(503)$31,790 
Investment in marketable equity securities$95 $62 $(1)$156 $83 $44 $— $127 
Investment securities held to maturity
U.S. Treasury$390 $— $(14)$376 $388 $— $(15)$373 
Government agency1,190 — (55)1,135 1,225 — (55)1,170 
Residential mortgage-backed securities4,311 17 (498)3,830 4,450 32 (490)3,992 
Commercial mortgage-backed securities3,279 — (633)2,646 3,337 — (608)2,729 
Supranational securities247 — (21)226 246 — (20)226 
Other1 — — 1 1 — — 1 
Total investment securities held to maturity$9,418 $17 $(1,221)$8,214 $9,647 $32 $(1,188)$8,491 
Total investment securities$44,023 $163 $(1,833)$42,353 $41,682 $417 $(1,691)$40,408 

U.S. Treasury investments include Treasury bills and Notes issued by the U.S. Treasury. Investments in government agency securities represent securities issued by the Small Business Administration (“SBA”), Federal Home Loan Bank (“FHLB”) and other U.S. agencies. Investments in residential and commercial mortgage-backed securities represent securities issued by the Government National Mortgage Association (“GNMA”), Federal National Mortgage Association (“FNMA”) and Federal Home Loan Mortgage Corporation (“FHLMC”). Investments in corporate bonds represent positions in debt securities of other financial institutions. Municipal bonds are revenue bonds. Investments in marketable equity securities represent positions in common stock of publicly traded financial institutions. Investments in supranational securities represent securities issued by the Supranational Entities & Multilateral Development Banks.

The Retained SBA Notes (as defined in Note 9—Variable Interest Entities) totaling $18 million are reported in other investment securities available for sale and include $14 million with a credit rating equivalent of AAA or AA. Refer to Note 1—Significant Accounting Policies and Basis of Presentation for discussion of the accounting policies for Retained Interests. Other investment securities held to maturity include certificates of deposit with financial institutions.

BancShares initially held approximately 354,000 shares of Visa, Inc. (“Visa”) Class B common stock (“Visa Class B common stock”). Effective January 24, 2024, all outstanding shares of Visa Class B common stock were redenominated as Visa Class B-1 common stock (“Visa Class B-1 common stock”) pursuant to Visa’s eighth amended and restated certificate of incorporation. BancShares currently holds approximately 354,000 shares of Visa Class B-1 common stock. Until the resolution of certain litigation, at which time the Visa Class B-1 common stock will convert to publicly traded Visa Class A common stock, or the potential exchange of Visa Class B-1 common stock for other marketable classes of Visa common stock, these shares are only transferable to other stockholders of Visa Class B-1 common stock or certain new denominations of Visa’s former Class B common stock. As a result, there is limited transfer activity in private transactions between buyers and sellers. Given this limited trading activity and the continuing uncertainty regarding the likelihood, ultimate timing and eventual exchange of Visa Class B-1 common stock for shares of Visa Class A common stock or other marketable classes of Visa common stock, these shares are not considered to have a readily determinable fair value and have no carrying value. BancShares has elected not to participate in any exchange offers pertaining to its shares of Visa Class B-1 common stock, including the exchange offer Visa commenced on April 13, 2026. BancShares continues to monitor the trading activity in Visa Class B-1 common stock, the status of the resolution of certain litigation matters at Visa, and other potential exchange alternatives that would trigger the conversion of the Visa Class B-1 common stock into Visa Class A common stock or other marketable classes of Visa common stock.
14


Accrued interest receivable for available for sale and held to maturity debt securities was excluded from the estimate for credit losses. At June 30, 2026, accrued interest receivable for available for sale and held to maturity debt securities was $177 million and $19 million, respectively. At December 31, 2025, accrued interest receivable for available for sale and held to maturity debt securities was $157 million and $20 million, respectively. During the three months ended June 30, 2026 and 2025, there was no accrued interest that was deemed uncollectible and written off against interest income.

A security is considered past due once it is 30 days contractually past due under the terms of the agreement. There were no securities past due as of June 30, 2026 or December 31, 2025.

The following table provides the amortized cost and fair value by contractual maturity. Expected maturities will differ from contractual maturities on certain securities because borrowers and issuers may have the right to call or prepay obligations with or without prepayment penalties. Residential and commercial mortgage-backed, government agency, and other investment securities are stated separately as they are not due at a single maturity date.

Maturities
dollars in millionsJune 30, 2026December 31, 2025
Amortized CostFair ValueAmortized CostFair Value
Investment securities available for sale
Non-amortizing securities maturing in:
One year or less$4,486 $4,489 $4,893 $4,914 
After one through five years8,995 8,945 5,853 5,879 
After five through 10 years16 14 23 20 
After 10 years12 12 12 12 
Government agency34 33 44 43 
Residential mortgage-backed securities17,804 17,500 17,683 17,623 
Commercial mortgage-backed securities3,145 2,972 3,444 3,299 
Other18 18 — — 
Total investment securities available for sale$34,510 $33,983 $31,952 $31,790 
Investment securities held to maturity
Non-amortizing securities maturing in:
One year or less$452 $446 $307 $303 
After one through five years1,376 1,292 1,434 1,360 
After five through 10 years— — 119 107 
Residential mortgage-backed securities4,311 3,830 4,450 3,992 
Commercial mortgage-backed securities3,279 2,646 3,337 2,729 
Total investment securities held to maturity$9,418 $8,214 $9,647 $8,491 



15


The following table presents interest and dividend income on investment securities:

Interest and Dividends on Investment Securities
dollars in millionsThree Months Ended June 30,Six Months Ended June 30,
2026202520262025
Interest income - taxable investment securities (1)
$401 $418 $784 $831 
Dividend income - marketable equity securities— 1 1 2 
Interest on investment securities$401 $419 $785 $833 
(1) Amount includes interest income on securities purchased under agreements to resell.

The following table presents the gross realized gain and loss on sales of investment securities available for sale, and the net realized gain on sale of marketable equity securities:

Realized Gain (Loss) on Sale of Investment Securities, Net
dollars in millionsThree Months Ended June 30,Six Months Ended June 30,
2026202520262025
Gross realized gain on sale of investment securities available for sale$12 $— $12 $1 
Gross realized loss on sale of investment securities available for sale(12)— (12)(2)
Net realized gain (loss) on sale of investment securities available for sale— — — (1)
Net realized gain on sale of marketable equity securities
— — — 1 
Realized gain (loss) on sale of investment securities, net$— $— $— $— 

The following table provides information regarding investment securities available for sale with unrealized losses:

Gross Unrealized Losses on Investment Securities Available For Sale
dollars in millionsJune 30, 2026
Less than 12 months12 months or moreTotal
Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
Investment securities available for sale
U.S. Treasury$9,139 $(51)$— $— $9,139 $(51)
Government agency— — 33 (1)33 (1)
Residential mortgage-backed securities6,898 (49)2,858 (326)9,756 (375)
Commercial mortgage-backed securities665 (3)1,000 (177)1,665 (180)
Corporate bonds8 — 112 (4)120 (4)
Total$16,710 $(103)$4,003 $(508)$20,713 $(611)
December 31, 2025
Less than 12 months12 months or moreTotal
Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
Investment securities available for sale
U.S. Treasury$859 $(1)$— $— $859 $(1)
Government agency— — 43 (1)43 (1)
Residential mortgage-backed securities815 (2)3,292 (321)4,107 (323)
Commercial mortgage-backed securities48 — 1,129 (173)1,177 (173)
Corporate bonds— — 123 (5)123 (5)
Total$1,722 $(3)$4,587 $(500)$6,309 $(503)


16


As of June 30, 2026, there were 292 investment securities available for sale with continuous unrealized losses for more than 12 months, of which 277 were government sponsored enterprise-issued mortgage-backed securities including GNMA, FHLMC and FNMA, or government agency securities, and the remaining 15 were corporate bonds. BancShares has the ability and intent to retain these securities for a period of time sufficient to recover all unrealized losses. Given the consistently strong credit rating of the U.S. Treasury, and the long history of no credit losses on debt securities issued by government agencies and government sponsored entities, as of June 30, 2026, no ACL was required. For corporate bonds, we analyzed the changes in interest rates relative to when the investment securities were purchased or acquired, and considered other factors including changes in credit ratings, delinquencies, and other macroeconomic factors. As a result of this analysis, we determined that no ACL was required for investment securities available for sale as of June 30, 2026. We reviewed the underlying credit exposures related to the Retained SBA Notes and determined no ACL was required as of June 30, 2026.

BancShares’ portfolio of held to maturity debt securities consists of mortgage-backed securities issued by government agencies and government sponsored entities including GNMA, FHLMC and FNMA, U.S. Treasury notes, unsecured bonds issued by government agencies and government sponsored entities, and securities issued by the Supranational Entities & Multilateral Development Banks. Given the consistently strong credit rating of the U.S. Treasury and the Supranational Entities & Multilateral Development Banks, and the long history of no credit losses on debt securities issued by government agencies and government sponsored entities, no ACL was required for debt securities held to maturity as of June 30, 2026.

There were no debt securities on nonaccrual status as of June 30, 2026 or December 31, 2025.

Investment securities having an aggregate carrying value of $3.73 billion at June 30, 2026, and $3.89 billion at December 31, 2025, were pledged as collateral to secure public funds on deposit, the Purchase Money Note, certain short-term borrowings, and for other purposes as required by law.

Certain investments held by BancShares are reported in other assets, including FHLB stock and nonmarketable securities without readily determinable fair values that are recorded at cost, investments in qualified affordable housing projects that are accounted for under the proportional amortization method (the “PAM”), and renewable energy tax credit investments that utilize the hypothetical liquidation at book value method (“HLBVM”). Refer to Note 1—Significant Accounting Policies and Basis of Presentation of our 2025 Form 10-K for descriptions of the accounting methodologies.


NOTE 4 — ASSETS HELD FOR SALE

The composition of assets held for sale is summarized in the following table.
dollars in millionsJune 30, 2026December 31, 2025
Loans and leases:
Commercial (1)
$34$18
Consumer56781
Loans and leases90799
Operating lease equipment35
Total assets held for sale$93$804
(1) There were nonaccrual loans held for sale of $0 at June 30, 2026 and $10 million at December 31, 2025.

In March 2026, FCB management committed to a plan to sell SBA commercial loans, which were then transferred from held for investment to held for sale. We did not establish a valuation allowance for the loans transferred to held for sale as the estimated fair value exceeded amortized cost. In June 2026, all of the SBA commercial loans held for sale totaling $363 million in amortized cost were sold in the SBA Securitization (as defined in Note 9—Variable Interest Entities) and BancShares recognized a gain of $3 million.

Consumer loans held for sale at June 30, 2026 and December 31, 2025 consisted of residential mortgage loans that FCB originated with the intent to sell. Additionally, consumer loans held for sale at December 31, 2025 were largely comprised of residential mortgage loans that were transferred from held for investment to held for sale in December 2025. We did not establish a valuation allowance for the loans transferred to held for sale as the estimated fair value exceeded the amortized cost. In April 2026, these residential mortgage loans held for sale totaling $644 million in amortized cost were sold and BancShares recognized a gain of $1 million.

17


NOTE 5 — LOANS AND LEASES

Loans held for sale are excluded from loans and leases on the Consolidated Balance Sheets and are included in Note 4—Assets Held for Sale. Finance leases for which we are the lessor are included in the commercial and industrial loan class in the following tables. Refer to Note 7—Leases for further information on leases.

The following table summarizes loans by class:

Loans by Class
dollars in millionsJune 30, 2026December 31, 2025
Commercial
Commercial and industrial$46,574 $44,721 
Capital call lines34,203 31,791 
Owner occupied commercial mortgage17,904 17,660 
Investor dependent2,624 2,778 
Commercial real estate23,233 23,784 
Total commercial124,538 120,734 
Consumer
Residential mortgage21,566 21,861 
Revolving mortgage2,868 2,863 
Auto1,261 1,416 
Other consumer801 1,056 
Total consumer26,496 27,196 
Total loans and leases$151,034 $147,930 

At June 30, 2026 and December 31, 2025, accrued interest receivable on loans included in other assets was $646 million and $635 million, respectively, and was excluded from the estimate of the ALLL.

The discount on acquired loans is accreted to interest income over the contractual life of the loan using the effective interest method. Discount accretion income was $55 million and $103 million for the three and six months ended June 30, 2026, including $1 million and $2 million for unfunded commitments, respectively. Discount accretion income was $75 million and $159 million for the three and six months ended June 30, 2025, including $4 million and $12 million for unfunded commitments, respectively.

The following table presents selected components of the amortized cost of loans, including the unamortized discount on acquired loans.

Components of Amortized Cost
dollars in millionsJune 30, 2026December 31, 2025
Deferred fees, including unamortized costs and unearned fees on Non-PCD loans$(103)$(103)
Net unamortized discount on acquired loans
Non-PCD$1,185$1,281
PCD3645 
Total net unamortized discount$1,221$1,326
















18


The aging and nonaccrual status of the outstanding loans and leases by class at June 30, 2026 and December 31, 2025 are provided in the tables below. Loans and leases less than 30 days past due are considered current, as various grace periods allow borrowers to make payments within a stated period after the due date and remain in compliance with the respective agreement.

Loans and Leases - Delinquency and Nonaccrual Status (1)
dollars in millionsJune 30, 2026
Accruing Loans
30-59 Days
Past Due		60-89 Days
Past Due		90 Days or
Greater		Total
Past Due		CurrentTotal Accruing
Nonaccrual Loans (2)
Total
Commercial
Commercial and industrial$139 $65 $37 $241 $45,835 $46,076 $498 $46,574 
Capital call lines— — — — 34,203 34,203 — 34,203 
Owner occupied commercial mortgage71 14 14 99 17,652 17,751 153 17,904 
Investor dependent2 3 — 5 2,578 2,583 41 2,624 
Commercial real estate26 2 197 225 22,496 22,721 512 23,233 
Total commercial238 84 248 570 122,764 123,334 1,204 124,538 
Consumer
Residential mortgage129 26 7 162 21,208 21,370 196 21,566 
Revolving mortgage25 3 — 28 2,805 2,833 35 2,868 
Auto11 2 — 13 1,238 1,251 10 1,261 
Other consumer5 2 1 8 792 800 1 801 
Total consumer170 33 8 211 26,043 26,254 242 26,496 
Total loans and leases$408 $117 $256 $781 $148,807 $149,588 $1,446 $151,034 
December 31, 2025
Accruing Loans
30-59 Days
Past Due
60-89 Days
Past Due
90 Days or
Greater
Total
Past Due
Current
Total Accruing
Nonaccrual Loans (2)
Total
Commercial
Commercial and industrial$232 $56 $63 $351 $43,914 $44,265 $456 $44,721 
Capital call lines— — — — 31,791 31,791 — 31,791 
Owner occupied commercial mortgage78 19 1 98 17,403 17,501 159 17,660 
Investor dependent11 1 — 12 2,717 2,729 49 2,778 
Commercial real estate221 31 171 423 22,943 23,366 418 23,784 
Total commercial542 107 235 884 118,768 119,652 1,082 120,734 
Consumer
Residential mortgage168 42 7 217 21,465 21,682 179 21,861 
Revolving mortgage25 4 — 29 2,799 2,828 35 2,863 
Auto15 3 — 18 1,389 1,407 9 1,416 
Other consumer5 3 2 10 1,044 1,054 2 1,056 
Total consumer213 52 9 274 26,697 26,971 225 27,196 
Total loans and leases$755 $159 $244 $1,158 $145,465 $146,623 $1,307 $147,930 
(1)    Accrued interest that was deducted from interest income when the loan was moved to nonaccrual status was $9 million for the six months ended June 30, 2026 and $10 million for the six months ended June 30, 2025.
(2)    Nonaccrual loans for which there was no related ALLL totaled $374 million at June 30, 2026 and $415 million at December 31, 2025. Refer to Note 1—Significant Accounting Policies and Basis of Presentation of our 2025 Form 10-K for discussion of loans individually evaluated to determine the ALLL.

Other real estate owned (“OREO”) and repossessed assets were $116 million as of June 30, 2026 and $124 million as of December 31, 2025.

19


Credit Quality Indicators
Loans and leases are monitored for credit quality on a recurring basis. Commercial loans and leases and consumer loans have different credit quality indicators as a result of the unique characteristics of the loan classes being evaluated. The credit quality indicators for commercial loans and leases are developed through a review of individual borrowers on an ongoing basis. Commercial loans are evaluated periodically with more frequent evaluations done on criticized loans. The indicators as of the date presented are based on the most recent assessment performed and are defined below:

Pass – A pass rated asset is not adversely classified because it does not display any of the characteristics for adverse classification.

Special mention – A special mention asset has potential weaknesses which deserve management’s close attention. If left uncorrected, such potential weaknesses may result in deterioration of the repayment prospects or collateral position at some future date. Special mention assets are not adversely classified and do not warrant adverse classification.

Substandard – A substandard asset is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Assets classified as substandard generally have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. These assets are characterized by the distinct possibility of loss if the deficiencies are not corrected.

Doubtful – An asset classified as doubtful has all the weaknesses inherent in an asset classified substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently existing facts, conditions and values.

Loss – Assets classified as loss are considered uncollectible and of such little value it is inappropriate to be carried as an asset. This classification is not necessarily equivalent to any potential for recovery or salvage value, but rather it is not appropriate to defer a full charge-off even though partial recovery may be affected in the future.

Ungraded – Ungraded loans represent loans not included in the individual credit grading process due to their relatively small balances or borrower type. The majority of ungraded loans at June 30, 2026 and December 31, 2025, relate to business credit cards. Business credit card loans are subject to automatic charge-off when they become 120 days past due in the same manner as unsecured consumer lines of credit.

The credit quality indicator for consumer loans is based on delinquency status of the borrower as of the end of the period. As the borrower becomes more delinquent, the likelihood of loss increases. An exemption is applied to government guaranteed loans as the principal repayments are insured by the Federal Housing Administration and U.S. Department of Veterans Affairs and thus remain on accrual status regardless of delinquency status.

20


The following tables summarize the commercial loans disaggregated by year of origination and by risk rating. The consumer loan delinquency status by year of origination is also presented below. The tables reflect the amortized cost of the loans and include PCD loans.

Commercial Loans - Risk Classifications by Class
June 30, 2026
Risk Classification:Term Loans by Origination YearRevolving Converted to Term Loans
dollars in millions202620252024202320222021 & PriorRevolvingTotal
Commercial and industrial
Pass$8,427 $9,973 $5,984 $2,921 $2,039 $2,440 $11,240 $125 $43,149 
Special Mention111 171 274 55 82 123 166 — 982 
Substandard138 412 342 169 371 305 325 8 2,070 
Doubtful60 24 16 21 44 15 40 — 220 
Ungraded— — — — — — 153 — 153 
Total commercial and industrial8,736 10,580 6,616 3,166 2,536 2,883 11,924 133 46,574 
Capital call lines
Pass— — — — — — 34,137 66 34,203 
Total capital call lines— — — — — — 34,137 66 34,203 
Owner occupied commercial mortgage
Pass1,585 2,615 2,568 1,995 2,297 5,618 274 28 16,980 
Special Mention20 11 40 29 66 59 1 — 226 
Substandard19 35 89 136 154 253 11 1 698 
Doubtful— — — — — — — — — 
Total owner occupied commercial mortgage1,624 2,661 2,697 2,160 2,517 5,930 286 29 17,904 
Investor dependent
Pass378 871 401 32 50 — 308 — 2,040 
Special Mention2 33 20 18 — — 18 — 91 
Substandard— 164 184 52 1 2 52 — 455 
Doubtful7 21 4 4 — — 2 — 38 
Total Investor dependent387 1,089 609 106 51 2 380 — 2,624 
Commercial real estate
Pass2,640 4,444 4,252 3,387 2,501 3,587 864 — 21,675 
Special Mention50 134 37 40 28 5 — — 294 
Substandard236 422 73 186 92 178 1 — 1,188 
Doubtful12 12 21 4 17 9 — — 75 
Ungraded1 — — — — — — — 1 
Total commercial real estate2,939 5,012 4,383 3,617 2,638 3,779 865 — 23,233 
Total commercial
Pass13,030 17,903 13,205 8,335 6,887 11,645 46,823 219 118,047 
Special Mention183 349 371 142 176 187 185 — 1,593 
Substandard393 1,033 688 543 618 738 389 9 4,411 
Doubtful79 57 41 29 61 24 42 — 333 
Ungraded1 — — — — — 153 — 154 
Total commercial$13,686 $19,342 $14,305 $9,049 $7,742 $12,594 $47,592 $228 $124,538 



21


Consumer Loans - Delinquency Status by Class
June 30, 2026
Days Past Due:Term Loans by Origination YearRevolving Converted to Term Loans
dollars in millions202620252024202320222021 & PriorRevolvingTotal
Residential mortgage
Current$948 $1,512 $1,546 $2,301 $4,581 $10,368 $4 $— $21,260 
30-59 days3 3 6 12 26 94 — — 144 
60-89 days— — 2 4 7 25 — — 38 
90 days or greater— 3 5 11 18 87 — — 124 
Total residential mortgage951 1,518 1,559 2,328 4,632 10,574 4 — 21,566 
Revolving mortgage
Current— — — — — — 2,672 144 2,816 
30-59 days— — — — — — 21 8 29 
60-89 days— — — — — — — 4 4 
90 days or greater— — — — — — 3 16 19 
Total revolving mortgage— — — — — — 2,696 172 2,868 
Auto
Current193 392 315 162 113 66 — — 1,241 
30-59 days— 2 4 3 2 2 — — 13 
60-89 days— 1 1 1 1 — — — 4 
90 days or greater— 1 1 1 — — — — 3 
Total consumer auto193 396 321 167 116 68 — — 1,261 
Other consumer
Current103 149 64 44 39 13 380 — 792 
30-59 days— 1 — — — — 4 — 5 
60-89 days— — — — — — 2 — 2 
90 days or greater— — — — — — 2 — 2 
Total consumer other103 150 64 44 39 13 388 — 801 
Total consumer$1,247 $2,064 $1,944 $2,539 $4,787 $10,655 $3,088 $172 $26,496 
 

22


The following tables represent current credit quality indicators by origination year as of December 31, 2025:

Commercial Loans - Risk Classifications by Class
December 31, 2025
Risk Classification:Term Loans by Origination YearRevolving Converted to Term Loans
dollars in millions202520242023202220212020 & PriorRevolvingTotal
Commercial and industrial
Pass$13,484 $7,906 $3,552 $2,963 $1,428 $1,539 $10,143 $76 $41,091 
Special Mention213 264 113 97 143 60 181 — 1,071 
Substandard451 296 215 475 347 65 416 5 2,270 
Doubtful18 24 27 35 10 — 32 — 146 
Ungraded— — — — — — 143 — 143 
Total Commercial and industrial14,166 8,490 3,907 3,570 1,928 1,664 10,915 81 44,721 
Capital call lines
Pass— — — — — — 31,758 33 31,791 
Total capital call lines— — — — — — 31,758 33 31,791 
Owner occupied commercial mortgage
Pass2,816 2,739 2,177 2,430 2,290 3,954 248 28 16,682 
Special Mention26 34 49 78 24 27 2 — 240 
Substandard41 55 128 179 88 222 8 3 724 
Doubtful— 4 10 — — — — — 14 
Total owner occupied commercial mortgage2,883 2,832 2,364 2,687 2,402 4,203 258 31 17,660 
Investor dependent
Pass981 648 110 67 — — 326 — 2,132 
Special Mention29 78 1 19 — — 19 — 146 
Substandard104 164 117 14 4 — 50 — 453 
Doubtful13 11 16 5 — — 2 — 47 
Total investor dependent1,127 901 244 105 4 — 397 — 2,778 
Commercial real estate
Pass5,005 4,720 4,512 2,791 1,614 2,631 732 — 22,005 
Special Mention202 19 139 25 2 31 — — 418 
Substandard409 249 221 145 70 193 1 — 1,288 
Doubtful29 3 — 18 1 22 — — 73 
Total commercial real estate5,645 4,991 4,872 2,979 1,687 2,877 733 — 23,784 
Total commercial
Pass22,286 16,013 10,351 8,251 5,332 8,124 43,207 137 113,701 
Special Mention470 395 302 219 169 118 202 — 1,875 
Substandard1,005 764 681 813 509 480 475 8 4,735 
Doubtful60 42 53 58 11 22 34 — 280 
Ungraded— — — — — — 143 — 143 
Total commercial$23,821 $17,214 $11,387 $9,341 $6,021 $8,744 $44,061 $145 $120,734 
23


Consumer Loans - Delinquency Status by Class
December 31, 2025
Days Past Due:Term Loans by Origination YearRevolving Converted to Term Loans
dollars in millions202520242023202220212020 & PriorRevolvingTotal
Residential mortgage
Current$1,601 $1,609 $2,512 $4,783 $4,715 $6,295 $2 $— $21,517 
30-59 days3 4 12 32 32 94 2 — 179 
60-89 days— 1 3 9 3 38 — — 54 
90 days or greater1 5 6 10 7 82 — — 111 
Total residential mortgage1,605 1,619 2,533 4,834 4,757 6,509 4 — 21,861 
Revolving mortgage
Current— — — — — — 2,686 125 2,811 
30-59 days— — — — — — 20 9 29 
60-89 days— — — — — — — 6 6 
90 days or greater— — — — — — 3 14 17 
Total revolving mortgage— — — — — — 2,709 154 2,863 
Auto
Current504 405 217 157 77 33 — — 1,393 
30-59 days3 4 3 3 2 1 — — 16 
60-89 days— 1 1 1 1 — — — 4 
90 days or greater— 1 1 1 — — — — 3 
Total consumer auto507 411 222 162 80 34 — — 1,416 
Other consumer
Current176 100 65 53 15 6 630 — 1,045 
30-59 days1 1 — — — — 4 — 6 
60-89 days— — — — — — 2 — 2 
90 days or greater1 — — — — — 2 — 3 
Total consumer other178 101 65 53 15 6 638 — 1,056 
Total consumer$2,290 $2,131 $2,820 $5,049 $4,852 $6,549 $3,351 $154 $27,196 


24


Gross Charge-offs

Gross charge-off disclosures by origination year and loan class are summarized in the following tables:

Six Months Ended June 30, 2026
Term Loans by Origination YearRevolving Converted to Term Loans
dollars in millions202620252024202320222021 & PriorRevolvingTotal
Commercial
Commercial and industrial$2 $15 $27 $13 $35 $7 $68 $1 $168 
Capital call lines— — — — — — — — — 
Owner occupied commercial mortgage— 1 4 — — — — — 5 
Investor dependent— 7 9 3 6 2 2 — 29 
Commercial real estate20 8 — — — 15 — — 43 
Total commercial22 31 40 16 41 24 70 1 245 
Consumer
Residential mortgage— — — — — 1 — — 1 
Revolving mortgage— — — — — — — — — 
Auto— 1 1 1 1 — — — 4 
Other consumer— 1 1 1 — — 9 — 12 
Total consumer— 2 2 2 1 1 9 — 17 
Total loans and leases$22 $33 $42 $18 $42 $25 $79 $1 $262 


Six Months Ended June 30, 2025
Term Loans by Origination YearRevolving Converted to Term Loans
dollars in millions202520242023202220212020 & PriorRevolvingTotal
Commercial
Commercial and industrial$16 $13 $34 $35 $8 $5 $56 $1 $168 
Capital call lines— — — — — — — — — 
Owner occupied commercial mortgage— — — — — 1 — — 1 
Investor dependent— 6 23 26 6 4 3 — 68 
Commercial real estate— 23 2 17 — 17 — — 59 
Total commercial16 42 59 78 14 27 59 1 296 
Consumer
Residential mortgage— — — — — — — — — 
Revolving mortgage— — — — — — — — — 
Auto— 1 1 1 — — — — 3 
Other consumer— 1 1 1 — — 9 — 12 
Total consumer— 2 2 2 — — 9 — 15 
Total loans and leases
$16 $44 $61 $80 $14 $27 $68 $1 $311 













25


Loan Modifications for Borrowers Experiencing Financial Difficulties
As part of BancShares’ ongoing credit risk management practices, BancShares attempts to work with borrowers when necessary to extend or modify loan terms to better align with the borrowers’ current ability to repay. BancShares’ modifications granted to debtors experiencing financial difficulties typically take the form of term extensions, payment delays, interest rate reductions, principal forgiveness, or a combination thereof. Modifications are made in accordance with internal policies and guidelines to conform to regulatory guidance.

The following tables present the amortized cost of loan modifications made to debtors experiencing financial difficulty, disaggregated by class and type of loan modification. The tables also provide financial effects by type of such loan modifications for the respective loan class. Loan modifications for principal forgiveness round to less than $1 million for all loan classes in all periods presented and are not presented in the following tables.

Amortized Cost of Loans Modified during the three months ended June 30, 2026
dollars in millions
Term Extension (1)
Payment DelayInterest Rate Reduction
Term Extension (1) and Interest Rate Reduction
Term Extension (1) and Payment Delay
Other Combinations (2)
TotalPercent of Total Loan Class
Commercial
Commercial and industrial$167 $49 $— $1 $20 $— $237 0.51 %
Owner occupied commercial mortgage5 3 — — 1 2 11 0.06 
Investor dependent3 24 — — — — 27 1.05 
Commercial real estate69 — 115 — — 7 191 0.82 
Total commercial244 76 115 1 21 9 466 0.37 
Consumer
Residential mortgage2 — 1 — — — 3 0.01 
Revolving mortgage1 — — — — — 1 0.02 
Auto— — — — — — — — 
Other consumer— — — — — — — 0.01 
Total consumer3 — 1 — — — 4 0.01 
Total loans and leases
$247 $76 $116 $1 $21 $9 $470 0.31 %
(1) Term extensions include modifications which extended the maturity date or amortization period, and modifications that deferred lump-sum principal payments to a later date.
(2) Consists of $7 million of commercial real estate loans modified with a term extension, interest rate reduction, and payment delay, as well as $2 million of owner occupied commercial mortgage loans modified with a payment delay and interest rate reduction.

Amortized Cost of Loans Modified during the three months ended June 30, 2025
dollars in millions
Term Extension (1)
Payment DelayInterest Rate Reduction
Term Extension (1) and Interest Rate Reduction
Term Extension (1) and Payment Delay
Other Combinations (2)
TotalPercent of Total Loan Class
Commercial
Commercial and industrial$23 $60 $— $2 $10 $5 $100 0.23 %
Owner occupied commercial mortgage2 2 — 29 7 — 40 0.24 
Investor dependent7 28 — — — — 35 1.27 
Commercial real estate84 — — 64 10 — 158 0.67 
Total commercial116 90 — 95 27 5 333 0.29 
Consumer
Residential mortgage5 — 3 1 24 — 33 0.14 
Revolving mortgage1 — — — — — 1 0.03 
Auto— — — — — — — 0.01 
Other consumer— — — — — — — 0.01 
Total consumer6 — 3 1 24 — 34 0.12 
Total loans and leases
$122 $90 $3 $96 $51 $5 $367 0.26 %
(1) Term extensions include modifications which extended the maturity date or amortization period, and modifications that deferred lump-sum principal payments to a later date.
(2) Consists of $5 million of commercial and industrial loans modified with a term extension, payment delay, and interest rate reduction.

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Financial Effects of Loan Modifications made during the three months ended June 30, 2026
Weighted Average Term Extension (in Months)Weighted Average Interest Rate ReductionWeighted Average Payment Delay (in Months)
Commercial
Commercial and industrial32 2.61 %12 
Owner occupied commercial mortgage11 1.95 8 
Investor dependent6 — 6 
Commercial real estate5 1.50 9 
Total commercial24 1.52 10 
Consumer
Residential mortgage20 1.87 — 
Revolving mortgage51 5.49 — 
Auto27 0.75 — 
Other consumer— 8.45 — 
Total consumer27 2.23 — 
Total loans and leases24 1.52 %10 


Financial Effects of Loan Modifications made during the three months ended June 30, 2025
Weighted Average Term Extension (in Months)Weighted Average Interest Rate ReductionWeighted Average Payment Delay (in Months)
Commercial
Commercial and industrial13 1.06 %15 
Owner occupied commercial mortgage12 1.93 5 
Investor dependent6 — 5 
Commercial real estate23 0.60 6 
Total commercial19 1.01 11 
Consumer
Residential mortgage8 1.14 6 
Revolving mortgage43 4.40 — 
Auto19 — — 
Other consumer60 8.94 — 
Total consumer9 1.58 6 
Total loans and leases18 1.04 %11 












27


Amortized Cost of Loans Modified during the six months ended June 30, 2026
dollars in millions
Term Extension (1)
Payment DelayInterest Rate Reduction
Term Extension (1) and Interest Rate Reduction
Term Extension (1) and Payment Delay
Other Combinations (2)
TotalPercent of Total Loan Class
Commercial
Commercial and industrial$236 $52 $— $3 $43 $18 $352 0.75 %
Owner occupied commercial mortgage28 3 — 18 3 2 54 0.30 
Investor dependent10 51 — — — — 61 2.33 
Commercial real estate72 — 115 3 — 7 197 0.84 
Total commercial346 106 115 24 46 27 664 0.53 
Consumer
Residential mortgage3 — 1 — — — 4 0.02 
Revolving mortgage1 — — — — — 1 0.03 
Auto— — — — — — — 0.01 
Other consumer— — — — — — — 0.01 
Total consumer4 — 1 — — — 5 0.02 
Total loans and leases
$350 $106 $116 $24 $46 $27 $669 0.44 %
(1) Term extensions include modifications which extended the maturity date or amortization period, and modifications that deferred lump-sum principal payments to a later date.
(2) Consists of $18 million of commercial and industrial loans and $7 million of commercial real estate loans modified with a term extension, interest rate reduction, and payment delay, as well as $2 million of owner occupied commercial mortgage loans modified with a payment delay and interest rate reduction.

Amortized Cost of Loans Modified during the six months ended June 30, 2025
dollars in millions
Term Extension (1)
Payment DelayInterest Rate Reduction
Term Extension (1) and Interest Rate Reduction
Term Extension (1) and Payment Delay
Other Combinations (2)
TotalPercent of Total Loan Class
Commercial
Commercial and industrial$79 $77 $— $3 $18 $5 $182 0.42 %
Owner occupied commercial mortgage11 4 — 29 20 — 64 0.37 
Investor dependent10 44 — — 6 — 60 2.15 
Commercial real estate88 — — 64 39 — 191 0.80 
Total commercial188 125 — 96 83 5 497 0.44 
Consumer
Residential mortgage9 — 3 2 25 — 39 0.17 
Revolving mortgage1 — — — — — 1 0.05 
Auto— — — — — — — 0.02 
Other consumer— — — — — — — 0.02 
Total consumer10 — 3 2 25 — 40 0.14 
Total loans and leases$198 $125 $3 $98 $108 $5 $537 0.38 %
(1) Term extensions include modifications which extended the maturity date or amortization period, and modifications that deferred lump-sum principal payments to a later date.
(2) Consists of $5 million of commercial and industrial loans modified with a term extension, payment delay, and interest rate reduction.


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Financial Effects of Loan Modifications made during the six months ended June 30, 2026
Weighted Average Term Extension (in Months)Weighted Average Interest Rate ReductionWeighted Average Payment Delay (in Months)
Commercial
Commercial and industrial27 0.82 %10 
Owner occupied commercial mortgage8 1.91 7 
Investor dependent10 — 6 
Commercial real estate6 1.47 9 
Total commercial21 1.44 8 
Consumer
Residential mortgage18 1.87 4 
Revolving mortgage54 4.30 — 
Auto25 0.45 — 
Other consumer— 9.87 — 
Total consumer24 2.51 4 
Total loans and leases
21 1.45 %8 


Financial Effects of Loan Modifications made during the six months ended June 30, 2025
Weighted Average Term Extension (in Months)Weighted Average Interest Rate ReductionWeighted Average Payment Delay (in Months)
Commercial
Commercial and industrial16 1.03 %13 
Owner occupied commercial mortgage11 1.93 5 
Investor dependent7 — 5 
Commercial real estate20 0.60 7 
Total commercial17 1.01 9 
Consumer
Residential mortgage11 1.18 6 
Revolving mortgage47 3.75 5 
Auto20 — — 
Other consumer60 9.20 — 
Total consumer12 1.67 6 
Total loans and leases
17 1.05 %9 

Note: The financial effects of loan modifications for certain loan classes reported in the tables above were not reported in the preceding tables as the total amortized cost of loans modified during the period for such loan classes rounded to less than $1 million.

Borrowers experiencing financial difficulties are typically identified in our credit risk management process and are consequently addressed in our methodology to estimate the ALLL, which incorporates delinquencies, probability of obligor default, and loss given default. Therefore, a change to the ALLL is generally not recorded upon modification. An assessment of whether a borrower is experiencing financial difficulty is reassessed or performed on the date of a modification. Upon BancShares’ determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged off.

At June 30, 2026, there were $168 million of loans modified in the twelve-months ended June 30, 2026, which defaulted subsequent to modification.

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The following tables present the amortized cost and performance of loans to borrowers experiencing financial difficulties for which the terms of the loan were modified during the referenced periods. The period of delinquency is based on the number of days the scheduled payment is contractually past due.
Modified Loans Payment Status (twelve months ended June 30, 2026)
dollars in millionsCurrent30–59 Days Past Due60–89 Days Past Due90 Days or Greater Past DueTotal
Commercial
Commercial and industrial$530 $1 $3 $36 $570 
Capital call lines— — — — — 
Owner occupied commercial mortgage64 5 2 8 79 
Investor dependent72 — 2 — 74 
Commercial real estate166 — — 135 301 
Total commercial832 6 7 179 1,024 
Consumer
Residential mortgage23 3 2 3 31 
Revolving mortgage2 — — — 2 
Auto— — — — — 
Other consumer4 — — — 4 
Total consumer29 3 2 3 37 
Total loans and leases
$861 $9 $9 $182 $1,061 
Modified Loans Payment Status (twelve months ended June 30, 2025)
dollars in millionsCurrent30–59 Days Past Due60–89 Days Past Due90 Days or Greater Past DueTotal
Commercial
Commercial and industrial$262 $2 $4 $1 $269 
Capital call lines— — — — — 
Owner occupied commercial mortgage71 1 1 3 76 
Investor dependent76 — 3 — 79 
Commercial real estate304 14 — 43 361 
Total commercial713 17 8 47 785 
Consumer
Residential mortgage37 3 2 3 45 
Revolving mortgage7 — — — 7 
Auto— — — — — 
Other consumer— — — — — 
Total consumer44 3 2 3 52 
Total loans and leases
$757 $20 $10 $50 $837 

At June 30, 2026, there were $13 million of commitments to lend additional funds to debtors experiencing financial difficulty for which the terms of the loan were modified during the six months ended June 30, 2026. At December 31, 2025, there were $60 million of commitments to lend additional funds to debtors experiencing financial difficulty for which the terms of the loan were modified during the year ended December 31, 2025.
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Loans Pledged

The following table provides information regarding loans pledged as collateral for borrowing capacity through the FHLB of Atlanta and the Federal Reserve Bank (“FRB”), and loans pledged as collateral for the Purchase Money Note to the FDIC.

Loans Pledged
dollars in millionsJune 30, 2026December 31, 2025
FHLB of Atlanta
Lendable collateral value of pledged Non-PCD loans$19,200 $19,225 
Less: advances— — 
Less: letters of credit1,450 1,450 
Available borrowing capacity$17,750 $17,775 
Pledged Non-PCD loans$31,820 $31,713 
FRB
Lendable collateral value of pledged Non-PCD loans$12,772 $12,962 
Less: advances— — 
Available borrowing capacity$12,772 $12,962 
Pledged Non-PCD loans$13,520 $13,640 
FDIC
Lendable collateral value of pledged loans$32,121 $35,705 
Less: advances— — 
Less: principal amount of the Purchase Money Note28,500 33,500 
Available borrowing capacity (1)
$— $— 
Pledged loans (2)
$30,963 $34,465 
(1) The draw period for the Advance Facility Agreement (an expired funding agreement between FCB and the FDIC in connection with the SVBB Acquisition) ended on March 27, 2025 so there was no available borrowing capacity at June 30, 2026 or December 31, 2025.
(2) Carrying value, net of remaining discount, for loans pledged as collateral for the Purchase Money Note.

As a member of the FHLB, FCB can access financing based on an evaluation of its creditworthiness, statement of financial position, size and eligibility of collateral. FCB may at any time grant a security interest in, sell, convey or otherwise dispose of any of the assets used for collateral, provided that FCB is in compliance with the collateral maintenance requirement immediately following such disposition. There were no outstanding advances from the FHLB at June 30, 2026 or December 31, 2025.

Under borrowing arrangements with the FRB, BancShares has access to the FRB Discount Window on a secured basis. There were no outstanding borrowings with the FRB Discount Window at June 30, 2026 or December 31, 2025.




















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NOTE 6 — ALLOWANCE FOR LOAN AND LEASE LOSSES

The ALLL is reported as a separate line item on the Consolidated Balance Sheets, while the reserve for off-balance sheet credit exposure of $184 million and $260 million at June 30, 2026 and December 31, 2025, respectively, is included in other liabilities. The provision or benefit for credit losses related to (i) loans and leases (ii) off-balance sheet credit exposure, and (iii) other receivables or investment securities available for sale, if any, is reported in the Consolidated Statements of Income as provision or benefit for credit losses.

The ALLL activity for loans and leases is summarized in the following tables:

Allowance for Loan and Lease Losses
dollars in millionsThree Months Ended June 30, 2026Three Months Ended June 30, 2025
CommercialConsumerTotalCommercialConsumerTotal
Balance at beginning of period$1,428 $130 $1,558 $1,517 $163 $1,680 
Provision for loan and lease losses
28 6 34 111 — 111 
Charge-offs(122)(8)(130)(137)(7)(144)
Recoveries19 3 22 21 4 25 
Balance at end of period$1,353 $131 $1,484 $1,512 $160 $1,672 

dollars in millionsSix Months Ended June 30, 2026Six Months Ended June 30, 2025
CommercialConsumerTotalCommercialConsumerTotal
Balance at beginning of period$1,436 $130 $1,566 $1,518 $158 $1,676 
Provision for loan and lease losses
125 12 137 249 10 259 
Charge-offs
(245)(17)(262)(296)(15)(311)
Recoveries37 6 43 41 7 48 
Balance at end of period$1,353 $131 $1,484 $1,512 $160 $1,672 

The ALLL may vary significantly from period to period due to changes in economic conditions, economic forecasts, the composition and credit quality of the loan and lease portfolio, and the related impacts to the ALLL models. We continuously monitor and update our ALLL estimation methodology and models, as appropriate. During the second quarter of 2026, we implemented enhancements to our probability of obligor default, loss given default and exposure at default models for the commercial and industrial, and commercial real estate portfolios which contributed to the decrease in the ALLL compared to December 31, 2025.

The ALLL was $1.48 billion at June 30, 2026, a decrease of $82 million from $1.57 billion at December 31, 2025, largely driven by lower specific reserves, improvements in credit quality including updates to certain models used to estimate the allowance as discussed above, changes in the macroeconomic scenarios, and growth concentrated in capital call lines which have a significantly lower loss rate relative to our other loan portfolios.

The following table presents the components of the provision for credit losses:

Provision for Credit Losses
dollars in millionsThree Months Ended June 30,Six Months Ended June 30,
2026202520262025
Provision for loan and lease losses
$34 $111 $137 $259 
(Benefit) provision for off-balance sheet credit exposure(44)4 (76)10 
Provision for other receivables— — 1 — 
(Benefit) provision for credit losses$(10)$115 $62 $269 





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NOTE 7 — LEASES

Lessee
BancShares’ leases primarily include administrative offices and bank locations. Substantially all of our operating lease liabilities relate to United States real estate leases. Our finance lease liabilities mainly relate to equipment leases, including the lease of certain ATMs. Our real estate leases have remaining lease terms of up to 31 years. Our lease terms may include options to extend or terminate the lease, and our operating leases have renewal terms that can extend from 1 to 25 years. The options are included in the lease term when it is determined that it is reasonably certain the option will be exercised.

The following table presents supplemental balance sheet information and remaining weighted average lease terms and discount rates:

Supplemental Lease Information
dollars in millionsClassificationJune 30, 2026December 31, 2025
Lease assets:
Operating lease ROU assetsOther assets$278 $294 
Finance leasesPremises and equipment83 71 
Total lease assets$361 $365 
Lease liabilities:
Operating leasesOther liabilities$310 $329 
Finance leasesOther borrowings85 72 
Total lease liabilities$395 $401 
Weighted-average remaining lease terms:
Operating leases6.9 years7.2 years
Finance leases8.1 years7.7 years
Weighted-average discount rate:
Operating leases3.11 %3.10 %
Finance leases4.29 4.20 

As of June 30, 2026, there were no leases that have not yet commenced that would have a material impact on BancShares’ consolidated financial statements.

The following table presents components of lease cost:

Components of Net Lease Cost
dollars in millionsThree Months Ended June 30,Six Months Ended June 30,
Classification2026202520262025
Operating lease cost
Occupancy expense$18 $18 $35 $36 
Finance lease ROU asset amortizationEquipment expense3 2 6 3 
Interest on lease liabilitiesInterest expense - other borrowings1 1 2 1 
Variable lease cost (1)
Occupancy expense4 5 9 12 
Sublease income Occupancy expense(1)(1)(2)(3)
Net lease cost (1)
$25 $25 $50 $49 
(1) Includes short-term lease cost.

Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term.

For finance leases, the right of use (“ROU”) asset is amortized straight-line over the lease term as equipment expense and interest on the lease liability is recognized separately.

Variable lease cost includes common area maintenance, property taxes, utilities, and other operating expenses related to leased premises recognized in the period in which the expense was incurred. Certain of our lease agreements also include rental payments adjusted periodically for inflation. While lease liabilities are not remeasured because of these changes, these adjustments are treated as variable lease costs and recognized in the period in which the expense is incurred.

Sublease income results from leasing excess building space that BancShares is no longer utilizing under operating leases, which have remaining lease terms of up to 11 years.
33

The following table presents supplemental cash flow information related to leases:

Supplemental Cash Flow Information
dollars in millionsSix Months Ended June 30,
20262025
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$37 $40 
Operating cash flows from finance leases2 1 
Financing cash flows from finance leases5 2 
ROU assets obtained in exchange for new operating lease liabilities15 41 
ROU assets obtained in exchange for new finance lease liabilities18 48 

Lessor
BancShares leases equipment to commercial end-users under operating lease and finance lease arrangements. The majority of operating lease equipment is long-lived rail equipment, which is typically leased several times over its life. We also lease technology and office equipment, and large and small industrial, medical, and transportation equipment under both operating leases and finance leases.

Our Rail operating leases typically do not include purchase options. Many of our finance leases, and other equipment operating leases, offer the lessee the option to purchase the equipment at fair market value or for a nominal fixed purchase option. Many of the leases that do not have a nominal purchase option include renewal provisions resulting in some leases continuing beyond the initial contractual term. Our leases typically do not include early termination options. Continued rent payments are due if leased equipment is not returned at the end of the lease.

The following table presents lease income related to BancShares’ equipment leases:

Lease Income
dollars in millionsThree Months Ended June 30,Six Months Ended June 30,
2026202520262025
Lease income – operating leases$267 $258 $535 $512 
Variable lease income – operating leases (1)
13 14 26 30 
Rental income on operating leases280 272 561 542 
Interest income – sales type and direct financing leases43 44 85 87 
Variable lease income included in other noninterest income (2)
14 16 28 30 
Interest income – leveraged leases— 1 1 2 
Total lease income$337 $333 $675 $661 
(1) Primarily includes per diem railcar operating lease rental income earned on a time or mileage usage basis.
(2) Includes revenue related to insurance coverage on leased equipment and leased equipment property tax reimbursements due from customers.


NOTE 8 — GOODWILL AND CORE DEPOSIT INTANGIBLES

Goodwill
BancShares had goodwill of $346 million at June 30, 2026 and December 31, 2025. There was no goodwill impairment during the six months ended June 30, 2026 or 2025. Goodwill relates to the General Bank reporting segment.

Core Deposit Intangibles
Core deposit intangibles represent the estimated fair value of core deposits and other customer relationships acquired. Core deposit intangibles are being amortized over their estimated useful lives. The following tables summarize the activity for core deposit intangibles:

Core Deposit Intangibles
Six Months Ended June 30,
dollars in millions2026
Balance at beginning of period, net of accumulated amortization $195 
Less: amortization for the period24 
Balance at end of period, net of accumulated amortization$171 

34

The following table summarizes the accumulated amortization balance for core deposit intangibles:

Core Deposit Intangible Accumulated Amortization
dollars in millionsJune 30, 2026December 31, 2025
Gross balance$501 $501 
Less: accumulated amortization330 306 
Balance, net of accumulated amortization$171 $195 

The following table summarizes the expected amortization expense as of June 30, 2026 in subsequent periods for core deposit intangibles:
Core Deposit Intangible Expected Amortization
dollars in millions
Remainder 2026$22 
202739 
202834 
202930 
203028 
203118 
Balance, net of accumulated amortization$171 


NOTE 9 — VARIABLE INTEREST ENTITIES

Unconsolidated VIEs
Unconsolidated VIEs include limited partnership interests, joint ventures and a securitization trust. The table below provides a summary of the assets and liabilities included on the Consolidated Balance Sheets associated with unconsolidated VIEs. The maximum exposure to loss for unconsolidated VIEs is generally limited to the sum of the unconsolidated VIE investment balance and off-balance sheet funding commitments. The maximum exposure to loss represents potential losses that would be incurred under hypothetical circumstances, such that the value of BancShares’ interests and any associated collateral declines to zero and assuming no recovery. BancShares believes the possibility is remote under this hypothetical scenario; accordingly, this disclosure is not an indication of expected loss.

Refer to Note 19—Commitments and Contingencies for off-balance sheet commitments to fund other tax credit investments and other unconsolidated investments.

Unconsolidated VIEs Carrying Value and Liabilities for Funding Commitments
dollars in millionsJune 30, 2026December 31, 2025
Affordable housing tax credit investments$2,485 $2,761 
Other tax credit investments28 — 
Total tax credit equity investments2,513 2,761 
Other unconsolidated investments218 194 
Tax credit and other unconsolidated VIE investments (1)
2,731 2,955 
Other investment securities available for sale (2)
18 — 
Total unconsolidated VIE investments$2,749 $2,955 
Liabilities for commitments to fund tax credit investments (3)
$1,166 $1,321 
(1) Included in other assets.
(2) Represents the Retained SBA Notes further discussed in Note 3—Investment Securities.
(3)    Represents commitments to invest in qualified affordable housing investments. These commitments are payable on demand and included in other liabilities.

During the second quarter of 2026, we sold $161 million of tax credit investments and recognized a pretax gain of $17 million, reflected in other noninterest income on the Consolidated Statements of Income.

35

The table below summarizes the tax benefits, recognized in income tax expense on the Consolidated Statements of Income, for the affordable housing tax credit investments accounted for under the PAM.

Tax Benefits - PAM
dollars in millionsThree Months Ended June 30,Six Months Ended June 30,
2026202520262025
Amortization of affordable housing tax credit investments (1)
$70 $70 $150 $134 
Tax credits from affordable housing tax credit investments (77)(67)(157)(135)
Other tax benefits from affordable housing tax credit investments (15)(16)(32)(23)
Net income tax benefit from affordable housing tax credit investments (2)
$(22)$(13)$(39)$(24)
(1) Amortization is included in depreciation, amortization, and accretion, net, in cash flows from operating activities on the Consolidated Statements of Cash Flows.
(2) The net income tax benefit is included in cash flows from operating activities on the Consolidated Statements of Cash Flows. Changes in income taxes payable are reported in net change in other liabilities in cash flows from operating activities on the Consolidated Statements of Cash Flows.
Other Tax Credit Investments
Other tax credit investments at June 30, 2026 consisted of renewable energy tax credit investments accounted for under the HLBVM. We elected the deferral method for the tax credits and deferred tax assets (“DTAs”) related to HLBVM tax credit investments.

Refer to Note 1—Significant Accounting Policies and Basis of Presentation of our 2025 Form 10-K for further discussion of the PAM, HLBVM, and deferral method.

SBA Securitization
On June 29, 2026, FCB completed a securitization transaction of $363 million in amortized cost of SBA commercial loans held for sale (the “SBA Securitization”). As part of the SBA Securitization, First Citizens Securitization Depositor LLC (the “Depositor”), a consolidated subsidiary of FCB, sold the loans to a special purpose trust (the “SBA Trust”), which then issued multiple classes of asset-backed notes (the “SBA Notes”). The SBA Trust transferred the SBA Notes to the Depositor, which retained 5% of each class of SBA Notes (the “Retained SBA Notes”) and offered and sold 95% of each class of SBA Notes in a private placement under Rule 144A and Regulation S of the Securities Act of 1933.

FCB did not consolidate the SBA Trust because FCB does not have both Significant VIE Power and Significant VIE Exposure. FCB recognized a servicing asset and earns servicing and other ancillary fees for its role as servicer which includes performing remedy obligations regarding representations and warranties. BancShares recognized a gain of $3 million on the SBA Securitization, which is net of transaction costs and includes recognition of the servicing asset.

Refer to Note 1—Significant Accounting Policies and Basis of Presentation for further information regarding accounting policies for loan sales and securitizations. Refer to Note 3—Investment Securities for further information regarding the Retained SBA Notes.

NOTE 10 — BORROWINGS

Short-term Borrowings
Securities Sold under Agreements to Repurchase
BancShares held $152 million and $224 million at June 30, 2026 and December 31, 2025, respectively, of securities sold under agreements to repurchase that have overnight contractual maturities and are collateralized by government agency securities. The weighted average interest rate for securities sold under agreements to repurchase was 0.37% and 0.41% at June 30, 2026 and December 31, 2025, respectively.

BancShares utilizes securities sold under agreements to repurchase to facilitate the needs for collateralization of commercial customers and secure wholesale funding needs. Repurchase agreements are transactions whereby BancShares offers to sell to a counterparty an undivided interest in an eligible security at an agreed upon purchase price, and which obligates BancShares to repurchase the security at an agreed upon date, repurchase price and interest rate. These agreements are recorded at the amount of cash received in connection with the transactions and are reflected as securities sold under customer repurchase agreements.

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BancShares monitors collateral levels on a continuous basis and maintains records of each transaction specifically describing the applicable security and the counterparty’s fractional interest in that security. BancShares segregates the security from general assets in accordance with regulations governing custodial holdings of securities. The primary risk with repurchase agreements is market risk associated with the investments securing the transactions, as additional collateral may be required based on fair value changes of the underlying investments. Securities pledged as collateral under repurchase agreements are maintained with safekeeping agents. The carrying value of investment securities pledged as collateral under repurchase agreements was $190 million and $230 million at June 30, 2026 and December 31, 2025, respectively.

Long-term Borrowings
On June 24, 2026, FCB issued and sold $750 million aggregate principal amount of its 5.097% Fixed-to-Floating Rate Senior Notes due in 2029. On March 3, 2026, the Parent Company issued and sold $500 million aggregate principal amount of its 4.869% Fixed-to-Floating Rate Senior Notes due in 2032.

During the six months ended June 30, 2026, FCB made prepayments of $5.00 billion on the Purchase Money Note and recognized a loss on extinguishment of debt of $15 million. In July 2026, we made an additional prepayment of $1.00 billion.

The following table presents long-term borrowings as of June 30, 2026 and December 31, 2025, net of the respective unamortized purchase accounting adjustments, issuance costs, and impacts of fair value hedges:

Long-term Borrowings
dollars in millionsInitial Issuance DateMaturityRate Reset DateInterest Rate After ResetJune 30,
2026		December 31,
2025
Parent Company:
Senior unsecured:
Fixed-to-Floating Senior Notes at 5.231%
March 12, 2025March 2031March 12, 2030
Compounded SOFR + 141 bps
$491 $497 
Fixed-to-Floating Senior Notes at 4.869%
March 3, 2026March 2032March 3, 2031
Compounded SOFR + 148.7 bps
489 — 
Subordinated:
Fixed Rate Reset Subordinated Notes at 5.600%
September 5, 2025September 2035September 5, 2030
Five-year U.S. Treasury Rate + 185 bps
589 597 
Fixed-to-Fixed Subordinated Notes at 6.254%
March 12, 2025March 2040March 12, 2035
Five-year U.S. Treasury Rate + 197 bps
732 745 
Subsidiaries:
Senior unsecured:
Fixed-to-Floating Senior Notes at 5.097%
June 24, 2026July 2029July 13, 2028
Compounded SOFR + 114.6 bps
746 — 
Fixed Senior Notes at 6.000%
March 27, 2006April 2036——58 58 
Subordinated:
Fixed Subordinated Notes at 6.125%
March 9, 2018March 2028——423 430 
Secured:
Purchase Money Note to FDIC fixed at 3.500% (1)
March 27, 2023March 2028——28,423 33,385 
Capital lease obligations—Maturities through May 2057——85 72 
Total long-term borrowings$32,036 $35,784 
(1)    Issued in connection with the SVBB Acquisition. The unamortized discount was $77 million and $115 million at June 30, 2026 and December 31, 2025, respectively. Refer to Note 5—Loans and Leases for further information on loans pledged as collateral to secure borrowings.

August 2026 Debt Issuance
On August 3, 2026, FCB issued and sold an additional $400 million aggregate principal amount of its 5.097% Fixed-to-Floating Rate Senior Notes due in 2029.

Pledged Assets
Refer to the “Loans Pledged” section in Note 5—Loans and Leases for information on loans pledged as collateral to secure borrowings. Additionally, interest-earning deposits at banks included $180 million and $212 million at June 30, 2026 and December 31, 2025, respectively, that were required minimum deposits under the Purchase Money Note.

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NOTE 11 — DERIVATIVE FINANCIAL INSTRUMENTS

Our derivatives designated as hedging instruments (“Designated Derivatives”) include interest rate swap contracts utilized to manage our interest rate exposure for items on our Consolidated Balance Sheets. This includes floating-rate loan portfolio cash flow hedges and fair value hedges of our fixed-rate borrowings.

Our derivatives not designated as hedging instruments (“Non-Designated Derivatives”) mainly include interest rate and foreign exchange contracts that our customers utilized for their risk management needs. We typically manage our exposure to these customer derivatives by entering into offsetting or “back-to-back” interest rate and foreign exchange contracts with third-party dealers. Our Non-Designated Derivatives also include risk participation agreements, as well as equity warrants that we often obtain through credit facility negotiations, primarily with private venture-backed companies in the technology, life sciences, or healthcare industries.

Derivative instruments that are cleared through certain central counterparty clearing houses are settled-to-market and reported net of collateral positions.

Refer to Note 1—Significant Accounting Policies and Basis of Presentation of our 2025 Form 10-K for accounting policies for derivatives.

The following table presents notional amounts and fair values of derivative financial instruments:

Notional Amount and Fair Value of Derivative Financial Instruments
dollars in millionsJune 30, 2026December 31, 2025
Notional AmountAsset Fair ValueLiability Fair ValueNotional AmountAsset Fair ValueLiability Fair Value
Designated Derivatives
Fair Value Hedges
Interest rate contracts hedging long-term borrowings (1) (2)
$3,100 $— $(2)$— $— $— 
Cash Flow Hedges
Interest rate contracts hedging loans (1) (2)
10,000 — (1)4,000 — — 
Total Designated Derivatives$13,100 $— $(3)$4,000 $— $— 
Non-Designated Derivatives
Interest rate contracts (1) (2)
$30,488 $349 $(380)$28,741 $385 $(381)
Foreign exchange contracts (3)
9,470 110 (82)8,912 122 (113)
Other contracts (4)
1,431 49 (1)1,485 27 — 
Total Non-Designated derivatives$41,389 $508 $(463)$39,138 $534 $(494)
Gross derivatives fair values presented in the Consolidated Balance Sheets$508 $(466)$534 $(494)
Less: gross amount offset in the Consolidated Balance Sheets— — — — 
Net amount included in other assets and other liabilities in the Consolidated Balance Sheets$508 $(466)$534 $(494)
(1)    Fair value balances include accrued interest.
(2)    BancShares accounts for swap contracts cleared by the Chicago Mercantile Exchange and LCH Clearnet as “settled-to-market.” As a result, the derivative asset and liability fair values in the table above are presented net of the variation margin payments. Refer to the table below for more information.
(3)    The foreign exchange contracts exclude foreign exchange spot contracts. The notional and net fair value amounts of these contracts were $605 million and $1 million, respectively, as of June 30, 2026, and $252 million and $0 million, respectively, as of December 31, 2025.
(4)    Other contracts include risk participation agreements and equity warrants.

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The following table presents the impact of variation margin netting (form of collateral payment when the underlying fair value changes) on derivative assets and liabilities:

Variation Margin Payments
dollars in millionsJune 30, 2026December 31, 2025
Asset Fair ValueLiability Fair ValueAsset Fair ValueLiability Fair Value
Designated Derivatives
Gross fair value$3 $(41)$19 $— 
Cleared trades, variation margin netting(3)38 (19)— 
Total Designated Derivatives$— $(3)$— $— 
Non-Designated Derivatives
Gross fair value$589 $(483)$596 $(529)
Cleared trades, variation margin netting(81)20 (62)35 
Total Non-Designated Derivatives$508 $(463)$534 $(494)
Gross derivatives fair values presented in the Consolidated Balance Sheets$508 $(466)$534 $(494)
Amounts subject to master netting agreements (1)
(73)73 (118)118 
Cash collateral pledged (received) subject to master netting agreements (2)
(296)3 (204)62 
Total net derivative fair value$139 $(390)$212 $(314)
(1)    BancShares’ derivative transactions are governed by International Swaps and Derivatives Association (“ISDA”) agreements that allow for net settlements of certain payments as well as offsetting of all contracts with a given counterparty in the event of bankruptcy or default of one of the two parties to the transaction. BancShares believes its ISDA agreements meet the definition of a master netting arrangement or similar agreement for purposes of the above disclosure.
(2)    In conjunction with the ISDA agreements described above, BancShares has entered into collateral arrangements with its counterparties, which provide for the exchange of cash depending on the change in the market valuation of the derivative contracts outstanding. Such collateral is available to be applied in settlement of the net balances upon an event of default of one of the counterparties. Collateral pledged or received is included in other assets or deposits, respectively.

Fair Value Hedges
The following table presents the impact of fair value hedges recorded in interest expense on the Consolidated Statements of Income:

Recognized Gains (Losses) on Fair Value Hedges
dollars in millionsThree Months Ended June 30,Six Months Ended June 30,
Interest Expense2026202520262025
Loss on hedging instruments - borrowingsBorrowings(30)— $(38)$— 
Gain on hedged item - borrowingsBorrowings30 1 38 2 
Net gain on fair value hedgesTotal interest expense$— $1 $— $2 

The following table presents the carrying value of hedged items and associated cumulative hedging adjustment related to fair value hedges as of June 30, 2026. There were no fair value hedges outstanding as of December 31, 2025.

Carrying Value of Hedged Items
dollars in millionsCumulative Fair Value Hedging Adjustment Included in the Carrying Value of Hedged Items
Carrying Value of Hedged ItemsCurrently DesignatedNo Longer Designated
June 30, 2026
Long-term borrowings$3,047 $(38)$— 

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Cash Flow Hedges
The following table presents the pretax unrealized (loss) or gain on hedging instruments in cash flow hedges, which are reported in other comprehensive income, and the pretax amount reclassified from accumulated other comprehensive income (“AOCI”) to earnings:

Other Comprehensive Loss on Cash Flow Hedges, Pretax
dollars in millionsThree Months Ended June 30,Six Months Ended June 30,
2026202520262025
Other comprehensive (loss) income on cash flow hedge derivatives before reclassifications$(28)$— $(47)$12 
Amounts reclassified from AOCI to earnings(2)(1)(2)(4)
Other comprehensive (loss) income on cash flow hedge derivatives$(30)$(1)$(49)$8 

The following table presents other information for cash flow hedges:

Other Information for Cash Flow Hedges
dollars in millionsJune 30, 2026December 31, 2025
Unrealized (loss) gain on cash flow hedge derivatives reported in AOCI, net of income taxes$(22)$14 
Estimate to be reclassified from AOCI to earnings during the next 12 months, net of income taxes (1)
$(13)$9 
Maximum number of months over which forecasted cash flows are hedged (2)
2727
(1) Reclassified amounts could differ from amounts actually recognized due to factors such as changes in interest rates, hedge de-designations and the addition of other hedges.
(2) Maximum number of months is based on the latest maturity date of cash flow hedges outstanding at June 30, 2026 and December 31, 2025.

Non-Designated Derivatives
The following table presents the gain or (loss) on Non-Designated Derivatives recognized on the Consolidated Statements of Income:

Gain (Loss) on Non-Designated Derivatives
dollars in millionsThree Months Ended June 30,Six Months Ended June 30,
Amounts Recognized2026202520262025
Interest rate contractsOther noninterest income$8 $7 $12 $6 
Foreign currency forward contracts (1)
Other noninterest income18 (45)37 (64)
Other contractsOther noninterest income31 2 35 2 
Gain (loss) on Non-Designated Derivatives$57 $(36)$84 $(56)
(1) This is primarily related to economic hedges of foreign currency risks arising from loans and other assets denominated in foreign currency. There is an offsetting impact within noninterest income for the foreign exchange revaluation of the associated assets denominated in foreign currency.


NOTE 12 — FAIR VALUE

Fair Value Hierarchy
BancShares measures certain financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP also establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels.

Assets and liabilities are recorded at fair value according to a fair value hierarchy comprised of three levels. The levels are based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. The level within the fair value hierarchy for an asset or liability is based on the lowest level of input significant to the fair value measurement with Level 1 inputs considered highest and Level 3 inputs considered lowest. A brief description of each input level follows:
•Level 1 inputs are quoted prices in active markets for identical assets and liabilities.
•Level 2 inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs other than quoted prices observable for the assets or liabilities and market corroborated inputs.
•Level 3 inputs are unobservable inputs for the asset or liability. These unobservable inputs and assumptions reflect the estimates market participants would use in pricing the asset or liability.


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Assets and Liabilities Measured at Fair Value - Recurring Basis
The following table presents assets and liabilities measured at fair value on a recurring basis:

Assets and Liabilities Measured at Fair Value - Recurring Basis
dollars in millionsJune 30, 2026December 31, 2025
TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Assets
Investment securities available for sale
U.S. Treasury$13,320 $— $13,320 $— $10,673 $— $10,673 $— 
Government agency33 — 33 — 43 — 43 — 
Residential mortgage-backed securities17,500 — 17,500 — 17,623 — 17,623 — 
Commercial mortgage-backed securities2,972 — 2,972 — 3,299 — 3,299 — 
Corporate bonds128 — 108 20 140 — 117 23 
Municipal bonds12 — 12 — 12 — 12 — 
Other18 — 18 — — — — — 
Total investment securities available for sale$33,983 $— $33,963 $20 $31,790 $— $31,767 $23 
Marketable equity securities156 69 87 — 127 50 77 — 
Loans held for sale56 — 56 — 87 — 87 — 
Loans24 — 24 — 22 — 22 — 
Derivative assets (1)
Total Designated Derivatives assets$— $— $— $— $— $— $— $— 
Interest rate contracts — Non-Designated Derivatives$349 $— $347 $2 $385 $— $383 $2 
Foreign exchange contracts — Non-Designated Derivatives110 — 110 — 122 — 122 — 
Other derivative contracts — Non-Designated Derivatives49 — 1 48 27 — — 27 
Total Non-Designated Derivatives assets$508 $— $458 $50 $534 $— $505 $29 
Total derivative assets$508 $— $458 $50 $534 $— $505 $29 
Liabilities
Derivative liabilities (1)
Interest rate contracts — Designated Derivatives$3 $— $3 $— $— $— $— $— 
Interest rate contracts — Non-Designated Derivatives$380 $— $380 $— $381 $— $381 $— 
Foreign exchange contracts — Non-Designated Derivatives82 — 82 — 113 — 113 — 
Other derivative contracts — Non-Designated Derivatives1 — 1 — — — — — 
Total Non-Designated Derivatives liabilities$463 $— $463 $— $494 $— $494 $— 
Total derivative liabilities$466 $— $466 $— $494 $— $494 $— 
(1) Derivative fair values include accrued interest.

The methods and assumptions used to estimate the fair value of each class of financial instruments measured at fair value on a recurring basis are as follows:

Investment securities available for sale. The fair value of U.S. Treasury, government agency, mortgage-backed securities, municipal bonds, and a portion of the corporate bonds are generally estimated using a third-party pricing service. To obtain an understanding of the processes and methodologies used, management reviews correspondence from the third-party pricing service. Management also performs a price variance analysis process to corroborate the reasonableness of prices. The third-party provider evaluates securities based on comparable investments with trades and market data and will utilize pricing models which use a variety of inputs, such as benchmark yields, reported trades, issuer spreads, benchmark securities, bids and offers as needed. These securities are generally classified as Level 2. The remaining corporate bonds held are generally measured at fair value based on indicative bids from broker-dealers using inputs that are not directly observable, and therefore classified as Level 3. Fair value of other investment securities available for sale are estimated using a third-party pricing service and are considered Level 2.

Marketable equity securities. Equity securities are measured at fair value using observable closing prices. Equity securities are classified as Level 1 if they are traded in an active market and as Level 2 if the observable closing price is from a less than active market.

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Loans and Loans held for sale. Certain residential real estate loans originated for sale to investors are carried at fair value based on quoted market prices for similar types of loans, which are considered Level 2 inputs. In instances when loans are not sold and subsequently transferred to portfolio, accounting at fair value is continued.

Derivative Assets and Liabilities. Derivatives were valued using models that incorporate inputs depending on the type of derivative. Other than the fair value of equity warrants and credit derivatives, which were estimated using Level 3 inputs, most derivative instruments were valued using Level 2 inputs based on observed pricing for similar assets and liabilities and model-based valuation techniques for which all significant assumptions are observable in the market. Refer to Note 11—Derivative Financial Instruments for notional amounts and fair values.

The following tables summarize information about significant unobservable inputs related to BancShares’ categories of Level 3 financial assets and liabilities measured on a recurring basis:

Quantitative Information About Level 3 Fair Value Measurements - Recurring Basis
dollars in millions
Financial InstrumentEstimated Fair ValueValuation TechniqueSignificant Unobservable Inputs
June 30,
2026		December 31
2025
Assets
Corporate bonds$20 $23 Indicative bid provided by brokerMultiple factors, including but not limited to, current operations, financial condition, cash flows, and recently executed financing transactions related to the issuer.
Interest rate & other derivative — Non-Designated Derivatives$50 $29 Internal valuation modelMultiple factors, including but not limited to, private company valuation, illiquidity discount, and estimated life of the instrument.

The following table summarizes the changes in estimated fair value for all assets and liabilities measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3):

Changes in Estimated Fair Value of Level 3 Financial Assets and Liabilities - Recurring Basis
dollars in millionsSix Months Ended June 30, 2026Six Months Ended June 30, 2025
Corporate BondsOther Derivative Assets — Non-DesignatedOther Derivative Liabilities — Non-DesignatedCorporate BondsOther Derivative Assets — Non-DesignatedOther Derivative Liabilities — Non-Designated
Beginning balance$23 $29 $— $168 $17 $1 
Purchases— 3 — — 4 — 
Changes in fair value included in earnings— 28 — — 3 — 
Changes in fair value included in comprehensive income— — — 5 — — 
Transfers out— — — — — — 
Maturity and settlements(3)(10)— (35)(1)— 
Ending balance$20 $50 $— $138 $23 $1 

Fair Value Option
The following table summarizes the difference between the aggregate fair value and the unpaid principal balance (“UPB”) for residential mortgage loans originated for sale measured at fair value:

Aggregate Fair Value and UPB - Residential Mortgage Loans
dollars in millionsJune 30, 2026December 31, 2025
Fair ValueUnpaid Principal BalanceDifferenceFair ValueUnpaid Principal BalanceDifference
Originated loans held for sale (1)
$80 $81 $(1)$109 $109 $— 
(1) Originated loans held for sale include loans held for sale and loans originated for sale but transferred to portfolio and held for investment.

BancShares has elected the fair value option for residential mortgage loans originated for sale. This election reduces certain timing differences in the Consolidated Statements of Income and better aligns with the management of the portfolio from a business perspective. The changes in fair value that were recorded as a component of other noninterest income were insignificant for the three and six months ended June 30, 2026 and 2025. Interest earned on originated loans held for sale is recorded within interest income on loans and leases in the Consolidated Statements of Income.

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No originated loans held for sale were 90 or more days past due or on nonaccrual status as of June 30, 2026 or December 31, 2025.

Assets Measured at Estimated Fair Value on a Non-recurring Basis
Certain assets or liabilities are required to be measured at estimated fair value on a non-recurring basis subsequent to initial recognition. Generally, these adjustments are the result of lower of cost or fair value (“LOCOM”) or other impairment accounting. The following table presents carrying value of assets measured at estimated fair value on a non-recurring basis for which gains and losses have been recorded in the periods. The gains and losses reflect amounts recorded for the respective periods, regardless of whether the asset is still held at period end.

Assets Measured at Fair Value - Non-recurring Basis
dollars in millionsFair Value Measurements
Carrying ValueLevel 1Level 2Level 3Total Gains
(Losses)
June 30, 2026
Assets held for sale - loans$3 $— $— $3 $(3)
Loans - collateral dependent loans209 — — 209 (67)
Other real estate owned56 — — 56 1 
Total$268 $— $— $268 $(69)
December 31, 2025
Assets held for sale - loans$5 $— $— $5 $(7)
Loans - collateral dependent loans186 — — 186 (157)
Other real estate owned104 — — 104 — 
Total$295 $— $— $295 $(164)

Certain other assets are adjusted to their fair value on a non-recurring basis, including certain loans, OREO, and goodwill, which are periodically tested for impairment. Most loans held for investment, deposits, and borrowings are not reported at fair value.

The methods and assumptions used to estimate the fair value of each class of financial instruments measured at fair value on a non-recurring basis are as follows:

Assets held for sale - loans. Loans held for investment subsequently transferred to held for sale are carried at the LOCOM. When available, the fair values for the transferred loans are based on quoted prices from the purchase commitments for the individual loans being transferred and are considered Level 1 inputs in instances where there is an active market, or Level 2 when there is no active market. The fair value of Level 2 assets may also be estimated based on prices of recent trades of similar assets. For other loans held for sale, the fair value of Level 3 assets was primarily measured under the income approach using the discounted cash flow model based on Level 3 inputs including discount rate or the price of committed trades. Gains and losses are recorded in noninterest income.

Loans - collateral dependent loans. The population of Level 3 loans measured at fair value that are experiencing financial difficulty and measured on a non-recurring basis includes collateral-dependent loans evaluated individually. Collateral values are determined using appraisals or other third-party value estimates of the subject property discounted based on estimated selling costs, and adjustments for other external factors that may impact the marketability of the collateral. Gains and losses generally reflect the required net provision and charge-offs specific to the loans included in the population for the respective periods and are recorded in the provision for credit losses.

Other real estate owned. OREO is carried at LOCOM. OREO asset valuations are determined by using appraisals or other third-party value estimates of the subject property with discounts, generally between 5% and 14%, applied for estimated selling costs and other external factors that may impact the marketability of the property. At June 30, 2026 and December 31, 2025, the weighted average discount applied was 8.90% and 7.86%, respectively. Changes to the value of the assets between scheduled valuation dates are monitored through continued communication with brokers and monthly reviews by the asset manager assigned to each asset. If there are any significant changes in the market or the subject property, valuations are adjusted or new appraisals are ordered to ensure the reported values reflect the most current information.

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Financial Instruments Fair Value
The table below presents the carrying values and estimated fair values for financial instruments, excluding leases and certain other assets and liabilities for which these disclosures are not required.

Carrying Values and Fair Values of Financial Assets and Liabilities
dollars in millionsJune 30, 2026
Carrying ValueEstimated Fair Value
Level 1Level 2Level 3Total
Financial Assets
Cash and due from banks$1,519 $1,519 $— $— $1,519 
Interest-earning deposits at banks21,132 21,132 — — 21,132 
Securities purchased under agreements to resell737 — 737 — 737 
Investment in marketable equity securities156 69 87 — 156 
Investment securities available for sale33,983 — 33,963 20 33,983 
Investment securities held to maturity9,418 — 8,214 — 8,214 
Loans held for sale90 — 56 34 90 
Net loans147,624 — 1,552 146,686 148,238 
Accrued interest receivable943 — 943 — 943 
Federal Home Loan Bank stock20 — 20 — 20 
Mortgage servicing rights45 — — 68 68 
Derivative assets - Non-Designated Derivatives508 — 458 50 508 
Financial Liabilities
Deposits with no stated maturity158,300 — 158,300 — 158,300 
Time deposits15,127 — 15,100 — 15,100 
Credit balances of factoring clients1,339 — — 1,339 1,339 
Securities sold under customer repurchase agreements152 — 152 — 152 
Long-term borrowings31,951 — 31,845 — 31,845 
Accrued interest payable167 — 167 — 167 
Derivative liabilities - Non-Designated Derivatives463 — 463 — 463 
December 31, 2025
Carrying ValueEstimated Fair Value
Level 1Level 2Level 3Total
Financial Assets
Cash and due from banks$801 $801 $— $— $801 
Interest-earning deposits at banks19,801 19,801 — — 19,801 
Securities purchased under agreements to resell232 — 232 — 232 
Investment in marketable equity securities127 50 77 — 127 
Investment securities available for sale31,790 — 31,767 23 31,790 
Investment securities held to maturity9,647 — 8,491 — 8,491 
Loans held for sale799 — 781 18 799 
Net loans144,346 — 1,580 143,782 145,362 
Accrued interest receivable912 — 912 — 912 
Federal Home Loan Bank stock20 — 20 — 20 
Mortgage servicing rights32 — — 50 50 
Derivative assets - Non-Designated Derivatives534 — 505 29 534 
Financial Liabilities
Deposits with no stated maturity150,342 — 150,342 — 150,342 
Time deposits11,236 — 11,227 — 11,227 
Credit balances of factoring clients1,148 — — 1,148 1,148 
Securities sold under customer repurchase agreements224 — 224 — 224 
Long-term borrowings35,712 — 35,795 — 35,795 
Accrued interest payable140 — 140 — 140 
Derivative liabilities - Non-Designated Derivatives494 — 494 — 494 
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The methods and assumptions used to estimate the fair value of each class of financial instruments not discussed elsewhere are as follows:

Interest-earning Deposits at Banks. The carrying value of interest-earning deposits at banks approximates its fair value due to its short-term nature and is classified on the fair value hierarchy as Level 1. The balances at June 30, 2026 and December 31, 2025 included $180 million and $212 million, respectively, as a required minimum deposit under the Purchase Money Note.

Net loans. The carrying value of net loans is net of the ALLL. Loans are generally valued by discounting expected cash flows using market inputs with adjustments based on cohort level assumptions for certain loan types as well as internally developed estimates at a business segment level. Due to the significance of the unobservable market inputs and assumptions, as well as the absence of a liquid secondary market for most loans, these loans are classified as Level 3. Certain loans are measured based on observable market prices sourced from external data providers and classified as Level 2. Nonaccrual loans are written down and reported at their estimated recovery value, which approximates their fair value, and classified as Level 3.
Securities Purchased Under Agreements to Resell. The fair value of securities purchased under agreements to resell equal the carrying value due to the short term nature, generally overnight, and therefore present an insignificant risk of change in fair value due to changes in market interest rate, and classified as Level 2.

Investment securities held to maturity. BancShares’ portfolio of debt securities held to maturity consists of mortgage-backed securities issued by government agencies and government sponsored entities, U.S. Treasury notes, unsecured bonds issued by government agencies and government sponsored entities, and securities issued by the Supranational Entities & Multilateral Development Banks. We primarily use prices obtained from pricing services to determine the fair value of securities, which are Level 2 inputs.

FHLB stock. The carrying amount of FHLB stock is a reasonable estimate of fair value, as these securities are not readily marketable and are evaluated for impairment based on the ultimate recoverability of the par value. BancShares considers positive and negative evidence, including the profitability and asset quality of the issuer, dividend payment history and recent redemption experience, when determining the ultimate recoverability of the par value. BancShares investment in FHLB stock is ultimately recoverable at par. The inputs used in the fair value measurement for the FHLB stock are considered Level 2 inputs.

Mortgage servicing rights. The fair value of mortgage servicing rights (“MSRs”) is determined using a pooling methodology. Similar loans are pooled together and a model which relies on discount rates, estimates of prepayment rates and the weighted average cost to service the loans is used to determine the fair value. The inputs used in the fair value measurement for MSRs are considered Level 3 inputs.

Deposits. The estimated fair value of deposits with no stated maturity, such as demand deposit accounts, money market accounts, and savings accounts was the amount payable on demand at the reporting date. The fair value of time deposits was estimated based on a discounted cash flow technique using Level 2 inputs appropriate to the contractual maturity.

Credit balances of factoring clients. The impact of the time value of money from the unobservable discount rate for credit balances of factoring clients is inconsequential due to the short term nature of these balances, therefore, the fair value approximated carrying value, and the credit balances are classified as Level 3.

Short-term borrowed funds. The fair value of short-term borrowed funds, which includes repurchase agreements, approximates carrying value and are classified as Level 2.

Long-term borrowings. For certain long-term senior and subordinated unsecured borrowings, the fair values are sourced from a third-party pricing service. The fair values of other long-term borrowings are determined by discounting future cash flows using current interest rates for similar financial instruments. The inputs used in the fair value measurement for FHLB borrowings, senior and subordinated debentures, and other borrowings are classified as Level 2.

For all other financial assets and financial liabilities, the carrying value is a reasonable estimate of the fair value as of June 30, 2026 and December 31, 2025. The carrying value and fair value for these assets and liabilities are equivalent because they are relatively short-term in nature and there is no interest rate or credit risk that would cause the fair value to differ from the carrying value. Cash and due from banks is classified as Level 1. Accrued interest receivable and accrued interest payable are classified as Level 2.


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NOTE 13 — STOCKHOLDERS' EQUITY

A roll forward of common stock activity is presented in the following table:

Number of Shares of Common Stock
Common Stock Outstanding
Class AClass B
Common stock - March 31, 202610,684,129 1,005,185 
Shares repurchased under authorized repurchase plan(298,907)— 
Common stock - June 30, 202610,385,222 1,005,185 
Common stock - December 31, 202511,133,974 1,005,185 
Shares repurchased under authorized repurchase plan(748,752)— 
Common stock - June 30, 202610,385,222 1,005,185 

Common Stock
The Parent Company has Class A common stock and Class B common stock, each with a par value of $1. Class A common stockholders have one vote per share and Class B common stockholders have 16 votes per share.

Non-Cumulative Perpetual Preferred Stock
As of June 30, 2026, the Parent Company had Series A, Series B, Series C, Series D, and Series E non-cumulative perpetual preferred stock outstanding (together, “BancShares Preferred Stock”) as summarized in the following table:

Preferred Stock
dollars in millions, except per share, depositary share, and per depositary share data
Preferred StockIssuance DateEarliest Redemption Date
Book Value (1)
Par Value Per ShareShares Authorized, Issued and OutstandingAggregate Liquidation PreferenceLiquidation Preference Per Share
Depositary Shares (Fractional Interest) (2)
Liquidation Preference Per Depositary ShareDividend
Series AMarch 12, 2020March 15, 2025$340 $0.01 345,000$345 $1,000 
13,800,000 (1/40th)
$25 5.375 %
Series B (3)
January 3, 2022January 4, 2027334 0.01 325,0003251,000 n/an/a
SOFR + 3.972%
Series CJanuary 3, 2022January 4, 2027207 0.01 8,000,00020025 n/an/a5.625 %
Series D (4)
November 18, 2025December 15, 2030494 0.01 5,000500100,000 
500,000 (1/100th)
1,000 7.000 %
Series E (5)
February 5, 2026March 15, 2031390 0.01 400,0004001,000 
16,000,000
(1/40th)
25 6.625 %
Total$1,765 9,075,000$1,770 
(1) The book value is net of direct issuance costs and premiums or discounts.
(2) Each depositary share represents a fractional ownership interest in a share of non-cumulative perpetual preferred stock.
(3) Upon conversion to SOFR in 2023, BancShares began paying a credit spread adjustment in addition to the stated dividend.
(4) The dividend rate is 7.000% per annum from the issuance date to, but excluding, the first reset date of December 15, 2030. Thereafter, the dividend rate resets to the five-year treasury rate plus 3.301% on the fifth anniversary of the preceding reset date.
(5) The initial dividend period will commence on and include the issuance date and will end on and include June 14, 2026. The dividend rate is 6.625% per annum from the issuance date to, but excluding, the first reset date of March 15, 2031. Thereafter, the dividend rate resets to the five-year treasury rate plus 2.830% on the fifth anniversary of the preceding reset date.

Dividends on BancShares Preferred Stock will be paid when, as, and if declared by the Board of Directors of the Parent Company, or a duly authorized committee thereof, to the extent that the Parent Company has lawfully available funds to pay dividends. If declared, dividends with respect to the BancShares Preferred Stock will accrue and be payable quarterly in arrears on March 15, June 15, September 15, and December 15 of each year. Dividends on the BancShares Preferred Stock will not be cumulative.

At its option and subject to any required regulatory approval, the Parent Company may redeem the BancShares Preferred Stock at a redemption price equal to the “Liquidation Preference Per Share” in the table above, plus any applicable dividends, (i) in whole or in part on any dividend payment date on or after the “Earliest Redemption Date” in the table above, or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event.

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NOTE 14 — ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

The following table includes the components of AOCI:

Components of Accumulated Other Comprehensive Loss
dollars in millionsJune 30, 2026December 31, 2025
PretaxIncome TaxesNet of Income TaxesPretaxIncome TaxesNet of Income Taxes
Unrealized loss on securities available for sale$(527)$118 $(409)$(162)$25 $(137)
Unrealized loss on securities available for sale transferred to held to maturity(5)1 (4)(5)1 (4)
Defined benefit pension items276 (71)205 282 (72)210 
Unrealized (loss) gain on cash flow hedge derivatives(30)8 (22)19 (5)14 
Total accumulated other comprehensive (loss) income$(286)$56 $(230)$134 $(51)$83 

The following table summarizes the changes in the components of AOCI, net of income taxes:

Changes in Accumulated Other Comprehensive (Loss) Income by Component
dollars in millionsUnrealized loss on securities available for saleUnrealized loss on securities available for sale transferred to held to maturityDefined benefit pension itemsUnrealized gain (loss) on cash flow hedge derivativesTotal accumulated other comprehensive income (loss)
Balance as of December 31, 2025$(137)$(4)$210 $14 $83 
AOCI activity before reclassifications(272)— (4)(34)(310)
Amounts reclassified from AOCI to earnings— — (1)(2)(3)
Other comprehensive loss for the period(272)— (5)(36)(313)
Balance as of June 30, 2026$(409)$(4)$205 $(22)$(230)
Balance as of December 31, 2024$(584)$(4)$135 $8 $(445)
AOCI activity before reclassifications328 — (3)9 334 
Amounts reclassified from AOCI to earnings— — — (3)(3)
Other comprehensive income (loss) for the period328 — (3)6 331 
Balance as of June 30, 2025$(256)$(4)$132 $14 $(114)
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Other Comprehensive Income
The amounts included in the Consolidated Statements of Comprehensive Income are net of income taxes. The following table presents the pretax and after tax components of other comprehensive income:

Other Comprehensive Income (Loss) by Component

dollars in millionsThree Months Ended June 30,
20262025
PretaxIncome TaxesNet of Income TaxesPretaxIncome TaxesNet of Income TaxesIncome Statement Line Items
Unrealized loss on securities available for sale:
Other comprehensive (loss) income on securities available for sale$(178)$45 $(133)$119 $(30)$89 
Defined benefit pension items:
Actuarial loss$(3)$1 $(2)$(4)$1 $(3)
Amounts reclassified from AOCI to earnings(1)— (1)— — — Other noninterest expense
Actuarial loss$(4)$1 $(3)$(4)$1 $(3)
Unrealized (loss) gain on cash flow hedge derivatives:
AOCI activity before reclassifications$(28)$8 $(20)$— $(1)$(1)
Amounts reclassified from AOCI to earnings(2)— (2)(1)1 — Interest income on loans and leases
Other comprehensive loss on cash flow hedge derivatives$(30)$8 $(22)$(1)$— $(1)
Total other comprehensive (loss) income$(212)$54 $(158)$114 $(29)$85 

dollars in millionsSix Months Ended June 30,
20262025
PretaxIncome TaxesNet of Income TaxesPretaxIncome TaxesNet of Income TaxesIncome Statement Line Items
Unrealized loss on securities available for sale:
Other comprehensive (loss) income on securities available for sale$(365)$93 $(272)$441 $(113)$328 
Defined benefit pension items:
Actuarial loss$(5)$1 $(4)$(4)$1 $(3)
Amounts reclassified from AOCI to earnings(1)— (1)— — — Other noninterest expense
Actuarial loss$(6)$1 $(5)$(4)$1 $(3)
Unrealized (loss) gain on cash flow hedge derivatives:
AOCI activity before reclassifications$(47)$13 $(34)$12 $(3)$9 
Amounts reclassified from AOCI to earnings(2)— (2)(4)1 (3)Interest income on loans and leases
Other comprehensive (loss) income on cash flow hedge derivatives$(49)$13 $(36)$8 $(2)$6 
Total other comprehensive (loss) income$(420)$107 $(313)$445 $(114)$331 


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NOTE 15 — EARNINGS PER COMMON SHARE

The following table sets forth the computation of the basic and diluted earnings per common share:

Earnings per Common Share
dollars in millions, except share and per share data
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Net income$672 $575 $1,206 $1,058 
Preferred stock dividends32 14 58 29 
Net income available to common stockholders$640 $561 $1,148 $1,029 
Weighted average common shares outstanding
Basic shares outstanding11,535,792 13,237,226 11,729,271 13,405,295 
Stock-based awards— — — — 
Diluted shares outstanding11,535,792 13,237,226 11,729,271 13,405,295 
Earnings per common share
Basic and diluted$55.52 $42.36 $97.95 $76.73 


NOTE 16 — INCOME TAXES

BancShares’ global effective income tax rates (“ETRs”) were 24.5% and 24.1% for the three months ended June 30, 2026 and 2025, respectively. The increase in the ETR for the three months ended June 30, 2026 compared to 2025 was primarily due to the favorable impact from the revaluation of deferred taxes due to a change in state law enacted in the prior year quarter. BancShares’ global ETRs were 24.4% and 24.9% for the six months ended June 30, 2026 and 2025, respectively. The decrease in the ETR for the six months ended June 30, 2026 compared to 2025 was primarily due to a higher tax credit benefit for 2026.

The quarterly income tax expense is based on a projection of BancShares’ annual ETR. This annual ETR is applied to the year-to-date consolidated pretax income to determine the interim provision for income taxes before discrete items. The ETR each period is also impacted by a number of factors, including the relative mix of domestic and international earnings, effects of changes in enacted tax laws, adjustments to the valuation allowances, and discrete items. The currently forecasted ETR may vary from the actual year-end 2026 ETR due to the changes in these factors.

Uncertain Tax Benefits
BancShares recognizes tax benefits when it is more likely than not that the position will prevail, based solely on the technical merits under the tax law of the relevant jurisdiction. BancShares will recognize the tax benefit if the position meets this recognition threshold determined based on the largest amount of the benefit that is more than likely to be recognized.

Deferred Tax Assets and Valuation Adjustments
BancShares’ ability to recognize DTAs is evaluated on a quarterly basis to determine if there are any significant events that would affect our ability to utilize existing DTAs. If events are identified that affect our ability to utilize our DTAs, changes to the valuation allowance may be required.

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NOTE 17 — EMPLOYEE BENEFIT PLANS

BancShares sponsors non-contributory defined benefit pension plans and supplemental and executive retirement plans for its qualifying employees. The service cost component of net periodic benefit cost is included in salaries and wages, while all other non-service cost components are included in other noninterest expense.

The components of net periodic benefit cost are as follows:

Net Periodic Benefit Costs
dollars in millionsThree Months Ended June 30,Six Months Ended June 30,
2026202520262025
Service cost$2 $2 $4 $4 
Interest cost16 16 32 32 
Expected return on assets(24)(23)(49)(47)
Amortization of net actuarial gain(1)— (1)— 
Total net periodic benefit$(7)$(5)$(14)$(11)

NOTE 18 — SEGMENT INFORMATION

BancShares’ segments include the General Bank, the Commercial Bank, and Rail. All other financial information not included in the segments is reported in the Corporate section of the segment disclosures. We do not aggregate multiple operating segments into a reportable segment. Therefore, each of our operating segments are reportable segments.

Under our segment expense allocation methodology, allocated expenses increase noninterest expense of the applicable segment(s), with an offsetting decrease to Corporate noninterest expense. “All other noninterest expense” in the segment reporting tables below includes the effect of allocated expenses, resulting in a reduction to expense (or “Contra Expense”) for Corporate.

General Bank
The General Bank segment delivers products and services to consumer and small business clients through our extensive network of branches and various digital channels. We offer a full suite of deposit products, loans (primarily residential mortgages and business and commercial loans), cash management, private banking, wealth management, payment services, and treasury services. We offer conforming and jumbo residential mortgage loans throughout the United States that are primarily originated through branches and retail referrals, employee referrals, internet leads, direct marketing and a correspondent lending channel, as well as through our private banking teams. Our wealth and private banking business offers a customized suite of products and services to individuals and institutional clients, as well as private equity and venture capital professionals and executive leaders of the innovation companies they support. Offerings include brokerage, investment advisory, private stock loans, other secured and unsecured lending products and vineyard development loans, as well as planning-based financial strategies, family office, financial planning, tax planning and trust services. The General Bank segment also includes a community association bank business that supports deposit, cash management and lending to homeowner associations and property management companies.

Revenue is primarily generated from interest income on loans and leases. Noninterest income is primarily generated from fees for banking and advisory services, including lending-related fees, most of the deposit fees and service charges and cardholder services, along with essentially all of the wealth management services income. We primarily originate loans by utilizing our branch network and industry referrals, as well as direct digital marketing efforts. We derive our SBA loans through a network of SBA originators. We periodically purchase loans on a whole-loan basis. We also invest in community development that supports the construction of affordable housing in our communities in line with our Community Reinvestment Act initiatives.

Commercial Bank
The Commercial Bank segment provides a range of lending, leasing, capital markets, asset management, and other financial and advisory services, primarily tailored to commercial and middle market companies in a wide range of industries, including energy, healthcare, technology media and telecommunications, maritime, and aerospace and defense. Loans offered are primarily senior secured loans collateralized by accounts receivable, inventory, machinery and equipment, transportation equipment, and/or intangibles, and are often used for working capital, plant expansion, acquisitions, or recapitalizations. These loans include revolving lines of credit and term loans and, depending on the nature of the collateral, may be referred to as collateral-backed loans, asset-based loans or cash flow loans. We provide senior secured loans to developers and other
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commercial real estate professionals. Additionally, we provide business loans and leases, including both capital and operating leases, through a highly automated credit approval, documentation and funding process.

Commercial Bank also includes products and services offered to commercial clients and investors across stages, sectors and regions in the innovation ecosystem, as well as private equity and venture capital firms. Loan products are offered through Global Fund Banking and Technology and Healthcare Banking and consist of capital call lines of credit, investor dependent loans, and commercial and industrial loans made primarily to technology, life science and healthcare companies.

We also provide factoring, receivable management, supply chain financing, and secured financing to businesses that operate in several industries. These include apparel, textile, furniture, home furnishings, and consumer electronics. See further disclosure on factoring in Note 21—Segment Information in our 2025 Form 10-K.

Revenue is primarily generated from interest income on loans and leases. Noninterest income is mostly generated from rental income on operating lease equipment, lending-related fees, including most of the capital market fees and international fees, essentially all of the client investment fees, and other revenue from banking services. Noninterest income also includes all of the commissions earned on factoring-related activities. We derive our commercial lending business through direct marketing to borrowers, lessees, manufacturers, vendors, and distributors, as well as through our private equity and venture capital relationships. We also utilize referrals as a source for commercial lending business and may periodically buy participations or syndications of loans and lines of credit, or purchase loans on a whole-loan basis.

Rental income and depreciation expense on operating lease equipment is related to small and large ticket equipment we own and lease to others. Rental income is generally influenced by the size of the operating lease portfolio. Operating lease equipment is subject to depreciation expense over the useful life of the small and large ticket equipment, which is generally 3-10 years.

We offer a full suite of commercial deposit products and services through online and mobile banking platforms, as well as physical locations.

Rail
The Rail segment offers customized leasing and financing solutions on a fleet of railcars and locomotives to railroads and shippers throughout North America. Railcar types include covered hopper cars used to ship grain and agricultural products, plastic pellets, sand, and cement; tank cars for energy products and chemicals; gondolas for coal, steel coil and mill service products; open-top hopper cars for coal and aggregates; boxcars for paper and auto parts; and centerbeams and flat cars for lumber. Revenue is generated primarily from rental income on operating lease equipment, which is included in noninterest income, and to a lesser extent, gains on sale of leasing equipment. Rental income is generally influenced by the size of the operating lease portfolio, utilization of the railcars, re-pricing of equipment renewed upon lease maturities, and pricing on new leases. Re-pricing refers to the rental rate in the renewed equipment contract compared to the prior contract.

Operating lease equipment is subject to depreciation expense over the useful life of the rail equipment, which is generally longer in duration, 40-50 years. The Rail segment leases railcars, primarily pursuant to full-service lease contracts under which we, as lessor, are responsible for railcar maintenance and repair. Maintenance and other operating lease expenses relate to equipment ownership and leasing costs associated with the railcar portfolio and tend to be variable due to timing and the number of railcars coming on or off lease as well as asset condition.

Corporate
All other financial information not included in the segments is reported in Corporate. Corporate contains BancShares’ centralized treasury function, which manages the investment security portfolio, interest-earning deposits at banks and corporate/wholesale funding (e.g., borrowings, Direct Bank deposits and brokered deposits). Corporate deposits are primarily comprised of Direct Bank deposits.

Corporate includes interest income on investment securities and interest-earning deposits at banks; interest expense for borrowings, Direct Bank deposits, and brokered deposits; as well as funds transfer pricing allocations. Noninterest income includes gains or losses on sales of investment securities, fair value adjustments on marketable equity securities, and income from bank owned life insurance. Personnel cost in Corporate includes the personnel costs not allocated to the operating segments. Corporate includes acquisition-related expenses and certain items related to accounting for business combinations, such as gains on acquisitions, and discount accretion income for certain acquired loans. Corporate also includes the offsetting impacts of allocated expenses as discussed above.


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Segment Results and Select Period End Balances
The following tables present the condensed income statements by segment and include the significant segment expenses and measure of segment profit or loss.

dollars in millionsThree Months Ended June 30, 2026
General BankCommercial BankRail
Corporate (1)
BancShares (2)
Net interest income (expense)$819 $805 $(59)$91 $1,656 
Rental income on operating lease equipment— 54 226 — 280 
All other noninterest income187 270 7 32 496 
Total noninterest income187 324 233 32 776 
Total revenue1,006 1,129 174 123 2,432 
Depreciation on operating lease equipment— 43 58 — 101 
Maintenance and other operating lease expenses— — 67 — 67 
Personnel cost209 186 6 443 844 
Acquisition-related expenses— — — 8 8 
All other noninterest expense (3)
392 400 18 (279)531 
Total noninterest expense601 629 149 172 1,551 
Provision (benefit) for credit losses54 (64)— — (10)
Income (loss) before income taxes351 564 25 (49)891 
Income tax expense (benefit)85 136 6 (8)219 
Net income (loss)$266 $428 $19 $(41)$672 
Select Period End Balances
Loans and leases$64,355 $86,635 $44 $— $151,034 
Operating lease equipment, net— 723 9,032 — 9,755 
Investment securities18 — — 43,539 43,557 
Deposits75,718 45,690 2 52,017 173,427 
Three Months Ended June 30, 2025
General BankCommercial BankRail
Corporate (1)
BancShares (2)
Net interest income (expense)$824 $789 $(53)$135 $1,695 
Rental income on operating lease equipment— 54 218 — 272 
All other noninterest income164 228 3 11 406 
Total noninterest income164 282 221 11 678 
Total revenue988 1,071 168 146 2,373 
Depreciation on operating lease equipment— 44 56 — 100 
Maintenance and other operating lease expenses— — 55 — 55 
Personnel cost207 183 6 414 810 
Acquisition-related expenses— — — 38 38 
All other noninterest expense (3)
373 422 26 (324)497 
Total noninterest expense580 649 143 128 1,500 
Provision for credit losses13 102 — — 115 
Income before income taxes395 320 25 18 758 
Income tax expense (benefit)101 82 6 (6)183 
Net income$294 $238 $19 $24 $575 
Select Period End Balances
Loans and leases$64,987 $76,220 $62 $— $141,269 
Operating lease equipment, net— 750 8,716 — 9,466 
Investment securities— — — 43,346 43,346 
Deposits73,499 40,697 3 45,736 159,935 
(1) Corporate includes all other financial information that is not included in the reportable segments.
(2) In the segment reporting table above, there are no reconciling differences between BancShares and the aggregate of all reportable segments and Corporate.
(3) All other noninterest expense represents “other segment items” under ASC 280 and primarily includes allocated expenses, net occupancy expense, equipment expense, professional fees, third-party processing fees, FDIC insurance expense, marketing expense, and intangible amortization. All other noninterest expense is presented net of allocated expenses in the segment reporting table above, resulting in Contra Expense for Corporate as further discussed above.
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dollars in millionsSix Months Ended June 30, 2026
General BankCommercial BankRail
Corporate (1)
BancShares (2)
Net interest income (expense)$1,632 $1,607 $(117)$155 $3,277 
Rental income on operating lease equipment— 109 452 — 561 
All other noninterest income359 500 16 32 907 
Total noninterest income359 609 468 32 1,468 
Total revenue1,991 2,216 351 187 4,745 
Depreciation on operating lease equipment— 86 116 — 202 
Maintenance and other operating lease expenses— — 132 — 132 
Personnel cost424 385 14 890 1,713 
Acquisition-related expenses— — — 13 13 
All other noninterest expense (3)
777 804 35 (589)1,027 
Total noninterest expense1,201 1,275 297 314 3,087 
Provision (benefit) for credit losses71 (9)— — 62 
Income (loss) before income taxes719 950 54 (127)1,596 
Income tax expense (benefit)175 231 13 (29)390 
Net income (loss)$544 $719 $41 $(98)$1,206 
Six Months Ended June 30, 2025
General BankCommercial BankRail
Corporate (1)
BancShares (2)
Net interest income (expense)$1,612 $1,575 $(105)$276 $3,358 
Rental income on operating lease equipment— 110 432 — 542 
All other noninterest income328 429 5 9 771 
Total noninterest income328 539 437 9 1,313 
Total revenue1,940 2,114 332 285 4,671 
Depreciation on operating lease equipment— 88 110 — 198 
Maintenance and other operating lease expenses— — 113 — 113 
Personnel cost417 373 14 824 1,628 
Acquisition-related expenses— — — 80 80 
All other noninterest expense (3)
728 842 40 (636)974 
Total noninterest expense1,145 1,303 277 268 2,993 
Provision for credit losses59 210 — — 269 
Income before income taxes736 601 55 17 1,409 
Income tax expense (benefit)189 154 14 (6)351 
Net income$547 $447 $41 $23 $1,058 
(1) Corporate includes all other financial information that is not included in the reportable segments.
(2) In the segment reporting table above, there are no reconciling differences between BancShares and the aggregate of all reportable segments and Corporate.
(3) All other noninterest expense represents “other segment items” under ASC 280 and primarily includes allocated expenses, net occupancy expense, equipment expense, professional fees, third-party processing fees, FDIC insurance expense, marketing expense, and intangible amortization. All other noninterest expense is presented net of allocated expenses in the segment reporting table above, resulting in Contra Expense for Corporate as further discussed above.
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NOTE 19 — COMMITMENTS AND CONTINGENCIES

Commitments
To meet the financing needs of its customers, BancShares and its subsidiaries have financial instruments with off-balance sheet risk. These financial instruments involve elements of credit, interest rate or liquidity risk and include commitments to extend credit and standby letters of credit.

The accompanying table summarizes credit-related commitments and other purchase and funding commitments:

dollars in millionsJune 30, 2026December 31, 2025
Financing Commitments
Financing assets (excluding leases)$52,858 $51,726 
Letters of Credit
Financial standby letters of credit2,762 2,583 
Other letters of credit197 227 
Deferred Purchase Agreements1,487 1,723 
Purchase and Funding Commitments (1)
103 102 
(1)    BancShares’ purchase and funding commitments relate to the Rail segment commitments to fund railcar manufacturer purchase and upgrade commitments.

Financing Commitments
Commitments to extend credit are legally binding agreements to lend to customers. These commitments generally have fixed expiration dates or other termination clauses and may require payment of fees. Established credit standards control the credit risk exposure associated with these commitments. In some cases, BancShares requires collateral be pledged to secure the commitment, including cash deposits, securities and other assets.

Financing commitments, referred to as net unfunded loan commitments or lines of credit, primarily reflect BancShares’ agreements to lend to its customers, subject to the customers’ compliance with contractual obligations. At June 30, 2026 and December 31, 2025, substantially all undrawn financing commitments were senior facilities. Financing commitments also include $296 million and $360 million at June 30, 2026 and December 31, 2025, respectively, related to off-balance sheet commitments to fund other tax credit investments and other unconsolidated investments. These off-balance sheet investment commitments are contingent on events that have yet to occur and may be subject to change.

As financing commitments may not be fully drawn, may expire unused, may be reduced or canceled at the customer’s request, and may require the customer to be in compliance with certain conditions, commitment amounts do not necessarily reflect actual future cash flow requirements.

The table above excludes uncommitted revolving credit facilities extended by Commercial Services to its clients for working capital purposes. In connection with these facilities, Commercial Services has the sole discretion throughout the duration of these facilities to determine the amount of credit that may be made available to its clients at any time and whether to honor any specific advance requests made by its clients under these credit facilities.

Letters of Credit
Financial standby letters of credit are commitments to pay the beneficiary thereof if drawn upon by the beneficiary upon satisfaction of the terms of the letter of credit. Those commitments are primarily issued to support public and private borrowing arrangements. To mitigate its risk, BancShares’ credit policies govern the issuance of standby letters of credit. The credit risk related to the issuance of these letters of credit is essentially the same as in extending loans to clients and, therefore, these letters of credit are collateralized when necessary. These financial instruments generate fees and involve, to varying degrees, elements of credit risk in excess of amounts recognized in the Consolidated Balance Sheets.

Deferred Purchase Agreements
A deferred purchase agreement (“DPA”) is provided in conjunction with factoring, whereby a client is provided with credit protection for trade receivables without purchasing the receivables. The trade receivables terms generally require payment in 90 days or less. If the client’s customer is unable to pay an undisputed receivable solely as the result of credit risk, BancShares is then required to purchase the receivable from the client, less any borrowings for such client based on such defaulted receivable. The outstanding amount in the table above, less $129 million and $211 million at June 30, 2026 and December 31, 2025, respectively, of borrowings for such clients, is the maximum amount that BancShares would be required to pay under all DPAs. This maximum amount would only occur if all receivables subject to DPAs default in the manner described above, thereby requiring BancShares to purchase all such receivables from the DPA clients.
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The table above includes $1.47 billion and $1.71 billion of DPA exposures at June 30, 2026 and December 31, 2025, respectively, related to receivables on which BancShares has assumed the credit risk. The table also includes $14 million and $13 million available under DPA credit line agreements provided at June 30, 2026 and December 31, 2025, respectively. The DPA credit line agreements specify a contractually committed amount of DPA credit protection and are cancellable by us only after a notice period, which is typically 90 days or less.

Litigation and Other Contingencies
The Parent Company and certain of its subsidiaries have been named as a defendant in legal actions arising from its normal business activities in which damages in various amounts are claimed. BancShares is also exposed to litigation risk relating to the prior business activities of banks from which assets were acquired and liabilities assumed.

BancShares is involved, and from time to time in the future may be involved, in a number of pending and threatened judicial, regulatory, and arbitration proceedings as well as proceedings, investigations, examinations and other actions brought or considered by governmental and self-regulatory agencies. These matters arise in connection with the ordinary conduct of BancShares’ business. At any given time, BancShares may also be in the process of responding to subpoenas, requests for documents, data and testimony relating to such matters and engaging in discussions to resolve the matters (all of the foregoing collectively being referred to as “Litigation”). While most Litigation relates to individual claims, BancShares may be subject to putative class action claims and similar broader claims and indemnification obligations.

In light of the inherent difficulty of predicting the outcome of Litigation matters and indemnification obligations, particularly when such matters are in their early stages or where the claimants seek indeterminate damages, BancShares cannot state with confidence what the eventual outcome of the pending Litigation will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, fines, or penalties related to each pending matter will be, if any. In accordance with applicable accounting guidance, BancShares establishes reserves for Litigation when those matters present loss contingencies as to which it is both probable that a loss will occur and the amount of such loss can reasonably be estimated. The actual results of resolving such matters may be substantially higher than the amounts reserved.

For certain Litigation matters for which a loss is probable or reasonably possible, BancShares is able to estimate a range of reasonably possible losses in excess of any established reserve, or for which there is no established reserve. Management currently estimates an aggregate range of reasonably possible losses to be up to approximately $25 million in excess of any established reserves. This estimate represents reasonably possible losses (in excess of any established reserves) over the life of such Litigation, which may span a currently indeterminable number of years, and is based on information currently available as of June 30, 2026. The Litigation matters underlying the estimated range will change from time to time, and actual results may vary significantly from this estimate. For certain other Litigation matters for which a loss is probable or reasonably possible, BancShares is not able to estimate a range of reasonably possible losses.

Based on information currently available as of June 30, 2026, those Litigation matters for which BancShares is not able to estimate a range of reasonably possible losses or as to which a loss does not appear to be reasonably possible are not included within this estimated range and, therefore, this estimated range does not represent BancShares’ maximum loss exposure.

The foregoing statements about BancShares’ Litigation are based on BancShares’ judgments, assumptions, and estimates and are necessarily subjective and uncertain. In the event of unexpected future developments, it is possible that the ultimate resolution of these cases, matters, and proceedings, if unfavorable, may be material to BancShares’ consolidated financial position in a particular period.


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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s discussion and analysis (“MD&A”) of earnings and related financial data is presented to assist in understanding the financial condition and results of operations of First Citizens BancShares, Inc. (the “Parent Company” and, when including all of its subsidiaries on a consolidated basis, “we,” “us,” “our,” or “BancShares”) and its banking subsidiary, First-Citizens Bank & Trust Company (“FCB”). Unless otherwise noted, the terms “we,” “us,” “our,” and “BancShares” in this section refer to the consolidated financial position and consolidated results of operations for BancShares.

This MD&A is expected to provide our investors with a view of our financial condition and results of operations from our management’s perspective. This MD&A should be read in conjunction with the unaudited consolidated financial statements and related notes presented within this Quarterly Report on Form 10-Q (this “Form 10-Q”), along with our consolidated financial statements and related MD&A of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). Throughout this MD&A, references to a specific “Note” refer to Notes to the Consolidated Financial Statements (Unaudited) in Item 1. Financial Statements.

Intercompany accounts and transactions have been eliminated. Refer to Note 1—Significant Accounting Policies and Basis of Presentation for further information.

Management uses certain financial measures that are not presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) in its analysis of the financial condition and results of operations of BancShares. Refer to the "Non-GAAP Financial Measurements" section of this MD&A for a reconciliation of these financial measures to the most directly comparable financial measures in accordance with GAAP.

EXECUTIVE OVERVIEW

The Parent Company is a bank holding company (“BHC”) and financial holding company. The Parent Company is regulated by the Board of Governors of the Federal Reserve System (“Federal Reserve”) under the U.S. Bank Holding Company Act of 1956, as amended. The Parent Company is also registered under the BHC laws of North Carolina and is subject to supervision, regulation and examination by the North Carolina Office of the Commissioner of Banks (the “NCCOB”). BancShares conducts its banking operations through its wholly owned subsidiary, FCB, a state-chartered bank organized under the laws of the state of North Carolina. FCB is regulated by the NCCOB. In addition, FCB, as an insured depository institution, is supervised by the Federal Deposit Insurance Corporation (the “FDIC”).

BancShares provides financial services for a wide range of consumer and commercial clients. BancShares offers deposit products, loans, and wealth management and private banking services to consumer clients. BancShares provides lending, leasing, capital markets and other financial and advisory services, to small and middle-market companies across a variety of industries. Additionally, BancShares provides a full suite of financial products and services to private equity firms, venture capital firms, and commercial clients in innovation markets, such as technology, life sciences and healthcare industries. BancShares also provides deposit, cash management and lending to homeowner associations and property management companies and owns a fleet of railcars and locomotives that are leased to railroads and shippers.

BancShares delivers banking products and services to its customers through an extensive branch network and additionally operates a nationwide digital banking platform that delivers deposit products to consumers (the “Direct Bank”). Services offered at most branches include accepting deposits, cashing checks and providing for consumer and commercial cash needs. Consumer and business customers may also conduct banking transactions through various digital channels.

In addition to our banking operations, we provide various investment products and services through FCB’s wholly owned subsidiaries, including First Citizens Investor Services, Inc. (“FCIS”), First Citizens Asset Management, Inc. (“FCAM”), and First Citizens Delaware Trust Company, and a non-bank subsidiary, First Citizens Capital Securities, LLC (“FCCS”). As a registered broker-dealer, FCIS provides a full range of investment products, including annuities, brokerage services and third-party mutual funds. As registered investment advisers, FCIS and FCAM provide investment management services and advice. FCCS is a broker-dealer that also provides underwriting and private placement services. We also have other wholly owned subsidiaries, including SVB Wealth LLC, SVB Asset Management, and First Citizens Institutional Asset Management, LLC, which are active investment advisers.

Refer to Note 18—Segment Information for further information regarding the products and services we provide.

Refer to the 2025 Form 10-K for a discussion of our strategy.
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Recent Events

Equity Transactions
Share Repurchase Programs
During the second quarter of 2026, we repurchased 298,907 shares of our Class A common stock for $600 million and paid a dividend of $2.10 per share on our Class A and Class B common stock. Shares repurchased during the second quarter of 2026 represented 2.80% of Class A common stock and 2.56% of total Class A and Class B common stock outstanding at March 31, 2026. From inception of the 2024 share repurchase program (“2024 SRP”) through June 30, 2026, we repurchased 3,141,855 shares of our Class A common stock for $6.19 billion, representing 23.23% of Class A common stock and 21.62% of total Class A and Class B common stock outstanding as of June 30, 2024.

From July 1, 2026 through July 31, 2026, BancShares repurchased an additional 97,287 shares of Class A common stock for a total of $206 million and had total capacity remaining under the current share repurchase program (the “2025 SRP”) of $1.11 billion as of July 31, 2026.

Refer to Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds for second quarter 2026 monthly repurchase activity of Class A common stock.

Preferred Stock Issuance
On February 5, 2026, the Parent Company issued and sold 6.625% non-cumulative perpetual preferred stock, series E for a total of $400 million. Refer to Note 13—Stockholders' Equity for further information, including depositary shares and liquidation preference.

Debt Transactions
Prepayments of the Purchase Money Note
In connection with the SVBB Acquisition (as defined in Note 2—Business Combinations), FCB issued a five-year $36.07 billion note payable to the FDIC, maturing March 27, 2028 (the “Purchase Money Note”). The Purchase Money Note had a carrying value of $28.42 billion and $33.39 billion at June 30, 2026 and December 31, 2025, respectively. During the current quarter, we prepaid $2.50 billion of the Purchase Money Note which resulted in a $7 million loss on extinguishment of debt. During the six months ended June 30, 2026, we prepaid $5.00 billion of the Purchase Money Note which resulted in a $15 million loss on extinguishment of debt. The outstanding balance of the Purchase Money Note declined from $35.85 billion at September 30, 2025 to $28.42 billion at June 30, 2026. Additionally, we prepaid $1.00 billion in July 2026. We will continue to monitor the interest rate environment, FCB’s collateral position for the Purchase Money Note, and FCB’s liquidity position to determine the timing and magnitude of further voluntary prepayments. We expect monthly prepayments to be at least $500 million throughout 2026. In the third quarter of 2026, we expect total prepayments of $6 billion to $8 billion, largely driven by expected liquidity from the BMO Branch Acquisition (as defined in Note 2—Business Combinations).

Debt Issuances
Debt issuances through June 30, 2026 of $1.25 billion include the following:
•On June 24, 2026, FCB issued and sold $750 million aggregate principal amount of its 5.097% Fixed-to-Floating Rate Senior Notes due in 2029 (the “Current Quarter Debt Issuance”).
•On March 3, 2026, the Parent Company issued and sold $500 million aggregate principal amount of its 4.869% Fixed-to-Floating Rate Senior Notes due in 2032 in a public offering.

On August 3, 2026, FCB issued and sold an additional $400 million aggregate principal amount of its 5.097% Fixed-to-Floating Rate Senior Notes due in 2029.

SBA Securitization
On June 29, 2026, we completed the SBA Securitization (as defined in Note 9—Variable Interest Entities) of SBA commercial loans held for sale totaling $363 million in amortized cost, resulting in a gain of $3 million.

Loan Sale
In April 2026, residential mortgage loans held for sale totaling $644 million in amortized cost were sold and we recognized a gain of $1 million as further discussed in Note 4—Assets Held for Sale.

Sale of Tax Credit Investments
In May 2026, we sold $161 million of tax credit investments and recognized a pretax gain of $17 million. Refer to Note 9—Variable Interest Entities for further discussion.
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Pending Branch Acquisition
On October 16, 2025, FCB announced the BMO Branch Acquisition to acquire 138 branches from BMO Bank N.A. located throughout the Midwest, Great Plains and West regions of the U.S. We expect to assume approximately $5.3 billion in deposits and acquire approximately $700 million in loans. We expect the transaction to be completed during the third quarter of 2026.

Commercial Banking Brand Alignment
On April 23, 2026, FCB announced plans to expand its commercial banking capabilities and align brand names in the fourth quarter of 2026. Silicon Valley Bank (“SVB”), a division of FCB, will rebrand as First Citizens Innovation Banking and First Citizens Fund Banking. CIT Commercial Services and the Silicon Valley Bank Wine division will rebrand as FCB.

Recent Economic, Industry and Regulatory Developments
Economic conditions reflected heightened uncertainty in 2026, as inflationary pressures, due in part to global energy constraints related to the conflicts in the Middle East, contributed to market volatility. We continue to monitor these developments and the broader macroeconomic environment; however, the ultimate effects remain uncertain and dependent on future events.

Entering 2026, the benchmark federal funds range was between 3.50% - 3.75%. During the 2026 Federal Open Market Committee meetings through July, the benchmark federal funds rate was left unchanged.

The U.S. government announced changes to its trade policies in 2025 and significantly increased tariffs on certain imports under emergency authorities, including the International Emergency Economic Powers Act (the “IEEPA”). In February 2026, the Supreme Court ruled that the IEEPA does not authorize the President to impose tariffs. The current tariff environment remains dynamic and uncertain, including with respect to replacement measures under other legal authorities. We continue to closely monitor both the impact and potential impact of such measures on our business, our customers and on overall economic conditions in the United States.

On March 19, 2026, federal banking regulators issued revised notices of proposed rulemaking to implement the final components of the Basel III accords (the “Basel III proposals”). The proposals include revisions and streamlining of the expanded risk-based approach (the “ERBA”). The proposals require the ERBA for Category I and Category II firms and allow all other banking organizations, including Category III and Category IV firms, to elect the ERBA. The proposals include a revised standardized approach for calculating risk-weighted assets applicable to all other banking organizations, including Category III and Category IV firms, that do not elect the ERBA. These proposals are expected to decrease risk-weighted assets in aggregate for the banking industry. The proposals also require Category III and Category IV firms to recognize most aspects of accumulated other comprehensive income (“AOCI”) in regulatory capital. The comment period closed on June 18, 2026. We will continue to monitor further developments regarding the proposals and assess potential impacts to our regulatory capital requirements, including enhanced capital flexibility.

Financial Performance Summary

The following tables in this MD&A include financial data for the three months ended June 30, 2026 (the “current quarter”), March 31, 2026 (the “linked quarter”) and June 30, 2025 (the “prior year quarter”), along with the six months ended June 30, 2026 (“current YTD”), and the six months ended June 30, 2025 (“prior YTD”). In accordance with Item 303(c) of Regulation S-K, we focus our discussion of quarterly results of operations on changes compared to the linked quarter for the narrative discussion and analysis as we believe this provides investors and other users of our data with the most relevant information.

We focus the discussion of our financial position by comparing balances as of June 30, 2026 to December 31, 2025, however the tables also provide linked quarter balances. Percent changes within this MD&A are based on unrounded amounts and may not recalculate precisely using the displayed rounded amounts.

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Table 1
Selected Financial Data
dollars in millions, except share dataThree Months EndedSix Months Ended June 30,
June 30, 2026March 31, 2026June 30, 202520262025
Results of Operations:
Interest income$2,851 $2,786 $2,945 $5,637 $5,840 
Interest expense1,195 1,165 1,250 2,360 2,482 
Net interest income1,656 1,621 1,695 3,277 3,358 
(Benefit) provision for credit losses(10)72 115 62 269 
Net interest income after provision for credit losses1,666 1,549 1,580 3,215 3,089 
Noninterest income776 692 678 1,468 1,313 
Noninterest expense1,551 1,536 1,500 3,087 2,993 
Income before income taxes891 705 758 1,596 1,409 
Income tax expense219 171 183 390 351 
Net income672 534 575 1,206 1,058 
Preferred stock dividends32 26 14 58 29 
Net income available to common stockholders$640 $508 $561 $1,148 $1,029 
Per Common Share Information:
Weighted average common shares outstanding (diluted)11,535,792 11,924,899 13,237,226 11,729,271 13,405,295 
Diluted earnings per common share$55.52 $42.63 $42.36 $97.95 $76.73 
Key Performance Metrics:
Return on average assets1.15 %0.93 %1.01 %1.04 %0.94 %
Net interest margin (1)
3.10 3.09 3.26 3.09 3.26 
Net interest margin, excluding purchase accounting accretion or amortization (1) (2)
3.01 3.01 3.14 3.01 3.13 
Select Average Balances:
Investment securities$42,891 $41,757 $43,935 $42,327 $43,746 
Total loans and leases (3)
150,602 149,890 141,952 150,249 141,420 
Operating lease equipment, net9,728 9,660 9,419 9,694 9,385 
Total assets235,200 233,181 227,552 234,197 226,506 
Total deposits170,639 165,927 157,664 168,296 157,024 
Total borrowings33,229 35,334 38,379 34,276 37,892 
Total stockholders’ equity22,180 22,487 22,488 22,332 22,472 
As of the Period Ending
June 30,
2026		March 31,
2026		June 30,
2025		December 31, 2025
Select Ending Balances:
Investment securities$43,557 $42,986 $43,346 $41,564 
Total loans and leases151,034 148,692 141,269 147,930 
Operating lease equipment, net9,755 9,685 9,466 9,621 
Total assets236,842 235,959 229,653 229,698 
Total deposits173,427 170,842 159,935 161,578 
Total borrowings32,188 33,962 38,112 36,008 
Total stockholders’ equity21,900 22,048 22,296 22,238 
Loan to deposit ratio87.09 %87.04 %88.33 %91.55 %
Noninterest-bearing deposits to total deposits24.49 25.52 25.56 25.16 
Capital Ratios:
Total risk-based capital13.37 %13.51 %14.25 %13.71 %
Tier 1 risk-based capital11.73 11.79 12.63 11.91 
Common equity Tier 110.77 10.83 12.12 11.15 
Tier 1 leverage9.22 9.30 9.62 9.29 
Select Asset Quality Metrics:
Ratio of nonaccrual loans to total loans0.96 %0.96 %0.93 %0.88 %
Allowance for loan and lease losses to loans ratio0.98 1.05 1.18 1.06 
(1)     Calculated net of average credit balances of factoring clients to appropriately reflect the interest-earning portion of factoring receivables.
(2)     Net interest margin (“NIM”), excluding purchase accounting accretion or amortization (“PAA”), is a non-GAAP financial measure. Refer to the “Net Interest Income (“NII”), NIM, and Interest Income on Loans and Leases, Excluding PAA” discussion in the “Non-GAAP Financial Measurements” section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.
(3) Average loan balances include loans held for sale and nonaccrual loans.

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Financial highlights are summarized below. Further details are discussed in the “Results of Operations” and “Balance Sheet Analysis” sections of this MD&A.

Current Quarter Income Statement Highlights (Current Quarter Compared to Linked Quarter)
•Net income for the current quarter was $672 million, an increase of $138 million or 26% from $534 million for the linked quarter. Net income available to common stockholders for the current quarter was $640 million, an increase of $132 million or 26% from $508 million for the linked quarter. Earnings per basic and diluted common share for the current quarter were $55.52, increases from $42.63 for the linked quarter. The increases in net income and net income available to common stockholders were due to lower provision for credit losses and higher noninterest income and NII, partially offset by higher noninterest expense and income tax expense, as discussed below.
•NII for the current quarter was $1.66 billion, an increase of $35 million or 2% from $1.62 billion for the linked quarter. NIM was 3.10% for the current quarter, an increase of 1 basis point (“bp”) from 3.09% for the linked quarter. The increases in NII and NIM were mainly due to higher yields on and average balances of loans and investment securities, and a decline in the average balance of borrowings as we repaid an additional $2.50 billion of the Purchase Money Note, partially offset by a higher average balance of and rate paid on interest-bearing deposits.
◦PAA for the current quarter was $48 million, an increase of $9 million from $39 million for the linked quarter. NIM, excluding PAA(1) was 3.01% for the current and linked quarters.
•Noninterest income for the current quarter was $776 million, an increase of $84 million or 12% from $692 million for the linked quarter, largely due to an increase in other noninterest income of $50 million, mainly attributable to a $27 million increase in the fair value of equity warrants and a $17 million gain on sale of tax credit investments, and increases of $12 million in the fair value of marketable equity securities, $6 million in client investment fees, $4 million in deposit fees and service charges, and $4 million in lending-related fees.
•Noninterest expense for the current quarter was $1.55 billion, an increase of $15 million or 1% from $1.54 billion for the linked quarter, mainly due to increases of $15 million in marketing expense, $8 million in other noninterest expense, $7 million in third-party processing fees and $5 million in equipment expense, partially offset by a decrease in personnel cost of $25 million.
•Benefit for credit losses was $10 million for the current quarter, compared to a provision for credit losses of $72 million for the linked quarter. The current quarter included a provision for loan and lease losses of $34 million that was more than offset by a benefit for off-balance sheet credit exposure of $44 million.
◦The provision for loan and lease losses for the current quarter was $34 million, compared to $103 million for the linked quarter. The $69 million decrease was mainly attributable to the impact of a $74 million reserve release in the current quarter compared to an $8 million reserve release in the linked quarter, as well as a decline of $3 million in net charge-offs.
▪The $74 million allowance for loan and lease losses (“ALLL”) reserve release in the current quarter was largely driven by lower specific reserves, improvements in credit quality including updates to certain models used to estimate the allowance as further discussed in the “Risk Management—Credit Risk—ALLL Methodology” section of this MD&A, changes in the macroeconomic scenarios, and growth concentrated in capital call lines which have a significantly lower loss rate relative to our other loan portfolios.
▪The $8 million reserve release in the linked quarter was driven by loan growth concentrated in capital call lines and changes in the macroeconomic scenarios, partially offset by higher reserves for individually evaluated loans.
◦The benefit for off-balance sheet credit exposure was $44 million, an increase of $12 million from $32 million for the linked quarter, primarily due to the model updates discussed above and changes in the macroeconomic scenarios.
•Income tax expense for the current quarter was $219 million, an increase of $48 million from $171 million for the linked quarter, largely due to higher income before income taxes.
•Return on average assets for the current quarter was 1.15%, an increase of 22 bps from 0.93% for the linked quarter due to the increase in net income explained above.

(1) NIM, excluding PAA is a non-GAAP measure. Refer to the “NII, NIM, and Interest Income on Loans and Leases, Excluding PAA” discussion in the “Non-GAAP Financial Measurements” section of this MD&A for further discussion.





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YTD Income Statement Highlights (Current YTD Compared to Prior YTD)
•Net income for the current YTD was $1.21 billion, an increase of $148 million or 14% from $1.06 billion for the prior YTD. Net income available to common stockholders for the current YTD was $1.15 billion, an increase of $119 million or 12% from $1.03 billion for the prior YTD. Earnings per basic and diluted common share for the current YTD were $97.95, increases from $76.73 for the prior YTD. The increases in net income and net income available to common stockholders were due to lower provision for credit losses and higher noninterest income, partially offset by lower NII and higher noninterest expense, as further discussed below.
•NII for the current YTD was $3.28 billion, a decrease of $81 million or 2% from $3.36 billion for the prior YTD. NIM was 3.09% for the current YTD and 3.26% for the prior YTD, a decrease of 17 bps. The decreases in NII and NIM were mainly due to a lower yield on loans, lower yields on and average balances of interest-earning deposits at banks and investment securities, lower PAA, and a higher average balance of interest-bearing deposits, partially offset by the impacts of a higher average balance of loans, a decline in the rate paid on interest-bearing deposits, and a decline in the average balance of borrowings due to continued prepayments on the Purchase Money Note.
◦PAA for the current YTD was $87 million, a decrease of $55 million from $142 million for the prior YTD. NIM, excluding PAA(1) was 3.01% for the current YTD, a decrease of 12 bps from 3.13% for the prior YTD.
•Noninterest income for the current YTD was $1.47 billion, an increase of $155 million or 12% from $1.31 billion for the prior YTD, largely due to increases in other noninterest income of $70 million, deposit fees and service charges of $27 million, a favorable change of $21 million in the fair value of marketable equity securities, along with higher rental income on operating lease equipment of $19 million, and increases of $12 million in the gain on sale of leasing equipment and $10 million in wealth management services.
•Noninterest expense for the current YTD was $3.09 billion, an increase of $94 million or 3% from $2.99 billion for the prior YTD, mainly due to increases in personnel cost of $85 million, third-party processing fees of $67 million, maintenance and other operating lease expenses of $19 million, marketing expense of $11 million, and equipment expense of $10 million, partially offset by decreases in acquisition-related expenses of $67 million and other noninterest expense of $27 million.
•Provision for credit losses for the current YTD was $62 million, a decrease of $207 million or 77% from $269 million for the prior YTD. The current YTD included a provision for loan and lease losses of $137 million, partially offset by a benefit for off-balance sheet credit exposure of $76 million.
◦The provision for loan and lease losses for the current YTD was $137 million compared to $259 million for the prior YTD. The $122 million decrease was mainly due to an $82 million ALLL reserve release in the current YTD compared to $4 million in the prior YTD and a decline in net charge-offs of $44 million.
▪The $82 million ALLL reserve release for the current YTD is discussed above as the “Current Quarter Income Statement Highlights” section of this MD&A summarizes the ALLL reserve releases of $74 million and $8 million for the current and linked quarters, respectively.
◦The benefit for off-balance sheet credit exposure for the current YTD was $76 million compared to a provision for the prior YTD of $10 million, resulting in a decrease in provision of $86 million, primarily due to the model updates discussed above in the “Current Quarter Income Statement Highlights” section of this MD&A and changes in the macroeconomic scenarios.
•Income tax expense for the current YTD was $390 million, an increase of $39 million from $351 million for the prior YTD, largely due to higher income before income taxes.
•Return on average assets for the current YTD was 1.04%, an increase of 10 bps from 0.94% for the prior YTD due to the increase in net income explained above.

(1) NIM, excluding PAA is a non-GAAP measure. Refer to the “NII, NIM, and Interest Income on Loans and Leases, Excluding PAA” discussion in the “Non-GAAP Financial Measurements” section of this MD&A for further discussion.
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Balance Sheet Highlights
•Loans and leases at June 30, 2026 were $151.03 billion, an increase of $3.10 billion or 2% from $147.93 billion at December 31, 2025. Commercial Bank segment loan growth of $3.73 billion, mainly concentrated in Global Fund Banking, was partially offset by a decrease in General Bank segment loans of $603 million, largely due to the $363 million in amortized cost of SBA commercial loans sold in the SBA Securitization.
•Investment securities at June 30, 2026 were $43.56 billion, an increase of $1.99 billion or 5% from $41.56 billion at December 31, 2025, as purchases of available for sale U.S. treasury securities were partially offset by maturities and paydowns.
•Deposits at June 30, 2026 were $173.43 billion, an increase of $11.85 billion or 7% from $161.58 billion at December 31, 2025. As shown in Table 2 and discussed below, the increase from December 31, 2025 was attributable to deposit growth in Corporate of $6.77 billion primarily due to the Direct Bank and brokered deposits, the Commercial Bank segment of $4.16 billion, and the General Bank segment of $922 million. Noninterest-bearing deposits grew by $1.82 billion or 5% compared to December 31, 2025, and represented 24.5% of total deposits as of June 30, 2026, compared to 25.2% at December 31, 2025.
•Borrowings at June 30, 2026 were $32.19 billion, a decrease of $3.82 billion or 11% from $36.01 billion at December 31, 2025. The decrease was primarily due to prepayments of $5.00 billion on the Purchase Money Note, partially offset by debt issuances of $1.25 billion.
•The ALLL was $1.48 billion at June 30, 2026, compared to $1.57 billion at December 31, 2025, resulting in an ALLL reserve release of $82 million for the current YTD as further discussed above in the “YTD Income Statement Highlights” section of this MD&A. The ALLL as a percentage of loans was 0.98% at June 30, 2026, a decrease of 8 bps from 1.06% at December 31, 2025.
•Interest-earning deposits at banks were $21.13 billion at June 30, 2026, an increase of $1.33 billion compared to $19.80 billion at December 31, 2025, a function of the balance sheet trends discussed above.
•At June 30, 2026, BancShares remained well capitalized with a total risk-based capital ratio of 13.37%, a Tier 1 risk-based capital ratio of 11.73%, a Common Equity Tier 1 (“CET1”) ratio of 10.77% and a Tier 1 leverage ratio of 9.22%.

Funding, Liquidity and Capital Overview

Deposit Composition and Trends
We primarily fund our business through deposits. Deposits represented 84% of total funding at June 30, 2026.

Table 2
Deposit Trends
dollars in millionsDeposit Balance
June 30, 2026March 31, 2026December 31, 2025
General Bank segment$75,718 $75,914 $74,796 
Commercial Bank segment45,690 47,191 41,532 
Corporate and Rail segment52,019 47,737 45,250 
Total deposits$173,427 $170,842 $161,578 

Deposit trends for the segments and Corporate at June 30, 2026 compared to December 31, 2025 are discussed below:
•Corporate deposit growth of $6.77 billion was primarily due to Direct Bank and brokered deposit growth of $3.42 billion and $3.32 billion, respectively. We utilized brokered deposits more prevalently in 2026 as rates were favorable relative to Direct Bank deposits. We will continue to monitor the rate environments for brokered and Direct Bank deposits to determine the target growth for these deposit channels.
•Commercial Bank segment deposit growth of $4.16 billion was mainly in Global Fund Banking and Tech and Healthcare lines of business. Most of the growth was in noninterest-bearing deposits and interest-bearing checking.
•General Bank segment deposit growth of $922 million was primarily concentrated in our Branch Network. Deposit growth was mostly in time deposits and noninterest-bearing deposits.

Refer to the “Results by Segment” for further discussion of changes in deposits at June 30, 2026 compared to March 31, 2026.

Total uninsured deposits were $65.06 billion or 38% of total deposits at June 30, 2026 and $61.81 billion or 38% at December 31, 2025.

62

Refer to the “Balance Sheet Analysis—Interest-bearing Liabilities—Deposits” section of this MD&A for further discussion of deposits.

Liquidity Position
We strive to maintain a strong liquidity position and our risk appetite for liquidity is low. At June 30, 2026, we had $59.14 billion in high-quality liquid assets consisting of $20.18 billion in cash and interest-earning deposits at banks (primarily held at the Federal Reserve Bank (“FRB”)) and $38.96 billion in high-quality liquid securities (“HQLS”), mainly comprised of U.S. agency mortgage-backed and U.S. Treasury investment securities. Additionally, we have unused borrowing capacity with the Federal Home Loan Bank (“FHLB”) and FRB of $17.75 billion and $12.77 billion, respectively. Refer to the “Risk Management—Liquidity Risk” section of this MD&A for further discussion.

In connection with the SVBB Acquisition, FCB issued a five-year, 3.50% fixed rate Purchase Money Note, which had a carrying value of $28.42 billion at June 30, 2026. While scheduled principal payments are not required until maturity in March 2028, FCB may voluntarily prepay principal without a premium or penalty. FCB prepaid $2.50 billion of the Purchase Money Note during the current quarter ($5.00 billion during the current YTD), and previously prepaid $2.49 billion in December 2025, which reduced the outstanding balance from $35.85 billion at September 30, 2025 to $28.42 billion at June 30, 2026. Additionally, we prepaid $1.00 billion in July 2026. We will continue to monitor the interest rate environment, FCB’s collateral position for the Purchase Money Note, and FCB’s liquidity position to determine the timing and magnitude of further voluntary prepayments. We expect monthly prepayments to be at least $500 million throughout 2026. In the third quarter of 2026, we expect total prepayments of $6 billion to $8 billion, largely driven by expected liquidity from the BMO Branch Acquisition. Potential sources that could fund voluntary prepayments or the amount due at maturity include excess liquidity (primarily comprised of interest-earning deposits at banks and proceeds from maturities and paydowns of investment securities), deposit growth including brokered deposits and deposits to be assumed in the BMO Branch Acquisition, loan sales or securitizations, FHLB advances, and issuance of perpetual preferred stock, unsecured debt or other borrowings.

Investment Securities Duration
At June 30, 2026, our investment securities portfolio primarily consisted of debt securities available for sale and held to maturity as summarized below. We manage debt security market risk by monitoring the average duration of our investment securities portfolio. The duration of our investment securities was 2.6 years at June 30, 2026. The investment securities available for sale portfolio had an average duration of 2.3 years and the held to maturity portfolio had an average duration of 3.9 years. Refer to the “Balance Sheet Analysis—Interest-earning Assets—Investment Securities” section of this MD&A and Note 3—Investment Securities for further information.

Table 3
Investment Securities Summary
dollars in millionsJune 30, 2026
Composition (1)
Amortized Cost
Fair Value
Fair Value to Amortized Cost
Total investment securities available for sale80.2 %$34,510 $33,983 98.5 %
Total investment securities held to maturity19.4 9,418 8,214 87.2 
Investment in marketable equity securities0.4 95 156 164.5 
Total investment securities100.0 %$44,023 $42,353 
(1) Calculated as a percentage of the total fair value of investment securities.

Capital Position
At June 30, 2026, all regulatory capital ratios for BancShares and FCB exceeded the prompt corrective action (“PCA”) thresholds, well capitalized thresholds, and Basel III requirements established by the federal banking agencies as further discussed in the “Capital” section of this MD&A.

63

RESULTS OF OPERATIONS

Net Interest Income and Net Interest Margin

NII is affected by changes in interest rates and changes in the amount and composition of interest-earning assets and interest-bearing liabilities. Interest income and expense and the respective yields and rates include amortization of premiums, accretion of discounts, and impacts from hedging activities.

The following tables present the average balances of interest-earning assets and interest-bearing liabilities with the associated yields and rates, interest income and expense, and changes therein due to changes in volume and yields or rates. Changes in interest income and expense due to changes in (i) volume (average balances of interest-earning assets and interest-bearing liabilities) and (ii) yields or rates are based on the following:
•The change in NII due to volume is calculated as the change in average balance multiplied by the yield or rate from the prior period.
•The change in NII due to yield or rate is calculated as the change in yield or rate multiplied by the average balance from the prior period.
•The change in NII due to changes in both volume and yield or rate (i.e., portfolio mix) is calculated as the change in rate multiplied by the change in volume. This component is allocated between the changes due to volume and yield or rate based on the ratio each component bears to the absolute dollar amounts of their total.
•Tax equivalent NII was not materially different from NII, therefore we present NII in our analysis.



64

Table 4
Average Balances, Yields and Rates, NII, and NIM (Current Quarter Compared to Linked Quarter)
dollars in millionsAverage BalanceYield / RateInterest Income / Expense
Three Months EndedIncrease (Decrease) Three Months EndedThree Months EndedIncrease (Decrease) due to:
Jun 30, 2026Mar 31, 2026Jun 30, 2026Mar 31, 2026Increase (Decrease) bpsJun 30, 2026Mar 31, 2026Increase (Decrease)
Volume(1)
Yield /Rate(1)
Loans and leases (1) (2)
$149,275 $148,666 $609 0.4 %6.05 %6.01 %4$2,253 $2,206 $47 $16 $31 
Investment securities42,891 41,757 1,134 2.7 3.72 3.67 5398 382 16 11 5 
Securities purchased under agreements to resell323 305 18 5.7 3.60 3.65 (5)3 2 1 1 — 
Interest-earning deposits at banks21,501 21,824 (323)(1.5)3.67 3.64 3197 196 1 (2)3 
Total interest-earning assets (2)
$213,990 $212,552 $1,438 0.7 5.34 5.30 4$2,851 $2,786 $65 $26 $39 
Noninterest-earning assets21,210 20,629 581 2.8 
Total assets$235,200 $233,181 $2,019 0.9 
Interest-bearing deposits
Checking with interest$26,146 $25,341 $805 3.2 %1.60 %1.52 %8$104 $95 $9 $3 $6 
Money market40,889 41,196 (307)(0.7)2.35 2.38 (3)240 242 (2)(1)(1)
Savings48,357 46,720 1,637 3.5 3.48 3.46 2420 398 22 18 4 
Time deposits13,993 11,946 2,047 17.1 3.36 3.31 5117 98 19 18 1 
Total interest-bearing deposits129,385 125,203 4,182 3.3 2.73 2.70 3881 833 48 38 10 
Borrowings:
Short-term borrowings162 197 (35)(17.6)0.35 0.37 (2)— — — — — 
Senior unsecured borrowings1,136 718 418 58.2 5.13 5.23 (10)14 10 4 4 — 
Subordinated debt1,755 1,771 (16)(0.9)5.27 5.28 (1)24 23 1 1 — 
Other borrowings30,176 32,648 (2,472)(7.6)3.66 3.66 —276 299 (23)(23)— 
Long-term borrowings33,067 35,137 (2,070)(5.9)3.80 3.78 2314 332 (18)(18)— 
Total borrowings33,229 35,334 (2,105)(6.0)3.78 3.76 2314 332 (18)(18)— 
Total interest-bearing liabilities$162,614 $160,537 $2,077 1.3 %2.95 2.93 2$1,195 $1,165 $30 $20 $10 
Noninterest-bearing liabilities$50,406 $50,157 $249 0.5 %
Stockholders' equity22,180 22,487 (307)(1.4)
Total liabilities and stockholders’ equity$235,200 $233,181 $2,019 0.9 
Net interest spread (2)
2.39 %2.37 %2
Net interest margin and net interest income (2)
3.10 %3.09 %1$1,656 $1,621 $35 
(1)     Loans and leases include nonaccrual loans and loans held for sale. Interest income on loans and leases includes accretion income and loan fees.
(2)    The average balances and yields for loans and leases are calculated net of average credit balances of factoring clients to appropriately reflect the interest-earning portion of factoring receivables.


65

NII and NIM (Current Quarter Compared to Linked Quarter)
The table above quantifies the increases or decreases for the current quarter compared to the linked quarter for NII and NIM, as well as average balances of interest-earning assets and interest-bearing liabilities, and the respective yields earned and rates paid. The main reasons for the increases and decreases are explained below:
•NII for the current quarter was $1.66 billion, an increase of $35 million or 2% from $1.62 billion for the linked quarter. NII, excluding PAA,(1) was $1.61 billion for the current quarter, an increase of $26 million, from $1.58 billion for the linked quarter. The main reasons for the increases in NII and NII, excluding PAA,(1) are explained below:
◦Interest income on loans and leases for the current quarter was $2.25 billion, an increase of $47 million or 2% from $2.21 billion for the linked quarter, mainly due to a higher yield, a higher average balance, and higher loan PAA.
▪Interest income on loans and leases, excluding loan PAA,(1) was $2.20 billion for the current quarter, an increase of $40 million or 2% from $2.16 billion for the linked quarter. Loan PAA was $55 million in the current quarter, an increase of $7 million or 16% from $48 million in the linked quarter, mainly a result of accelerated PAA for prepayments of residential mortgage loans.
◦Interest expense on borrowings for the current quarter was $314 million, a decrease of $18 million or 5% from $332 million for the linked quarter, mainly due to a decline in the average balance as we repaid an additional $2.50 billion of the Purchase Money Note, partially offset by the Current Quarter Debt Issuance.
◦Interest income on investment securities (including securities purchased under agreements to resell) for the current quarter was $401 million, an increase of $17 million or 4% from $384 million for the linked quarter, due to a higher yield and a higher average balance.
◦Interest expense on interest-bearing deposits for the current quarter was $881 million, an increase of $48 million or 6% from $833 million for the linked quarter, due to a higher average balance and a higher rate paid.
•NIM for the current quarter was 3.10%, an increase of 1 bp from 3.09% for the linked quarter. NIM, excluding PAA,(1) was 3.01% for the current and linked quarters. The modest increase in NIM was mainly due to higher yields on and average balances of loans and investment securities, and a decline in the average balance of borrowings as we repaid an additional $2.5 billion of the Purchase Money Note, partially offset by a higher average balance of and rate paid on interest-bearing deposits.
◦The yield on average interest-earning assets for the current quarter was 5.34%, an increase of 4 bps from 5.30% for the linked quarter, mainly due to higher yields on and average balances of loans and investment securities.
◦The rate paid on average interest-bearing liabilities for the current quarter was 2.95%, an increase of 2 bps from 2.93% for the linked quarter, primarily due to increases in the average balance of and rate paid on interest-bearing deposits, partially offset by the impact of lower average borrowings.
(1) Refer to the “NII, NIM, and Interest Income on Loans and Leases, Excluding PAA” discussion in the “Non-GAAP Financial Measurements” section of this MD&A for further information.
Refer to the “Executive Overview—Financial Performance Summary—Balance Sheet Highlights,” “Balance Sheet Analysis—Interest-earning Assets,” and “Balance Sheet Analysis—Interest-bearing Liabilities” sections of this MD&A for discussions of balance sheet trends that impact average interest-earning assets, average interest-bearing liabilities, and the related yields and rates paid.
66

Table 5
Average Balances, Yields and Rates, NII, and NIM (Current Quarter Compared to Prior Year Quarter)
dollars in millionsAverage BalanceYield / RateInterest Income / Expense
Three Months EndedIncrease (Decrease) Three Months EndedThree Months EndedIncrease (Decrease) due to:
Jun 30, 2026Jun 30, 2025Jun 30, 2026Jun 30, 2025Increase (Decrease) bpsJun 30, 2026Jun 30, 2025Increase (Decrease)
Volume(1)
Yield /Rate(1)
Loans and leases (1) (2)
$149,275 $140,699 $8,576 6.1 %6.05 %6.47 %(42)$2,253 $2,270 $(17)$134 $(151)
Investment securities42,891 43,935 (1,044)(2.4)3.72 3.79 (7)398 416 (18)(10)(8)
Securities purchased under agreements to resell323 237 86 36.2 3.60 4.34 (74)3 3 — 1 (1)
Interest-earning deposits at banks21,501 23,304 (1,803)(7.8)3.67 4.40 (73)197 256 (59)(19)(40)
Total interest-earning assets (2)
$213,990 $208,175 $5,815 2.8 5.34 5.67 (33)$2,851 $2,945 $(94)$106 $(200)
Noninterest-earning assets21,210 19,377 1,833 9.5 
Total assets$235,200 $227,552 $7,648 3.4 
Interest-bearing deposits
Checking with interest$26,146 $22,929 $3,217 14.0 %1.60 %1.69 %(9)$104 $97 $7 $12 $(5)
Money market40,889 37,980 2,909 7.7 2.35 2.84 (49)240 269 (29)20 (49)
Savings48,357 46,163 2,194 4.8 3.48 3.72 (24)420 428 (8)20 (28)
Time deposits13,993 11,510 2,483 21.6 3.36 3.48 (12)117 100 17 21 (4)
Total interest-bearing deposits129,385 118,582 10,803 9.1 2.73 3.02 (29)881 894 (13)73 (86)
Borrowings:
Short-term borrowings162 471 (309)(65.5)0.35 0.57 (22)— — — — — 
Senior unsecured borrowings1,136 555 581 104.5 5.13 5.27 (14)14 8 6 6 — 
Subordinated debt1,755 1,473 282 19.2 5.27 5.23 424 19 5 5 — 
Other borrowings30,176 35,880 (5,704)(15.9)3.66 3.66 —276 329 (53)(53)— 
Long-term borrowings33,067 37,908 (4,841)(12.8)3.80 3.74 6314 356 (42)(42)— 
Total borrowings33,229 38,379 (5,150)(13.4)3.78 3.71 7314 356 (42)(42)— 
Total interest-bearing liabilities$162,614 $156,961 $5,653 3.6 %2.95 3.19 (24)$1,195 $1,250 $(55)$31 $(86)
Noninterest-bearing liabilities$50,406 $48,103 $2,303 4.8 %
Stockholders' equity22,180 22,488 (308)(1.4)
Total liabilities and stockholders’ equity$235,200 $227,552 $7,648 3.4 
Net interest spread (2)
2.39 %2.48 %(9)
Net interest margin and net interest income (2)
3.10 %3.26 %(16)$1,656 $1,695 $(39)
(1)     Loans and leases include nonaccrual loans and loans held for sale. Interest income on loans and leases includes accretion income and loan fees.
(2)    The average balances and yields for loans and leases are calculated net of average credit balances of factoring clients to appropriately reflect the interest-earning portion of factoring receivables.

67

Table 6
Average Balances, Yields and Rates, NII, and NIM (Current YTD Compared to Prior YTD)
dollars in millionsAverage BalanceYield / RateInterest Income / Expense
Six Months EndedIncrease (Decrease) Six Months EndedSix Months EndedIncrease (Decrease) due to:
Jun 30, 2026Jun 30, 2025Jun 30, 2026Jun 30, 2025Increase (Decrease) bpsJun 30, 2026Jun 30, 2025Increase (Decrease)
Volume(1)
Yield /Rate(1)
Loans and leases (1) (2)
$148,973 $140,099 $8,874 6.3 %6.03 %6.48 %(45)$4,459 $4,506 $(47)$276 $(323)
Investment securities42,327 43,746 (1,419)(3.2)3.70 3.79 (9)780 827 (47)(27)(20)
Securities purchased under agreements to resell314 260 54 21.0 3.63 4.36 (73)5 6 (1)— (1)
Interest-earning deposits at banks21,662 23,003 (1,341)(5.8)3.65 4.39 (74)393 501 (108)(27)(81)
Total interest-earning assets (2)
$213,276 $207,108 $6,168 3.0 5.32 5.67 (35)$5,637 $5,840 $(203)$222 $(425)
Noninterest-earning assets20,921 19,398 1,523 7.8 
Total assets$234,197 $226,506 $7,691 3.4 
Interest-bearing deposits
Checking with interest$25,746 $23,427 $2,319 9.9 %1.56 %1.73 %(17)$199 $201 $(2)$19 $(21)
Money market41,041 37,373 3,668 9.8 2.37 2.84 (47)482 526 (44)48 (92)
Savings47,543 45,046 2,497 5.5 3.47 3.79 (32)818 845 (27)45 (72)
Time deposits12,975 12,060 915 7.6 3.34 3.60 (26)215 215 — 16 (16)
Total interest-bearing deposits127,305 117,906 9,399 8.0 2.72 3.06 (34)1,714 1,787 (73)128 (201)
Borrowings:
Short-term borrowings180 450 (270)(60.1)0.36 0.55 (19)— 1 (1)(1)— 
Senior unsecured borrowings928 363 565 155.6 5.16 5.16 —24 10 14 14 — 
Subordinated debt1,763 1,218 545 44.8 5.27 4.49 7847 27 20 15 5 
Other borrowings31,405 35,861 (4,456)(12.4)3.66 3.66 —575 657 (82)(82)— 
Long-term borrowings34,096 37,442 (3,346)(8.9)3.79 3.70 9646 694 (48)(53)5 
Total borrowings34,276 37,892 (3,616)(9.5)3.77 3.66 11646 695 (49)(54)5 
Total interest-bearing liabilities$161,581 $155,798 $5,783 3.7 %2.94 3.20 (26)$2,360 $2,482 $(122)$74 $(196)
Noninterest-bearing liabilities$50,284 $48,236 $2,048 4.2 %
Stockholders' equity22,332 22,472 (140)(0.6)
Total liabilities and stockholders’ equity$234,197 $226,506 $7,691 3.4 
Net interest spread (2)
2.38 %2.47 %(9)
Net interest margin and net interest income (2)
3.09 %3.26 %(17)$3,277 $3,358 $(81)
(1)     Loans and leases include nonaccrual loans and loans held for sale. Interest income on loans and leases includes accretion income and loan fees.
(2)    The average balances and yields for loans and leases are calculated net of average credit balances of factoring clients to appropriately reflect the interest-earning portion of factoring receivables.
68

NII and NIM (Current YTD Compared to Prior YTD)
The table above quantifies the increases or decreases for the current YTD compared to the prior YTD for NII and NIM, as well as average balances of interest-earning assets and interest-bearing liabilities, and the respective yields earned and rates paid. The main reasons for the increases and decreases are explained below:
•NII for the current YTD was $3.28 billion, a decrease of $81 million or 2% from $3.36 billion for the prior YTD. NII, excluding PAA,(1) was $3.19 billion for the current YTD, a decrease of $26 million from $3.22 billion for the prior YTD. The main reasons for the decreases in NII and NII, excluding PAA,(1) are explained below:
◦Interest income on interest-earning deposits at banks for the current YTD was $393 million, a decrease of $108 million or 22% from $501 million for the prior YTD, due to a decline in the federal funds rate and a lower average balance.
◦Interest income on investment securities (including securities purchased under agreements to resell) for the current YTD was $785 million, a decrease of $48 million or 6% from $833 million for the prior YTD, due to a lower average balance and a decline in yield.
◦Interest income on loans and leases for the current YTD was $4.46 billion, a decrease of $47 million or 1% from $4.51 billion for the prior YTD, mainly due to a lower yield and lower loan PAA, partially offset by a higher average balance.
•Interest income on loans and leases, excluding loan PAA,(1) was $4.36 billion for the current YTD, an increase of $9 million from $4.35 billion for the prior YTD.
•Loan PAA was $103 million in the current YTD, a decrease of $56 million or 35% from $159 million for the prior YTD.
◦Interest expense on interest-bearing deposits for the current YTD was $1.71 billion, a decrease of $73 million or 4% from $1.79 billion for the prior YTD, as a lower rate paid was partially offset by the impact of a higher average balance.
◦Interest expense on borrowings for the current YTD was $646 million, a decrease of $49 million or 7% from $695 million for the prior YTD, primarily due to a lower average balance as a result of $5.00 billion prepayments on the Purchase Money Note, partially offset by current YTD debt issuances of $1.25 billion and a higher rate paid on subordinated debt.
•NIM for the current YTD was 3.09%, a decrease of 17 bps from 3.26% for the prior YTD. NIM, excluding PAA,(1) was 3.01% for the current YTD, a decrease of 12 bps from 3.13% for the prior YTD.
◦The yield on average interest-earning assets for the current YTD was 5.32%, a decrease of 35 bps from 5.67% for the prior YTD, mainly due to a decline in yield on loans, as well as lower loan PAA and lower yields on and average balances of interest-earning deposits at banks and investment securities, partially offset by a higher average balance of loans.
◦The rate paid on average interest-bearing liabilities for the current YTD was 2.94%, a decrease of 26 bps from 3.20% for the prior YTD, primarily due to a lower rate paid on interest-bearing deposits and a lower average balance of borrowings, partially offset by a higher average balance of interest-bearing deposits and a higher rate paid for subordinated debt.
(1) Refer to the “NII, NIM, and Interest Income on Loans and Leases, Excluding PAA” discussion in the “Non-GAAP Financial Measurements” section of this MD&A for further information.

The following table shows the types of average interest-earning assets as a percentage of total average interest-earning assets.
Table 7
Average Interest-earning Asset Mix
Three Months EndedSix Months Ended June 30,
June 30, 2026March 31, 2026June 30, 202520262025
Loans and leases70 %70 %68 %70 %68 %
Investment securities20 20 21 20 21 
Interest-earning deposits at banks10 10 11 10 11 
Total interest-earning assets100 %100 %100 %100 %100 %



69

The following table shows the average interest-bearing liabilities as a percentage of total average interest-bearing liabilities.

Table 8
Average Interest-bearing Liability Mix
Three Months EndedSix Months Ended June 30,
June 30, 2026March 31, 2026June 30, 202520262025
Total interest-bearing deposits80 %78 %76 %79 %76 %
Long-term borrowings20 22 24 21 24 
Total interest-bearing liabilities100 %100 %100 %100 %100 %

Provision for Credit Losses

Table 9
Provision for Credit Losses
dollars in millionsThree Months EndedIncrease (Decrease) from Linked QuarterSix Months EndedIncrease (Decrease) from Prior YTD
June 30, 2026March 31, 2026June 30, 2025June 30, 2026June 30, 2025
Provision for loan and lease losses
$34 $103 $111 $(69)(67.5)%$137 $259 (122)(47.0)%
(Benefit) provision for off-balance sheet credit exposure(44)(32)4 (12)(36.6)(76)10 (86)NM
Provision for other receivables— 1 — (1)(100.0)1 — 1 100.0 
(Benefit) provision for credit losses$(10)$72 $115 $(82)(113.9)%$62 $269 $(207)(77.0)%

Benefit for credit losses was $10 million for the current quarter, compared to a provision for credit losses of $72 million for the linked quarter. The current quarter included a provision for loan and lease losses of $34 million that was more than offset by a benefit for off-balance sheet credit exposure of $44 million.
•The provision for loan and lease losses for the current quarter was $34 million, compared to $103 million for the linked quarter. The $69 million decrease was mainly attributable to the impact of a $74 million reserve release in the current quarter compared to an $8 million reserve release in the linked quarter, as well as a decline of $3 million in net charge-offs.
◦The $74 million ALLL reserve release in the current quarter was largely driven by lower specific reserves, improvements in credit quality including updates to certain models used to estimate the ALLL as further discussed in the “Risk Management—Credit Risk—ALLL Methodology” section of this MD&A, changes in the macroeconomic scenarios, and growth concentrated in capital call lines which have a significantly lower loss rate relative to our other loan portfolios.
◦The $8 million reserve release in the linked quarter was driven by loan growth concentrated in capital call lines and changes in the macroeconomic scenarios, partially offset by higher reserves for individually evaluated loans.
•The benefit for off-balance sheet credit exposure was $44 million, an increase of $12 million from $32 million for the linked quarter, primarily due to the model updates discussed above and changes in the macroeconomic scenarios.

Provision for credit losses for the current YTD was $62 million, a decrease of $207 million or 77% from $269 million for the prior YTD. The current YTD included a provision for loan and lease losses of $137 million, partially offset by a benefit for off-balance sheet credit exposure of $76 million.
•The provision for loan and lease losses for the current YTD was $137 million compared to $259 million for the prior YTD. The $122 million decrease was mainly due to an $82 million ALLL reserve release in the current YTD compared to $4 million in the prior YTD and a decline in net charge-offs of $44 million. The current YTD ALLL reserve release of $82 million is addressed in the summary above, which discusses the reserve releases of $74 million and $8 million for the current and linked quarters, respectively.
◦The $4 million ALLL reserve release in the prior YTD primarily reflected decreases related to Hurricane Helene, other credit quality improvements, growth concentrated in capital call lines, and a modest shift in our weighting from the downside to baseline economic scenario.
•The benefit for off-balance sheet credit exposure for the current YTD was $76 million compared to a provision for the prior YTD of $10 million, resulting in a decrease in provision of $86 million, primarily due to the model updates discussed above and changes in the macroeconomic scenarios.

The ALLL and net charge-offs are further discussed in the “Risk Management—Credit Risk” section of this MD&A and in Note 6—Allowance for Loan and Lease Losses.
70

Noninterest Income

The following table presents noninterest income:

Table 10
Noninterest Income
dollars in millionsThree Months EndedIncrease (Decrease) from Linked QuarterSix Months EndedIncrease (Decrease) from Prior YTD
June 30, 2026March 31, 2026June 30, 2025June 30, 2026June 30, 2025
Rental income on operating lease equipment$280 $281 $272 $(1)(0.1)%$561 $542 $19 3.5 %
Lending-related fees73 69 69 4 4.4 142 135 7 4.9 
Deposit fees and service charges74 70 59 4 5.1 144 117 27 23.1 
Client investment fees59 53 52 6 13.8 112 105 7 7.6 
Wealth management services62 59 55 3 4.5 121 111 10 8.6 
International fees36 35 33 1 (0.4)71 65 6 8.9 
Factoring commissions18 17 18 1 8.1 35 35 — — 
Cardholder services, net38 38 41 — — 76 82 (6)(6.9)
Merchant services, net13 13 13 — — 26 27 (1)(3.4)
Insurance commissions13 13 14 — — 26 28 (2)(7.5)
Fair value adjustment on marketable equity securities, net15 3 2 12 370.3 18 (3)21 759.6 
Gain on sale of leasing equipment, net14 11 8 3 15.0 25 13 12 91.9 
Loss on extinguishment of debt(7)(8)— 1 11.6 (15)— (15)(100.0)
Other noninterest income 88 38 42 50 138.1 126 56 70 126.7 
Total noninterest income$776 $692 $678 $84 12.1 %$1,468 $1,313 $155 11.8 %

Noninterest income for the current quarter was $776 million, an increase of $84 million or 12% from $692 million for the linked quarter, primarily due to the following:
•The increase of $50 million in other noninterest income was mainly attributable to a $27 million increase in the fair value of equity warrants and a $17 million gain on sale of tax credit investments. Our equity warrant portfolio could continue to grow, and changes in fair value will largely depend on market conditions affecting the underlying entities, primarily private venture-backed companies in the technology, life sciences, or healthcare industries.
•The increase of $12 million in the fair value of marketable equity securities was due to higher market prices for the underlying securities.
•The increase of $6 million in client investment fees was mostly due to higher transaction volumes and average balances.
•Lending-related fees increased $4 million, mainly due to line of credit fees.
•Deposit fees and service charges increased $4 million, largely attributable to overdraft fees.
•The loss on extinguishment of debt for the current and linked quarters were due to continued prepayments of the Purchase Money Note.

Noninterest income for the current YTD was $1.47 billion, an increase of $155 million or 12% from $1.31 billion for the prior YTD as further discussed below:
•The increase of $70 million in other noninterest income was mainly attributable to a $34 million increase in the fair value of equity warrants discussed above, a $17 million gain on sale of tax credit investments, a $10 million increase in other real estate owned (“OREO”) income due to a write down in the prior YTD, and a $6 million increase in derivative fee income largely due to higher commercial client transaction volumes.
•The increase of $27 million in deposit fees and service charges was primarily due to higher overdraft fees charged, and higher volume-related service charges for commercial clients.
•The increase of $19 million in rental income on operating lease equipment was mainly the result of growth in the railcar portfolio.
•The $21 million increase in the fair value of marketable equity securities was due to higher market prices for the underlying securities.
•The increase of $12 million in gain on sale of leasing equipment was primarily the result of higher volume of rail equipment sales.
•The increase of $10 million in wealth management services was primarily due to growth in assets under management.
71

Noninterest Expense

The following table presents noninterest expense:

Table 11
Noninterest Expense
dollars in millionsThree Months EndedIncrease (Decrease) from Linked QuarterSix Months EndedIncrease (Decrease) from Prior YTD
June 30, 2026March 31, 2026June 30, 2025June 30, 2026June 30, 2025
Depreciation on operating lease equipment$101 $101 $100 $— — %$202 $198 $4 2.0 %
Maintenance and other operating lease expenses67 65 55 2 3.4 132 113 19 16.5 
Personnel cost844 869 810 (25)(2.9)1,713 1,628 85 5.3 
Net occupancy expense59 60 61 (1)(0.9)119 119 — — 
Equipment expense141 136 131 5 2.9 277 267 10 3.7 
Professional fees26 24 30 2 4.2 50 55 (5)(10.1)
Third-party processing fees100 93 63 7 6.7 193 126 67 52.5 
FDIC insurance expense39 38 38 1 — 77 76 1 0.9 
Marketing expense45 30 32 15 48.9 75 64 11 17.2 
Acquisition-related expenses8 5 38 3 90.4 13 80 (67)(83.7)
Intangible asset amortization11 13 13 (2)(13.8)24 28 (4)(16.6)
Other noninterest expense110 102 129 8 8.8 212 239 (27)(11.2)
Total noninterest expense$1,551 $1,536 $1,500 $15 0.9 %$3,087 $2,993 $94 3.1 %

Noninterest expense for the current quarter was $1.55 billion, an increase of $15 million or 1% from $1.54 billion for the linked quarter as further discussed below:
•The increase of $15 million in marketing expense was primarily related to promotions for Direct Bank deposits.
•The increase of $8 million in other noninterest expense was largely driven by the timing of charitable contributions.
•Third-party processing fees and equipment expense increased $7 million and $5 million, respectively, as we advanced our long-term digital infrastructure dedicated to data center modernization and enhanced client-facing capabilities.
•The increases above were partially offset by a decrease of $25 million in personnel cost, largely driven by lower incentive compensation and seasonal declines as employees reach annual benefit limits, partly tempered by merit increases, one additional payroll day, and higher health insurance claims.

Noninterest expense for the current YTD was $3.09 billion, an increase of $94 million or 3% from $2.99 billion for the prior YTD as further discussed below:
•The increase in personnel cost of $85 million was mainly due to higher salaries, reflecting higher merit and promotion costs and net staff additions, in addition to higher employee benefit costs.
•Third-party processing fees and equipment expense increased $67 million and $10 million, respectively, as we advanced our long-term digital infrastructure dedicated to data center modernization and enhanced client-facing capabilities.
•The increase of $19 million in maintenance and other operating lease expenses reflects timing and the number of railcars coming on or off lease as well as asset condition. Refer to the “Results by Segment—Rail” section of this MD&A for further information.
•The increase of $11 million in marketing expense was primarily related to marketing promotions for Direct Bank deposits.
•The decrease in acquisition-related expenses of $67 million is summarized in Table 12 and discussed below.
•The decrease in other noninterest expense of $27 million was largely attributable to the prior YTD, which included accruals totaling $15 million resulting from a vendor dispute and an increase in litigation reserves.
72

Table 12
Acquisition-related Expenses
dollars in millionsThree Months EndedSix Months Ended June 30,
June 30, 2026March 31, 2026June 30, 202520262025
Personnel cost$2 $1 $15 $3 $30 
Professional fees— 1 20 1 46 
Other acquisition-related expense6 3 3 9 4 
Total acquisition-related expense$8 $5 $38 $13 $80 

The 2026 acquisition-related expenses relate to the pending BMO Branch Acquisition. Acquisition-related expenses for the prior year quarter and prior YTD include costs related to previous acquisitions.

Personnel cost for the 2026 periods primarily relate to temporary contract labor costs. Personnel costs for the 2025 periods mainly included severance and retention costs for employees associated with business combinations. These amounts are recognized over the requisite service period, if any.

Acquisition-related professional fees mainly include consulting, legal and accounting costs associated with business combinations and the related integration, optimization, and business process reengineering, including enhancements to technology. These amounts are expensed as incurred.

Income Taxes

Table 13
Income Tax Data
dollars in millionsThree Months EndedSix Months Ended June 30,
June 30, 2026March 31, 2026June 30, 202520262025
Income before income taxes$891 $705 $758 $1,596 $1,409 
Income tax expense$219 $171 $183 $390 $351 
Effective income tax rate24.5 %24.3 %24.1 %24.4 %24.9 %
The effective income tax rate (“ETR”) was 24.5% for the current quarter compared to 24.3% for the linked quarter. The ETRs were 24.4% and 24.9% for the six months ended June 30, 2026 and 2025, respectively. The decrease in the ETR compared to the prior YTD was primarily due to higher tax credit benefits for 2026.

The ETR is impacted by a number of factors, including the relative mix of domestic, state, and international earnings, effects of changes in enacted tax laws, adjustments to valuation allowances, and discrete items. The ETR in future periods may vary from the current quarter ETR due to changes in these factors.

BancShares monitors and evaluates the potential impact of current events on the estimates used to establish income tax expense and income tax liabilities. On a periodic basis, we evaluate our income tax positions based on current tax law and positions taken by various tax auditors within the jurisdictions where BancShares is required to file income tax returns, as well as potential or pending audits or assessments by tax auditors. Refer to Note 16—Income Taxes for additional information.


73

RESULTS BY SEGMENT

BancShares’ segments include the General Bank, the Commercial Bank, and Rail. All other financial information not included in the segments is reported in the Corporate section of the segment disclosures.

Refer to Note 18—Segment Information for descriptions of segment products and services.

General Bank
Table 14
General Bank: Financial Data
dollars in millionsThree Months EndedIncrease (Decrease) from Linked QuarterSix Months EndedIncrease (Decrease) from Prior YTD
Earnings SummaryJune 30, 2026March 31, 2026June 30, 2025June 30, 2026June 30, 2025
Net interest income$819 $813 $824 $6 0.8 %$1,632 $1,612 $20 1.2 %
Total noninterest income187 172 164 15 8.5 359 328 31 9.3 
Total revenue1,006 985 988 21 2.1 1,991 1,940 51 2.6 
Personnel cost209 215 207 (6)(2.9)424 417 7 1.5 
All other noninterest expense392 385 373 7 1.8 777 728 49 6.6 
Total noninterest expense601 600 580 1 0.1 1,201 1,145 56 4.8 
Provision for credit losses54 17 13 37 215.5 71 59 12 20.9 
Income before income taxes351 368 395 (17)(4.6)719 736 (17)(2.3)
Income tax expense85 90 101 (5)(5.6)175 189 (14)(7.4)
Net income$266 $278 $294 $(12)(4.2)$544 $547 $(3)(0.5)
Select Period End Balances
Loans and leases$64,355 $64,367 $64,987 $(12)— %$64,355 $64,987 $(632)(1.0)%
Deposits75,718 75,914 73,499 (196)(0.3)75,718 73,499 2,219 3.0 

General Bank segment net income for the current quarter decreased $12 million from the linked quarter, primarily due to an increase in provision for credit losses, partially offset by higher noninterest income and NII.
•The $37 million increase in provision for credit losses was mostly due to an ALLL reserve release in the linked quarter, partially offset by lower net charge-offs in the current quarter.
•The $15 million increase in noninterest income was primarily due to higher gains on loan sales, including a gain on the SBA Securitization, deposit fees and service charges, and wealth management services.
•The $6 million increase in NII was mostly due to a modest increase in loan yield.

General Bank segment loans were $64.36 billion at June 30, 2026, a modest decline of $12 million or less than 1% compared to $64.37 billion at March 31, 2026.

General Bank segment deposits were $75.72 billion at June 30, 2026, a marginal decrease of $196 million or less than 1% compared to $75.91 billion at March 31, 2026.

General Bank segment net income for the current YTD decreased $3 million or less than 1% compared to the prior YTD, primarily due to higher noninterest expense and provision for credit losses, partially offset by higher noninterest income and NII.
•The $56 million increase in total noninterest expense was mainly due to a $49 million increase in all other noninterest expense, which includes allocated expenses.
•The $12 million increase in provision for credit losses was largely due to higher net charge-offs, partially offset by a lower ALLL reserve build.
•The $31 million increase in total noninterest income was mostly due to higher deposit fees and service charges, including overdraft fees, and wealth management services.
•The $20 million increase in NII was largely due to a higher yield on loans and a lower rate paid on interest-bearing deposits.

74

Commercial Bank

Table 15
Commercial Bank: Financial Data
dollars in millionsThree Months EndedIncrease (Decrease) from Linked QuarterSix Months EndedIncrease (Decrease) from Prior YTD
Earnings SummaryJune 30, 2026March 31, 2026June 30, 2025June 30, 2026June 30, 2025
Net interest income$805 $802 $789 $3 0.5 %$1,607 $1,575 $32 2.0 %
Noninterest Income
Rental income on operating lease equipment54 55 54 (1)(2.6)109 110 (1)(1.4)
All other noninterest income270 230 228 40 17.5 500 429 71 16.7 
Total noninterest income324 285 282 39 13.6 609 539 70 13.0 
Total revenue1,129 1,087 1,071 42 3.9 2,216 2,114 102 4.8 
Noninterest Expense
Personnel cost186 199 183 (13)(6.3)385 373 12 3.6 
Depreciation on operating lease equipment43 43 44 — — 86 88 (2)(2.6)
All other noninterest expense400 404 422 (4)(1.2)804 842 (38)(4.6)
Total noninterest expense629 646 649 (17)(2.7)1,275 1,303 (28)(2.1)
(Benefit) provision for credit losses(64)55 102 (119)(216.5)(9)210 (219)(104.3)
Income before income taxes564 386 320 178 46.4 950 601 349 58.1 
Income tax expense136 95 82 41 44.4 231 154 77 49.5 
Net income$428 $291 $238 $137 47.1 $719 $447 $272 61.0 
Select Period End Balances
Loans and leases$86,635 $84,263 $76,220 $2,372 2.8 %$86,635 $76,220 $10,415 13.7 %
Operating lease equipment, net723 717 750 6 0.8 723 750 (27)(3.6)
Deposits45,690 47,191 40,697 (1,501)(3.2)45,690 40,697 4,993 12.3 
Table 16
Adjusted Rental Income on Operating Lease Equipment (non-GAAP)
dollars in millionsThree Months EndedIncrease (Decrease) from Linked QuarterSix Months EndedIncrease (Decrease) from Prior YTD
June 30, 2026March 31, 2026June 30, 2025June 30, 2026June 30, 2025
Rental income on operating leases (GAAP)$54 $55 $54 $(1)(2.6)%$109 $110 $(1)(1.4)%
Less: depreciation on operating lease equipment43 43 44 — — 86 88 (2)(2.6)
Adjusted rental income on operating lease equipment (non-GAAP) (1)
$11 $12 $10 $(1)(8.3)$23 $22 $1 4.6 
(1)    Adjusted rental income on operating lease equipment is a non-GAAP measure. Refer to the “Non-GAAP Financial Measurements” section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.

Commercial Bank segment net income for the current quarter increased $137 million compared to the linked quarter, primarily due to a benefit for credit losses, higher noninterest income, and lower noninterest expense.
•The $119 million decrease in provision for credit losses was largely due to an ALLL reserve release for commercial and industrial, as well as commercial real estate, as discussed further in the “Risk Management—Credit Risk—ALLL Methodology” section later in this MD&A.
•The $39 million increase in total noninterest income was largely attributable to an increase in the fair value of derivatives, higher client investment fees and gains on sales of leasing equipment.
•The $17 million decrease in total noninterest expense mainly included a $13 million decrease in personnel cost and a $4 million decrease in all other noninterest expense, which includes allocated expenses.

Commercial Bank segment loans were $86.64 billion at June 30, 2026, an increase of $2.37 billion from $84.26 billion at March 31, 2026, mainly concentrated in Global Fund Banking.

Commercial Bank deposits were $45.69 billion at June 30, 2026, a decrease of $1.50 billion from $47.19 billion at March 31, 2026, largely due to large short-term deposits which moved off-balance sheet shortly after March 31, 2026.
75

Commercial Bank segment net income for the current YTD increased $272 million compared to the prior YTD, primarily due to a lower provision for credit losses, higher noninterest income, higher NII, and lower noninterest expense.
•The $219 million decrease in provision for credit losses was largely due to an ALLL reserve release as mentioned above, in addition to lower net charge-offs. Refer to the “Risk Management—Credit Risk—ALLL Methodology” section of this MD&A for further discussion.
•The $70 million increase in total noninterest income was largely due to the increases in lending-related fees, the fair value of derivatives, and client investment fees.
•The $32 million increase in NII was largely due to the impact of loan growth and a lower rate paid on interest-bearing deposits, partially offset by a lower yield on loans, and deposit growth.
•The $28 million decrease in total noninterest expense was mainly due to a $38 million decrease in all other noninterest expense, which includes allocated expenses, partially offset by a $12 million increase in personnel cost.

Rail
Table 17
Rail: Financial Data
dollars in millionsThree Months EndedIncrease (Decrease) from Linked QuarterSix Months EndedIncrease (Decrease) from Prior YTD
Earnings SummaryJune 30, 2026March 31, 2026June 30, 2025June 30, 2026June 30, 2025
Net interest expense$(59)$(58)$(53)$(1)(2.1)%$(117)$(105)$(12)(10.9)%
Noninterest Income
Rental income on operating lease equipment226 226 218 — — 452 432 20 4.7 
All other noninterest income7 9 3 (2)(28.0)16 5 11 185.5 
Total noninterest income233 235 221 (2)(0.6)468 437 31 7.0 
Total revenue174 177 168 (3)(1.5)351 332 19 5.8 
Noninterest Expense
Personnel cost6 8 6 (2)(14.6)14 14 — — 
Depreciation on operating lease equipment58 58 56 — — 116 110 6 5.7 
Maintenance and other operating lease expenses67 65 55 2 3.4 132 113 19 16.5 
All other noninterest expense18 17 26 1 1.5 35 40 (5)(15.0)
Total noninterest expense149 148 143 1 1.4 297 277 20 6.9 
Income before income taxes25 29 25 (4)(15.4)54 55 (1)(1.0)
Income tax expense6 7 6 (1)(16.6)13 14 (1)(5.0)
Net income$19 $22 $19 $(3)(15.1)%$41 $41 $— — 
Select Period End Balances
Loans and leases$44 $62 $62 $(18)(29.7)%$44 $62 $(18)(29.6)%
Operating lease equipment, net9,032 8,968 8,716 64 0.7 9,032 8,716 316 3.6 
Deposits2 2 3 — (1.5)2 3 (1)(15.7)

Table 18
Adjusted Rental Income on Operating Lease Equipment (non-GAAP)
dollars in millionsThree Months EndedIncrease (Decrease) from Linked QuarterSix Months EndedIncrease (Decrease) from Prior YTD
June 30, 2026March 31, 2026June 30, 2025June 30, 2026June 30, 2025
Rental income on operating leases (GAAP)$226 $226 $218 $— — %$452 $432 $20 4.7 %
Less: depreciation on operating lease equipment58 58 56 — — 116 110 6 5.7 
Less: maintenance and other operating lease expenses67 65 55 2 3.4 132 113 19 16.5 
Adjusted rental income on operating lease equipment (non-GAAP) (1)
$101 $103 $107 $(2)(1.9)$204 $209 $(5)(2.4)
(1)    Adjusted rental income on operating lease equipment is a non-GAAP measure. Refer to the “Non-GAAP Financial Measurements” section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.
76

Rail segment net income for the current quarter decreased $3 million compared to the linked quarter, mostly due to lower gains on sales of leasing equipment.

Rail segment net income for the current YTD was relatively unchanged compared to the prior YTD, as higher rental income on operating lease equipment and other noninterest income was offset by higher total noninterest expense and higher net interest expense.
•The $20 million increase in rental income on operating lease equipment reflected portfolio growth and strong repricing.
•The $11 million increase in all other noninterest income reflects higher gains on sales of operating lease equipment.
•The $12 million increase in net interest expense was primarily due to higher funding costs and an increase in operating lease equipment.
•Total noninterest expense increased $20 million. Depreciation on operating lease equipment increased $6 million, reflective of growth in operating lease equipment, and maintenance and other operating lease expenses increased $19 million. Maintenance and other operating lease expenses tend to be variable due to timing and the number of railcars coming on or off lease as well as asset condition. All other noninterest expense decreased $5 million as the prior YTD included a charge related to a vendor dispute.

Railcar Portfolio
Our fleet is diverse and the average re-pricing of equipment upon lease maturities was 115% of the average prior or expiring lease rate during the current quarter. Railcar utilization, including commitments to lease, was 96.7% at June 30, 2026 and 96.2% at December 31, 2025.

Rail segment customers include all of the U.S. and Canadian Class I railroads (i.e., railroads with annual revenues of approximately $500 million and greater) and other railroads, as well as manufacturers and commodity shippers. Our total operating lease fleet at June 30, 2026 consisted of 129,331 railcars and locomotives.

The following tables reflect the proportion of railcars by type based on units and net investment, and rail operating lease equipment by obligor industry:

Table 19
Operating Lease Railcar Portfolio by Type (units and net investment)
June 30, 2026March 31, 2026December 31, 2025
Railcar TypeTotal Owned
Fleet - % Total Units		Total Owned
Fleet - % Total
Net Investment		Total Owned
Fleet - % Total Units		Total Owned
Fleet - % Total
Net Investment		Total Owned
Fleet - % Total Units		Total Owned
Fleet - % Total
Net Investment
Covered hoppers45 %41 %45 %41 %45 %41 %
Tank cars28 40 28 39 28 39 
Mill/ coil gondolas8 5 8 6 8 6 
Coal6 1 6 1 6 1 
Boxcars5 5 5 5 5 5 
Other8 8 8 8 8 8 
Total100 %100 %100 %100 %100 %100 %

Table 20
Rail Operating Lease Equipment by Obligor Industry
dollars in millions June 30, 2026March 31, 2026December 31, 2025
Manufacturing$3,988 44 %$3,908 44 %$3,782 43 %
Rail2,017 22 2,010 22 2,047 23 
Wholesale1,567 18 1,582 18 1,554 18 
Oil and gas extraction / services468 5 475 5 487 5 
Energy and utilities188 2 198 2 206 2 
Other 804 9 795 9 806 9 
Total$9,032 100 %$8,968 100 %$8,882 100 %

77

Corporate
Table 21
Corporate: Financial Data
dollars in millions Three Months EndedIncrease (Decrease) from Linked QuarterSix Months EndedIncrease (Decrease) from Prior YTD
Earnings SummaryJune 30, 2026March 31, 2026June 30, 2025June 30, 2026June 30, 2025
Net interest income$91 $64 $135 $27 40.7 %$155 $276 $(121)(43.7)%
Total noninterest income32 — 11 32 100.0 32 9 23 268.9 
Total revenue123 64 146 59 89.9 187 285 (98)(34.1)
Personnel cost443 447 414 (4)(1.1)890 824 66 8.0 
Acquisition-related expenses8 5 38 3 90.4 13 80 (67)(83.7)
All other noninterest expense (1)
(279)(310)(324)31 9.8 (589)(636)47 7.6 
Total noninterest expense172 142 128 30 20.6 314 268 46 17.7 
Provision for credit losses— — — — — — — — — 
Loss before income taxes(49)(78)18 29 36.9 (127)17 (144)NM
Income tax (benefit) expense(8)(21)(6)13 56.8 (29)(6)(23)(336.7)
Net (loss) income$(41)$(57)$24 $16 29.9 $(98)$23 $(121)(517.2)
Select Period End Balances
Deposits52,017 47,735 45,736 4,282 9.0 %52,017 45,736 6,281 13.7 %
(1) Under our segment expense allocation methodology, allocated expenses increase noninterest expense of the applicable segment(s), with an offsetting decrease to Corporate noninterest expense. “All other noninterest expense” in the Corporate table above includes the effect of allocated expenses, resulting in a reduction to expense (i.e., contra expense).

The Corporate loss before income taxes was $49 million for the current quarter, compared to $78 million for the linked quarter. The $29 million change was mainly due to the following:
•Total noninterest income increased $32 million, largely due to the gain on sale of tax credit investments and an increase in the fair value of marketable equity securities.
•NII increased $27 million, mainly due to a higher yield on and average balance of investment securities, higher loan PAA, and a lower average balance of borrowings mainly due to prepayments of the Purchase Money Note, partially offset by a higher average balance of interest-bearing deposits.
•Total noninterest expenses increased $30 million, primarily due to higher all other noninterest expense, which includes allocated expenses.

Corporate deposits were $52.02 billion at June 30, 2026, an increase of $4.28 billion compared to $47.74 billion at March 31, 2026, as Direct Bank and brokered deposits increased $2.81 billion and $1.49 billion, respectively. At June 30, 2026, Corporate deposits primarily included $48.22 billion of Direct Bank deposits, the vast majority of which are savings, and $3.32 billion of brokered deposits, which are further discussed in the “Executive Overview—Funding, Liquidity and Capital Overview” section of this MD&A.

The Corporate loss before income taxes was $127 million for the current YTD, compared to income before income taxes of $17 million for the prior YTD. The $144 million change primarily reflected lower NII and higher noninterest expense, partially offset by higher noninterest income.
•NII decreased $121 million mainly due to the impacts of lower average balances of and yields on interest-earning deposits at banks and investment securities, a higher average balance of interest-bearing deposits, and lower loan PAA, partially offset by a lower rate paid on interest-bearing deposits and a lower average balance of borrowings, mainly due to prepayments of the Purchase Money Note.
•Total noninterest expenses increased $46 million. All other noninterest expense, which includes allocated expenses, increased $47 million. Personnel cost increased $66 million, mainly due to higher salaries, reflecting higher merit and promotion costs and net staff additions, in addition to higher employee benefit costs. The decrease in acquisition-related expenses of $67 million is summarized in Table 12 and discussed in the “Results of Operations—Noninterest Expense” section of this MD&A.
•Total noninterest income increased $23 million, largely due to the gain on sale of tax credit investments, and an increase in the fair value of marketable equity securities, partially offset by the loss on extinguishment of debt.




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BALANCE SHEET ANALYSIS

The following discussion provides additional information about the major components of our balance sheet. Information regarding our ALLL is included in the “Risk Management—Credit Risk—ALLL Methodology” section of this MD&A and in Note 6—Allowance for Loan and Lease Losses. Information regarding our capital and regulatory capital is included in the “Capital” section of this MD&A.

Interest-earning Assets

Interest-earning assets include interest-earning deposits at banks, securities purchased under agreements to resell, investment securities, loans held for sale, and loans and leases, all of which reflect varying interest rates based on the risk level and repricing characteristics of the underlying asset. Higher-risk investments typically carry a higher interest rate, but could expose us to higher levels of market and/or credit risk. We strive to maintain a high level of interest-earning assets relative to total assets.

Interest-earning Deposits at Banks
Interest-earning deposits at banks are primarily comprised of interest-earning deposits at the FRB. Interest-earning deposits at banks as of June 30, 2026 totaled $21.13 billion, an increase of $1.33 billion or 7% from $19.80 billion at December 31, 2025. The increase from December 31, 2025 is a function of the balance sheet trends discussed above in “Executive Overview—Financial Performance Summary—Balance Sheet Highlights.”

Securities Purchased Under Agreements to Resell
Securities purchased under agreements to resell at June 30, 2026 totaled $737 million, an increase of $505 million from $232 million at December 31, 2025, due primarily to timing of these short-term investments.

Investment Securities
The primary objective of the investment portfolio is to generate incremental income by deploying excess funds into securities that have minimal liquidity risk and low to moderate interest rate risk and credit risk. Other objectives include acting as a stable source of liquidity, serving as a tool for asset and liability management and maintaining an interest rate risk profile compatible with our objectives. Changes in the total balance of our investment securities portfolio result from trends in balance sheet funding and market performance. Generally, when inflows arising from deposit and treasury services products exceed loan and lease demand, we invest excess funds into the securities portfolio or into interest-earning deposits at banks. Conversely, when loan demand exceeds growth in deposits and short-term borrowings, we allow interest-earning deposits at banks to decline and use proceeds from maturing securities and prepayments to fund loan growth. Also refer to Note 3—Investment Securities and “Funding, Liquidity and Capital Overview” in the “Executive Overview” section of this MD&A for additional disclosures regarding investment securities.

The carrying value of investment securities at June 30, 2026 totaled $43.56 billion, an increase of $1.99 billion or 5% from $41.56 billion at December 31, 2025. The increase mainly resulted from purchases of $8.79 billion, which were primarily short duration available for sale U.S. treasury and agency mortgage-backed securities, partially offset by maturities, sales, and prepayments totaling $6.57 billion.

Our portfolio of investment securities available for sale consists of mortgage-backed securities issued by government agencies and government sponsored entities, U.S. Treasury securities, corporate and municipal bonds, and Retained SBA Notes. Investment securities available for sale are reported at fair value and unrealized gains and losses are included as a component of AOCI, net of deferred taxes. As of June 30, 2026, investment securities available for sale had a pretax net unrealized loss of $527 million, compared to $162 million as of December 31, 2025, primarily reflecting changes in interest rates. The fair value of investment securities is impacted by interest rates, credit spreads, market volatility and liquidity conditions. The fair value of the investment securities portfolio generally increases when interest rates decrease or when credit spreads tighten.

Our portfolio of investment securities held to maturity consists of mortgage-backed securities issued by government agencies and government sponsored entities, U.S. Treasury notes, unsecured bonds issued by government agencies and government sponsored entities, and by the Supranational Entities & Multilateral Development Banks.

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The following table presents the investment securities portfolio, segregated by major category:

Table 22
Investment Securities
dollars in millionsJune 30, 2026March 31, 2026December 31, 2025
Amortized Cost
Fair Value
Composition (1)
Amortized Cost
Fair
Value
Composition (1)
Amortized Cost
Fair Value
Composition (1)
Investment securities available for sale:
U.S. Treasury$13,365 $13,320 31.5 %$12,439 $12,442 29.8 %$10,624 $10,673 26.4 %
Government agency34 33 0.1 39 38 0.1 44 43 0.1 
Residential mortgage-backed securities17,804 17,500 41.3 17,782 17,595 42.1 17,683 17,623 43.6 
Commercial mortgage-backed securities3,145 2,972 7.0 3,259 3,099 7.4 3,444 3,299 8.2 
Corporate bonds132 128 0.3 132 128 0.3 145 140 0.3 
Municipal bonds12 12 — 12 12 — 12 12 — 
Other (2)
18 18 — — — — — — — 
Total investment securities available for sale$34,510 $33,983 80.2 %$33,663 $33,314 79.7 %$31,952 $31,790 78.6 %
Investment in marketable equity securities$95 $156 0.4 %$83 $130 0.3 %$83 $127 0.3 %
Investment securities held to maturity:
U.S. Treasury$390 $376 0.9 %$389 $374 0.9 %$388 $373 0.9 %
Government agency1,190 1,135 2.7 1,205 1,150 2.8 1,225 1,170 2.9 
Residential mortgage-backed securities4,311 3,830 9.0 4,395 3,926 9.4 4,450 3,992 9.9 
Commercial mortgage-backed securities3,279 2,646 6.3 3,305 2,682 6.4 3,337 2,729 6.8 
Supranational securities247 226 0.5 246 226 0.5 246 226 0.6 
Other1 1 — 2 2 — 1 1 — 
Total investment securities held to maturity$9,418 $8,214 19.4 %$9,542 $8,360 20.0 %$9,647 $8,491 21.1 %
Total investment securities$44,023 $42,353 100.0 %$43,288 $41,804 100.0 %$41,682 $40,408 100.0 %
(1) Calculated as a percentage of the total fair value of investment securities.
(2) Other investment securities available for sale includes Retained SBA Notes (as defined in Note 9—Variable Interest Entities).
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The following table presents the weighted average yields for investment securities available for sale and held to maturity at June 30, 2026, segregated by major category with ranges of contractual maturities. The weighted average yields represent the yields of the underlying securities as of the specified date, June 30, 2026, within the specified maturity range. The weighted average yield on the portfolio was calculated using security-level annualized yields based on book yield to maturity and takes into account amortization of premiums and accretion of discounts. The total weighted average yields for investment securities available for sale and held to maturity are based on the underlying weighted average amortized cost.

Table 23
Weighted Average Yield on Investment Securities
June 30, 2026
Within One YearOne to Five YearsFive to 10 YearsAfter 10 YearsTotal
Investment securities available for sale:
U.S. Treasury4.15 %3.82 %— %— %3.93 %
Government agency— 3.45 — — 3.45 
Residential mortgage-backed securities (1)
— 4.66 3.80 4.41 4.21 
Commercial mortgage-backed securities (1)
4.26 4.78 4.49 2.68 3.91 
Corporate bonds— 7.83 5.24 — 7.52 
Municipal bonds— — — 7.73 7.73 
Other (2)
— — — 6.36 6.36 
Total investment securities available for sale4.15 %4.02 %3.81 %4.25 %4.09 %
Investment securities held to maturity:
U.S. Treasury1.42 %1.44 %— %— %1.43 %
Government agency1.41 1.70 — — 1.61 
Residential mortgage-backed securities (1)
— — 1.07 2.87 2.71 
Commercial mortgage-backed securities (1)
— 1.83 4.65 2.43 2.44 
Supranational securities— 1.64 — — 1.64 
Other3.17 — — — 3.17 
Total investment securities held to maturity1.42 %1.64 %1.27 %2.67 %2.40 %
(1) Residential mortgage-backed and commercial mortgage-backed securities, which are not due at a single maturity date, have been included in maturity groupings based on the contractual maturity at June 30, 2026. The expected life will differ from contractual maturities because borrowers have the right to prepay the underlying loans.
(2) Other includes Retained SBA Notes. Refer to the “Executive Overview—Recent Events—SBA Securitization” section of this MD&A and Note 9—Variable Interest Entities for further information.

Assets Held for Sale
Assets held for sale at June 30, 2026 were $93 million, a decrease of $711 million from $804 million at December 31, 2025, primarily due to loan sales.

The composition of assets held for sale is included in the following table:

Table 24
Assets Held for Sale
Increase (Decrease) from:
dollars in millionsJune 30, 2026March 31, 2026December 31, 2025March 31, 2026December 31, 2025
Loans and leases:
Commercial (1)
$34$385$18$(351)(91.2)%$1684.0 %
Consumer56733781(677)(92.3)(725)(92.8)
Loans and leases901,118799(1,028)(91.9)(709)(88.7)
Operating lease equipment345(1)(13.3)(2)(40.4)
Total assets held for sale$93$1,122$804$(1,029)(91.7)%$(711)(88.4)%
(1) There were nonaccrual loans held for sale of $0 at June 30, 2026 and March 31, 2026, and $10 million at December 31, 2025.



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In March 2026, FCB management committed to a plan to sell SBA commercial loans, which were then transferred from held for investment to held for sale. We did not establish a valuation allowance for the loans transferred to held for sale as the estimated fair value exceeded amortized cost. In June 2026, all of the SBA commercial loans held for sale totaling $363 million in amortized cost were sold in the SBA Securitization and BancShares recognized a gain of $3 million.

Consumer loans held for sale at June 30, 2026 and December 31, 2025 consisted of residential mortgage loans that FCB originated with the intent to sell. Additionally, consumer loans held for sale at December 31, 2025 were largely comprised of residential mortgage loans that were transferred from held for investment to held for sale in December 2025. We did not establish a valuation allowance for the loans transferred to held for sale as the estimated fair value exceeded the amortized cost. In April 2026, these residential mortgage loans held for sale totaling $644 million in amortized cost were sold and BancShares recognized a gain of $1 million.

Loans and Leases
The following table presents loans and leases by loan segment and loan class, and the respective proportion to total loans:

Table 25
Loans and Leases
dollars in millionsJune 30, 2026March 31, 2026December 31, 2025Balance Increase (Decrease) from:
Balance% to Total LoansBalance% to Total LoansBalance% to Total LoansMarch 31, 2026December 31, 2025
Commercial:
Commercial and industrial$46,574 31 %$45,753 31 %$44,721 30 %$821 1.8 %$1,853 4.1 %
Capital call lines34,203 22 32,274 21 31,791 21 1,929 6.0 $2,412 7.6 
Owner occupied commercial mortgage17,904 12 17,502 12 17,660 12 402 2.3 $244 1.4 
Investor dependent2,624 2 2,714 2 2,778 2 (90)(3.3)$(154)(5.5)
Commercial real estate23,233 15 23,707 16 23,784 16 (474)(2.0)$(551)(2.3)
Total commercial$124,538 82 %$121,950 82 %$120,734 81 %$2,588 2.1 %3,804 3.2 %
Consumer:— — 
Residential mortgage$21,566 14 %$21,698 14 %$21,861 15 %$(132)(0.6)%$(295)(1.3)%
Revolving mortgage2,868 2 2,863 2 2,863 2 5 0.2 $5 0.2 
Auto1,261 1 1,332 1 1,416 1 (71)(5.4)$(155)(11.0)
Other consumer801 1 849 1 1,056 1 (48)(5.7)$(255)(24.2)
Total consumer$26,496 18 %$26,742 18 %$27,196 19 %$(246)(0.9)%(700)(2.6)%
Total loans and leases$151,034 100 %$148,692 100 %$147,930 100 %$2,342 1.60 %$3,104 2.1 %
Allowance for loan and lease losses(1,484)(1,558)(1,566)
Net loans and leases$149,550 $147,134 $146,364 

Loans and leases at June 30, 2026 were $151.03 billion, an increase of $3.10 billion or 2% from $147.93 billion at December 31, 2025, primarily due to growth of $2.41 billion in capital call lines.

The unamortized discount related to acquired loans was $1.22 billion at June 30, 2026, a decrease of $105 million from $1.33 billion at December 31, 2025.

Refer to Note 5—Loans and Leases for further information.

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Operating Lease Equipment, Net

Our operating lease portfolio mostly relates to the Rail segment, with the remainder included in the Commercial Bank segment as summarized in the following table. Refer to the “Results by Segment” section of this MD&A for further details on the operating lease equipment portfolio in Rail.

Table 26
Operating Lease Equipment, Net
dollars in millionsBalance Increase (Decrease) from:
June 30, 2026March 31, 2026December 31, 2025March 31, 2026December 31, 2025
Railcars and locomotives$9,032 $8,968 $8,882 $64 0.7 %$150 1.7 %
Other equipment723 717 739 6 0.8 (16)(2.2)
Total (1)
$9,755 $9,685 $9,621 $70 0.7 %$134 1.4 %
(1)    Includes off-lease rail equipment of $251 million at June 30, 2026, $265 million at March 31, 2026 and $257 million at December 31, 2025.

Interest-bearing Liabilities

Interest-bearing liabilities include interest-bearing deposits, securities sold under agreements to repurchase, and borrowings. Interest-bearing liabilities at June 30, 2026 totaled $163.14 billion, an increase of $6.21 billion or 4% from $156.93 billion at December 31, 2025. The increase from December 31, 2025 was mainly due to deposit growth, partially offset by lower borrowings as further discussed below.

Deposits
We strive to maintain a strong liquidity position, and therefore, deposit retention remains a key business objective. We believe traditional bank deposit products remain an attractive option for many customers. As economic conditions change, we recognize that our liquidity position could be adversely affected if bank deposits are withdrawn. Our ability to fund future loan growth is significantly dependent on our success in retaining existing deposits and generating new deposits at a reasonable cost.

The following table summarizes the types of deposits:

Table 27
Deposits
dollars in millionsBalance Increase (Decrease) from:
June 30, 2026March 31, 2026December 31, 2025March 31, 2026December 31, 2025
Noninterest-bearing$42,475 $43,606 $40,653 $(1,131)(2.6)%$1,822 4.5 %
Checking with interest25,778 25,599 24,377 179 0.7 1,401 5.7 
Money market39,964 41,136 38,687 (1,172)(2.9)1,277 3.3 
Savings50,083 47,258 46,625 2,825 6.0 3,458 7.4 
Time15,127 13,243 11,236 1,884 14.2 3,891 34.6 
Interest-bearing deposits130,952 127,236 120,925 3,716 2.9 10,027 8.3 
Total deposits$173,427 $170,842 $161,578 $2,585 1.5 %$11,849 7.3 %
Noninterest-bearing deposits to total deposits24.5 %25.5 %25.2 %

Deposits at June 30, 2026 were $173.43 billion, an increase of $11.85 billion or 7% from $161.58 billion at December 31, 2025 as further discussed below:
•Corporate deposit growth of $6.77 billion was primarily due to Direct Bank and brokered deposit growth of $3.42 billion and $3.32 billion, respectively.
•Commercial Bank segment deposit growth of $4.16 billion was mainly in Global Fund Banking and Tech and Healthcare lines of business. Most of the growth was in noninterest-bearing deposits and interest-bearing checking.
•General Bank segment deposit growth of $922 million was primarily concentrated in our Branch Network. Deposit growth was mostly in time deposits and noninterest-bearing deposits.

Noninterest-bearing deposits grew by $1.82 billion or 5% compared to December 31, 2025 and represented 24.5% of total deposits as of June 30, 2026, compared to 25.2% at December 31, 2025.

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Deposit Concentrations
BancShares operates a network of branches and offices, predominantly located in the Southeast, Mid-Atlantic, Midwest and Western United States, providing a broad range of financial services to individuals, businesses and professionals. Based on branch location, our top state deposit concentrations as of June 30, 2026 were in North Carolina, South Carolina, and California, which represented 26.0%, 7.2%, and 6.3%, respectively, of total deposits.

The Direct Bank had $48.22 billion or 27.8% of our total deposits as of June 30, 2026. The Direct Bank deposits mainly consist of savings.

Commercial Bank segment deposits as of June 30, 2026 were $45.69 billion or 26.3% of total deposits and are primarily concentrated in online banking. Deposits in the Commercial Bank segment include large dollar accounts with private equity and venture capital clients, primarily in the technology, life science and healthcare industries.

Deposit accounts with balances in excess of $50 million totaled $10.75 billion as of June 30, 2026, compared to $7.09 billion as of December 31, 2025.

Brokered deposits as of June 30, 2026 were $3.32 billion or 1.9% of total deposits. We had no brokered deposits as of December 31, 2025. We utilized brokered deposits more prevalently in 2026 as rates have been favorable relative to Direct Bank deposits. We will continue to monitor the rate environments for brokered and Direct Bank deposits to determine the target growth for these deposit channels.

Uninsured Deposits
The amount of uninsured deposits is estimated consistent with the methodologies and assumptions utilized in providing information to the FDIC and Federal Reserve. We estimate total uninsured deposits were $65.06 billion, which represented 37.5% of total deposits at June 30, 2026, compared to $61.81 billion or 38.3% of total deposits at December 31, 2025.

Refer to the “Executive Overview—Funding, Liquidity and Capital Overview” and “Results by Segment” sections of this MD&A for further discussion of deposit composition, uninsured deposits, and recent deposit trends.

The following table provides the expected maturity of time deposits with balances in excess of $250,000 as of June 30, 2026:

Table 28
Maturities of Time Deposits In Excess of $250,000
dollars in millionsJune 30, 2026
Time deposits maturing in:
Three months or less$799 
Over three months through six months364 
Over six months through 12 months359 
More than 12 months12 
Total$1,534 
Borrowings
Total borrowings at June 30, 2026 were $32.19 billion, a decrease of $3.82 billion or 11% from $36.01 billion at December 31, 2025. The decrease from December 31, 2025 primarily related to the prepayments of the Purchase Money Note, partially offset by the current YTD debt issuances. Refer to the “Executive Overview—Recent Events” section of this MD&A for further information related to 2026 borrowings activity, and Table 30 below for current YTD debt issuances.

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The following table presents borrowings, net of the respective unamortized purchase accounting adjustments, premiums, discounts, and issuance costs:

Table 29
Borrowings
dollars in millionsBalance Increase (Decrease) from:
June 30, 2026March 31, 2026December 31, 2025March 31, 2026December 31, 2025
Securities sold under agreements to repurchase$152 $170 $224 $(18)(10.6)%$(72)(32.0)%
Federal Deposit Insurance Corporation
   3.500% fixed rate note due March 2028 (1)
28,423 30,905 33,385 (2,482)(8.0)(4,962)(14.9)
Senior Unsecured Borrowings
5.097% fixed-to-floating rate notes due July 2029
746 — — 746 100.0 746 100.0 
5.231% fixed-to-floating rate notes due March 2031491 497 497 (6)(1.2)(6)(1.2)
4.869% fixed-to-floating rate notes due March 2032
489 495 — (6)(1.2)489 100.0 
   6.000% fixed rate notes due April 203658 58 58 — — — — 
Subordinated debt
6.125% fixed rate notes due March 2028423 427 430 (4)(0.9)(7)(1.6)
5.600% fixed rate reset notes due September 2035589 595 597 (6)(1.0)(8)(1.3)
6.254% fixed-to-fixed rate notes due March 2040 732 742 745 (10)(1.3)(13)(1.7)
Capital lease obligations85 73 72 12 16.4 13 18.1 
Total borrowings$32,188 $33,962 $36,008 $(1,774)(5.2)%$(3,820)(10.6)%
(1) Issued in connection with the SVBB Acquisition and secured by collateral. Refer to Note 5—Loans and Leases. The unamortized discount was $77 million, $95 million, and $115 million at June 30, 2026, March 31, 2026, and December 31, 2025, respectively.

The following summarizes debt issuances in the current YTD:

Table 30
Borrowings - Issuances
dollars in millions

Borrowing Type
Issuance DateStated Maturity DateEarliest Par Call DatePar ValueCurrent Interest RateCurrent Payment FrequencyRate Reset DateInterest Rate After ResetPayment Frequency After Reset
Parent Company
Fixed-to-Floating Rate Senior NotesMarch 3, 2026March 3, 2032March 3, 2031$5004.869%SemiannualMarch 3, 2031Compounded SOFR + 148.7 bpsQuarterly
FCB
Fixed-to-Floating Rate Senior NotesJune 24, 2026July 13, 2029July 13, 2028$7505.097%SemiannualJuly 13, 2028Compounded SOFR + 114.6 bpsQuarterly

We continually monitor our capital needs and market conditions in an effort to diversify our borrowing base and capital mix when appropriate. Refer to the “Risk Management—Liquidity Risk” section of this MD&A and Note 10—Borrowings for further information regarding liquidity and borrowings.

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Other Assets and Liabilities    

The following table includes the components of other assets:

Table 31
Other Assets
dollars in millionsBalance Increase (Decrease) from:
June 30, 2026March 31, 2026December 31, 2025March 31, 2026December 31, 2025
Affordable housing tax credit and other unconsolidated investments (1) (2)
$2,731 $2,909 $2,955 $(178)(6.1)%$(224)(7.6)%
Accrued interest receivable943 955 912 (12)(1.3)31 3.4 
Fair value of derivative financial instruments508 498 534 10 2.2 (26)(4.8)
Pension and other retirement plan assets803 794 784 9 1.1 19 2.4 
Right of use assets for operating leases, net278 285 294 (7)(2.3)(16)(5.3)
Income tax assets526 504 510 22 4.4 16 3.1 
Counterparty receivables122 124 124 (2)(1.6)(2)(1.5)
Bank-owned life insurance107 107 108 — — (1)(1.3)
Nonmarketable investments158 164 167 (6)(4.1)(9)(5.6)
Other real estate owned113 110 119 3 2.4 (6)(5.8)
Mortgage servicing rights45 33 32 12 38.7 13 42.3 
Federal Home Loan Bank stock20 20 20 — — — — 
Other1,105 1,010 964 95 9.3 141 14.5 
Total other assets$7,459 $7,513 $7,523 $(54)(0.7)%$(64)(0.9)%
(1)    Refer to Note 9—Variable Interest Entities for additional information.
(2) During the current quarter, we sold $161 million of tax credit investments and recognized a pretax gain of $17 million included in other noninterest income.

The following table includes the components of other liabilities:

Table 32
Other Liabilities
dollars in millionsBalance Increase (Decrease) from:
June 30, 2026March 31, 2026December 31, 2025March 31, 2026December 31, 2025
Income tax liabilities$3,805 $3,825 $3,819 $(20)(0.5)%$(14)(0.4)%
Commitments to fund tax credit investments1,166 1,234 1,321 (68)(5.5)(155)(11.8)
Accrued personnel cost (1)
724 519 1,042 205 39.5 (318)(30.5)
Fair value of derivative financial instruments466 448 494 18 4.1 (28)(5.7)
Lease liabilities310 317 329 (7)(2.1)(19)(5.8)
Reserve for off-balance sheet credit exposure184 228 260 (44)(19.2)(76)(29.1)
Accrued interest payable167 109 140 58 53.2 27 19.4 
Accounts payable and other1,166 1,143 1,321 23 1.9 (155)(11.7)
Total other liabilities$7,988 $7,823 $8,726 $165 2.1 %$(738)(8.5)%
(1) Includes accruals for annual incentive compensation which is typically paid during the first quarter. Additionally, accrued personnel cost can fluctuate based on timing of the payroll cycle.

A reserve for off-balance sheet credit exposure is established for unfunded commitments and is included in other liabilities. BancShares estimates the expected funding amounts and applies its probability of obligor default (“PD”) and loss given default (“LGD”) models to those expected funding amounts to estimate the reserve. The reserve for off-balance sheet credit exposure was $184 million at June 30, 2026, a decrease of $76 million compared to $260 million at December 31, 2025. Refer to the “Results of Operations—Provision for Credit Losses” section of this MD&A for further discussion. Refer to Note 19—Commitments and Contingencies for information relating to off-balance sheet commitments.


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RISK MANAGEMENT

Risk is inherent in any business. BancShares has defined a moderate risk appetite and a balanced approach to risk taking with a philosophy that does not preclude higher risk business activities commensurate with acceptable returns while meeting regulatory objectives. Through the comprehensive Risk Management Framework and Risk Appetite Policy and Statement, senior management has primary responsibility for day-to-day management of the risks we face with accountability of and support from all associates. Senior management applies various strategies to reduce the risks to which BancShares may be exposed, with effective challenge by independent risk management and oversight by management committees. The Board of Directors of the Parent Company (the “Board”) strives to ensure that risk management is a part of our business culture and that our policies and procedures to identify, assess, respond, and monitor risk are part of the decision-making process. The Board’s role in risk oversight is an integral part of our overall Risk Management Framework and Risk Appetite Policy. The Board administers its risk oversight function primarily through its Risk Committee.

The Risk Committee structure is designed to allow for information flow, effective challenge and timely escalation of risk-related issues. The Risk Committee monitors adherence to our Risk Management Framework and Risk Appetite Policy and Statement and provides quarterly updates to the Board on risk management. Our Chief Risk Officer also provides regular reports to the Risk Committee and the Board. Management and independent risk functions make regular reports to the Risk Committee on key risk areas, including credit, market, capital, liquidity, operational, compliance, and strategic risks. The Risk Committee also reviews reports of examination by and communications from regulatory agencies, the results of internal and third-party testing and qualitative and quantitative assessments related to risk management, and any other matters within the scope of the Risk Committee’s oversight responsibilities. The Risk Committee monitors management’s response to certain risk-related regulatory and audit issues. In addition, the Risk Committee may coordinate with the Board’s Audit Committee, Technology Committee and the Compensation, Nominations and Governance Committee for the review of financial statements and related risks, technology and cybersecurity risk, compensation risk management, and other areas of responsibility.

BancShares leverages a Three Lines Model to promote clarity of roles and responsibilities in managing risk. The first line is comprised of organizational functions that own or support the management of risk. The second line is led by the Chief Risk Officer, who reports to the Risk Committee of the Board, and is comprised of organizational functions that make up the Risk Management Department which has the responsibility for establishing risk frameworks, policies, standards, and procedures which support the Framework; providing proactive, transparent, and independent oversight and effective challenge of the first line; and identifying, measuring, monitoring, or controlling for aggregate risks. Internal audit is independent of the first and second lines, reporting directly to the Audit Committee of the Board and constitutes the third line.

In combination with other risk management and monitoring practices, enterprise-wide stress testing activities are conducted within a defined framework. Stress tests are performed for various risks to ensure the financial institution can support continued operations during stressed periods.

BancShares monitors and stress tests its capital and liquidity consistent with the safety and soundness expectations of the federal regulators. Refer to the “Regulatory Considerations” section of Item 1. Business included in the 2025 Form 10-K for further discussion.

BancShares assesses emerging risks on an ongoing basis, such as monitoring economic sentiment and emerging geopolitical issues, inflationary pressures due to rising energy prices among other factors, and the impact of artificial intelligence on various industries. BancShares also continues to assess operational risks such as those associated with potential cyberattacks for FCB and third parties upon whom it relies. Assessments will remain ongoing as the conditions continue to exist and develop. BancShares is also assessing the potential risk of an economic slowdown or recession that could create increased credit and market risk having downstream impacts on earnings, capital, and/or liquidity. Supported by resilient economic conditions, baseline forecasts reflect improving commercial real estate property values and a lower unemployment rate compared to the prior year, which have favorably impacted the ALLL. Key indicators will continue to be monitored, and impacts assessed as part of our ongoing Risk Management Framework.

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Credit Risk

Credit risk is the risk arising from a borrower, obligor, or counterparty’s failure to meet the terms of any financial obligation, which can result in financial impact to current or anticipated earnings or capital, or strategic objectives. Loans and leases we originate are underwritten in accordance with our credit policies and procedures and are subject to periodic ongoing reviews. Acquired loans, regardless of whether purchased credit deteriorated (“PCD”) or Non-PCD, are recorded at fair value as of the acquisition date and are subject to periodic reviews to identify any further credit deterioration. Our independent credit review function conducts risk reviews and analyses of both originated and acquired loans to ensure compliance with credit policies and to monitor asset quality trends and borrower financial strength. These reviews include portfolio analysis by geographic location, industry, collateral type, and product. We strive to identify potential problem loans as early as possible, to record charge-offs as appropriate and to maintain an appropriate ALLL that accounts for expected losses over the life of the loan and lease portfolios.

Commercial Lending and Leasing
BancShares employs a credit ratings system where each commercial loan is assigned a PD, LGD, and/or overall credit rating using scorecards developed to rate each type of transaction incorporating assessments of both quantitative and qualitative factors. When commercial loans and leases are graded during underwriting, or when updated periodically thereafter, a model is run to generate a preliminary risk rating. These models incorporate both internal and external historical default and loss data, as well as other borrower and loan characteristics, to assign a risk rating. The preliminary risk rating assigned by the model can be adjusted as a result of borrower specific facts and circumstances that, in management’s judgment, warrant a modification of the modeled risk rating to arrive at the final approved risk ratings.

Consumer Lending
Consumer lending begins with an evaluation of a consumer borrower’s credit profile against published standards. Credit decisions are made after analyzing quantitative and qualitative factors to assess the borrower’s ability to repay the loan, and secondary sources of repayment, such as collateral value.

Consumer products use traditional and measurable standards to document and assess the creditworthiness of a loan applicant. Credit standards follow industry standard documentation requirements. Performance is largely evaluated based on an acceptable pay history along with a quarterly assessment which incorporates current market conditions. Loans may also be monitored during quarterly reviews of the borrower’s refreshed credit score. When warranted, an additional review of the loan-to-value of the underlying collateral may be conducted.

ALLL Methodology

Our ALLL methodology is discussed further in the section entitled “Critical Accounting Estimates” of the MD&A and Note 1—Significant Accounting Policies and Basis of Presentation in the 2025 Form 10-K. The ALLL is also discussed in Note 6—Allowance for Loan and Lease Losses of this Form 10-Q.

Our ALLL estimate as of June 30, 2026 included extensive reviews of the changes in credit risk associated with the uncertainties around macroeconomic forecasts. These loss estimates consider industry risk and the actual net losses incurred during prior periods of economic stress as well as recent credit trends.

The ALLL represents management’s best estimate of credit losses expected over the life of the loan or lease, adjusted for expected contractual payments and the impact of prepayment expectations. Estimates for loan and lease losses are determined by analyzing quantitative and qualitative components present as of the evaluation date.

The ALLL is calculated based on a variety of considerations, including, but not limited to actual net loss history of the various loan and lease pools, delinquency trends, changes in forecasted economic conditions, loan growth, estimated loan life, and changes in portfolio credit quality. Loans and leases are segregated into pools with similar risk characteristics and each pool has a model tailored for the applicable risks.

Macroeconomic Forecasts Utilized in the Estimate of the ALLL
While management utilizes its best judgment and information available, the ultimate adequacy of our ALLL is dependent upon a variety of factors beyond our control which are inherently difficult to predict, the most significant being the macroeconomic scenario forecasts that determine the economic variables, including the U.S. unemployment rate, U.S. real gross domestic product (“GDP”), home price index (“HPI”), and commercial real estate price index (“CRE price index”) utilized in the ALLL models. These economic variables are based on macroeconomic scenario forecasts with a forecast horizon that covers the reasonable and supportable period.

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Due to the inherent uncertainty in the macroeconomic forecasts, BancShares utilizes baseline, upside, and downside macroeconomic scenarios and probability weights the scenarios based on review of variable forecasts for each scenario and comparison to expectations. Our scenario weighting has remained consistent since the second quarter of 2025. We will continue to monitor economic sentiment and emerging geopolitical issues, rising energy prices, and the impact of artificial intelligence on various industries.

At June 30, 2026, ALLL estimates ranged from $1.21 billion, when weighing the upside scenario 100%, to $2.06 billion when weighting the downside scenario 100%. BancShares management determined that an ALLL of $1.48 billion was appropriate as of June 30, 2026.

The following table presents the U.S. unemployment rate, U.S. real GDP, HPI, and CRE price index based on the weighted-average scenario forecasts used in determining the ALLL at June 30, 2026 and December 31, 2025. The projected trends in the macroeconomic variables below may fluctuate depending on the underlying scenarios and our scenario weighting assumptions utilized for the applicable period.

Table 33
Select Variables in ALLL Weighted-average Scenarios
Assumptions as of June 30, 2026
202620272028
U.S. unemployment rate (1)
4.7 %5.5 %5.3 %
U.S. real GDP (2)
1.5 %1.2 %2.1 %
HPI (2)
(0.3)%(0.1)%3.7 %
CRE price index (2)
2.2 %(1.2)%2.1 %
Assumptions as of December 31, 2025
202620272028
U.S. unemployment rate (1)
5.2 %5.4 %5.1 %
U.S. real GDP (2)
1.5 %1.6 %2.0 %
HPI (2)
(1.4)%2.2 %3.5 %
CRE price index (2)
(3.4)%(1.6)%4.1 %
(1) Assumptions represent the projected quarterly averages for the years ending December 31, 2026, 2027, and 2028.
(2) Assumptions represent the projected year-over-year percent changes.

Qualitative Component of the ALLL
ALLL model outputs may be adjusted through a qualitative assessment to reflect trends that may not be adequately reflected within the models, which could include economic conditions, uncertainty in macroeconomic forecasts, credit quality, risk to specific industry concentrations, and any significant policy and underwriting changes. These qualitative adjustments are also used to accommodate for the imprecision of certain assumptions and uncertainties inherent in the model calculations.

Current economic conditions and forecasts can change which could affect the anticipated amount of estimated credit losses and therefore the appropriateness of the ALLL. It is difficult to estimate how potential changes in any one economic factor or input might affect the overall ALLL because a wide variety of factors and inputs are considered in estimating the ALLL and changes in those factors and inputs considered may not occur at the same rate and may not be consistent across all product types. Additionally, changes in factors and inputs may be directionally inconsistent, such that improvement in one factor may offset deterioration in others.

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The following table summarizes the ALLL for commercial, consumer and total loans.

Table 34
ALLL
dollars in millionsThree Months Ended June 30, 2026Three Months Ended March 31, 2026Three Months Ended June 30, 2025
CommercialConsumerTotalCommercialConsumerTotalCommercialConsumerTotal
Balance at beginning of period$1,428 $130 $1,558 $1,436 $130 $1,566 $1,517 $163 $1,680 
Provision for loan and lease losses28 6 34 97 6 103 111 — 111 
Charge-offs(122)(8)(130)(123)(9)(132)(137)(7)(144)
Recoveries19 3 22 18 3 21 21 4 25 
Balance at end of period$1,353 $131 $1,484 $1,428 $130 $1,558 $1,512 $160 $1,672 
Net charge-off ratio0.29 %0.30 %0.33 %
Net charge-offs$103 $5 $108 $105 $6 $111 $116 $3 $119 
Average loans$150,094 $149,121 $141,791 
Percent of loans in each category to total loans82 %18 %100 %82 %18 %100 %80 %20 %100 %
Six Months Ended June 30, 2026Six Months Ended June 30, 2025
CommercialConsumerTotalCommercialConsumerTotal
Balance at beginning of period$1,436 $130 $1,566 $1,518 $158 $1,676 
Provision for loan and lease losses125 12 137 249 10 259 
Charge-offs(245)(17)(262)(296)(15)(311)
Recoveries37 6 43 41 7 48 
Balance at end of period$1,353 $131 $1,484 $1,512 $160 $1,672 
Net charge-off ratio0.29 %0.37 %
Net charge-offs$208 $11 $219 $255 $8 $263 
Average loans$149,611 $141,288 
Percent of loans in each category to total loans82 %18 %100 %80 %20 %100 %

The following table summarizes the ALLL as a percentage of loans for each loan class:

Table 35
ALLL by Loan Class
dollars in millionsJune 30, 2026March 31, 2026December 31, 2025
ALLLLoan BalanceALLL as a Percentage of LoansALLLLoan BalanceALLL as a Percentage of LoansALLLLoan BalanceALLL as a Percentage of Loans
Commercial
Commercial and industrial$740 $46,574 1.59 %$808 $45,753 1.77 %$807 $44,721 1.80 %
Capital call lines28 34,203 0.08 29 32,274 0.09 29 31,791 0.09 
Owner occupied commercial mortgage60 17,904 0.33 52 17,502 0.30 50 17,660 0.28 
Investor dependent170 2,624 6.46 166 2,714 6.12 181 2,778 6.52 
Commercial real estate355 23,233 1.53 373 23,707 1.58 369 23,784 1.55 
Total commercial1,353 124,538 1.09 1,428 121,950 1.17 1,436 120,734 1.19 
Consumer
Residential mortgage72 21,566 0.33 70 21,698 0.32 67 21,861 0.31 
Revolving mortgage27 2,868 0.94 28 2,863 0.96 26 2,863 0.89 
Auto10 1,261 0.83 9 1,332 0.70 9 1,416 0.67 
Other consumer22 801 2.75 23 849 2.71 28 1,056 2.62 
Total consumer131 26,496 0.49 130 26,742 0.48 130 27,196 0.48 
Total$1,484 $151,034 0.98 %$1,558 $148,692 1.05 %$1,566 $147,930 1.06 %

The ALLL may vary significantly from period to period due to changes in economic conditions, economic forecasts, the composition and credit quality of the loan and lease portfolio, and the related impacts to the ALLL models. We continuously monitor and update our ALLL estimation methodology and models, as appropriate. During the current quarter, we implemented enhancements to our PD, LGD, and exposure at default models for the commercial and industrial, and commercial real estate portfolios which contributed to the decreases in the ALLL at June 30, 2026 compared to March 31, 2026 and December 31, 2025.
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The ALLL was $1.48 billion at June 30, 2026, a decrease of $82 million or 5% from $1.57 billion at December 31, 2025, largely driven by lower specific reserves, improvements in credit quality including updates to certain models used to estimate the allowance as discussed above, changes in the macroeconomic scenarios, and growth concentrated in capital call lines which have a significantly lower loss rate relative to our other loan portfolios.

The ALLL as a percentage of loans was 0.98% at June 30, 2026, a decrease of 7 bps from 1.05% at March 31, 2026 and a decrease of 8 bps from 1.06% at December 31, 2025.

Net Charge-Offs
The following table summarizes net charge-offs for each loan class:

Table 36
Net Charge-Offs
dollars in millionsThree Months Ended June 30, 2026Three Months Ended March 31, 2026Three Months Ended June 30, 2025
Charge-offsRecoveriesNet
charge-offs (recoveries)		Charge-offsRecoveriesNet
charge-offs (recoveries)		Charge-offsRecoveriesNet
charge-offs (recoveries)
Commercial
Commercial and industrial$73 $10 $63 $95 $11 $84 $87 $11 $76 
Owner occupied commercial mortgage1 — 1 4 — 4 1 — 1 
Investor dependent17 5 12 12 7 5 29 10 19 
Commercial real estate31 4 27 12 — 12 20 — 20 
Total commercial122 19 103 123 18 105 137 21 116 
Consumer
Residential mortgage1 1 — — 1 (1)— 1 (1)
Revolving mortgage— 1 (1)— — — — 1 (1)
Auto2 — 2 2 1 1 2 1 1 
Other consumer5 1 4 7 1 6 5 1 4 
Total consumer8 3 5 9 3 6 7 4 3 
Total$130 $22 $108 $132 $21 $111 $144 $25 $119 
Six Months Ended June 30, 2026Six Months Ended June 30, 2025
Charge-offsRecoveriesNet
charge-offs (recoveries)		Charge-offsRecoveriesNet
charge-offs (recoveries)
Commercial
Commercial and industrial$168 $21 $147 $168 $26 $142 
Owner occupied commercial mortgage5 — 5 1 — 1 
Investor dependent29 12 17 68 15 53 
Commercial real estate43 4 39 59 — 59 
Total commercial245 37 208 296 41 255 
Consumer
Residential mortgage1 2 (1)— 1 (1)
Revolving mortgage— 1 (1)— 1 (1)
Auto4 1 3 3 1 2 
Other consumer12 2 10 12 4 8 
Total consumer17 6 11 15 7 8 
Total$262 $43 $219 $311 $48 $263 

Net charge-offs for the current quarter were $108 million, a decrease of $3 million from $111 million for the linked quarter, primarily due to a decline of $21 million in commercial and industrial, partially offset by an increase of $15 million in commercial real estate.

Net charge-offs for the current YTD were $219 million, a decrease of $44 million from $263 million for the prior YTD, primarily due to decreases of $36 million in investor dependent and $20 million in commercial real estate, partially offset by increases of $5 million in commercial and industrial, and $4 million in owner occupied commercial mortgage.

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Nonperforming Assets
Nonperforming assets include nonaccrual loans and leases, OREO and repossessed assets. Accounting policies related to nonperforming assets are discussed in Note 1—Significant Accounting Policies and Basis of Presentation of the 2025 Form 10-K.

Table 37
Non-Performing Assets
Increase (Decrease) from:
dollars in millionsJune 30, 2026March 31, 2026December 31, 2025March 31, 2026December 31, 2025
Nonaccrual loans:
Commercial loans$1,204 $1,184 $1,082 $20 1.7 %$122 11.3 %
Consumer loans242 245 225 (3)(1.4)17 7.2 
Total nonaccrual loans1,446 1,429 1,307 17 1.2 139 10.6 
Other real estate owned (1) and repossessed assets
116 116 124 — — (8)(6.1)
Total nonperforming assets$1,562 $1,545 $1,431 $17 1.1 $131 9.2 
Total loans and leases$151,034 $148,692 $147,930 $2,342 1.6 %$3,104 2.1 %
Total loans and leases, other real estate owned, and repossessed assets151,150 148,808 148,054 $2,342 1.6 $3,096 2.1 
ALLL to total loans and leases0.98 %1.05 %1.06 %-7bps-8bps
Ratio of total nonperforming assets to total loans, leases, other real estate owned and repossessed assets1.03 1.04 0.97 -16
Ratio of nonaccrual loans and leases to total loans and leases0.96 %0.96 %0.88 %—8
Ratio of ALLL to nonaccrual loans and leases102.61 109.01 119.80 -640-1,719
(1) OREO includes former branch property and other non-foreclosed property of $22 million and $26 million as of June 30, 2026 and December 31, 2025, respectively.

OREO and repossessed assets were $116 million at June 30, 2026 compared to $124 million at December 31, 2025, a decrease of $8 million.




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Past Due and Nonaccrual Loans
Past due and nonaccrual loans by loan class are summarized in the following table:

Table 38
Delinquencies and Nonaccrual Loans
dollars in millionsJune 30, 2026March 31, 2026December 31, 2025
Accruing LoansAccruing LoansAccruing loans
30-89 Days Past Due
90 Days or
Greater
Nonaccrual Loans30-89 Days Past Due
90 Days or
Greater
Nonaccrual Loans30-89 Days Past Due
90 Days or
Greater
Nonaccrual Loans
Commercial
Commercial and industrial$204 $37 $498 $251 $35 $461 $288 $63 $456 
Capital call lines— — — 31 — — — — — 
Owner occupied commercial mortgage85 14 153 89 16 162 97 1 159 
Investor dependent5 — 41 8 — 37 12 — 49 
Commercial real estate28 197 512 97 185 524 252 171 418 
Total commercial322 248 1,204 476 236 1,184 649 235 1,082 
Consumer
Residential mortgage155 7 196 173 7 196 210 7 179 
Revolving mortgage28 — 35 27 — 38 29 — 35 
Auto13 — 10 12 — 10 18 — 9 
Other consumer7 1 1 6 2 1 8 2 2 
Total consumer203 8 242 218 9 245 265 9 225 
Total$525 $256 $1,446 $694 $245 $1,429 $914 $244 $1,307 
The decrease of $389 million from December 31, 2025 in accruing loans that are 30 to 89 days past due is largely attributable to declines of $224 million in commercial real estate, $84 million in commercial and industrial, $55 million in residential mortgage, and $12 million in owner occupied commercial mortgage. Accruing loans that are 30 to 89 days past due are early stage delinquencies that are not showing signs of significant credit deterioration. Delinquency status is considered in the estimate of the ALLL.

The increase of $12 million from December 31, 2025 in accruing loans that are 90 days or greater past due is primarily attributable to increases of $26 million in commercial real estate and $13 million in owner occupied commercial mortgage, partially offset by a decrease of $26 million in commercial and industrial. Loans 90 days or greater past due are assigned a more severe PD in accordance with our ALLL methodology.

Nonaccrual loans and leases at June 30, 2026 were $1.45 billion (0.96% of loans), an increase of $139 million compared to $1.31 billion (0.88% of loans) at December 31, 2025, largely concentrated in a small number of commercial and industrial, and commercial real estate loans that were individually evaluated. Nonaccrual loans over an established threshold are individually evaluated for specific ALLL reserves as discussed in Note 1—Significant Accounting Policies and Basis of Presentation of the 2025 Form 10-K.


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Commercial Real Estate Portfolio Composition
Our commercial real estate portfolio is diversified across various property types. The following table provides an overview of the property type exposures within our commercial real estate portfolio:
Table 39
Commercial Real Estate Portfolio
dollars in millionsJune 30, 2026
Balance% to Total Loans and Leases
Multi-family$5,116 3.4 %
Medical office3,620 2.4 
Industrial, including warehouses2,801 1.9 
Data center2,722 1.8 
General office1,806 1.2 
Healthcare1,749 1.2 
Retail1,484 1.0 
Hotel and motel822 0.5 
Other3,113 2.0 
Total$23,233 15.4 %
Evolving macroeconomic and social conditions (including the shift to hybrid work arrangements) may result in changes for general office demand moving forward. Our general office portfolio has experienced more negative credit quality trends relative to our other commercial real estate portfolios. Our general office portfolio is 1.20% of total loans and leases and 7.77% of total commercial real estate at June 30, 2026. Select metrics for our general office portfolio are summarized in the following table:

Table 40
General Office Portfolio
dollars in millionsJune 30, 2026
General office as a percentage of total loans and leases1.20  %
General office as a percentage of commercial real estate loans7.77  %
Net charge-offs as a percentage of general office (YTD annualized %)1.53  %
Percentage of general office 30 days or more past due7.81  %
Nonaccrual loans as a percentage of general office
9.48  %
ALLL as a percentage of general office4.93  %


























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Concentration
We strive to minimize the risks associated with large concentrations within specific geographic areas, collateral types or industries. Despite our focus on diversification, several characteristics of our loan portfolio subject us to concentration risk. Loan concentration for our commercial and consumer loans is summarized below.

Commercial Loan Concentration

Industry Concentration
The following table summarizes the industry concentration of our commercial loans and leases based on the obligors’ industries:

Table 41
Commercial Loans and Leases - Industry
dollars in millionsJune 30, 2026March 31, 2026December 31, 2025
Finance and insurance$42,180 33.9 %$39,540 32.4 %$38,417 31.8 %
Real estate17,038 13.7 17,678 14.5 17,911 14.8 
Healthcare11,137 8.9 11,196 9.2 11,155 9.2 
Information10,390 8.3 10,015 8.2 9,699 8.0 
Business services9,808 7.9 9,584 7.9 9,601 8.0 
Transportation, communication, gas, utilities7,890 6.3 7,631 6.3 7,567 6.3 
Manufacturing7,189 5.8 7,134 5.8 7,137 5.9 
Retail4,148 3.3 4,466 3.7 4,329 3.6 
Service industries4,296 3.5 4,271 3.5 4,274 3.5 
Wholesale3,676 3.0 3,622 3.0 3,571 3.0 
Other6,786 5.4 6,813 5.5 7,073 5.9 
Total$124,538 100.0 %$121,950 100.0 %$120,734 100.0 %

Loans to non-depository financial institutions (“NDFIs”)
Loans to borrowers in the finance and insurance industry were $42.18 billion or 33.9% of commercial loans and leases at June 30, 2026, compared to $38.42 billion or 31.8% of commercial loans and leases at December 31, 2025. Loans to NDFIs of $41.43 billion comprised 98.2% of our loans to borrowers in the finance and insurance industry at June 30, 2026. Our NDFI portfolio composition is presented in Table 42 and described below.

Table 42
Loans to Non-Depository Financial Institutions
June 30, 2026
dollars in millionsBalance% of Total
Loans to NDFIs
Capital call lines$34,203 82.5 %
Net asset value loans2,689 6.5 
Leveraged fund lines1,392 3.4 
Warehouse lines1,059 2.6 
Specialty finance631 1.5 
Other1,453 3.5 
Total$41,427 100.0 %

As of June 30, 2026, loans to NDFIs were $41.43 billion. Capital call lines comprise $34.20 billion, or 83%, of the NDFI portfolio. The primary source of repayment for capital call lines is the capital commitments of the underlying limited partner (“LP”) investors in funds managed by certain private equity and venture capital firms. Capital calls are contractual obligations of the LPs and are not subject to the performance of the underlying portfolio of investments. Capital call lines are typically governed by financial covenants oriented towards ensuring that the funds’ remaining callable capital is sufficient to repay the loan, and larger commitments (typically provided to larger private equity funds) are typically secured by an assignment of the general partner's right to call capital from the fund's LP investors. The credit quality is strong for capital call lines based on the structural protection provided by the funds and the underlying investors. Capital call lines have a significantly lower loss rate relative to our other loan portfolios. As of June 30, 2026, the ALLL was 0.08% of capital call lines, compared to 0.98% of total loans.



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The loans to NDFIs that are not capital call lines (the “Other NDFI Portfolios”) have balances totaling $7.22 billion at June 30, 2026, and the largest portfolios are described below:
•The net asset value portfolio ($2.69 billion) consists of: (i) loans to private equity funds collateralized by the funds’ portfolios of direct equity investments in private companies, and (ii) loans to predominantly secondary funds collateralized by the funds’ portfolios of investments in LP interests in private funds and/or co-investment vehicles.
•Leveraged fund lines ($1.39 billion) are lines of credit provided to private credit funds and are collateralized by portfolios of the underlying assets, primarily first lien loans.
•Warehouse lines ($1.06 billion) are asset-based lines of credit that finance cash flows for large pools of assets, such as accounts receivable and loans, that the borrower (or sponsor) typically sell or transfer to special purpose vehicle entities.
•Specialty finance ($631 million) includes asset-based lending facilities to lenders that are primarily investing in first lien senior debt.

The Other NDFI Portfolios are included in commercial and industrial loans and leases. As of June 30, 2026, the ALLL was 1.59% of commercial and industrial loans and leases.

Through our credit risk management practices and our targeted analysis of the NDFI portfolios, we determined that the ALLL was appropriate.

NDFIs could be subject to a less stringent regulatory environment than FDIC-insured depository institutions or BHCs as further discussed in Item 1A. Risk Factors of the 2025 Form 10-K. We strive to mitigate the credit risk of our loans to NDFIs through our underwriting and credit monitoring processes. As discussed above, 83% of our NDFI portfolio at June 30, 2026 is comprised of capital call lines which have strong credit quality based on the structural protection provided by the funds and the underlying investors. Additionally, we establish advance rates (the percentage of the collateral value FCB will lend to the borrower) for loans in the Other NDFI Portfolios commensurate with the risks of the underlying collateral type, structural protection of the funds or investors, diversification of the funds, and financial strength of the borrower (or sponsor).

Real estate secured loans
Our commercial real estate portfolio comprises the vast majority of the real estate industry loans in Table 41, which is based on the industry of the obligor. Additionally, we have commercial real estate and owner occupied commercial mortgage loans that are secured by real estate, but are categorized in other industries in Table 41. At June 30, 2026, the combined balances of our commercial real estate and owner occupied commercial mortgage loans were $41.14 billion, or 33% of commercial loans and leases, compared to $41.44 billion or 34% at December 31, 2025. We have historically carried a concentration of real estate secured loans, but actively mitigate exposure through underwriting policies, which primarily rely on borrower cash flow rather than underlying collateral values. When we do rely on underlying real property values, we prefer financing secured by owner-occupied real property.

Healthcare and information industries
The healthcare and information industries in Table 41 largely consist of the healthcare, life sciences, and technology sectors, which include clients in our Commercial Finance, Global Fund Banking, and Technology and Healthcare Banking lines of business within our Commercial Bank segment. Loans and leases to borrowers in medical, dental or other healthcare fields were $11.14 billion as of June 30, 2026, which represents 8.9% of commercial loans and leases, compared to $11.16 billion or 9.2% of commercial loans and leases at December 31, 2025. Loans and leases to borrowers in the information industry were $10.39 billion as of June 30, 2026, which represents 8.3% of commercial loans and leases, compared to $9.70 billion or 8.0% of commercial loans and leases at December 31, 2025. We actively mitigate credit risk exposure of these industry concentrations through our underwriting policies that emphasize reliance on adequate levels of borrower repayment sources.
Larger Balance Loans
The following table provides a summary of commercial loans by loan size and loan class as of June 30, 2026:

Table 43
Commercial Loans by Size and Class
dollars in millionsLess Than $10 Million$10 Million to $30 MillionGreater Than $30 MillionTotal Commercial Loans
Commercial and industrial$15,762 $11,447 $19,365 $46,574 
Capital call lines1,324 3,546 29,333 34,203 
Owner occupied commercial mortgage14,939 2,322 643 17,904 
Investor dependent1,475 874 275 2,624 
Commercial real estate8,189 6,653 8,391 23,233 
Total$41,689 $24,842 $58,007 $124,538 

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Most of our loans greater than $30 million at June 30, 2026 are capital call lines which are described above in “Risk Management—Credit Risk—Concentration—Loans to non-depository financial institutions (“NDFIs”).”
Geographic Concentrations
The following table summarizes geographic concentrations based on the location of the real estate collateral for owner occupied commercial mortgage and commercial real estate loans, and based on the obligor address for all other commercial loans.

Table 44
Commercial Loans and Leases - Geography
dollars in millionsJune 30, 2026March 31, 2026December 31, 2025
State
California$26,291 21.1 %$25,324 20.8 %$26,056 21.6 %
New York12,284 9.9 12,129 9.9 12,193 10.1 
North Carolina11,745 9.4 11,258 9.2 11,005 9.1 
Texas9,491 7.6 9,570 7.9 8,811 7.3 
Massachusetts7,802 6.3 7,484 6.1 7,325 6.1 
Florida6,455 5.2 6,259 5.1 6,175 5.1 
All other states47,367 38.0 46,900 38.5 46,093 38.2 
Total U.S.$121,435 97.5 %$118,924 97.5 %$117,658 97.5 %
Total international3,103 2.5 3,026 2.5 3,076 2.5 
Total$124,538 100.0 %$121,950 100.0 %$120,734 100.0 %

Consumer Loan Concentration
Loan concentrations may exist when multiple borrowers could be similarly impacted by economic or other conditions. The following table summarizes state concentrations greater than 5.0% of consumer loans based on customer address:

Table 45
Consumer Loans - Geography
dollars in millionsJune 30, 2026March 31, 2026December 31, 2025
State
California$7,764 29.3 %$7,950 29.7 %$8,118 29.8 %
North Carolina6,672 25.2 6,695 25.0 6,736 24.8 
South Carolina3,452 13.0 3,471 13.0 3,502 12.9 
Massachusetts1,498 5.7 1,486 5.6 1,597 5.9 
Other states7,110 26.8 7,140 26.7 7,243 26.6 
Total $26,496 100.0 %$26,742 100.0 %$27,196 100.0 %
Market Risk

Market risk is the risk arising from changes in interest rates, foreign exchange, fixed income, commodity, or equity prices which can result in financial loss, or adverse impact to earnings and capital.

Interest rate risk management
BancShares is exposed to the risk that changes in market conditions may affect interest rates and negatively impact earnings. The risk arises from the nature of BancShares’ business activities, the composition of BancShares’ balance sheet, and changes in the level or shape of the yield curve. BancShares manages this inherent risk strategically based on prescribed guidelines and approved limits.

Interest rate risk can arise from many of BancShares’ business activities, such as lending, leasing, investing, deposit taking, derivatives, and funding activities. We evaluate and monitor interest rate risk primarily through two metrics.
•Net Interest Income Sensitivity (“NII Sensitivity”) measures the net impact of hypothetical changes in interest rates on forecasted NII; and
•Economic Value of Equity (“EVE”) Sensitivity (“EVE Sensitivity”) measures the net impact of these hypothetical changes on the value of equity by assessing the economic value of assets, liabilities and off-balance sheet instruments.

BancShares uses a holistic process to measure and monitor both short term and long term risks, which includes, but is not limited to, gradual and immediate parallel rate shocks, changes in the shape of the yield curve, and changes in the relationship of various yield curves. NII Sensitivity generally focuses on shorter term earnings risk, while EVE Sensitivity assesses the longer-term risk of the existing balance sheet.
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Our exposure to NII Sensitivity is guided by the Risk Appetite Policy and Statement and a range of risk metrics, and BancShares may utilize tools across the balance sheet to adjust its interest rate risk exposures, including through business line actions and actions within the investment, funding and derivative portfolios.

The composition of our interest rate sensitive assets and liabilities generally results in a net asset-sensitive position for NII Sensitivity, whereby our assets will reprice faster than our liabilities. A component of our interest rate risk management strategy is the use of derivative instruments to mitigate fluctuations in earnings caused by changes in market interest rates. Interest rate swaps are the primary type of derivative instrument that we use as part of our interest rate risk management strategy. These derivatives hedge interest income variability of floating rate loans indexed to secured overnight financing rate (“SOFR”), as well as fair value changes of fixed rate long-term debt. Refer to Note 11—Derivative Financial Instruments for further information on our derivative portfolio.
Our funding sources consist primarily of deposits, and we also support our funding needs through wholesale funding sources (including unsecured and secured borrowings).

The deposit rates we offer are influenced by market conditions and competitive factors. Market rates are the key factors of deposit costs, and we continue to optimize deposit costs by improving our deposit mix. Changes in interest rates, expected funding needs, as well as actions by competitors, can affect our deposit taking activities and deposit pricing. We believe our targeted non-maturity deposit customer retention is strong and we remain focused on optimizing our mix of deposits. We regularly assess the effect of deposit rate changes on our balances and seek to achieve optimal alignment between assets and liabilities.

The following table summarizes the results of 12-month NII Sensitivity simulations produced by our asset/liability management system. These simulations assume static balance sheet replacement with like products and implied forward market rates, and also incorporate additional internal models and assumptions, which we may update periodically, including rate dependent prepayment for certain loans and securities and repricing of interest-bearing non-maturity deposits. The below simulations assume an immediate 100 and 200 bps parallel increase and decrease from current interest rates.

Table 46
NII Sensitivity Simulation Analysis
Estimated (Decrease) Increase in NII
Change in interest rate (bps)June 30, 2026March 31, 2026December 31, 2025
-200(9.5) %(12.1) %(11.3) %
-100(5.6)(6.4)(5.8)
+1006.4 6.7 6.5 
+20012.5 14.0 13.6 

NII Sensitivity metrics at June 30, 2026, compared to December 31, 2025, were primarily affected by increased derivative hedges, prepayments on the Purchase Money Note, as well as other balance sheet compositional and market rate changes.

As of June 30, 2026, BancShares continues to have an asset sensitive interest rate risk profile and the potential exposure to forecasted earnings was largely due to the composition of the balance sheet (primarily due to floating rate commercial loans and cash), as well as estimates of modest future deposit betas. 66.5% of our loans have floating contractual reference rates, indexed primarily to SOFR and the U.S. prime rate. Deposit betas are currently modeled to have a portfolio average of 35%-40% over the twelve-month forecast horizon, including 45%-50% for interest-bearing non-maturity deposits. Deposit beta is the portion of a change in the federal funds rate that is passed on to the deposit rate. Actual deposit betas may be different than modeled, depending on various factors, including liquidity requirements, deposit mix and competitive pressures. Impacts to NII Sensitivity may change due to actual results differing from modeled expectations.

As noted above, EVE Sensitivity supplements NII simulations as it estimates risk exposures beyond a twelve-month horizon. EVE Sensitivity measures the change in EVE due to changes in assets, liabilities, and off-balance sheet instruments in response to a change in interest rates. EVE Sensitivity was calculated by estimating the change in the net present value of assets, liabilities, and off-balance sheet items under various rate movements, including utilizing a dynamic rate level dependent modeling approach for our deposit attrition assumption. In addition to interest rate changes, other key assumptions used in our EVE Sensitivity simulations include asset prepayments, as well as balance attrition and pricing of non-maturity deposits.

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The below simulations assume an immediate 100 and 200 bps parallel increase and decrease from current interest rates and the estimated impact on our EVE profile based on our current modeling approach:

Table 47
EVE Modeling Analysis
Estimated Increase (Decrease) in EVE
Change in interest rate (bps)June 30, 2026March 31, 2026December 31, 2025
-2006.1  %7.2  %6.7  %
-1003.5 4.4 4.3 
+100(4.0)(4.3)(4.2)
+200(8.0)(7.8)(8.2)

In addition to the above reported sensitivities, a wide variety of potential interest rate scenarios are simulated within our asset/liability management system. Scenarios that impact balance sheet composition or the sensitivity to key assumptions are also evaluated.

We use results of our various interest rate risk analyses to formulate and implement asset and liability management strategies, in coordination with the Asset and Liability Committee, to achieve the desired risk profile, while managing our objectives for market risk and other strategic objectives. Specifically, we may manage our interest rate risk position through certain pricing strategies and product design for loans and deposits, our investment portfolio, funding portfolio, or by using derivatives to mitigate earnings volatility.

The above sensitivities provide an estimate of our interest rate sensitivity; however, they do not account for potential changes in credit quality, size, mix, or changes in the competition for business in the industries we serve. They also do not account for other business developments and other actions. Accordingly, we can give no assurance that actual results would not differ materially from the estimated outcomes of our simulations.

Loan Maturity and Loan Interest Rate Sensitivity
The following table provides loan maturity distribution information:

Table 48
Loan Maturity Distribution
dollars in millionsAt June 30 2026, Maturing
Within
One Year		One to Five
Years		Five to 15
Years		After 15 YearsTotal
Commercial
Commercial and industrial$12,938 $28,366 $4,452 $818 $46,574 
Capital call lines33,992 211 — — 34,203 
Owner occupied commercial mortgage2,270 9,623 5,685 326 17,904 
Investor dependent1,108 1,516 — — 2,624 
Commercial real estate6,539 12,897 2,622 1,175 23,233 
Total commercial56,847 52,613 12,759 2,319 124,538 
Consumer
Residential mortgage826 2,802 7,738 10,200 21,566 
Revolving mortgage49 176 1,132 1,511 2,868 
Consumer auto323 851 87 — 1,261 
Consumer other204 485 107 5 801 
Total consumer1,402 4,314 9,064 11,716 26,496 
Total loans and leases$58,249 $56,927 $21,823 $14,035 $151,034 

As noted above, 66.5% of our total loans have floating contractual reference rates, indexed primarily to SOFR and the U.S. prime rate. The following table provides information regarding fixed and variable interest rate loans and leases maturing one year or after, as of June 30, 2026:
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Table 49
Fixed and Variable Interest Rate Loans
dollars in millionsLoans Maturing One Year or After with
Fixed Interest RatesVariable Interest Rates
Commercial
Commercial and industrial$9,703 $23,933 
Capital call lines— 211 
Owner occupied commercial mortgage13,860 1,774 
Investor dependent7 1,509 
Commercial real estate7,540 9,154 
Total commercial31,110 36,581 
Consumer
Residential mortgage8,120 12,620 
Revolving mortgage21 2,798 
Consumer auto938 — 
Consumer other281 316 
Total consumer9,360 15,734 
Total loans and leases$40,470 $52,315 
Liquidity Risk

Liquidity risk is the risk arising from BancShares being unable to meet its obligations as they come due because of an inability to: (i) liquidate assets or obtain adequate funding, or (ii) unwind or offset specific exposures without significantly lowering market prices because of inadequate market depth or market disruptions. This may result in impairment of safety and soundness.

Our liquidity risk management and monitoring process is designed to ensure the availability of adequate cash and collateral resources and funding capacity to meet our obligations. Our overall liquidity management strategy is intended to ensure appropriate liquidity to meet expected and contingent funding needs under both normal and stressed environments. Consistent with this strategy, we maintain sufficient amounts of available cash and HQLS. Additional sources of liquidity include committed credit facilities, repurchase agreements, brokered certificates of deposit issuances, unsecured debt issuances, cash collections generated by portfolio asset sales to third parties and securitizations.

We utilize measurement tools to assess and monitor the level and adequacy of our liquidity position, liquidity conditions and trends. We measure and forecast liquidity and liquidity risks under different hypothetical scenarios and across different horizons. We use a liquidity stress testing framework to better understand the range of potential risks and their impacts to which BancShares is exposed. Stress test results inform our business strategy, risk appetite, levels of liquid assets, and contingency funding plans. Also included among our liquidity measurement tools are key risk indicators that assist in identifying potential liquidity risk and stress events.

BancShares maintains a framework to establish liquidity risk tolerances, monitoring, and breach escalation protocol to alert management of potential funding and liquidity risks and to initiate mitigating actions as appropriate. Further, BancShares maintains a contingent funding plan, which details protocols and potential actions to be taken under liquidity stress conditions.

Liquidity includes available cash and HQLS. At June 30, 2026 we had $59.14 billion of high-quality liquid assets (25.0% of total assets) and $30.52 billion of contingent liquidity sources available. Some of the more significant changes from December 31, 2025 included higher available cash and HQLS due to balance sheet changes discussed above in “Executive Overview—Financial Performance Summary—Balance Sheet Highlights.”

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Table 50
Liquidity
dollars in millionsJune 30, 2026March 31, 2026December 31, 2025
Available cash
$20,180 $22,142 $19,111 
High-quality liquid securities (1)
38,958 38,580 36,895 
High-quality liquid assets$59,138 $60,722 $56,006 
Current Capacity (2) of Credit Facilities:
FHLB facility (3)
$17,750 $17,349 $17,775 
FRB facility12,772 12,944 12,962 
Total contingent sources$30,522 $30,293 $30,737 
Total liquid assets and contingent sources$89,660 $91,015 $86,743 
Total uninsured deposits$65,060 $65,439 $61,809 
Coverage ratio of total liquid assets and contingent sources to uninsured deposits138 %139 %140 %
(1)    Consists of readily marketable, unpledged securities, as well as securities pledged but not drawn against at the FHLB and available for sale, and generally is comprised of U.S. Treasury and U.S. agency investment securities held outright or via reverse repurchase agreements.
(2)    Current capacity is based on the amount of collateral pledged and available for use at June 30, 2026, March 31, 2026, and December 31, 2025.
(3)    Refer to Table 51 for additional details.

We fund our operations through deposits and borrowings. Our primary source of liquidity is derived from our various deposit channels, including our Branch Network and Direct Bank. Total deposits at June 30, 2026 were $173.43 billion, an increase of $11.85 billion or 7% from $161.58 billion at December 31, 2025. Funding mix improved as deposits represented 84.3% of total funding at June 30, 2026 compared to 81.8% at December 31, 2025.

We use borrowings to diversify the funding of our business operations. In addition to the Purchase Money Note and FHLB advances, borrowings also include senior unsecured notes, securities sold under customer repurchase agreements, and subordinated notes. Total borrowings at June 30, 2026 were $32.19 billion, a decrease of $3.82 billion or 11% from $36.01 billion at December 31, 2025. Refer to details of debt prepayments and issuances in the “Executive Overview—Recent Events” section of this MD&A. We continually monitor our capital needs and market conditions in an effort to diversify our borrowing base and capital mix when appropriate.

FHLB Capacity
A source of available funds is advances from the FHLB of Atlanta. We may pledge assets for secured borrowing transactions, which include borrowings from the FHLB or FRB, or for other purposes as required or permitted by law. The debt issued in conjunction with these transactions is collateralized by certain discrete receivables, securities, loans, leases and underlying equipment. Certain related cash balances are restricted.

Table 51
FHLB Balances
dollars in millionsJune 30, 2026March 31, 2026December 31, 2025
Total borrowing capacity$19,200 $18,799 $19,225 
Less:
Advances— — — 
Letters of credit (1)
1,450 1,450 1,450 
Available capacity$17,750 $17,349 $17,775 
Pledged Non-PCD loans$31,820 $31,368 $31,713 
(1) Letters of credit were established with the FHLB to collateralize public funds.

FRB Capacity
Under borrowing arrangements with the FRB, FCB has access to $12.77 billion on a secured basis at June 30, 2026. Loans pledged are disclosed in Note 5—Loans and Leases. There were no outstanding borrowings with the FRB Discount Window at June 30, 2026 and December 31, 2025.

Contractual Obligations and Commitments
The following table includes significant contractual obligations and commitments as of June 30, 2026, representing required and potential cash outflows, including impacts from purchase accounting adjustments and deferred fees. Refer to Note 19—Commitments and Contingencies for additional information regarding commitments. Financing commitments, letters of credit and deferred purchase commitments are presented at contractual amounts and do not necessarily reflect future cash outflows, as many are expected to expire unused or partially used.

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Table 52
Contractual Obligations and Commitments
dollars in millionsPayments Due by Period
Less than 1 year1-3 years4-5 yearsThereafterTotal
Contractual obligations:
Time deposits$14,868 $221 $38 $— $15,127 
Short-term borrowings152 — — — 152 
Long-term borrowings (1) (2)
(33)28,870 1,232 1,967 32,036 
Total contractual obligations$14,987 $29,091 $1,270 $1,967 $47,315 
Commitments:
Financing commitments
$26,716 $10,145 $8,492 $7,505 $52,858 
Letters of credit
2,129 567 177 86 2,959 
Deferred purchase agreements1,487 — — — 1,487 
Purchase and funding commitments103 — — — 103 
Affordable housing partnerships (1)
613 486 26 41 1,166 
Total commitments$31,048 $11,198 $8,695 $7,632 $58,573 
(1)    Long-term borrowings are presented net of purchase accounting adjustments of $50 million. On-balance sheet commitments for affordable housing partnerships are included in other liabilities and presented net of a purchase accounting adjustment of $9 million.
(2)    Balance in parenthesis represents the estimated amortization of the purchase accounting adjustment and deferred costs in excess of any principal balance.

Long-term Borrowings
As displayed above in Table 52, we do not have any significant long-term debt obligations due until the Purchase Money Note matures. While scheduled principal payments are not required until maturity in March 2028, FCB may voluntarily prepay principal without a premium or penalty. As noted earlier in “Executive Overview—Recent Events,” FCB made prepayments of the Purchase Money Note in the second quarter of 2026 totaling $2.50 billion ($5.00 billion for the current YTD period) and previously made a prepayment of $2.49 billion in December 2025. We will continue to monitor the interest rate environment, FCB’s collateral position for the Purchase Money Note, and FCB’s liquidity position to determine the timing and magnitude of further voluntary prepayments. We expect monthly prepayments to be at least $500 million throughout 2026. In the third quarter of 2026, we expect total prepayments of $6 billion to $8 billion, largely driven by expected liquidity from the BMO Branch Acquisition. Potential sources that could fund voluntary prepayments or the amount due at maturity include excess liquidity (primarily comprised of interest-earning deposits at banks and proceeds from maturities and paydowns of investment securities), deposit growth including brokered deposits and deposits to be assumed in the BMO Branch Acquisition, loan sales or securitizations, FHLB advances, and issuance of perpetual preferred stock, unsecured debt or other borrowings. At the time of any further voluntary prepayment or maturity, the interest rates for the potential interest-bearing sources of prepayment could be higher than the 3.50% rate. Refer to the respective “Deposits” and “Borrowings” discussions in the “Balance Sheet Analysis—Interest-bearing Liabilities” section of this MD&A for further details.

CAPITAL

Capital requirements applicable to BancShares are discussed in the “Regulatory Considerations” section in Item 1. Business of the 2025 Form 10-K.

Common and Preferred Stock Dividends
During the current quarter, we paid quarterly dividends of $2.10 per share on the Class A common stock and Class B common stock. In July 2026, the Board declared a quarterly dividend on the Class A common stock and Class B common stock of $2.10 per common share. The dividends are payable on September 15, 2026 to stockholders of record as of August 31, 2026.

During the current quarter, we paid quarterly dividends on our Series A, Series B, Series C, Series D, and Series E Preferred Stock as disclosed in Note 13—Stockholders' Equity. In July 2026, the Board declared dividends on our Series A, Series B, Series C, Series D, and Series E Preferred Stock in accordance with their terms. The dividends are payable on September 15, 2026.

Capital Composition and Ratios
As discussed earlier in the “Executive Overview—Recent Events” section of this MD&A, during the current quarter and current YTD, we repurchased 298,907 and 748,752 shares of our Class A common stock, respectively. Refer to Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds for additional information regarding repurchases of Class A common stock, including current quarter monthly repurchase activity.

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The following table summarizes the change in outstanding Class A common stock through June 30, 2026. Refer to Note 13—Stockholders' Equity for additional information.

Table 53
Changes in Shares of Class A Common Stock Outstanding
Three Months Ended June 30, 2026Six Months Ended June 30, 2026
Class A common stock shares outstanding at beginning of period10,684,129 11,133,974 
Shares repurchased under authorized repurchase plan(298,907)(748,752)
Class A common stock shares outstanding at end of period10,385,222 10,385,222 

We also had 1,005,185 Class B common stock outstanding at June 30, 2026 and December 31, 2025.

We are committed to effectively managing our capital to protect our depositors, creditors and stockholders. We continually monitor the capital levels and ratios for BancShares and FCB to ensure they exceed the minimum requirements imposed by regulatory authorities and to ensure they are appropriate given growth projections, risk profile and potential changes in the regulatory or external environment. Failure to meet certain capital requirements may result in actions by regulatory agencies that could have a material impact on our operations or consolidated financial statements.

In accordance with GAAP, the unrealized gains and losses on certain assets and liabilities, net of deferred taxes, are included in AOCI within stockholders’ equity. These amounts are excluded from the calculation of our regulatory capital ratios under current regulatory guidelines. Refer to details of Basel III proposals in the “Executive Overview—Recent Events” section of this MD&A.

Table 54
Analysis of Capital Adequacy
dollars in millionsBasel III RequirementsPCA Well Capitalized ThresholdsJune 30, 2026March 31, 2026December 31, 2025
AmountRatioAmountRatioAmountRatio
BancShares
Risk-based capital ratios
Total risk-based capital10.50 %10.00 %$24,680 13.37 %$24,799 13.51 %$24,945 13.71 %
Tier 1 risk-based capital8.50 8.00 21,650 11.73 21,634 11.79 21,660 11.91 
Common equity Tier 17.00 6.50 19,885 10.77 19,869 10.83 20,285 11.15 
Tier 1 leverage ratio4.00 5.00 21,650 9.22 21,634 9.30 21,660 9.29 
FCB
Risk-based capital ratios
Total risk-based capital10.50 %10.00 %$24,568 13.34 %$24,892 13.59 %$24,739 13.62 %
Tier 1 risk-based capital8.50 8.00 22,858 12.41 23,064 12.59 22,796 12.55 
Common equity Tier 17.00 6.50 22,858 12.41 23,064 12.59 22,796 12.55 
Tier 1 leverage ratio4.00 5.00 22,858 9.75 23,064 9.93 22,796 9.79 

As of June 30, 2026, BancShares and FCB had total risk-based capital ratio conservation buffers of 5.37% and 5.34%, respectively, which are in excess of the Basel III conservation buffer of 2.50%. As of December 31, 2025, BancShares and FCB’s total risk-based capital ratio conservation buffers were 5.71% and 5.62%, respectively. The capital ratio conservation buffers represent the excess of the regulatory capital ratios as of June 30, 2026 and December 31, 2025 over the Basel III minimum for the applicable ratio.

Additional Tier 1 capital for BancShares includes perpetual preferred stock. Additional Tier 2 capital for BancShares and FCB primarily consists of qualifying ALLL and qualifying subordinated debt.

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Dividend Restrictions
Dividends paid from FCB to the Parent Company are the primary source of funds available to the Parent Company for payment of dividends to its stockholders. The Board of Directors of FCB may approve distributions, including dividends, as it deems appropriate, subject to the requirements of the FDIC and the General Statutes of North Carolina, provided that the distributions do not reduce the regulatory capital ratios below the applicable requirements. FCB could have paid additional dividends to the Parent Company in the amount of $6.15 billion while continuing to meet the requirements for well capitalized banks at June 30, 2026. Dividends declared by FCB and paid to the Parent Company amounted to $1.15 billion for the six months ended June 30, 2026. Payment of dividends is made at the discretion of FCB’s Board of Directors and may be contingent upon satisfactory earnings as well as projected capital needs.

CRITICAL ACCOUNTING ESTIMATES

The accounting and reporting policies of BancShares are described in Note 1—Significant Accounting Policies and Basis of Presentation in the 2025 Form 10-K.

The ALLL is considered a critical accounting estimate. For more information regarding the ALLL, refer to the “Risk Management—Credit Risk—ALLL Methodology” section of this MD&A and Note 6—Allowance for Loan and Lease Losses.

RECENT ACCOUNTING PRONOUNCEMENTS
The following Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board are not yet effective for BancShares. Refer to Note 1—Significant Accounting Policies and Basis of Presentation for descriptions of ASUs that were adopted as of January 1, 2026.

ASUSummary
Effective Date and Expected Impact
ASU 2024-03—Income Statement—Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses
Issued November 2024
This ASU enhances expense disclosures, primarily by requiring footnote disaggregation of specified expenses in a tabular format. This ASU does not change the requirements for the presentation of expenses on the consolidated statements of income.This ASU is effective for annual reporting periods
beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. This ASU may be applied prospectively or retrospectively.

We are currently evaluating the impact of this ASU on our notes to the consolidated financial statements. We do not plan to early adopt this ASU.
ASU 2025-06—Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software Issued September 2025This ASU amends certain aspects of the accounting for internal-use software. This ASU eliminated references to software development stages, which were previously determinants of whether internal-use software costs should be capitalized. This ASU also provided more specific criteria to assess when determining whether internal-use software costs should be capitalized.This ASU is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. This ASU may be applied using either a prospective, retrospective, or modified transition approach.

We are currently evaluating the impact of this ASU on our consolidated financial statements. We did not early adopt this ASU on January 1, 2026, but are considering whether we may early adopt on January 1, 2027.
ASU 2025-09—Derivatives and Hedging (Topic 815)—Hedge Accounting Improvements Issued November 2025This ASU clarified certain aspects of hedge accounting to better reflect the economics of risk management activities. For example, this ASU eliminated the requirement that a group of interest payments be based on the same index in order to be hedged as a group, and provided more flexibility for grouping transactions with similar risks for cash flow hedges. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted on any date on or after the issuance date of this ASU. Entities are required to apply this ASU on a prospective basis for all hedging relationships.

We are currently evaluating the impact of this ASU on our consolidated financial statements and considering whether we may early adopt during 2026.
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NON-GAAP FINANCIAL MEASUREMENTS

BancShares provides certain non-GAAP information in reporting its financial results to give investors additional data to evaluate its operations. A non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance or financial position that may either exclude or include amounts, or is adjusted in some way to the effect of including or excluding amounts, as compared to the most directly comparable measure calculated and presented in accordance with GAAP financial statements. BancShares’ management believes that non-GAAP financial measures, when reviewed in conjunction with GAAP financial information, can provide transparency about, or an alternate means of assessing, its operating results and financial position to its investors, analysts and management. These non-GAAP measures should be considered in addition to, and not superior to or a substitute for, GAAP measures presented in BancShares’ consolidated financial statements and other publicly filed reports. In addition, our non-GAAP measures may be different from or inconsistent with non-GAAP financial measures used by other institutions.

Whenever we refer to a non-GAAP financial measure we will generally define and present the most directly comparable financial measure calculated and presented in accordance with GAAP, along with a reconciliation between the GAAP financial measure and the non-GAAP financial measure. We describe each of these measures below and explain why we believe the measure to be useful.

Adjusted Rental Income on Operating Lease Equipment for Commercial Bank and Rail Segments

Commercial Bank segment net income, rental income on operating lease equipment, and adjusted rental income on operating lease equipment are utilized to measure profitability. Adjusted rental income on operating lease equipment is a non-GAAP measure calculated as rental income on operating lease equipment less depreciation on operating lease equipment, as well as maintenance and other operating lease expenses, if any. This measure is meaningful because it enables management to monitor the performance and profitability of operating leases after deducting direct expenses.

The following tables reconcile the most comparable GAAP measures to the non-GAAP measures for the Commercial Bank and Rail segments.

Table 55
Commercial Bank Segment
dollars in millionsThree Months EndedSix Months Ended June 30,
June 30, 2026March 31, 2026June 30, 202520262025
Rental income on operating leases (GAAP)$54 $55 $54 $109 $110 
Less: depreciation on operating lease equipment43 43 44 86 88 
Adjusted rental income on operating lease equipment (non-GAAP)$11 $12 $10 $23 $22 

Rail segment net income, rental income on operating lease equipment and adjusted rental income on operating lease equipment are utilized to measure profitability. Adjusted rental income on operating lease equipment is calculated as rental income on operating lease equipment reduced by depreciation, maintenance and other operating lease expenses. This measure is meaningful because it enables management to monitor the performance and profitability of operating leases after deducting direct expenses. Due to the nature of the Rail segment portfolio, which is essentially all operating lease equipment, certain financial measures commonly used by banks, such as NII, are not as meaningful for the Rail segment. NII is not used because it includes the impact of debt costs funding our operating lease assets but excludes the associated adjusted rental income.

Table 56
Rail Segment
dollars in millionsThree Months EndedSix Months Ended June 30,
June 30, 2026March 31, 2026June 30, 202520262025
Rental income on operating leases (GAAP)$226 $226 $218 $452 $432 
Less: depreciation on operating lease equipment58 58 56 116 110 
Less: maintenance and other operating lease expenses67 65 55 132 113 
Adjusted rental income on operating lease equipment (non-GAAP)$101 $103 $107 $204 $209 


105

NII, NIM, and Interest Income on Loans and Leases, Excluding PAA

NII and NIM, excluding PAA, and interest income on loans and leases, excluding loan PAA are meaningful metrics as they allow management to analyze NII, NIM and loan and lease interest income trends more directly related to the rates of the underlying interest-earning assets and interest-bearing liabilities. Loan PAA is primarily related to the loan discount in the SVBB Acquisition. Other PAA is primarily related to the discount on the Purchase Money Note and the premium on deposits assumed in the merger with CIT Group Inc.

The following table reconciles NII to NII, excluding PAA, NIM to NIM, excluding PAA, and interest income on loans and leases to interest income on loans and leases, excluding loan PAA:

Table 57
NII, NIM, and Interest Income on Loans and Leases, Excluding PAA
dollars in millionsThree Months EndedSix Months Ended June 30,
June 30, 2026March 31, 2026June 30, 202520262025
NII (GAAP)a$1,656 $1,621 $1,695 $3,277 $3,358 
Loan PAAb55 48 75 103 159 
Other PAAc(7)(9)(9)(16)(17)
PAAd = (b+c)48 39 66 87 142 
NII, excluding PAA (non-GAAP)e = (a-d)$1,608 $1,582 $1,629 $3,190 $3,216 
Annualized NIIf = a annualized$6,642 $6,575 $6,800 $6,609 $6,772 
Annualized NII, excluding PAA (non-GAAP)g = e annualized6,451 6,416 6,533 6,434 6,486 
Average interest-earning assetsh$213,990 $212,552 $208,175 $213,276 $207,108 
NIM (GAAP)f/h3.10 %3.09 %3.26 %3.09 %3.26 %
NIM, excluding PAA (non-GAAP)g/h3.01 3.01 3.14 3.01 3.13 
Interest income on loans and leases (GAAP)$2,253 $2,206 $2,270 $4,459 $4,506 
Less: loan PAAb55 48 75 103 159 
Interest income on loans and leases, excluding loan PAA (non-GAAP)$2,198 $2,158 $2,195 $4,356 $4,347 

106

Forward-Looking Statements

Statements in this Quarterly Report on Form 10-Q contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the financial condition, results of operations, business plans, asset quality, future performance, and other strategic goals of BancShares. Words such as “anticipates,” “believes,” “estimates,” “expects,” “predicts,” “forecasts,” “intends,” “plans,” “projects,” “targets,” “designed,” “could,” “may,” “should,” “will,” “potential,” “continue,” “aims,” or other similar words and expressions are intended to identify these forward-looking statements. These forward-looking statements are based on BancShares’ current expectations and assumptions regarding BancShares’ business, the economy, and other future conditions.

Because forward-looking statements relate to future results and occurrences, they are subject to inherent risks, uncertainties, changes in circumstances and other factors that are difficult to predict. Many possible events or factors could affect BancShares’ future financial results and performance and could cause actual results, performance or achievements of BancShares to differ materially from any anticipated results expressed or implied by such forward-looking statements. Such risks and uncertainties include, among others, general competitive, economic (including the imposition of tariffs, retaliatory tariff measures, trade barriers on trading partners, and supply chain disruptions), political (including impacts of any U.S. government shutdown), geopolitical events (including conflicts or developments in Ukraine, the Middle East, and Latin America), natural disasters and market conditions, including changes in competitive pressures among financial institutions and the impacts related to or resulting from previous bank failures, the risks and impacts of future bank failures and other volatility in the banking industry, public perceptions of our business practices, including our deposit pricing and acquisition activity, the financial success or changing conditions or strategies of BancShares’ vendors or customers, including changes in demand for deposits, loans and other financial services, fluctuations in interest rates, changes in the quality or composition of BancShares’ loan or investment portfolio, actions of government regulators, including interest rate decisions by the Federal Reserve, changes to estimates of future costs and benefits of actions taken by BancShares, BancShares’ ability to maintain adequate sources of funding and liquidity, the potential impact of decisions by the Federal Reserve on BancShares’ capital plans, adverse developments with respect to U.S. or global economic conditions, including significant turbulence in the capital or financial markets, the impact of any sustained or elevated inflationary environment, the impact of any cyberattack, information or security breach, the effect of technological change, including artificial intelligence and digital assets, the impact of implementation and compliance with current or proposed laws, regulations and regulatory interpretations, including potential increased regulatory requirements, limitations, and costs, such as FDIC special assessments, increases to FDIC deposit insurance premiums, changes in regulatory capital requirements, or limitations on credit card interest rates, along with the risk that such laws, regulations and regulatory interpretations may change, the availability of capital and personnel, changes or enhancements BancShares implements with respect to risk management, technology, personnel, financial service offerings, or other areas, and the risks associated with BancShares’ previously completed acquisition transactions, the pending BMO Branch Acquisition, or any future transactions.

BancShares’ 2025 SRP allows BancShares to repurchase shares of its Class A common stock through 2026. BancShares is not obligated under the 2025 SRP to repurchase any minimum or particular number of shares, and repurchases may be suspended or discontinued at any time (subject to the terms of any Rule 10b5-1 plan in effect) without prior notice. The authorization to repurchase Class A common stock pursuant to the 2025 SRP will be utilized at management’s discretion. The actual timing and amount of Class A common stock that may be repurchased under the plan will depend on a number of factors, including the terms of any Rule 10b5-1 plan then in effect, price, general business and market conditions, regulatory requirements, and alternative investment opportunities or capital needs.

Except to the extent required by applicable laws or regulations, BancShares disclaims any obligation to update forward-looking statements or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments. Additional factors which could affect the forward-looking statements may be included in BancShares’ other filings with the Securities and Exchange Commission.

107

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Market risk is the potential economic loss resulting from changes in market prices and interest rates. This risk can either result in diminished current fair values of financial instruments or reduced NII in future periods. Changes in fair value that result from movement in market rates cannot be predicted with any degree of certainty. Therefore, the impact that future changes in market rates will have on the fair values of financial instruments is uncertain.

The information required by this Item 3. Quantitative and Qualitative Disclosures about Market Risk is set forth in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations within the “Risk Management” section and in Item 1. Financial Statements within Note 11—Derivative Financial Instruments and Note 12—Fair Value of this Form 10-Q.


Item 4. Controls and Procedures.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision of and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that we are able to record, process, summarize and report in a timely manner the information required to be disclosed in the reports we file under the Exchange Act.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
We review our internal controls over financial reporting on an ongoing basis and make changes intended to ensure the quality of our financial reporting. There were no changes in our internal control over financial reporting during the second quarter of 2026 that have materially affected, or are reasonably likely to materially affect, BancShares’ internal control over financial reporting.


108

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

Information relating to legal proceedings is set forth in Note 19—Commitments and Contingencies of the Notes to Consolidated Financial Statements contained in Item 1. Financial Statements, and is incorporated herein by reference.

Item 1A. Risk Factors.

There have been no material changes in the risk factors during 2026 from those reported in our 2025 Form 10-K. For a discussion of the risks and uncertainties that management believes are material to an investment in us, refer to Part I, Item 1A. Risk Factors, of our 2025 Form 10-K, and Forward-Looking Statements of this Form 10-Q.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(c) The following table summarizes our monthly Class A common stock repurchase activity during the three months ended June 30, 2026. Subsequent to June 30, 2026, BancShares purchased an additional 97,287 shares of Class A common stock through July 31, 2026 under the 2025 SRP.

Table 58
Issuer Purchases of Class A Common Stock
dollars in millions, except per share dataTotal Number of Class A Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Repurchased as Part of Publicly Announced PlanApproximate Dollar Value of Shares that May Yet be Purchased Under Plan
Repurchases from April 1 - 30, 2026102,340 $1,982.56 102,340 $1,708 
Repurchases from May 1 - 31, 202698,628 1,963.09 98,628 1,514 
Repurchases from June 1 - 30, 202697,939 2,074.78 97,939 1,311 
Total298,907 $2,006.36 298,907 $1,311 

On July 25, 2025, BancShares announced that the Board authorized the 2025 SRP, which allows BancShares to repurchase shares of its Class A common stock in an aggregate amount up to $4.0 billion through December 31, 2026. Repurchases under the 2025 SRP commenced in September 2025 after the 2024 SRP was completed.

Under the 2025 SRP, shares of BancShares’ Class A common stock may be purchased from time to time on the open market or in privately negotiated transactions, including through a Rule 10b5-1 plan, but the Board’s action does not obligate BancShares to repurchase any minimum or particular number of shares, and repurchases may be suspended or discontinued at any time (subject to the terms of any Rule 10b5-1 plan in effect) without prior notice.

Item 5. Other Information.

(c) Director and Officer Trading Arrangements

During the second quarter of 2026, none of BancShares’ directors or officers adopted or terminated any “Rule 10b5-1 trading arrangement” or any “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.



109

Item 6. Exhibits.
EXHIBIT INDEX

4.1Instruments defining the rights of holders of long-term debt will be furnished to the SEC upon request.
31.1
31.2
32.1
32.2
*101.INSInline XBRL Instance Document (filed herewith)
*101.SCHInline XBRL Taxonomy Extension Schema (filed herewith)
*101.CALInline XBRL Taxonomy Extension Calculation Linkbase (filed herewith)
*101.LABInline XBRL Taxonomy Extension Label Linkbase (filed herewith)
*101.PREInline XBRL Taxonomy Extension Presentation Linkbase (filed herewith)
*101.DEFInline XBRL Taxonomy Definition Linkbase (filed herewith)
*104Cover Page Interactive Data File (embedded within the Inline XBRL document filed as Exhibit 101)
*Interactive data files are furnished but not filed for purposes of Sections 11 and 12 of the Securities Act of 1933, as amended, and Section 18 of the Securities Exchange Act of 1934, as amended.
110

SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 
Date:August 7, 2026First Citizens BancShares, Inc.
(Registrant)
By:/s/ Craig L. Nix
Craig L. Nix
Chief Financial Officer



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