FIRST CITIZENS BANCSHARES INC /DE/ 10-K

Item 8. Financial Statements and Supplementary Data. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders First Citizens BancShares, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of First Citizens BancShares, Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 24, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 92 Allowance for loans and lease losses and reserve for off-balance sheet credit exposures (ACL) As discussed in Notes 1 and 6 to the consolidated financial statements, as of December 31, 2025, the Company had an allowance for loan and lease losses (ALLL) of $1.57 billion and a reserve for off-balance sheet credit exposures (AULL) of $260 million. Loans and leases are segregated into pools with similar risk characteristics, where models are utilized to estimate the ALLL. The ALLL models estimate the probability of default (PD) and loss given default (LGD) for individual loans and leases within each risk pool based on historical loss experience, borrower characteristics, collateral type, forecasts of future economic conditions, expected future recoveries, and other factors. The loan and lease level undiscounted ALLL is calculated by applying the modeled PD and LGD to forecasted loan and lease balances which are adjusted for contractual payments, prior defaults, and prepayments. The ALLL models utilize economic variables which are based on macroeconomic scenario forecasts which cover the lives of the loan portfolios. The macroeconomic forecasts utilize weighted baseline, upside and downside scenarios. ALLL model outputs may be adjusted through a qualitative assessment to reflect trends not captured within the models, which could include economic conditions, credit quality, concentrations, and significant policy and underwriting changes. Unfunded commitments are assessed to determine both the probability of funding as well as the expectation of future losses. The Company estimates the expected funding amounts and applies the ALLL PD and LGD models to those expected funding amounts to estimate the AULL. We identified the assessment of the ACL as a critical audit matter. A high degree of audit effort, including specialized skills and knowledge, and subjective and complex auditor judgment was involved in the assessment of the ACL due to significant measurement uncertainty. Specifically, the assessment encompassed the evaluation of the methodology, including the models used to estimate the PD and LGD, the selection of the economic scenarios, and the weighting of each economic scenario. The assessment also included an evaluation of the conceptual soundness and performance of the ALLL models. In addition, auditor judgment was required to evaluate the sufficiency of audit evidence obtained. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s measurement of the ACL including controls related to the: • development and approval of the ACL methodology • continued use and appropriateness of changes to the ALLL models, including the significant assumptions used in the ALLL models • development of certain ALLL models • selection of the economic scenarios and the weighting of each economic scenario • performance monitoring of the ALLL models • development of the qualitative adjustments, including the significant assumptions used in the measurement of certain qualitative adjustments • analysis of the ACL results, trends, and ratios. We evaluated the Company’s process to develop the ACL by testing certain sources of data, factors, and assumptions that the Company used, and considered the relevance and reliability of such data, factors, and assumptions. In addition, we involved credit risk professionals with specialized skills and knowledge, who assisted in: • evaluating the ACL methodology for compliance with U.S. generally accepted accounting principles • evaluating judgments made by the Company relative to the development, assessment and performance testing of the ALLL models by comparing them to relevant Company-specific metrics and trends and the applicable industry and regulatory practices • assessing the conceptual soundness of the ALLL models by inspecting the model documentation to determine whether the models are suitable for their intended use • evaluating the selection of the economic scenarios and the weighting applied to each economic scenario by comparing them to the Company’s business environment and relevant industry practices and 93 • evaluating the methodology used to develop certain qualitative adjustments and the effect of those adjustments on the ACL compared with relevant credit risk factors and consistency with credit trends associated with the Company’s portfolio We also assessed the sufficiency of the audit evidence obtained related to the ACL by evaluating the: • cumulative results of the audit procedures • qualitative aspects of the Company’s accounting practices and • potential bias in the accounting estimate. /s/ KPMG LLP We have served as the Company’s auditor since 2021. Raleigh, North Carolina February 24, 2026 94 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders First Citizens BancShares, Inc.: Opinion on Internal Control Over Financial Reporting We have audited First Citizens BancShares, Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements), and our report dated February 24, 2026 expressed an unqualified opinion on those consolidated financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 95 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP Raleigh, North Carolina February 24, 2026 96 First Citizens BancShares, Inc. and Subsidiaries Consolidated Balance Sheets dollars in millions, except share data December 31, 2025 December 31, 2024 Assets Cash and due from banks $ 801 $ 814 Interest-earning deposits at banks 19,801 21,364 Securities purchased under agreements to resell 232 158 Investment in marketable equity securities (cost of $ 83 at December 31, 2025 and $ 79 at December 31, 2024) 127 101 Investment securities available for sale (cost of $ 31,952 at December 31, 2025 and $ 34,512 at December 31, 2024) 31,790 33,750 Investment securities held to maturity (fair value of $ 8,491 at December 31, 2025 and $ 8,702 at December 31, 2024) 9,647 10,239 Assets held for sale 804 85 Loans and leases 147,930 140,221 Allowance for loan and lease losses ( 1,566 ) ( 1,676 ) Loans and leases, net of allowance for loan and lease losses 146,364 138,545 Operating lease equipment, net 9,621 9,323 Premises and equipment, net 2,447 2,006 Goodwill 346 346 Other intangible assets, net 195 249 Other assets 7,523 6,740 Total assets $ 229,698 $ 223,720 Liabilities Deposits: Noninterest-bearing $ 40,653 $ 38,633 Interest-bearing 120,925 116,596 Total deposits 161,578 155,229 Credit balances of factoring clients 1,148 1,016 Borrowings: Short-term borrowings 224 367 Long-term borrowings 35,784 36,684 Total borrowings 36,008 37,051 Other liabilities 8,726 8,196 Total liabilities 207,460 201,492 Stockholders’ equity Preferred stock - $ 0.01 par value ( 20,000,000 shares authorized at December 31, 2025 and December 31, 2024) 1,375 881 Common stock: Class A - $ 1 par value ( 32,000,000 shares authorized at December 31, 2025 and December 31, 2024; 11,133,974 and 12,712,436 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively) 11 13 Class B - $ 1 par value ( 2,000,000 shares authorized and 1,005,185 shares issued and outstanding at December 31, 2025 and December 31, 2024) 1 1 Additional paid in capital — 2,417 Retained earnings 20,768 19,361 Accumulated other comprehensive income (loss) 83 ( 445 ) Total stockholders’ equity 22,238 22,228 Total liabilities and stockholders’ equity $ 229,698 $ 223,720 See accompanying Notes to the Consolidated Financial Statements. 97 First Citizens BancShares, Inc. and Subsidiaries Consolidated Statements of Income Year Ended December 31, dollars in millions, except share and per share data 2025 2024 2023 Interest income Loans and leases $ 9,096 $ 9,528 $ 8,187 Investment securities 1,690 1,347 648 Deposits at banks 992 1,478 1,556 Total interest income 11,778 12,353 10,391 Interest expense Deposits 3,559 3,864 2,497 Borrowings 1,405 1,346 1,182 Total interest expense 4,964 5,210 3,679 Net interest income 6,814 7,143 6,712 Provision for credit losses 514 431 1,375 Net interest income after provision for credit losses 6,300 6,712 5,337 Noninterest income Rental income on operating lease equipment 1,096 1,048 971 Lending-related fees 266 257 218 Deposit fees and service charges 241 230 200 Client investment fees 217 213 157 Wealth management services 229 211 188 International fees 136 119 91 Factoring commissions 73 75 82 Cardholder services, net 158 163 139 Merchant services, net 52 49 48 Insurance commissions 53 55 54 Realized gain (loss) on sale of investment securities, net 3 6 ( 26 ) Fair value adjustment on marketable equity securities, net 22 13 ( 11 ) Gain on sale of leasing equipment, net 30 30 20 Gain on acquisition — — 9,808 Loss on extinguishment of debt ( 9 ) ( 2 ) — Other noninterest income 160 148 136 Total noninterest income 2,727 2,615 12,075 Noninterest expense Depreciation on operating lease equipment 398 394 371 Maintenance and other operating lease expenses 244 219 222 Personnel cost 3,294 3,078 2,636 Net occupancy expense 238 242 244 Equipment expense 555 504 422 Professional fees 115 121 71 Third-party processing fees 268 230 205 FDIC insurance expense 141 138 158 Marketing expense 142 76 102 Acquisition-related expenses 141 210 470 Intangible asset amortization 54 63 57 Other noninterest expense 466 460 377 Total noninterest expense 6,056 5,735 5,335 Income before income taxes 2,971 3,592 12,077 Income tax expense 765 815 611 Net income $ 2,206 $ 2,777 $ 11,466 Preferred stock dividends 57 61 59 Net income available to common stockholders $ 2,149 $ 2,716 $ 11,407 Earnings per common share Basic $ 165.24 $ 189.42 $ 785.14 Diluted $ 165.24 $ 189.41 $ 784.51 Weighted average common shares outstanding Basic 13,002,455 14,341,872 14,527,902 Diluted 13,002,455 14,342,655 14,539,613 See accompanying Notes to the Consolidated Financial Statements. 98 First Citizens BancShares, Inc. and Subsidiaries Consolidated Statements of Comprehensive Income Year Ended December 31, dollars in millions 2025 2024 2023 Net income $ 2,206 $ 2,777 $ 11,466 Other comprehensive income, net of tax Net unrealized gain (loss) on securities available for sale 447 ( 7 ) 162 Net change in unrealized loss on securities available for sale transferred to securities held to maturity — 1 1 Net change in defined benefit pension items 75 44 81 Net unrealized gain on cash flow hedge derivatives 6 8 — Other comprehensive income, net of tax $ 528 $ 46 $ 244 Total comprehensive income $ 2,734 $ 2,823 $ 11,710 See accompanying Notes to the Consolidated Financial Statements. 99 First Citizens BancShares, Inc. and Subsidiaries Consolidated Statements of Changes in Stockholders’ Equity dollars in millions, except share data Preferred Stock Class A Common Stock Class B Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Total Stockholders' Equity Balance at December 31, 2022 $ 881 $ 14 $ 1 $ 4,109 $ 5,392 $ ( 735 ) $ 9,662 Net income — — — — 11,466 — 11,466 Other comprehensive income, net of tax — — — — — 244 244 Stock based compensation — — — ( 1 ) — — ( 1 ) Cash dividends declared ($ 3.89 per common share): Class A common stock — — — — ( 53 ) — ( 53 ) Class B common stock — — — — ( 4 ) — ( 4 ) Preferred stock dividends declared: Series A — — — — ( 18 ) — ( 18 ) Series B — — — — ( 30 ) — ( 30 ) Series C — — — — ( 11 ) — ( 11 ) Balance at December 31, 2023 $ 881 $ 14 $ 1 $ 4,108 $ 16,742 $ ( 491 ) $ 21,255 Net income — — — — 2,777 — 2,777 Other comprehensive income, net of tax — — — — — 46 46 Stock based compensation — — — ( 12 ) — — ( 12 ) Repurchased 814,641 shares of Class A common stock — ( 1 ) — ( 1,679 ) — — ( 1,680 ) Cash dividends declared ($ 6.87 per common share): Class A common stock — — — — ( 91 ) — ( 91 ) Class B common stock — — — — ( 6 ) — ( 6 ) Preferred stock dividends declared: Series A — — — — ( 19 ) — ( 19 ) Series B — — — — ( 31 ) — ( 31 ) Series C — — — — ( 11 ) — ( 11 ) Balance at December 31, 2024 $ 881 $ 13 $ 1 $ 2,417 $ 19,361 $ ( 445 ) $ 22,228 Net income — — — — 2,206 — 2,206 Other comprehensive income, net of tax — — — — — 528 528 Issuance of Series D preferred stock 494 — — — — — 494 Repurchased 1,578,462 shares of Class A common stock — ( 2 ) — ( 2,417 ) ( 638 ) — ( 3,057 ) Cash dividends declared ($ 7.95 per common share): Class A common stock — — — — ( 96 ) — ( 96 ) Class B common stock — — — — ( 8 ) — ( 8 ) Preferred stock dividends declared: Series A — — — — ( 18 ) — ( 18 ) Series B — — — — ( 28 ) — ( 28 ) Series C — — — — ( 11 ) — ( 11 ) Balance at December 31, 2025 $ 1,375 $ 11 $ 1 $ — $ 20,768 $ 83 $ 22,238 See accompanying Notes to the Consolidated Financial Statements. 100 First Citizens BancShares, Inc. and Subsidiaries Consolidated Statements of Cash Flows Year Ended December 31, dollars in millions 2025 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 2,206 $ 2,777 $ 11,466 Adjustments to reconcile net income to cash provided by operating activities: Provision for credit losses 514 431 1,375 Deferred tax (benefit) expense ( 111 ) 6 ( 165 ) Depreciation, amortization, and accretion, net 405 130 ( 57 ) Stock based compensation expense — — 5 Realized (gain) loss on sale of investment securities, net ( 3 ) ( 6 ) 26 Fair value adjustment on marketable equity securities, net ( 22 ) ( 13 ) 11 (Gain) loss on sale of loans, net ( 21 ) ( 7 ) 2 Gain on sale of operating lease equipment, net ( 30 ) ( 30 ) ( 20 ) Gain on other real estate owned, net ( 2 ) ( 7 ) ( 4 ) Gain on acquisition — — ( 9,808 ) Loss on extinguishment of debt 9 2 — Origination of loans held for sale ( 1,401 ) ( 1,078 ) ( 740 ) Proceeds from sale of loans held for sale 1,553 1,289 693 Impairment of premises and equipment and other assets 6 22 70 Net change in other assets ( 282 ) ( 495 ) 206 Net change in other liabilities 170 ( 34 ) ( 379 ) Other operating activities ( 68 ) 1 ( 21 ) Net cash provided by operating activities 2,923 2,988 2,660 CASH FLOWS FROM INVESTING ACTIVITIES Net decrease in interest-earning deposits at banks 1,563 12,245 5,416 Purchases of marketable equity securities ( 5 ) ( 6 ) — Proceeds from sales of investments in marketable equity securities 1 15 — Purchases of investment securities available for sale ( 13,969 ) ( 22,490 ) ( 12,839 ) Proceeds from maturities of investment securities available for sale 12,989 7,445 2,084 Proceeds from sales of investment securities available for sale 3,817 1,493 495 Purchases of investment securities held to maturity ( 389 ) ( 792 ) ( 213 ) Proceeds from maturities of investment securities held to maturity 1,010 562 545 Net (increase) decrease in securities purchased under agreements to resell ( 74 ) 315 ( 473 ) Net (increase) decrease in loans ( 9,111 ) ( 7,484 ) 6,057 Proceeds from sales of loans 399 354 317 Net decrease (increase) in credit balances of factoring clients 212 ( 73 ) 94 Purchases of operating lease equipment ( 852 ) ( 1,106 ) ( 1,023 ) Proceeds from sales of operating lease equipment 285 250 243 Purchases of premises and equipment ( 710 ) ( 429 ) ( 405 ) Proceeds from sales of other real estate owned 29 19 19 Cash acquired, net of cash paid as consideration for acquisition — — 810 Proceeds from surrender of bank-owned life insurance policies — — 1,094 Other investing activities ( 806 ) ( 473 ) 208 Net cash (used in) provided by investing activities ( 5,611 ) ( 10,155 ) 2,429 CASH FLOWS FROM FINANCING ACTIVITIES Net (decrease) increase in time deposits ( 2,015 ) ( 3,169 ) 5,634 Net increase (decrease) in demand and other interest-bearing deposits 8,539 12,630 ( 5,369 ) Net (decrease) increase in securities sold under agreements to repurchase ( 143 ) ( 118 ) 39 Repayment of short-term borrowings — — ( 2,250 ) Proceeds from issuance of short-term borrowings — — 500 Repayment of long-term borrowings ( 2,850 ) ( 450 ) ( 13,120 ) Net proceeds from issuance of long-term borrowings 1,838 — 9,991 Net proceeds from issuance of preferred stock 494 — — Repurchase of Class A common stock ( 3,027 ) ( 1,648 ) — Cash dividends paid ( 161 ) ( 158 ) ( 117 ) Other financing activities — ( 14 ) ( 7 ) Net cash provided by (used in) financing activities 2,675 7,073 ( 4,699 ) Change in cash and due from banks ( 13 ) ( 94 ) 390 Cash and due from banks at beginning of period 814 908 518 Cash and due from banks at end of period $ 801 $ 814 $ 908 101 Year Ended December 31, dollars in millions 2025 2024 2023 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 4,810 $ 5,079 $ 3,686 Income taxes 315 763 514 Significant non-cash investing and financing activities: Transfers of loans to other real estate 86 — — Net settlement with FDIC for Purchase Money Note — 80 — Transfer of assets from held for investment to held for sale 1,296 606 336 Transfer of assets from held for sale to held for investment 31 — — Commitments extended during the period on affordable housing investment credits 648 710 224 Purchase Money Note as consideration for SVBB Acquisition — — 35,808 See accompanying Notes to the Consolidated Financial Statements. 102 First Citizens BancShares, Inc. and Subsidiaries Notes to Consolidated Financial Statements 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 The accounting and reporting policies of BancShares are in accordance with United States generally accepted accounting principles (“GAAP”) and general practices within the banking industry. 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. 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. 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. BancShares has investments in certain partnerships and limited liability entities that have been evaluated and determined to be VIEs. Consolidation of a VIE is appropriate if a reporting entity holds a controlling financial interest in the VIE and is the primary beneficiary. BancShares is not the primary beneficiary and does not hold a controlling interest in the VIEs as we do not have the power to direct the activities that most significantly impact the VIEs’ economic performance or the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. As such, assets and liabilities of these entities are not consolidated into the financial statements of BancShares. The recorded investment in these entities is reported within other assets. Refer to Note 10—Variable Interest Entities for additional information regarding VIEs. Reclassifications Financial Statements In certain instances, amounts reported in the 2024 and 2023 consolidated financial statements have been reclassified to conform to the current financial statement presentation. Such reclassifications had no effect on previously reported stockholders’ equity or net income. Changes to Reportable Segments As of December 31, 2025, our reportable segments included 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 made the following changes to our segment reporting during 2025 (the “Segment Reporting Updates”): • All components previously reported in the Silicon Valley Bank (“SVB”) Commercial segment and certain components of the General Bank segment were consolidated into the Commercial Bank segment. • We made minor updates to our segment expense allocations. Segment disclosures for the years ended December 31, 2024 and 2023 included in this Form 10-K were recast to conform with the Segment Reporting Updates summarized above. Refer to Note 21—Segment Information for additional information. 103 Loan Class Changes At December 31, 2025, our commercial loan classes included: commercial and industrial, capital call lines, owner occupied commercial mortgage, investor dependent, and commercial real estate, while our consumer loan classes included: residential mortgage, revolving mortgage, auto, and other consumer. During 2025, we changed our loan classes (the “Loan Class Changes”) from the loan classes in the Annual Report on Form 10-K as of and for the year ended December 31, 2024 (the “2024 Form 10-K”). The Loan Class Changes recast capital call lines and commercial real estate into separate loan classes, and recast SVB loan classes into the commercial loan classes. Additionally, investor dependent - early stage and investor dependent - growth stage were combined into a single investor dependent loan class, and leases were recast into commercial and industrial. The following table summarizes the recast of the 2024 Form 10-K loan classes to the loan classes in this Annual Report on Form 10-K. 2025 Loan Class Changes 2024 Form 10-K Loan Class Loan Class in this Annual Report on Form 10-K Commercial Commercial construction Commercial real estate Owner occupied commercial mortgage Owner occupied commercial mortgage Non-owner occupied commercial mortgage Commercial real estate Commercial and industrial Commercial and industrial, commercial real estate (1) Leases Commercial and industrial Consumer Residential mortgage Residential mortgage, commercial real estate (2) Revolving mortgage Revolving mortgage Consumer auto Auto Consumer other Other consumer SVB Global fund banking (3) Capital call lines, commercial and industrial (3) Investor dependent - early stage Investor dependent Investor dependent - growth stage Investor dependent Innovation C&I and cash flow dependent Commercial and industrial (1) Loans for the purpose of acquiring, constructing or developing real estate were included in commercial and industrial in the 2024 Form 10-K, and are included in commercial real estate in this Form 10-K. (2) Residential construction loans were included in residential mortgage in the 2024 Form 10-K, and are included in commercial real estate in this Form 10-K. (3) In the 2024 Form 10-K, the global fund banking loan class included capital call lines and other commercial loans in the Global Fund Banking line of businesses (a component of the Commercial Bank segment). Capital call lines are a separate loan class, and the other commercial loans in the Global Fund Banking line of business are included in commercial and industrial in this Form 10-K. Our loan classes as of December 31, 2025 are further described in the “Loans and Leases” discussion of this Note 1—Significant Accounting Policies and Basis of Presentation. Loan and lease and allowance for loan and lease losses (“ALLL”) disclosures for all periods presented in this Form 10-K were recast to reflect the Loan Class Changes. Refer to Note 5—Loans and Leases and Note 6—Allowance for Loan and Lease Losses. 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 ALLL is considered a critical accounting estimate. SIGNIFICANT ACCOUNTING POLICIES Interest-Earning Deposits at Banks Interest-earning deposits at banks are primarily comprised of interest-bearing deposits with the Federal Reserve Bank (“FRB”) and other banks. Interest-earning deposits at banks have maturities of three months or less. The carrying value of interest-earning deposits at banks approximates its fair value due to its short-term nature. 104 Securities Purchased Under Agreements to Resell Securities purchased under agreements to resell are accounted for as collateralized financing transactions as the terms of such purchase agreements do not qualify for sale accounting and are therefore recorded at the amount of cash advanced. The securities purchased under agreements to resell are primarily collateralized by U.S. Treasury and U.S. agency mortgage-backed securities. Accrued interest receivables are recorded in other assets. Interest earned is recorded in interest income. Investments Debt Securities BancShares classifies debt securities as held to maturity or available for sale. Debt securities are classified as held to maturity when BancShares has the intent and ability to hold the securities to maturity. Held to maturity securities are reported at amortized cost. Debt securities classified as available for sale are reported at estimated fair value, with unrealized gains and losses, net of income taxes, reported in Accumulated Other Comprehensive Income (“AOCI”). Amortization of premiums and accretion of discounts for debt securities are recorded in interest income. Realized gains and losses from the sale of debt securities are included in noninterest income. BancShares performs pre-purchase due diligence and evaluates the credit risk of available for sale and held to maturity debt securities purchased directly into BancShares' portfolio or via acquisition. If securities have evidence of more than insignificant credit deterioration since issuance, they are designated as purchased credit deteriorated (“PCD”). For available for sale debt securities, management performs a quarterly analysis of the investment portfolio to evaluate securities currently in an unrealized loss position for potential credit-related impairment. If BancShares intends to sell a security, or does not have the intent and ability to hold a security before recovering the amortized cost, the entirety of the unrealized loss is immediately recorded in earnings to the extent that it exceeds the associated allowance for credit losses previously established. For the remaining securities, an analysis is performed to determine if any portion of the unrealized loss recorded relates to credit impairment. If credit-related impairment exists, the amount is recorded through the allowance for credit losses and related provision. This review includes indicators such as changes in credit rating, delinquency, bankruptcy, or other significant events impacting the issuer. Debt securities are classified as past due when the payment of principal and interest based upon contractual terms is 30 days delinquent or greater. Management reviews all debt securities with delinquent interest and immediately charges off any accrued interest determined to be uncollectible. Refer to Note 3—Investment Securities for additional information. Equity Securities Investments in equity securities having readily determinable fair values are stated at fair value. Realized and unrealized gains and losses on these securities are included in noninterest income. Dividends on marketable equity securities are included in interest on investment securities. Nonmarketable equity securities that do not meet the criteria to be accounted for under the equity method and that do not have readily determinable fair values are measured at cost under the measurement alternative with adjustments for impairment and observable price changes if applicable. Dividends from these investments are included in noninterest income. BancShares evaluates its nonmarketable equity securities for impairment and recoverability of the recorded investment based on analysis of the facts and circumstances of each investment, including asset quality of the issuer, dividend payment history and recent redemption experience. Any impairment is recorded in noninterest income. Other Securities Membership in the Federal Home Loan Bank (“FHLB”) network requires ownership of FHLB restricted stock. This stock is restricted as it may only be sold to the FHLB and all sales must be at par. Accordingly, the FHLB restricted stock is carried at cost, less any applicable impairment charges and is recorded within other assets. Additionally, BancShares holds shares of Visa Inc. (“Visa”) Class B common stock. Refer to Note 3—Investment Securities for additional information. 105 Affordable Housing Tax Credit and Unconsolidated Investments Unconsolidated VIEs include limited partnership interests and joint ventures where BancShares’ involvement is limited to an investor interest and BancShares does not have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance or obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Affordable Housing Tax Credit Investments BancShares has investments in qualified affordable housing projects primarily for the purposes of fulfilling Community Reinvestment Act (“CRA”) requirements and obtaining tax credits and other tax benefits. These investments are accounted for using the proportional amortization method (“PAM”) if certain conditions are met. Under PAM, the initial cost of the investment is amortized in proportion to the tax credits and other tax benefits received, the net investment performance, and impairment, if any, is recognized in the statements of income as a component of income tax expense. All of our investments in qualified affordable housing projects are accounted for under PAM. Other Tax Credit Investments Certain tax credit investments not eligible for PAM, such as investments in renewable energy projects, are accounted for under the hypothetical liquidation at book value method (“HLBVM”) which is applied to equity investments in investees for which distributions vary at different points in time and are not directly linked to an equity holder’s ownership percentage. Under the HLBVM, we calculate our share of earnings or losses based on the change in our claim on the net assets of the investee assuming the investee is liquidated at book value at the end of each reporting period. The pretax results from applying the HLBVM are reported in other noninterest income. We elected the Deferral Method for the tax credits and deferred tax assets (“DTAs”) related to these tax credit investments. Under the Deferral Method, we reduce the carrying value of our investment and income taxes payable upon receipt of the tax credits when the underlying project is placed in service. Equity Method Investments Under the equity method, we record our proportionate share of the profits or losses of the investment entity as an adjustment to the carrying value of the investment and as a component of other noninterest income. Dividends and distributions from these investments are recorded as reductions to the carrying value of the investments. Unconsolidated investments accounted for under the equity method are evaluated for impairment, with any impairment recorded in noninterest income. The recorded impairment is the excess of the investment carrying value over the fair value. Refer to Note 10—Variable Interest Entities for additional information. Assets Held for Sale Assets held for sale (“AHFS”) consist of: (i) loans we previously held for investment that were transferred to held for sale at the lower of the cost or fair value (“LOCOM”) at the date we made a formal decision and plan to sell, (ii) residential mortgage loans that we originated with the intent to sell and for which we elected to apply the fair value option, and (iii) operating lease equipment (which we previously leased as the lessor) that was transferred to held for sale at LOCOM at the date we made a formal decision and plan to sell. Loans and Leases Originated loans for which management has the intent and ability to hold for the foreseeable future are classified as held for investment and carried at the principal amount outstanding net of any unearned income, charge-offs and unamortized fees and costs. Nonrefundable fees collected and certain direct costs incurred related to loan originations are deferred and recorded as an adjustment to loans outstanding. The net amount of the nonrefundable fees and costs is amortized to interest income over the contractual lives as an adjustment to yield using methods that approximate a constant yield, as applicable, or the straight-line method for revolving lines of credit. BancShares extends credit to commercial customers through a variety of financing arrangements including term loans, revolving credit facilities, finance leases and operating leases. BancShares also extends credit through consumer loans, including residential mortgages and auto loans. Our loan classes as of December 31, 2025 are described below. 106 Commercial Loans and Leases Commercial and Industrial – Commercial and industrial loans consist of loans or lines of credit to finance accounts receivable, inventory or other general business needs, and business credit cards. The primary risk associated with commercial and industrial loans is the ability of borrowers to achieve business results consistent with those projected at origination. Failure to achieve these projections presents risk that the borrower will be unable to service the debt consistent with the contractual terms of the loan. Commercial and industrial includes loans that borrowers use to assist a select group of private equity sponsors with the acquisition of businesses. These loans are larger in size, and repayment is generally dependent upon the cash flows of the combined entities. Acquired companies are typically established, later-stage businesses of scale, and characterized by reasonable levels of leverage with loan structures that include meaningful financial covenants. Commercial and industrial includes loans to non-depository financial institutions (“NDFIs”), except for capital call lines which is a separate loan class since it is our largest NDFI portfolio. In addition to capital call lines, loans to NDFIs include the following: • The net asset value (“NAV”) portfolio 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 limited partner (“LP”) interests in private funds and/or co-investment vehicles. • Leveraged fund lines are lines of credit provided to private credit funds and are collateralized by portfolios of the underlying assets, primarily first lien loans. • Warehouse lines 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 includes asset-based lending facilities to lenders that are primarily investing in first lien senior debt. We provide factoring, receivable management, and secured financing to businesses (our clients, who are generally manufacturers or importers of goods) that operate in several industries, including apparel, textile, furniture, home furnishings and consumer electronics. Factoring entails the assumption of credit risk with respect to trade accounts receivable arising from the sale of goods by our clients to their customers (generally retailers) that have been factored (i.e., sold or assigned to the factor). The most prevalent risk in factoring transactions is customer credit risk, which relates to the financial inability of a customer to pay undisputed factored trade accounts receivable. We also provide supply chain financing to our clients on the supply and demand sides of the supply chain. Supply chain financing could include purchasing our clients’ accounts receivable and subsequently collecting from our clients’ customers, or paying our clients’ accounts payable and subsequently collecting directly from our client. Factoring and supply chain finance receivables are primarily included in the commercial and industrial loan class. Commercial and industrial also includes leases, which consists of finance lease arrangements for technology and office equipment and large and small industrial, medical, and transportation equipment. Capital Call Lines – The primary source of repayment for capital call lines is the capital commitments of the underlying 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. Owner Occupied Commercial Mortgage – Owner occupied commercial mortgage consists of loans to purchase or refinance owner occupied nonresidential properties. This includes office buildings, other commercial facilities, and farmland. Commercial mortgages secured by owner occupied properties are primarily dependent on the ability of borrowers to achieve business results consistent with those projected at loan origination. While these loans are collateralized by real property in an effort to mitigate risk, it is possible the liquidation of collateral will not fully satisfy the obligation. Investor Dependent – The investor dependent class includes loans made primarily to technology, life science and healthcare industry borrowers that typically have modest or negative cash flows and rarely have an established record of profitable operations. Repayment of these loans may be dependent upon receipt by borrowers of additional equity financing from venture capital firms or other investors, or in some cases, a successful sale to a third party or an initial public offering. Investor dependent includes lending to: (i) pre-revenue, development-stage companies and companies that are in the early phases of commercialization, with revenues of up to $ 5 million, (ii) companies with revenues between $ 5 million and $ 15 million, or pre-revenue clinical-stage biotechnology companies, and (iii) companies with revenues in excess of $ 15 million. 107 Commercial Real Estate – Commercial Real Estate primarily includes the following portfolios: non-owner occupied commercial mortgage, commercial construction, and other loans for the purpose of acquiring, constructing or developing real estate. Residential construction loans are also included in commercial real estate. Non-owner occupied commercial mortgage consists of loans to purchase or refinance investment nonresidential properties. This includes office buildings and other facilities rented or leased to unrelated parties, as well as farmland and multifamily properties. The primary risk associated with income producing commercial mortgage loans is the ability of the income-producing property that collateralizes the loan to produce adequate cash flow to service the debt. While these loans are collateralized by real property in an effort to mitigate risk, it is possible the liquidation of collateral will not fully satisfy the obligation. Commercial construction consists of loans to finance land for commercial development of real property and construction of multifamily apartments or other commercial properties. Delays in construction and development projects can cause cost overruns exceeding the borrower’s financial ability to complete the project. Such cost overruns can result in foreclosure of partially completed and unmarketable collateral. These loans are highly dependent on the supply and demand for commercial real estate. Deterioration in demand could result in decreased collateral values, which could make repayments of outstanding loans difficult. Residential construction consists of loans to developers or consumers to finance construction of 1-4 family residential property or to purchase undeveloped or partially developed land in anticipation of completing construction of 1-4 family residential property. These loans are subject to risks of the supply chain and fluctuations in construction and development costs, as well as the demand for newly constructed residential homes and lots acquired for development. When construction is complete, consumer borrowers often convert or refinance the residential construction loan into a residential mortgage loan. Consumer Loans Residential Mortgage – Residential mortgage primarily consists of loans to purchase or refinance the borrower’s primary dwelling, secondary residence or vacation home and are often secured by 1-4 family residential properties. Significant and rapid declines in real estate values can result in borrowers having debt levels in excess of the current market value of the collateral. Revolving Mortgage – Revolving mortgage consists of home equity lines of credit and other lines of credit or loans secured by first or second liens on the borrower’s primary residence. These loans are secured by both senior and junior liens on the residential real estate and are particularly susceptible to declining collateral values. This risk is elevated for loans secured by junior liens as a substantial decline in value could render the junior lien position effectively unsecured. Auto – Auto loans consist of installment loans to finance purchases of vehicles. These loans include direct auto loans originated in bank branches, as well as indirect auto loans originated through agreements with auto dealerships. The value of the underlying collateral within this class is at risk of potential rapid depreciation, which could result in unpaid balances in excess of the collateral, if any. Other Consumer – Other consumer loans consist of loans to finance unsecured home improvements, student loans, and revolving lines of credit that can be secured or unsecured, including personal credit cards. The value of the underlying collateral, if any, within this class is at risk of potential rapid depreciation, which could result in unpaid balances in excess of the collateral. Acquired Loans and Leases BancShares’ accounting methods for acquired loans and leases depends on whether or not the loans reflect more than insignificant credit deterioration since origination at the date of acquisition. Non-Purchased Credit Deteriorated Loans and Leases Non-Purchased Credit Deteriorated (“Non-PCD”) loans and leases do not reflect more than insignificant credit deterioration since origination at the date of acquisition. These loans are recorded at fair value and an increase to the ALLL is recorded with a corresponding increase to the provision for credit losses at the date of acquisition. The difference between fair value and the unpaid principal balance (“UPB”) at the acquisition date is amortized or accreted to interest income over the contractual life of the loan using the effective interest method. 108 Purchased Credit Deteriorated Loans and Leases Purchased loans and leases that reflect a more than insignificant credit deterioration since origination at the date of acquisition are classified as PCD loans and leases. PCD loans and leases are recorded at acquisition date amortized cost, which is the purchase price or fair value in a business combination, plus BancShares' initial ALLL, which results in a gross up of the loan balance (the “PCD Gross-Up”). The initial ALLL for PCD loans and leases (the “Initial PCD ALLL”) is established through the PCD Gross-Up and there is no corresponding increase to the provision for credit losses. The difference between the UPB and the acquisition date amortized cost resulting from the PCD Gross-Up is amortized or accreted to interest income over the contractual life of the loan using the effective interest method. Refer to Note 6—Allowance for Loan and Lease Losses for additional information. Past Due and Non-Accrual Loans and Leases Loans and leases are classified as past due when the payment of principal and interest based upon contractual terms is 30 days or greater delinquent. Loans and leases are generally placed on nonaccrual when principal or interest becomes 90 days past due or when it is probable the principal or interest is not fully collectible. When loans are placed on nonaccrual, previously uncollected accrued interest is reversed from interest income and the ongoing accrual of interest is discontinued. All payments received thereafter are applied as a reduction of the outstanding balance until the account is collected, charged-off or returned to accrual status. Loans and leases are generally removed from nonaccrual status when they become current for a sustained period of time and there is no longer concern as to the collectability of principal and interest. Loan Charge-Offs and Recoveries Loan charge-offs are recorded after considering such factors as the borrower’s financial condition, the value of underlying collateral, guarantees, and the status of collection activities. Loan balances considered uncollectible are charged-off against the ALLL and deducted from the carrying value of the related loans. Consumer loans are subject to mandatory charge-off at specified delinquency dates in accordance with regulatory guidelines. The value of the underlying collateral for consumer loans is considered when determining the charge-off amount if repossession is reasonably assured and in process. Refer to Note 5—Loans and Leases for additional information. Realized recoveries of amounts previously charged-off are credited to the ALLL. Allowance for Loan and Lease Losses 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 using the current expected credit loss (“CECL”) methodology in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 326 Financial Instruments - Credit Losses . Adjustments to the ALLL are recorded with a corresponding entry to the provision or benefit for credit losses. 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 have a model that is utilized to estimate the ALLL. These ALLL models estimate the probability of obligor default (“PD”) and loss given default (“LGD”) for individual loans and leases within each risk pool based on historical loss experience, borrower characteristics, collateral type, forecasts of future economic conditions, expected future recoveries and other factors. The loan and lease level undiscounted ALLL is calculated by applying the modeled PD and LGD to monthly forecasted loan and lease balances (or exposure at default), which are adjusted for contractual payments, prior defaults, and prepayments. Prepayment assumptions were developed through a review of BancShares’ historical prepayment activity and considered forecasts of future economic conditions. Forecasted LGDs are adjusted for expected recoveries. 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. The ALLL models utilize economic variables, including unemployment, gross domestic product, home price index, commercial real estate (“CRE” index, corporate profits, and credit spreads. These economic variables are based on macroeconomic scenario forecasts with a forecast horizon that covers the lives of the loan portfolios. 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. 109 When loans do not share risk characteristics similar to others in the pool, the ALLL is evaluated on an individual basis. Given that BancShares’ CECL models are loan level models, the number of loans individually evaluated is not significant and consists primarily of loans greater than an established threshold. A specific ALLL is established (or charge-off recorded) for the shortfall, if any, between the present value of future cash flows (or fair value of the collateral, less estimated costs to sell) and the amortized cost of the loan. Risk pools for estimating the ALLL, along with loans evaluated on an individual basis, are aggregated into commercial and consumer loan portfolios for reporting purposes in Note 6—Allowance for Loan and Lease Losses. Accrued Interest Receivable BancShares' accounting policies and credit monitoring provide that uncollectible accrued interest is reversed or written off against interest income in a timely manner. Therefore, BancShares elected to not measure an ALLL for accrued interest receivable. Accrued interest receivable is recorded in other assets and is excluded from the amortized cost basis of loans, investment securities available for sale, and investment securities held to maturity. Unfunded Commitments A reserve for off-balance sheet exposures is established for unfunded commitments such as unfunded balances for existing lines of credit, deferred purchase agreements (“DPAs”), commitments to extend future credit, as well as both standby and commercial letters of credit, when there is a contractual obligation to extend credit and when this extension of credit is not unconditionally cancellable (i.e. commitment cannot be canceled at any time). These unfunded commitments are assessed to determine both the probability of funding as well as the expectation of future losses. BancShares estimates the expected funding amounts and applies its PD and LGD models to those expected funding amounts to estimate the reserve for off-balance sheet exposures. We do not recognize an ALLL for commitments that are unconditionally cancellable at our discretion. Refer to Note 6—Allowance for Loan and Lease Losses for the provision for off-balance sheet credit exposure. Leases Lessor Arrangements Operating lease equipment is carried at cost less accumulated depreciation. Operating lease equipment is depreciated to its estimated residual value using the straight-line method over the lease term or estimated useful life of the asset. Rail equipment has estimated useful lives of 40 - 50 years and the useful lives of other equipment are generally 3 - 10 years. When AHFS accounting criteria are met for operating lease equipment, the equipment is marked to LOCOM and classified as AHFS and depreciation is no longer recognized. Equipment received at the end of the lease that will be sold is marked to LOCOM, with the adjustment recorded in other noninterest income. Initial direct costs are amortized over the lease term. Sales-type and direct financing leases are carried at the aggregate of lease payments receivable and estimated residual value of the leased property, if applicable, less unearned income. Interest income is recognized over the term of the leases to achieve a constant periodic rate of return on the outstanding investment. Our finance lease activity primarily relates to leasing of new equipment with the equipment purchase price equal to fair value and therefore there is no selling profit or loss at lease commencement. Lease components are separated from non-lease components that transfer a good or service to the customer, and the non-lease components in our lease contracts are accounted for in accordance with ASC 310 Receivables . BancShares utilizes the operating lease practical expedient for its Rail portfolio leases to not separate non-lease components of railcar maintenance services from associated lease components, and as a result rental income includes the maintenance non-lease component. This practical expedient is available when both of the following are met: (i) the timing and pattern of transfer of the non-lease components and associated lease component are the same and (ii) the lease component, if accounted for separately, would be classified as an operating lease. We manage and evaluate residual risk by performing periodic reviews of estimated residual values and monitoring levels of residual realizations. A change in estimated operating lease residual values would result in a change in future depreciation expense. A change in estimated finance lease residual values during the lease term impacts the ALLL as the lessor considers both the lease receivable and the unguaranteed residual asset when determining the finance lease ALLL. 110 Impairment of Operating Lease Equipment A review for impairment of our operating lease equipment is performed at least annually or when events or changes in circumstances indicate that the carrying amount of these long-lived assets may not be recoverable. Impairment of long-lived assets is determined by comparing the carrying amount to future undiscounted net cash flows expected to be generated. If a long-lived asset is impaired, the impairment is the amount by which the carrying amount exceeds the fair value of the long-lived asset. Depreciation expense is adjusted when the projected fair value is below the projected book value at the end of the depreciable life. Lessee Arrangements BancShares leases certain branch locations, administrative offices, and equipment. Operating lease right of use (“ROU”) assets are included in other assets and the associated lease obligations are included in other liabilities. Finance leases are included in premises and equipment and other borrowings. Refer to Note 12—Borrowings for additional information. Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets; BancShares instead recognizes lease expense for these leases on a straight-line basis over the lease term. ROU assets represent BancShares' right to use an underlying asset for the lease term and lease liabilities represent BancShares' corresponding obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets also include initial direct costs and pre-paid lease payments made less any lease incentives received. As most of BancShares' leases do not provide an implicit rate, BancShares uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is determined using secured rates for new FHLB advances under similar terms as the lease at inception. Most leases include one or more options to renew. The exercise of lease renewal options is at BancShares' sole discretion. When it is reasonably certain BancShares will exercise its option to renew or extend the lease term, the option is included in calculating the value of the ROU asset and lease liability. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Goodwill and Other Intangible Assets Goodwill is defined below in the “Business Combinations” section. BancShares’ evaluates goodwill for impairment annually as of July 31, or more frequently if events occur or circumstances change that may trigger a decline in the value of the reporting unit or otherwise indicate that a potential impairment exists. BancShares applied the acquisition method of accounting for the SVBB Acquisition (as defined in Note 2—Business Combinations) and the fair values of the net assets acquired and core deposit intangibles exceeded the purchase price for each transaction. Consequently, there was a gain on acquisition (and no goodwill) related to the SVBB Acquisition. Other finite-lived intangible assets, such as core deposit intangibles, are initially recorded at fair value and are amortized over their average estimated useful lives. Intangible assets are evaluated for impairment when events or changes in circumstances indicate a potential impairment exists. Refer to further discussion in Note 2—Business Combinations and Note 9—Goodwill and Core Deposit Intangibles. Other Real Estate Owned Other Real Estate Owned (“OREO”) includes foreclosed real estate property and closed branch properties. Foreclosed real estate property in OREO is initially recorded at the asset’s estimated fair value less costs to sell. Any excess in the recorded investment in the loan over the estimated fair value less costs to sell is charged-off against the ALLL at the time of foreclosure. If the estimated value of the OREO exceeds the recorded investment of the loan, the difference is recorded as a gain within other income. OREO is subsequently carried at LOCOM less estimated selling costs and is evaluated at least annually. The periodic evaluations are generally based on the appraised value of the property and may include additional adjustments based upon management’s review of the valuation estimate and specific knowledge of the property. Routine maintenance costs, income and expenses related to the operation of the foreclosed asset, subsequent declines in market value and net gains or losses on disposal are included in collection and foreclosure-related expense. 111 Premises and Equipment Premises and equipment are carried at cost less accumulated depreciation. Land is carried at cost. Depreciation expense is generally computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements and finance lease ROU assets are amortized on a straight-line basis over the lesser of the lease terms or the estimated useful lives of the assets. BancShares reviews premises and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, and when an impairment loss is recognized the adjusted carrying amount will be its new cost basis to depreciate over the remaining useful life of the asset. Derivative Assets and Liabilities BancShares manages economic risk and exposure to interest rate and foreign currency risk through derivative transactions in over-the-counter markets with other financial institutions. BancShares also offers derivative products to its customers in order for them to manage their interest rate and currency risks. BancShares does not enter into derivative financial instruments for speculative purposes. Derivatives utilized by BancShares may include swaps, forward settlement contracts, options contracts, and risk participations. A swap agreement is a contract between two parties to exchange cash flows based on specified underlying notional amounts, assets and/or indices. Forward settlement contracts are agreements to buy or sell a quantity of a financial instrument, index, currency or commodity at a predetermined future date, and rate or price. An option contract is an agreement that gives the buyer the right, but not the obligation, to buy or sell an underlying asset from or to another party at a predetermined price or rate over a specific period of time. A risk participation is a financial guarantee, in exchange for a fee, that gives the buyer the right to be made whole in the event of a predefined default event. At inception, BancShares documents all relationships between hedging instruments and hedged items, including effectiveness as well as the risk management objectives and strategies for undertaking various hedges. Upon executing a derivative contract, BancShares designates the derivative as either a qualifying hedge or nonqualifying hedge (each as defined below). The designation may change based upon management’s reassessment of circumstances. BancShares assesses hedge effectiveness at inception and on an ongoing basis. In order to manage its interest rate exposure, BancShares enters into fair value hedges of certain fixed rate debt and deposits. BancShares recognizes the changes in the fair values of the hedging instrument and hedged item in interest expense for borrowings and deposits in the Consolidated Statements of Income. BancShares also utilizes floating-rate loan portfolio cash flow hedges. The changes in fair value of the hedging instrument in a cash flow hedge are reported in AOCI and subsequently reclassified to earnings during the periods in which the hedged cash flows affect earnings. The recognized gains and losses on loan portfolio cash flow hedges are reported in “interest income on loans and leases” on the Consolidated Statements of Income when reclassified from AOCI to earnings. If an accounting hedge (“qualifying hedge”) subsequently ceases to qualify as an effective hedge or the forecasted cash flows are no longer probable of occurring in a cash flow hedge within the specified period, hedge accounting will be discontinued. Any amounts in AOCI related to a discontinued cash flow hedge will be reclassified to earnings over the same periods in which the hedged cash flows affect earnings. However, if it becomes probable that the forecasted cash flows will not occur within the specified period, any related amounts in AOCI will be reclassified to earnings immediately. Derivatives not designated as hedging instruments (“nonqualifying hedges”) are presented in the Consolidated Balance Sheets in other assets or other liabilities, with resulting gains or losses and periodic interest settlements and other changes in fair value reported in other noninterest income. BancShares provides interest rate derivative contracts to support the business requirements of its customers. The derivative contracts include interest rate swap agreements and interest rate cap and floor agreements wherein BancShares acts as a seller of these derivative contracts to its customers. The carrying amount of these customer derivatives is net of the credit valuation allowance for counterparty credit risk. To mitigate the market risk associated with these customer derivatives, BancShares enters into back-to-back positions with other financial institutions. We have purchased and sold risk participation agreements associated with borrowers’ interest rate swaps. We purchase risk participation agreements from other institutions in an effort to mitigate the credit risk associated with interest rate swap agreements with borrowers to whom we have provided loans structured with interest rate swaps. Additionally, we sell risk participation agreements to other institutions as a means of sharing the credit risk associated with borrowers’ interest rate swaps. Risk participation agreements we sold have maturities ranging between 2026 and 2048 and may require us to make payment to the counterparty if the customer fails to make payment on any amounts due to the counterparty upon early termination of the swap transaction. 112 BancShares uses foreign currency forward contracts, interest rate swaps, and options to hedge interest rate and foreign currency risks arising from its asset and liability mix. These are treated as economic hedges, which are nonqualifying hedges. All derivative instruments are recorded at their respective fair value. BancShares reports all derivatives on a gross basis in the Consolidated Balance Sheets and does not offset derivative assets and liabilities and cash collateral under master netting agreements except for swap contracts cleared by the Chicago Mercantile Exchange and LCH Clearnet. These swap contracts are accounted as “settled-to-market” and cash variation margin paid or received is characterized as settlement of the derivative exposure. Variation margin balances are offset against the corresponding derivative asset and liability balances on the balance sheet. Fair value is based on dealer quotes, pricing models, discounted cash flow methodologies, or similar techniques for which the determination of fair value may require significant management judgment or estimation. Valuations of derivative assets and liabilities reflect the value of the instrument including BancShares’ and the counterparty’s credit risk. BancShares is exposed to credit risk to the extent that the counterparty fails to perform under the terms of a derivative agreement. Losses related to credit risk would be reflected in other noninterest income. BancShares manages this credit risk by requiring that all derivative transactions entered into as hedges be conducted with counterparties rated investment grade at the initial transaction by nationally recognized rating agencies, and by setting limits on the exposure with any individual counterparty. In addition, pursuant to the terms of the Credit Support Annexes between BancShares and its counterparties, BancShares may be required to post collateral or may be entitled to receive collateral in the form of cash or highly liquid securities depending on the valuation of the derivative instruments as measured on a daily basis. Refer to Note 13—Derivative Financial Instruments for additional information. Foreign Exchange Contracts FCB has foreign exchange forwards and swaps contracts with clients involved in foreign activities, either as the purchaser or seller, depending upon the clients’ needs. These are structured as back-to-back contracts to mitigate the risk of fluctuations in currency rates. The foreign exchange forward contracts are with correspondent banks to economically reduce our foreign exchange exposure related to certain foreign currency denominated instruments. Equity Warrant Assets In connection with negotiating credit facilities and certain other services, FCB may obtain rights that include an option to purchase a position in a client company's stock in the form of an equity warrant. The equity warrant assets are primarily in private, venture-backed companies in the technology, life science and healthcare industries and are generally categorized as Level 3 on the fair value hierarchy due to lack of direct observable pricing and a general lack of liquidity due to the private nature of the associated underlying company. Mortgage Servicing Rights Mortgage servicing rights (“MSRs”) represent the right to provide servicing under various loan servicing contracts when servicing is retained in connection with a loan sale or acquired in a business combination. MSRs are initially recorded at fair value and subsequently carried at LOCOM. MSRs are amortized in proportion to, and over the period of, the future net servicing income of the underlying loan. At each reporting period, MSRs are evaluated for impairment based upon the fair value of the rights as compared to the carrying value. Therefore, MSRs are carried at fair value only when fair value is less than the amortized cost. Securities Sold Under Customer Repurchase Agreements BancShares enters into sales of securities under agreements to repurchase which are treated as financings, with the obligation to repurchase securities sold reflected as short-term borrowings. Refer to Note 12—Borrowings for additional information. 113 Fair Values Fair Value Hierarchy BancShares measures the fair value of its financial assets and liabilities in accordance with ASC 820 Fair Value Measurement , which defines fair value, establishes a consistent framework for measuring fair value, and requires disclosures about fair value measurements. BancShares categorizes its financial instruments based on the significance of inputs to the valuation techniques according to the following three-tier fair value hierarchy: • Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that are accessible at the measurement date. Level 1 assets and liabilities include equity securities that are traded in an active exchange market. • Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include certain commercial loans, debt and equity securities with quoted prices that are traded less frequently than exchange-traded instruments or using a third-party pricing service, borrowings, time deposits, deposits with no stated maturity, securities sold under customer repurchase agreements and derivative contracts whose values are determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. • Level 3 - Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments such as collateral dependent commercial and consumer loans, as well as loans held for sale, certain available for sale corporate securities and derivative contracts, such as equity warrants, whose values are determined using valuation models, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. Refer to Note 14—Fair Value for additional information. Per Share Data Earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of Class A common stock, par value $ 1 (“Class A common stock”), and Class B common stock, par value $ 1 (“Class B common stock”), outstanding during each period. Diluted earnings per common share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding increased by the weighted-average potential impact of dilutive shares. BancShares’ potential dilutive instruments include unvested restricted stock units (“RSUs”). The dilutive effect is computed using the treasury stock method, which assumes the conversion of these instruments. However, in periods when there is a net loss, these shares would not be included in the diluted earnings per common share computation as the result would have an anti-dilutive effect. Refer to Note 18—Earnings Per Common Share for additional information. Income Taxes Income taxes are accounted for using the asset and liability approach as prescribed in ASC 740, Income Taxes . Under this method, a DTA or deferred tax liability is determined based on the currently enacted tax rates applicable to the period in which the differences between the financial statement carrying amounts and tax basis of existing assets and liabilities are expected to be reported in BancShares’ income tax returns. The effect on deferred taxes of a change in tax rates is recognized in income in the period which includes the enactment date. BancShares has adopted the portfolio approach for purposes of releasing residual tax effects within AOCI. BancShares has unrecognized tax benefits (“UTBs”) related to the uncertain portion of tax positions BancShares has taken or expects to take. The potential impact of current events on the estimates used to establish income tax expenses and income tax liabilities is continually monitored and evaluated. Income tax positions based on current tax law, positions taken by various tax auditors within the jurisdictions where income tax returns are filed, as well as potential or pending audits or assessments by such tax auditors are evaluated on a periodic basis. BancShares files a consolidated federal income tax return and various combined and separate company state tax returns. Refer to Note 19—Income Taxes for additional disclosures. 114 Bank-Owned Life Insurance Banks can purchase life insurance (“BOLI”) policies on the lives of certain officers and employees and are the owner and beneficiary of the policies. These BOLI policies offset the cost of providing employee benefits. BancShares records BOLI at each policy’s respective cash surrender value (“CSV”), with changes in the CSV recorded as noninterest income in the Consolidated Statements of Income. Defined Benefit Pension Plans and Other Postretirement Benefits BancShares has both funded and unfunded noncontributory defined benefit pension and postretirement plans covering certain employees. The calculation of the obligations and related expenses under the plans require the use of actuarial valuation methods and assumptions. Actuarial assumptions used in the determination of future values of plan assets and liabilities are subject to management judgment and may differ significantly if different assumptions are used. All assumptions are reviewed annually for appropriateness. The discount rate assumption used to measure the plan obligations is based on a yield curve developed from high-quality corporate bonds across a full maturity spectrum. The projected cash flows of the pension plans are discounted based on this yield curve, and a single discount rate is calculated to achieve the same present value. The assumed rate of future compensation increases is based on actual experience and future salary expectations. BancShares also estimates a long-term rate of return on pension plan assets used to estimate the future value of plan assets. In developing the long-term rate of return, BancShares considers such factors as the actual return earned on plan assets, historical returns on the various asset classes in the plans and projections of future returns on various asset classes. Refer to Note 20—Employee Benefit Plans for disclosures related to the plans. Stock-Based Compensation All previously issued stock-based compensation awards vested during 2024 and there were no unvested RSUs as of December 31, 2025 and 2024. The fair value of the RSUs issued in BancShares merger (the “CIT Merger”) with CIT Group Inc. (“CIT”) on January 3, 2022 (the “CIT Merger Date”) was determined based on the closing share price of the Parent Company’s Class A common stock on the CIT Merger Date. The fair value of the RSUs was (i) included in the purchase price consideration for the portion related to employee services provided prior to completion of the CIT Merger and (ii) recognized in expenses for the portion related to employee services to be provided after completion of the CIT Merger. Expenses related to stock-based compensation were included in acquisition-related expenses in the Consolidated Statements of Income. Stock-based compensation is briefly discussed further in Note 20—Employee Benefit Plans. Common Stock Repurchases Repurchased common stock is immediately retired upon repurchase, resulting in a reduction to common stock at par value. The excess cost of repurchased common stock over the par amount is recorded as a reduction to additional paid-in capital (“APIC”). When APIC is reduced to zero, then the remainder of the excess cost of repurchased common stock over the par amount is recorded as a reduction to retained earnings. Direct costs, including excise taxes, are included in the cost of the repurchased shares. Revenue Recognition Interest income on held for investment loans is recognized using the effective interest method or on a basis approximating a level rate of return over the life of the asset. Interest income includes components of accretion of the fair value discount on loans and lease receivables recorded in connection with purchase accounting adjustments, which are accreted using the effective interest method as a yield adjustment over the remaining contractual term of the loan and recorded in interest income. If the loan is subsequently classified as held for sale, accretion (amortization) of the discount (premium) will cease. Interest income on loans held for investment and held for sale is included in interest income on loans and leases in the Consolidated Statements of Income. Interest on investment securities and interest on interest-earning deposits at banks is recognized in interest income on an accrual basis. Amortization of premiums and accretion of discounts for investment securities are included in interest on investment securities. Dividends received from marketable equity securities are recognized within interest on investment securities. BancShares generally acts in a principal capacity, on its own behalf, in its contracts with customers. In these transactions, BancShares recognizes revenues and the related costs to generate those revenues on a gross basis. In certain, circumstances, BancShares acts in an agent capacity, on behalf of the customers with other entities, and recognizes revenues and the related costs to provide BancShares' services on a net basis. BancShares acts as an agent when providing certain cardholder and merchant, insurance, investment management, and brokerage services. 115 Descriptions of our noninterest revenue-generating activities are summarized below: Rental income on operating lease equipment – Rental income is recognized on a straight-line basis over the lease term for lease contract fixed payments and is included in noninterest income. Rental income also includes variable lease income which is recognized as earned. The accrual of rental income on operating leases is suspended when the collection of substantially all rental payments is no longer probable and rental income for such leases is recognized when cash payments are received. In the period we conclude that collection of rental payments is no longer probable, accrued but uncollected rental revenue is reversed against rental income. Lending-related fees – These include, but are not limited to, fees on lines and letters of credit, capital market-related fees and commercial loan service fees. The performance obligation is fulfilled and revenue is recognized at the point in time the requested service is provided to the customer. Deposit fees and service charges – These deposit account-related fees and service charges include monthly account maintenance and transaction-based service fees, such as overdraft fees, stop payment fees and charges for issuing cashier’s checks and money orders. Other fees include, but are not limited to, internet banking fees, wire transfer fees, and safe deposit fees. For account maintenance services, revenue is recognized at the end of the statement period when BancShares' performance obligation has been satisfied. Other revenues from transaction-based services are recognized at a point in time when the performance obligation has been completed. Client investment fees – These are earned from discretionary investment management and related transaction-based services. For discretionary investment management services, revenue is recognized monthly based on the clients’ assets under management. Transaction-based fees are earned when transactions are executed. Amounts paid to third-party providers are not reflected in the transaction price because FCB is an agent for such services. Wealth management services – These primarily represent sales commissions on various product offerings, transaction fees and trust and asset management fees. The performance obligation for wealth management services is the provision of services to place annuity products issued by the counterparty to investors and the provision of services to manage the client’s assets, including brokerage custodial and other management services. Revenue from wealth management services is recognized over the period in which services are performed, and is based on a percentage of the value of the assets under management/administration. International fees – These primarily include foreign exchange fees. Foreign exchange fees represent the difference between foreign currency's purchase and sale price in spot contracts. These fees are recognized when contracts are executed with our clients. Fees related to other foreign exchange contracts are recognized outside the scope of ASC 606, Revenue from Contracts with Customers , because they are considered derivatives. Factoring commissions – These are earned in the Commercial Bank segment and generally correlate with factoring volumes, principally in the retail sectors. Factoring commissions are charged as a percentage of the invoice amount of the receivables assigned to BancShares. The volume of factoring activity and the commission rates charged impact factoring commission income earned. Factoring commissions are deferred and recognized as income over time based on the underlying terms of the assigned receivables. Refer to Commercial Loans and Leases section for additional commentary on factoring. Cardholder and Merchant Services – These represent interchange fees from customer debit and credit card transactions earned when a cardholder engages in a transaction with a merchant as well as fees charged to merchants for providing them the ability to accept and process the debit and credit card transaction. Revenue is recognized when the performance obligation has been satisfied, which is upon completion of the card transaction. As BancShares is acting as an agent for the customer and transaction processor, costs associated with cardholder and merchant services transactions are netted against the fee income. Insurance commissions – These include revenue from insurance on equipment leased to customers, which is recognized over the policy period. We also earn commissions on the issuance of insurance products and services. The commission performance obligation is generally satisfied upon the issuance of the insurance policy and revenue is recognized when the commission payment is remitted by the insurance carrier or policy holder depending on whether the billing is performed by BancShares or the carrier. Realized gain or loss on sale of investment securities, net – This reflects the net gain or loss realized from sales based on the difference between sales price and amortized cost. 116 Fair value adjustments on marketable equity securities, net – This reflects changes in market prices of underlying portfolio investments. Gain on sale of leasing equipment, net – These are recognized upon completion of sale (sale closing) and transfer of title. The gain is determined based on sales price less book carrying value (net of accumulated depreciation). Gain on acquisition – This represents the excess of the fair value of net assets acquired over the purchase price in business combination. Other noninterest income – This consists of several forms of recurring revenue, such as FHLB dividends and BOLI income. For the remaining transactions, revenue is recognized when, or as, the performance obligation is satisfied. Other items include derivative gains and losses, gain on sales of other assets including OREO, fixed assets and loans, and non-marketable securities, and income from investment tax credit benefits. Segment Reporting Our chief operating decision maker (“CODM”) is the Chief Executive Officer. We qualitatively and quantitatively assessed the segment expense items that are regularly provided to the CODM and identified significant segment expenses. Net income is the primary measure of segment profit or loss and is determined in accordance with the measurement principles most consistent with GAAP, which is required for BancShares’ Consolidated Statements of Income. The CODM periodically reviews comparisons to forecasts and recent prior periods for segment net income to evaluate segment financial performance and determine where to deploy capital, liquidity, and human resources and develop strategies for loan and deposit volumes, fee-based products and services, and expense management. Refer to Note 21—Segment Information for the segment reporting tables, which include significant segment expenses and the measure of segment profit or loss the CODM uses to assess the financial performance and decide how to allocate resources to each segment, as well as a qualitative description of the components of all other noninterest expense. Newly Adopted Accounting Standards As of January 1, 2025, BancShares adopted the following Accounting Standards Update (“ASU”) issued by FASB: ASU 2023-09—Income Taxes (Topic 740): Improvements to Income Tax Disclosures, Issued December 2023 This ASU enhances income tax disclosure requirements primarily by requiring annual disclosure of specific categories in the rate reconciliation table and disaggregation of income taxes paid by jurisdiction. BancShares applied the required disclosures retrospectively. Aside from complying with the new disclosure requirements, this ASU did not have a material impact on our financial statements. Refer to Note 19—Income Taxes for required disclosures. As of January 1, 2026, BancShares adopted the following ASU issued by FASB: 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 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 effective for annual and interim periods beginning after December 15, 2026. Early adoption is permitted as of the beginning of an interim or annual reporting period. This ASU must be applied prospectively. We early adopted this ASU on January 1, 2026 (the “Adoption Date”). We are currently evaluating the impact of this ASU on our consolidated financial statements and disclosures. For business combinations or loan acquisitions that close 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 the Adoption Date. 117 Business Combinations BancShares accounts for business combinations using the acquisition method of accounting. Under this method, acquired assets and assumed liabilities are included with the acquirer’s accounts at their estimated fair value as of the date of acquisition, with any excess of purchase price over the fair values of the net assets acquired and any finite-lived intangible assets established in connection with the business combination recognized as goodwill. To the extent the fair value of identifiable net assets acquired exceeds the purchase price, a gain on acquisition is recognized. Acquisition-related costs are recognized as period expenses as incurred. NOTE 2 — BUSINESS COMBINATIONS Pending Branch Acquisition On October 16, 2025, FCB announced that it had entered into an agreement to consummate the acquisition of 138 branches from BMO Bank N.A. located throughout the Midwest, Great Plains and West regions of the U.S. (the “BMO Branch Acquisition”). In connection with the BMO Branch Acquisition, FCB expects to assume approximately $ 5.7 billion in deposit liabilities and acquire approximately $ 1.1 billion in loans. We expect the transaction to close in the second half of 2026, subject to customary closing terms and conditions and regulatory approvals. Completed Acquisition On March 27, 2023 (the “SVBB Acquisition Date”), 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. (“SVBB”) from the Federal Deposit Insurance Corporation (the “FDIC”) pursuant to the terms of a purchase and assumption agreement (the “SVBB Purchase Agreement”) by and among FCB, the FDIC, and the FDIC, as receiver of SVBB (the “SVBB Acquisition”). BancShares determined that the SVBB Acquisition constituted a business combination as defined by ASC Topic 805, Business Combinations . Accordingly, the assets acquired and liabilities assumed were presented at their estimated fair values based on valuations as of March 27, 2023. The gain on acquisition of $ 9.81 billion, net of income taxes of $ 3.36 billion, was recorded in noninterest income during the year ended December 31, 2023, and represented the excess of the fair value of net assets acquired over the purchase price. In connection with the SVBB Purchase Agreement, FCB entered into a commercial shared loss agreement with the FDIC (the “Shared-Loss Agreement”). The Shared-Loss Agreement covered an estimated $ 60 billion of commercial loans (collectively, the “Covered Assets”) at the time of acquisition. On April 7, 2025, FCB and the FDIC entered into an agreement (the “Shared-Loss Termination Agreement”) to terminate the Shared-Loss Agreement. The Shared-Loss Agreement stipulated the FDIC would have to reimburse FCB for 0 % of losses of up to $ 5 billion with respect to Covered Assets and 50 % of losses in excess of $ 5 billion with respect to Covered Assets (“FDIC Loss Sharing”) and FCB would have to reimburse the FDIC for 50 % of recoveries related to such Covered Assets (“FCB reimbursement”). As a result of entering into the Shared-Loss Termination Agreement, all rights and obligations of the parties under the Shared-Loss Agreement terminated as of the date of the Shared-Loss Termination Agreement, including FCB’s reporting covenants and obligations related to FDIC Loss Sharing and FCB reimbursement. There was no impact to our consolidated balance sheets or statements of income resulting from the Shared-Loss Termination Agreement because there was no loss indemnification asset or true-up liability associated with the Shared-Loss Agreement, primarily based on evaluation of historical loss experience and the credit quality of the Covered Assets. In connection with the SVBB Acquisition, 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”). FCB and the FDIC, as lender and as collateral agent, also entered into an Advance Facility Agreement, dated as of the SVBB Acquisition Date, and effective as of November 20, 2023 (the “Advance Facility Agreement”), which provided total advances available through March 27, 2025 of up to $ 70 billion solely to provide liquidity to offset deposit withdrawal or runoff of former SVBB deposit accounts and to fund the unfunded commercial lending commitments acquired in the SVBB Acquisition. There were no amounts outstanding on the facility at the end of the draw period on March 27, 2025. 118 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 December 31, 2025 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Investment securities available for sale U.S. Treasury $ 10,624 $ 50 $ ( 1 ) $ 10,673 Government agency 44 — ( 1 ) 43 Residential mortgage-backed securities 17,683 263 ( 323 ) 17,623 Commercial mortgage-backed securities 3,444 28 ( 173 ) 3,299 Corporate bonds 145 — ( 5 ) 140 Municipal bonds 12 — — 12 Total investment securities available for sale $ 31,952 $ 341 $ ( 503 ) $ 31,790 Investment in marketable equity securities $ 83 $ 44 $ — $ 127 Investment securities held to maturity U.S. Treasury $ 388 $ — $ ( 15 ) $ 373 Government agency 1,225 — ( 55 ) 1,170 Residential mortgage-backed securities 4,450 32 ( 490 ) 3,992 Commercial mortgage-backed securities 3,337 — ( 608 ) 2,729 Supranational securities 246 — ( 20 ) 226 Other 1 — — 1 Total investment securities held to maturity $ 9,647 $ 32 $ ( 1,188 ) $ 8,491 Total investment securities $ 41,682 $ 417 $ ( 1,691 ) $ 40,408 December 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Investment securities available for sale U.S. Treasury $ 13,897 $ 33 $ ( 27 ) $ 13,903 Government agency 79 — ( 2 ) 77 Residential mortgage-backed securities 16,161 41 ( 582 ) 15,620 Commercial mortgage-backed securities 3,869 7 ( 210 ) 3,666 Corporate bonds 489 — ( 22 ) 467 Municipal bonds 17 — — 17 Total investment securities available for sale $ 34,512 $ 81 $ ( 843 ) $ 33,750 Investment in marketable equity securities $ 79 $ 27 $ ( 5 ) $ 101 Investment securities held to maturity U.S. Treasury $ 483 $ — $ ( 31 ) $ 452 Government agency 1,489 — ( 115 ) 1,374 Residential mortgage-backed securities 4,558 2 ( 682 ) 3,878 Commercial mortgage-backed securities 3,407 — ( 678 ) 2,729 Supranational securities 300 — ( 33 ) 267 Other 2 — — 2 Total investment securities held to maturity $ 10,239 $ 2 $ ( 1,539 ) $ 8,702 Total investment securities $ 44,830 $ 110 $ ( 2,387 ) $ 42,553 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. Other held to maturity investments include certificates of deposit with other financial institutions. 119 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 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. Accrued interest receivable for available for sale and held to maturity debt securities was excluded from the estimate for credit losses. At December 31, 2025, accrued interest receivable for available for sale and held to maturity debt securities was $ 157 million and $ 20 million, respectively. At December 31, 2024, accrued interest receivable for available for sale and held to maturity debt securities was $ 177 million and $ 20 million, respectively. During the year ended December 31, 2025 and 2024, 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 December 31, 2025 or 2024. 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 and government agency securities are stated separately as they are not due at a single maturity date. Maturities - Debt Securities dollars in millions December 31, 2025 December 31, 2024 Amortized Cost Fair Value Amortized Cost Fair Value Investment securities available for sale Non-amortizing securities maturing in: One year or less $ 4,893 $ 4,914 $ 5,090 $ 5,086 After one through five years 5,853 5,879 8,945 8,949 After five through 10 years 23 20 346 330 After 10 years 12 12 22 22 Government agency 44 43 79 77 Residential mortgage-backed securities 17,683 17,623 16,161 15,620 Commercial mortgage-backed securities 3,444 3,299 3,869 3,666 Total investment securities available for sale $ 31,952 $ 31,790 $ 34,512 $ 33,750 Investment securities held to maturity Non-amortizing securities maturing in: One year or less $ 307 $ 303 $ 429 $ 419 After one through five years 1,434 1,360 1,299 1,208 After five through 10 years 119 107 546 468 Residential mortgage-backed securities 4,450 3,992 4,558 3,878 Commercial mortgage-backed securities 3,337 2,729 3,407 2,729 Total investment securities held to maturity $ 9,647 $ 8,491 $ 10,239 $ 8,702 120 T he following table presents interest and dividend income on investment securities: Interest and Dividends on Investment Securities dollars in millions Year Ended December 31, 2025 2024 2023 Interest income - taxable investment securities (1) $ 1,687 $ 1,344 $ 642 Interest income - nontaxable investment securities 1 1 4 Dividend income - marketable equity securities 2 2 2 Interest on investment securities $ 1,690 $ 1,347 $ 648 (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 millions Year Ended December 31, 2025 2024 2023 Gross realized gain on sale of investment securities available for sale $ 5 $ 1 $ — Gross realized loss on sale of investment securities available for sale ( 3 ) ( 1 ) ( 26 ) Net realized gain (loss) on sale of investment securities available for sale 2 — ( 26 ) Net realized gain on sale of marketable equity securities 1 6 — Realized gain (loss) on sale of investment securities, net $ 3 $ 6 $ ( 26 ) The following table provides information regarding investment securities available for sale with unrealized losses: Gross Unrealized Losses on Debt Securities Available For Sale dollars in millions December 31, 2025 Less than 12 months 12 months or more Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Investment securities available for sale U.S. Treasury $ 859 $ ( 1 ) $ — $ — $ 859 $ ( 1 ) Government agency — — 43 ( 1 ) 43 ( 1 ) Residential mortgage-backed securities 815 ( 2 ) 3,292 ( 321 ) 4,107 ( 323 ) Commercial mortgage-backed securities 48 — 1,129 ( 173 ) 1,177 ( 173 ) Corporate bonds — — 123 ( 5 ) 123 ( 5 ) Total $ 1,722 $ ( 3 ) $ 4,587 $ ( 500 ) $ 6,309 $ ( 503 ) December 31, 2024 Less than 12 months 12 months or more Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Investment securities available for sale U.S. Treasury $ 3,791 $ ( 12 ) $ 981 $ ( 15 ) $ 4,772 $ ( 27 ) Government agency — — 77 ( 2 ) 77 ( 2 ) Residential mortgage-backed securities 7,470 ( 61 ) 3,575 ( 521 ) 11,045 ( 582 ) Commercial mortgage-backed securities 1,183 ( 8 ) 1,342 ( 202 ) 2,525 ( 210 ) Corporate bonds 16 — 438 ( 22 ) 454 ( 22 ) Total $ 12,460 $ ( 81 ) $ 6,413 $ ( 762 ) $ 18,873 $ ( 843 ) 121 As of December 31, 2025, there were 307 investment securities available for sale with continuous unrealized losses for more than 12 months, of which 288 were government sponsored enterprise-issued mortgage-backed securities including GNMA, FHLMC and FNMA, or government agency securities, and the remaining 19 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 December 31, 2025, no allowance for credit loss 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 allowance for credit loss was required for investment securities available for sale as of December 31, 2025. 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 allowance for credit loss was required for debt securities held to maturity as of December 31, 2025. There were no debt securities on nonaccrual status as of December 31, 2025 or December 31, 2024. Investment securities having an aggregate carrying value of $ 3.89 billion at December 31, 2025, and $ 3.94 billion at December 31, 2024, 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 are accounted for under PAM, and renewable energy tax credit investments that utilize the HLBVM. Refer to Note 1—Significant Accounting Policies and Basis of Presentation for descriptions of the accounting methodologies. NOTE 4 — ASSETS HELD FOR SALE The composition of AHFS is summarized in the following table. dollars in millions December 31, 2025 December 31, 2024 Loans and leases: Commercial (1) $ 18 $ 27 Consumer 781 55 Loans and leases 799 82 Operating lease equipment 5 3 Total assets held for sale $ 804 $ 85 (1) There were nonaccrual loans held for sale of $ 10 million at December 31, 2025 and $ 0 at December 31, 2024. Consumer loans held for sale at December 31, 2024 were largely comprised of residential mortgage loans that FCB originated with the intent to sell. In December 2025, FCB management committed to a plan to sell approximately $ 694 million of residential mortgage 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. Accounting for AHFS is discussed in Note 1—Significant Accounting Policies and Basis of Presentation. 122 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. Disclosures for leases are in Note 7—Leases. The following table summarizes loans by class: Loans by Class dollars in millions December 31, 2025 December 31, 2024 Commercial Commercial and industrial $ 44,721 $ 43,559 Capital call lines 31,791 25,501 Owner occupied commercial mortgage 17,660 16,842 Investor dependent 2,778 3,193 Commercial real estate 23,784 23,282 Total commercial 120,734 112,377 Consumer Residential mortgage 21,861 22,768 Revolving mortgage 2,863 2,567 Auto 1,416 1,523 Other consumer 1,056 986 Total consumer 27,196 27,844 Total loans and leases $ 147,930 $ 140,221 Refer to Note 1—Significant Accounting Policies and Basis of Presentation for discussion of the Loan Class Changes. At December 31, 2025 and 2024, accrued interest receivable on loans included in other assets was $ 635 million and $ 603 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 $ 289 million for the year ended December 31, 2025, including $ 19 million for unfunded commitments. Discount accretion income was $ 505 million for the year ended December 31, 2024, including $ 81 million for unfunded commitments. Discount accretion income was $ 733 million for the year ended December 31, 2023, including $ 128 million for unfunded commitments. 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 millions December 31, 2025 December 31, 2024 Deferred fees, including unamortized costs and unearned fees on non-PCD loans $ ( 103 ) $ ( 91 ) Net unamortized discount on acquired loans Non-PCD $ 1,281 $ 1,504 PCD 45 94 Total net unamortized discount $ 1,326 $ 1,598 123 The aging and nonaccrual status of the outstanding loans and leases by class at December 31, 2025 and 2024 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 millions 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 mortgage 78 19 1 98 17,403 17,501 159 17,660 Investor dependent 11 1 — 12 2,717 2,729 49 2,778 Commercial real estate 221 31 171 423 22,943 23,366 418 23,784 Total commercial 542 107 235 884 118,768 119,652 1,082 120,734 Consumer Residential mortgage 168 42 7 217 21,465 21,682 179 21,861 Revolving mortgage 25 4 — 29 2,799 2,828 35 2,863 Auto 15 3 — 18 1,389 1,407 9 1,416 Other consumer 5 3 2 10 1,044 1,054 2 1,056 Total consumer 213 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 December 31, 2024 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 $ 203 $ 50 $ 17 $ 270 $ 42,869 $ 43,139 $ 420 $ 43,559 Capital call lines — — — — 25,501 25,501 — 25,501 Owner occupied commercial mortgage 30 9 2 41 16,739 16,780 62 16,842 Investor dependent 11 1 — 12 3,094 3,106 87 3,193 Commercial real estate 65 30 79 174 22,669 22,843 439 23,282 Total commercial 309 90 98 497 110,872 111,369 1,008 112,377 Consumer Residential mortgage 172 25 7 204 22,421 22,625 143 22,768 Revolving mortgage 20 4 — 24 2,519 2,543 24 2,567 Auto 12 3 — 15 1,500 1,515 8 1,523 Other consumer 5 3 3 11 974 985 1 986 Total consumer 209 35 10 254 27,414 27,668 176 27,844 Total loans and leases $ 518 $ 125 $ 108 $ 751 $ 138,286 $ 139,037 $ 1,184 $ 140,221 (1) Accrued interest that was deducted from interest income when the loan was moved to nonaccrual status was approximately $ 17 million for the year ended December 31, 2025, and approximately $ 14 million for the year ended December 31, 2024. (2) Nonaccrual loans for which there was no related ALLL totaled $ 415 million at December 31, 2025 and $ 303 million at December 31, 2024. Refer to Note 1—Significant Accounting Policies and Basis of Presentation for discussion of loans individually evaluated to determine the ALLL. OREO and repossessed assets were $ 124 million as of December 31, 2025 and $ 64 million as of December 31, 2024. 124 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 December 31, 2025 and 2024, 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. 125 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 December 31, 2025 Risk Classification: Term Loans by Origination Year Revolving Converted to Term Loans dollars in millions 2025 2024 2023 2022 2021 2020 & Prior Revolving Total Commercial and industrial Pass $ 13,484 $ 7,906 $ 3,552 $ 2,963 $ 1,428 $ 1,539 $ 10,143 $ 76 $ 41,091 Special Mention 213 264 113 97 143 60 181 — 1,071 Substandard 451 296 215 475 347 65 416 5 2,270 Doubtful 18 24 27 35 10 — 32 — 146 Ungraded — — — — — — 143 — 143 Total commercial and industrial 14,166 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 Pass 2,816 2,739 2,177 2,430 2,290 3,954 248 28 16,682 Special Mention 26 34 49 78 24 27 2 — 240 Substandard 41 55 128 179 88 222 8 3 724 Doubtful — 4 10 — — — — — 14 Total owner occupied commercial mortgage 2,883 2,832 2,364 2,687 2,402 4,203 258 31 17,660 Investor dependent Pass 981 648 110 67 — — 326 — 2,132 Special Mention 29 78 1 19 — — 19 — 146 Substandard 104 164 117 14 4 — 50 — 453 Doubtful 13 11 16 5 — — 2 — 47 Total Investor dependent 1,127 901 244 105 4 — 397 — 2,778 Commercial real estate Pass 5,005 4,720 4,512 2,791 1,614 2,631 732 — 22,005 Special Mention 202 19 139 25 2 31 — — 418 Substandard 409 249 221 145 70 193 1 — 1,288 Doubtful 29 3 — 18 1 22 — — 73 Total commercial real estate 5,645 4,991 4,872 2,979 1,687 2,877 733 — 23,784 Total commercial Pass 22,286 16,013 10,351 8,251 5,332 8,124 43,207 137 113,701 Special Mention 470 395 302 219 169 118 202 — 1,875 Substandard 1,005 764 681 813 509 480 475 8 4,735 Doubtful 60 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 $ 120,734 126 Consumer Loans - Delinquency Status by Class December 31, 2025 Days Past Due: Term Loans by Origination Year Revolving Converted to Term Loans dollars in millions 2025 2024 2023 2022 2021 2020 & Prior Revolving Total Residential mortgage Current $ 1,601 $ 1,609 $ 2,512 $ 4,783 $ 4,715 $ 6,295 $ 2 $ — $ 21,517 30-59 days 3 4 12 32 32 94 2 — 179 60-89 days — 1 3 9 3 38 — — 54 90 days or greater 1 5 6 10 7 82 — — 111 Total residential mortgage 1,605 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 Current 504 405 217 157 77 33 — — 1,393 30-59 days 3 4 3 3 2 1 — — 16 60-89 days — 1 1 1 1 — — — 4 90 days or greater — 1 1 1 — — — — 3 Total consumer auto 507 411 222 162 80 34 — — 1,416 Other consumer Current 176 100 65 53 15 6 630 — 1,045 30-59 days 1 1 — — — — 4 — 6 60-89 days — — — — — — 2 — 2 90 days or greater 1 — — — — — 2 — 3 Total consumer other 178 101 65 53 15 6 638 — 1,056 Total consumer $ 2,290 $ 2,131 $ 2,820 $ 5,049 $ 4,852 $ 6,549 $ 3,351 $ 154 $ 27,196 127 The following tables represent current credit quality indicators by origination year as of December 31, 2024: Commercial Loans - Risk Classifications by Class December 31, 2024 Risk Classification: Term Loans by Origination Year Revolving Converted to Term Loans dollars in millions 2024 2023 2022 2021 2020 2019 & Prior Revolving Total Commercial and industrial Pass $ 13,235 $ 6,531 $ 4,814 $ 2,329 $ 1,242 $ 1,394 $ 9,898 $ 69 $ 39,512 Special Mention 157 253 281 302 33 68 203 — 1,297 Substandard 177 371 621 353 205 231 461 4 2,423 Doubtful 6 26 44 17 2 1 97 — 193 Ungraded — — — — — — 134 — 134 Total Commercial and industrial 13,575 7,181 5,760 3,001 1,482 1,694 10,793 73 43,559 Capital call lines Pass — — — — — — 25,467 34 25,501 Total capital call lines — — — — — — 25,467 34 25,501 Owner occupied commercial mortgage Pass 2,721 2,445 2,747 2,581 2,199 2,988 223 29 15,933 Special Mention 22 46 70 58 32 61 9 — 298 Substandard 30 34 136 82 73 245 10 1 611 Total owner occupied commercial mortgage 2,773 2,525 2,953 2,721 2,304 3,294 242 30 16,842 Investor dependent Pass 1,135 640 352 37 — — 315 3 2,482 Special Mention 17 28 6 — — — 26 — 77 Substandard 122 173 164 31 1 — 61 — 552 Doubtful 26 19 28 5 — — 4 — 82 Total investor dependent 1,300 860 550 73 1 — 406 3 3,193 Commercial real estate Pass 4,336 5,528 4,337 2,569 1,842 2,258 526 3 21,399 Special Mention — 147 331 49 11 111 — — 649 Substandard 13 27 241 58 143 741 — — 1,223 Doubtful — 2 — 1 2 6 — — 11 Total commercial real estate 4,349 5,704 4,909 2,677 1,998 3,116 526 3 23,282 Total commercial Pass 21,427 15,144 12,250 7,516 5,283 6,640 36,429 138 104,827 Special Mention 196 474 688 409 76 240 238 — 2,321 Substandard 342 605 1,162 524 422 1,217 532 5 4,809 Doubtful 32 47 72 23 4 7 101 — 286 Ungraded — — — — — — 134 — 134 Total commercial $ 21,997 $ 16,270 $ 14,172 $ 8,472 $ 5,785 $ 8,104 $ 37,434 $ 143 $ 112,377 128 Consumer Loans - Delinquency Status by Class December 31, 2024 Days Past Due: Term Loans by Origination Year Revolving Converted to Term Loans dollars in millions 2024 2023 2022 2021 2020 2019 & Prior Revolving Total Residential mortgage Current $ 2,024 $ 2,824 $ 5,202 $ 5,135 $ 2,910 $ 4,353 $ 4 $ — $ 22,452 30-59 days 2 13 18 23 31 95 — — 182 60-89 days 1 2 4 2 1 28 — — 38 90 days or greater — 2 6 6 9 73 — — 96 Total residential mortgage 2,027 2,841 5,230 5,166 2,951 4,549 4 — 22,768 Revolving mortgage Current — — — — — — 2,420 108 2,528 30-59 days — — — — — — 16 6 22 60-89 days — — — — — — 1 5 6 90 days or greater — — — — — — 3 8 11 Total revolving mortgage — — — — — — 2,440 127 2,567 Auto Current 617 358 277 155 68 27 — — 1,502 30-59 days 3 3 3 2 1 1 — — 13 60-89 days 1 1 1 1 — — — — 4 90 days or greater 1 1 1 1 — — — — 4 Total consumer auto 622 363 282 159 69 28 — — 1,523 Other consumer Current 147 144 99 30 6 18 531 — 975 30-59 days 1 — — — — 1 3 — 5 60-89 days — — 1 — — — 2 — 3 90 days or greater — — — — — 1 2 — 3 Total consumer other 148 144 100 30 6 20 538 — 986 Total consumer $ 2,797 $ 3,348 $ 5,612 $ 5,355 $ 3,026 $ 4,597 $ 2,982 $ 127 $ 27,844 129 Gross Charge-offs Gross charge-off disclosures by origination year and loan class are summarized in the following tables: Year Ended December 31, 2025 Term Loans by Origination Year Revolving Converted to Term Loans dollars in millions 2025 2024 2023 2022 2021 2020 & Prior Revolving Total Commercial Commercial and industrial $ 33 $ 36 $ 66 $ 57 $ 12 $ 7 $ 240 $ 2 $ 453 Capital call lines — — — — — — — — — Owner occupied commercial mortgage — 3 — — 3 1 — — 7 Investor dependent 4 31 31 37 7 6 9 — 125 Commercial real estate 26 41 3 21 — 32 — — 123 Total commercial 63 111 100 115 22 46 249 2 708 Consumer Residential mortgage — — — — — 7 — — 7 Revolving mortgage — — — — — — — — — Auto — 2 2 1 — — — — 5 Other consumer — 2 1 1 — — 17 — 21 Total consumer — 4 3 2 — 7 17 — 33 Total loans and leases $ 63 $ 115 $ 103 $ 117 $ 22 $ 53 $ 266 $ 2 $ 741 Year Ended December 31, 2024 Term Loans by Origination Year Revolving Converted to Term Loans dollars in millions 2024 2023 2022 2021 2020 2019 & Prior Revolving Total Commercial Commercial and industrial $ 19 $ 54 $ 88 $ 26 $ 8 $ 23 $ 75 $ 1 $ 294 Capital call lines — — — — — — — — — Owner occupied commercial mortgage — — — — — 12 — — 12 Investor dependent — 55 103 28 3 6 9 — 204 Commercial real estate — — — — 36 81 — — 117 Total commercial 19 109 191 54 47 122 84 1 627 Consumer Residential mortgage — — — — — 1 — — 1 Revolving mortgage — — — — — — — 1 1 Auto 1 2 2 1 — — — — 6 Other consumer — 2 1 1 — 1 17 — 22 Total consumer 1 4 3 2 — 2 17 1 30 Total loans and leases $ 20 $ 113 $ 194 $ 56 $ 47 $ 124 $ 101 $ 2 $ 657 130 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 year ended December 31, 2025 dollars in millions Term Extension (1) Payment Delay Interest Rate Reduction Term Extension (1) and Interest Rate Reduction Term Extension (1) and Payment Delay Other Combinations (2) Total Percent of Total Loan Class Commercial Commercial and industrial $ 434 $ 85 $ — $ 19 $ 27 $ 32 $ 597 1.34 % Owner occupied commercial mortgage 15 7 — 18 26 — 66 0.38 Investor dependent 13 53 — — 11 — 77 2.77 Commercial real estate 169 9 16 109 40 — 343 1.44 Total commercial 631 154 16 146 104 32 1,083 0.90 Consumer Residential mortgage 15 — 1 3 25 2 46 0.21 Revolving mortgage 5 — — 1 — — 6 0.22 Auto — — — — — — — 0.03 Other consumer — — — — — — — 0.03 Total consumer 20 — 1 4 25 2 52 0.19 Total loans and leases $ 651 $ 154 $ 17 $ 150 $ 129 $ 34 $ 1,135 0.77 % (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 $ 26 million of commercial and industrial loans and $ 2 million of residential mortgage loans modified with a payment delay, and interest rate reduction, as well as $ 6 million of commercial and industrial loans modified with a term extension, payment delay, and interest rate reduction. Amortized Cost of Loans Modified during the year ended December 31, 2024 dollars in millions Term Extension (1) Payment Delay Interest Rate Reduction Term Extension (1) and Interest Rate Reduction Term Extension (1) and Payment Delay Other Combinations (2) Total Percent of Total Loan Class Commercial Commercial and industrial $ 143 $ 97 $ 30 $ 14 $ 2 $ — $ 286 0.70 % Owner occupied commercial mortgage 37 10 4 1 2 — 54 0.32 Investor dependent 7 64 — — 27 1 99 3.07 Commercial real estate 195 8 — 9 26 — 238 1.04 Total commercial 382 179 34 24 57 1 677 0.60 Consumer Residential mortgage 10 — 2 2 — — 14 0.06 Revolving mortgage 9 — — 1 — — 10 0.38 Auto — — — — — — — 0.01 Other consumer — — — — — — — 0.03 Total consumer 19 — 2 3 — — 24 0.09 Total loans and leases $ 401 $ 179 $ 36 $ 27 $ 57 $ 1 $ 701 0.50 % (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 $ 1 million of investor dependent loans modified with a term extension, interest rate reduction, and payment delay. 131 Amortized Cost of Loans Modified during the year ended December 31, 2023 dollars in millions Term Extension (1) Payment Delay Interest Rate Reduction Term Extension (1) and Interest Rate Reduction Term Extension (1) and Payment Delay Other Combinations (2) Total Percent of Total Loan Class Commercial Commercial and industrial $ 178 $ 2 $ — $ 5 $ 7 $ — $ 192 0.45 % Owner occupied commercial mortgage 16 — 2 — — — 18 0.11 Investor dependent 11 45 — — — 6 62 1.44 Commercial real estate 262 8 — 40 — — 310 1.54 Total commercial 467 55 2 45 7 6 582 0.55 Consumer Residential mortgage 8 — — 3 — 3 14 0.06 Revolving mortgage 2 — — 1 — — 3 0.12 Auto — — — — — — — 0.01 Other consumer — — — — — — — 0.02 Total consumer 10 — — 4 — 3 17 0.06 Total loans and leases $ 477 $ 55 $ 2 $ 49 $ 7 $ 9 $ 599 0.45 % (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 $ 6 million of Investor dependent loans modified with a term extension, interest rate reduction, and payment delay as well as $ 3 million of Residential mortgages modified with a payment delay and interest rate reduction. Financial Effects of Loan Modifications made during the year ended December 31, 2025 Weighted Average Term Extension (in Months) Weighted Average Interest Rate Reduction Weighted Average Payment Delay (in Months) Commercial Commercial and industrial 13 0.72 % 11 Owner occupied commercial mortgage 10 1.88 3 Investor dependent 10 — 7 Commercial real estate 16 0.56 10 Total commercial 14 0.72 9 Consumer Residential mortgage 16 2.75 6 Revolving mortgage 24 4.20 5 Auto 20 0.31 — Other consumer 60 9.72 — Total consumer 17 3.26 6 Total loans and leases 14 0.81 % 9 Financial Effects of Loan Modifications made during the year ended December 31, 2024 Weighted Average Term Extension (in Months) Weighted Average Interest Rate Reduction Weighted Average Payment Delay (in Months) Commercial Commercial and industrial 19 0.79 % 11 Owner occupied commercial mortgage 30 1.42 7 Investor dependent 11 2.75 8 Commercial real estate 20 0.78 39 Total commercial 20 0.86 13 Consumer Residential mortgage 71 1.89 11 Revolving mortgage 37 4.27 — Auto 31 0.53 — Other consumer 60 9.66 — Total consumer 56 2.73 11 Total loans and leases 21 1.00 % 13 132 Financial Effects of Loan Modifications made during the year ended December 31, 2023 Weighted Average Term Extension (in Months) Weighted Average Interest Rate Reduction Weighted Average Payment Delay (in Months) Commercial Commercial and industrial 13 2.04 % 6 Owner occupied commercial mortgage 17 3.52 — Investor dependent 9 1.00 5 Commercial real estate 12 3.00 7 Total commercial 12 2.71 6 Consumer Residential mortgage 79 4.13 6 Revolving mortgage 59 2.81 — Auto 27 0.69 — Other consumer 53 9.42 — Total consumer 74 4.08 6 Total loans and leases 14 2.89 % 6 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, PDs, and LGDs. 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 December 31, 2025, there were $ 166 million of loans modified in the year ended December 31, 2025, which defaulted subsequent to modification. At December 31, 2024 there were $ 62 million of loans modified in the year ended December 31, 2024, which defaulted subsequent to modification. 133 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 (year ended December 31, 2025) dollars in millions Current 30–59 Days Past Due 60–89 Days Past Due 90 Days or Greater Past Due Total Commercial Commercial and industrial $ 551 $ 15 $ 1 $ 30 $ 597 Capital call lines — — — — — Owner occupied commercial mortgage 59 2 3 2 66 Investor dependent 60 17 — — 77 Commercial real estate 246 17 — 80 343 Total commercial 916 51 4 112 1,083 Consumer Residential mortgage 30 3 6 7 46 Revolving mortgage 6 — — — 6 Auto — — — — — Other consumer — — — — — Total consumer 36 3 6 7 52 Total loans and leases $ 952 $ 54 $ 10 $ 119 $ 1,135 Modified Loans Payment Status (year ended December 31, 2024) dollars in millions Current 30–59 Days Past Due 60–89 Days Past Due 90 Days or Greater Past Due Total Commercial Commercial and industrial $ 252 $ 1 $ 1 $ 33 $ 287 Capital call lines — — — — — Owner occupied commercial mortgage 51 2 — — 53 Investor dependent 87 11 — — 98 Commercial real estate 233 6 — — 239 Total commercial 623 20 1 33 677 Consumer Residential mortgage 8 2 1 3 14 Revolving mortgage 9 — — 1 10 Auto — — — — — Other consumer — — — — — Total consumer 17 2 1 4 24 Total loans and leases $ 640 $ 22 $ 2 $ 37 $ 701 Modified Loans Payment Status (year ended December 31, 2023) dollars in millions Current 30–59 Days Past Due 60–89 Days Past Due 90 Days or Greater Past Due Total Commercial Commercial and industrial $ 147 $ 3 $ 1 $ 41 $ 192 Capital call lines — — — — — Owner occupied commercial mortgage 17 — — — 17 Investor dependent 58 1 — 4 63 Commercial real estate 309 — — 1 310 Total commercial 531 4 1 46 582 Consumer Residential mortgage 12 — 1 1 14 Revolving mortgage 3 — — — 3 Auto — — — — — Other consumer — — — — — Total consumer 15 — 1 1 17 Total loans and leases $ 546 $ 4 $ 2 $ 47 $ 599 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. At December 31, 2024, there were $ 55 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, 2024 . 134 Loans Pledged The following table provides information regarding loans pledged as collateral for borrowing capacity through the FHLB of Atlanta, the FRB and FDIC. Loans Pledged dollars in millions December 31, 2025 December 31, 2024 FHLB of Atlanta Lendable collateral value of pledged non-PCD loans $ 19,225 $ 17,873 Less: advances — — Less: letters of credit 1,450 1,450 Available borrowing capacity $ 17,775 $ 16,423 Pledged non-PCD loans $ 31,713 $ 30,421 FRB Lendable collateral value of pledged non-PCD loans $ 12,962 $ 5,475 Less: advances — — Available borrowing capacity $ 12,962 $ 5,475 Pledged non-PCD loans $ 13,640 $ 6,309 FDIC Lendable collateral value of pledged loans $ 35,705 $ 41,282 Less: advances — — Less: principal amount of the Purchase Money Note 33,500 35,991 Available borrowing capacity (1) $ — $ 5,291 Pledged loans (1) $ 34,465 $ 41,040 (1) As discussed in Note 2—Business Combinations, the draw period for the Advance Facility Agreement ended on March 27, 2025 so there was no available borrowing capacity at December 31, 2025. Loans remain 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 December 31, 2025 or 2024. 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 December 31, 2025 or 2024. In connection with the SVBB Acquisition, FCB and the FDIC entered into financing agreements, including the five-year Purchase Money Note, and the Advance Facility Agreement, which allowed for advances through March 27, 2025. There were no amounts outstanding at the end of the draw period of the facility on March 27, 2025. Subsequently in 2025, we increased our borrowing capacity under agreements with the FRB and FHLB through additional eligible collateral and portfolio growth. Refer to Note 2—Business Combinations for further discussion of the Purchase Money Note and the Advance Facility agreement and Note 12—Borrowings for the outstanding carrying value of the Purchase Money Note. 135 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 $ 260 million and $ 278 million, at December 31, 2025 and December 31, 2024, 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 Initial PCD ALLL for the SVBB Acquisition was established through a PCD Gross-Up and there was no corresponding increase to the provision for credit losses. The PCD Gross-Up is discussed in Note 1—Significant Accounting Policies and Basis of Presentation. The initial ALLL for Non-PCD loans and leases acquired in the SVBB Acquisition was established through a corresponding increase to the Day 2 Provision for Loan and Lease Losses. The ALLL activity for loans and leases is summarized in the following table: Allowance for Loan and Lease Losses dollars in millions Year Ended December 31, 2025 Year Ended December 31, 2024 Year Ended December 31, 2023 Commercial Consumer Total Commercial Consumer Total Commercial Consumer Total Balance at beginning of period $ 1,518 $ 158 $ 1,676 $ 1,581 $ 166 $ 1,747 $ 789 $ 133 $ 922 Initial PCD ALLL — — — — — — 217 3 220 Day 2 Provision for Loan and Lease Losses — — — — — — 419 43 462 Provision (benefit) for loan and lease losses 538 ( 8 ) 530 461 8 469 701 2 703 Total provision (benefit) for loan and lease losses 538 ( 8 ) 530 461 8 469 1,120 45 1,165 Charge-offs ( 708 ) ( 33 ) ( 741 ) ( 627 ) ( 30 ) ( 657 ) ( 610 ) ( 28 ) ( 638 ) Recoveries 88 13 101 103 14 117 65 13 78 Balance at end of period $ 1,436 $ 130 $ 1,566 $ 1,518 $ 158 $ 1,676 $ 1,581 $ 166 $ 1,747 The decrease of $ 110 million in the ALLL at December 31, 2025 compared to December 31, 2024, mainly driven by loan growth concentrated in capital call lines which have a lower loss rate relative to our other loan portfolios, elimination of the reserves related to Hurricane Helene, a modest shift in our weighting from the downside to baseline economic scenario, improvements in the economic outlook and credit quality, and lower specific reserves for individually evaluated loans. Also, during the year ended December 31, 2025, we updated our PD, LGD, and exposure at default methodology for certain portfolios which contributed to changes in the ALLL compared to prior periods. The following table presents the components of the provision for credit losses: Provision for Credit Losses dollars in millions Year Ended December 31, 2025 2024 2023 Day 2 Provision for Loan and Lease Losses $ — $ — $ 462 Provision for loan and lease losses 530 469 703 Total provision for loan and lease losses 530 469 1,165 Day 2 Provision for Off-Balance Sheet Credit Exposure — — 254 Benefit for off-balance sheet credit exposure ( 18 ) ( 38 ) ( 44 ) Total (benefit) provision for off-balance sheet credit exposure ( 18 ) ( 38 ) 210 Provision for other receivables 2 — — Provision for credit losses $ 514 $ 431 $ 1,375 136 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 relate to equipment leases, including the lease of certain ATMs. Our real estate leases have remaining lease terms of up to 32 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 millions Classification December 31, 2025 December 31, 2024 Lease assets: Operating lease ROU assets Other assets $ 294 $ 316 Finance leases Premises and equipment 71 15 Total lease assets $ 365 $ 331 Lease liabilities: Operating leases Other liabilities $ 329 $ 357 Finance leases Other borrowings 72 15 Total lease liabilities $ 401 $ 372 Weighted-average remaining lease terms: Operating leases 7.2 years 7.4 years Finance leases 7.7 years 11.7 years Weighted-average discount rate: Operating leases 3.10 % 2.94 % Finance leases 4.20 3.96 As of December 31, 2025, 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 millions Year Ended December 31, Classification 2025 2024 2023 Operating lease cost Occupancy expense $ 72 $ 76 $ 64 Finance lease ROU asset amortization Equipment expense 9 2 2 Interest on lease liabilities Interest expense - other borrowings 2 — — Variable lease cost (1) Occupancy expense 22 28 25 Sublease income Occupancy expense ( 6 ) ( 6 ) ( 3 ) Net lease cost (1) $ 99 $ 100 $ 88 (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 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. 137 The following table presents supplemental cash flow information related to leases: Supplemental Cash Flow Information dollars in millions Year Ended December 31, 2025 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 77 $ 77 $ 63 Operating cash flows from finance leases 2 — — Financing cash flows from finance leases 8 2 2 ROU assets obtained in exchange for new operating lease liabilities 48 28 69 ROU assets obtained in exchange for new finance lease liabilities 64 8 4 The following table presents lease liability maturities at December 31, 2025: Maturity of Lease Liabilities dollars in millions Operating Leases Finance Leases Total 2026 $ 67 $ 14 $ 81 2027 62 12 74 2028 48 12 60 2029 42 12 54 2030 35 12 47 Thereafter 110 23 133 Total undiscounted lease payments 364 85 449 Difference between undiscounted cash flows and discounted cash flows 35 13 48 Lease liabilities, at present value $ 329 $ 72 $ 401 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 includes the net book value of operating lease equipment by equipment type, net of accumulated depreciation of $ 1.18 billion and $ 941 million at December 31, 2025 and December 31, 2024, respectively. Operating Lease Equipment dollars in millions December 31, 2025 December 31, 2024 Railcars and locomotives (1) $ 8,882 $ 8,573 Other equipment 739 750 Total (1) $ 9,621 $ 9,323 (1) Includes off-lease rail equipment of $ 258 million at December 31, 2025 and $ 219 million at December 31, 2024. 138 The following table presents the components of the finance lease net investment on a discounted basis: Components of Net Investment in Finance Leases dollars in millions December 31, 2025 December 31, 2024 Lease receivables $ 1,827 $ 1,764 Unguaranteed residual assets 209 235 Total net investment in finance leases 2,036 1,999 Leveraged lease net investment (1) 17 15 Total (2) $ 2,053 $ 2,014 (1) Leveraged leases are reported net of non-recourse debt of $ 1 million at December 31, 2025 and $ 2 million at December 31, 2024. Our leveraged lease arrangements commenced before the ASC 842, Leases, effective date of January 1, 2019, and continue to be reported under the leveraged lease accounting model. ASC 842 eliminated leveraged lease accounting for new leases and for existing leases modified on or after the January 1, 2019. (2) Included in commercial and industrial in Note 5—Loans and Leases. The following table presents lease income related to BancShares’ equipment leases: Lease Income dollars in millions Year Ended December 31, 2025 2024 2023 Lease income – operating leases $ 1,037 $ 966 $ 895 Variable lease income – operating leases (1) 59 82 76 Rental income on operating leases 1,096 1,048 971 Interest income – sales type and direct financing leases 175 175 171 Variable lease income included in other noninterest income (2) 58 61 59 Interest income – leveraged leases 3 4 12 Total lease income $ 1,332 $ 1,288 $ 1,213 (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. The following tables present lease payments due on non-cancellable equipment operating leases and lease receivables due on finance leases at December 31, 2025. Excluded from these tables are variable lease payments, including rentals calculated based on asset usage levels, rentals from future renewal and re-leasing activity, and expected sales proceeds from remarketing equipment at lease expiration, all of which are components of lease profitability. Maturity Analysis of Operating Lease Payments dollars in millions 2026 $ 864 2027 721 2028 547 2029 364 2030 216 Thereafter 349 Total $ 3,061 Maturity Analysis of Lease Receivable Payments - Sales Type and Direct Financing Leases dollars in millions 2026 $ 739 2027 568 2028 394 2029 234 2030 84 Thereafter 45 Total undiscounted lease receivables $ 2,064 Difference between undiscounted cash flows and discounted cash flows 237 Lease receivables, at present value $ 1,827 139 NOTE 8 — PREMISES AND EQUIPMENT Major classifications of premises and equipment at December 31, 2025 and 2024 are summarized as follows: dollars in millions Useful Life (years) December 31, 2025 December 31, 2024 Land indefinite $ 496 $ 407 Premises and leasehold improvements 3 - 30 1,808 1,598 Furniture, equipment and software 2 - 15 2,046 1,629 Total 4,350 3,634 Less accumulated depreciation and amortization 1,903 1,628 Premises and equipment, net $ 2,447 $ 2,006 Depreciation and amortization expense is included in equipment expense and net occupancy expense in the Consolidated Statements of Income and was $ 314 million, $ 276 million, and $ 225 million for the years ended December 31, 2025, 2024 and 2023, respectively. For the year ended December 31, 2025, there was $ 6 million of impairment, primarily on software and related projects, recognized in other noninterest expense. For the year ended December 31, 2024, there was $ 22 million of impairment, primarily on software, of which $ 9 million was included in acquisition-related expenses, with the remaining amount included in other non-interest expense. NOTE 9 — GOODWILL AND CORE DEPOSIT INTANGIBLES Goodwill BancShares had goodwill of $ 346 million at December 31, 2025 and 2024. There was no goodwill impairment during the year ended December 31, 2025 or 2024. 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 Year Ended December 31, dollars in millions 2025 2024 Balance at beginning of period, net of accumulated amortization $ 249 $ 312 Less: amortization for the period 54 63 Balance at end of period, net of accumulated amortization $ 195 $ 249 The following table summarizes the accumulated amortization balance for core deposit intangibles: Core Deposit Intangible Accumulated Amortization dollars in millions December 31, 2025 December 31, 2024 Gross balance $ 501 $ 501 Less: accumulated amortization 306 252 Balance, net of accumulated amortization $ 195 $ 249 140 The following table summarizes the expected amortization expense as of December 31, 2025 in subsequent periods for core deposit intangibles: Core Deposit Intangible Expected Amortization dollars in millions 2026 46 2027 39 2028 34 2029 30 2030 28 Thereafter 18 Balance, net of accumulated amortization $ 195 NOTE 10 — VARIABLE INTEREST ENTITIES Unconsolidated VIEs Unconsolidated VIEs include limited partnership interests and joint ventures. 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 22—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 millions December 31, 2025 December 31, 2024 Affordable housing tax credit investments $ 2,761 $ 2,357 Other tax credit investments — 2 Total tax credit equity investments $ 2,761 $ 2,359 Other unconsolidated investments 194 157 Total unconsolidated VIE investments (1) $ 2,955 $ 2,516 Liabilities for commitments to fund tax credit investments (2) $ 1,321 $ 1,214 (1) Included in other assets. (2) Represents commitments to invest in qualified affordable housing investments. These commitments are payable on demand and included in other liabilities. 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 millions Year Ended December 31, 2025 2024 2023 Amortization of affordable housing tax credit investments (1) $ 264 $ 237 $ 169 Tax credits from affordable housing tax credit investments ( 263 ) ( 231 ) ( 157 ) Other tax benefits from affordable housing tax credit investments ( 73 ) ( 56 ) ( 29 ) Net income tax benefit from affordable housing tax credit investments (2) $ ( 72 ) $ ( 50 ) $ ( 17 ) (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 During 2025, we received approximately $ 190 million of tax credits related to renewable energy tax credit investments accounted for under the HLBVM and Deferral Method. Refer to Note 1—Significant Accounting Policies and Basis of Presentation for further discussion of the PAM, HLBVM, and Deferral Method. 141 NOTE 11 — DEPOSITS The following table provides detail on deposit types: Deposit Types dollars in millions December 31, 2025 December 31, 2024 Noninterest-bearing $ 40,653 $ 38,633 Checking with interest 24,377 25,343 Money market 38,687 35,722 Savings 46,625 42,278 Time 11,236 13,253 Total deposits $ 161,578 $ 155,229 At December 31, 2025, the scheduled maturities of time deposits were: Deposit Maturities dollars in millions Twelve months ended December 31, 2026 $ 11,002 2027 159 2028 31 2029 19 2030 25 Thereafter — Total time deposits $ 11,236 Time deposits with a denomination of $250,000 or more were $ 3.26 billion and $ 3.80 billion at December 31, 2025 and December 31, 2024, respectively. NOTE 12 — BORROWINGS Short-term Borrowings Securities Sold under Agreements to Repurchase BancShares held $ 224 million and $ 367 million at December 31, 2025 and December 31, 2024, 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 0.41 % and 0.59 % at December 31, 2025 and 2024, 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. 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, and 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 $ 230 million and $ 435 million at December 31, 2025 and 2024, respectively. 142 Long-term Borrowings On September 5, 2025, the Parent Company issued and sold $ 600 million aggregate principal amount of its 5.600 % Fixed Rate Reset Subordinated Notes due in 2035 in a public offering. On March 12, 2025, the Parent Company issued and sold $ 500 million aggregate principal amount of its 5.231 % Fixed-to-Floating Rate Senior Notes due in 2031 and $ 750 million aggregate principal amount of its 6.254 % Fixed-to-Fixed Rate Subordinated Notes due in 2040 in a public offering. In December 2025, FCB made a partial prepayment of $ 2.49 billion on the outstanding Purchase Money Note and recognized a loss on extinguishment of debt of $ 9 million. On June 15, 2025, the Parent Company redeemed all $ 350 million aggregate principal amount of its 3.375 % Fixed-to-Floating Rate Subordinated Notes due in 2030. The following table presents long-term borrowings, net of the respective unamortized purchase accounting adjustments and issuance costs: Long-term Borrowings dollars in millions Maturity December 31, 2025 December 31, 2024 Parent Company: Senior: Fixed-to-Floating Senior Notes at 5.231 % (1) March 2031 $ 497 $ — Subordinated: Fixed-to-Floating Subordinated Notes at 3.375 % (2) March 2030 — 350 Fixed Rate Reset Subordinated Notes at 5.600 % (3) September 2035 597 — Fixed-to-Fixed Subordinated Notes at 6.254 % (4) March 2040 745 — Subsidiaries: Senior: Fixed Senior Unsecured Notes at 6.000 % April 2036 58 58 Subordinated: Fixed Subordinated Notes at 6.125 % March 2028 430 445 Secured: Purchase Money Note to FDIC fixed at 3.500 % (5) March 2028 33,385 35,816 Capital lease obligations Maturities through May 2057 72 15 Total long-term borrowings $ 35,784 $ 36,684 (1) The fixed rate period will end March 12, 2030, and the notes will thereafter bear a floating interest rate equal to a benchmark rate based on the Compounded Secured Overnight Financing Rate (“SOFR”) Index Rate plus 141 basis points (“bps”) per annum until the maturity date (or date of earlier redemption). (2) The fixed rate period ended on March 15, 2025, and the notes converted to a floating interest rate equal to Three-Month Term SOFR plus 246.5 bps per annum. The notes included a callable feature and were redeemed on June 15, 2025. (3) The interest rate will reset on September 5, 2030, and the notes will thereafter bear a fixed interest rate equal to the Five-year U.S. Treasury Rate as of the day falling two business days prior to the notes reset date plus 185 bps per annum until the maturity date (or date of earlier redemption). (4) The interest rate will reset on March 12, 2035, and the notes will thereafter bear a fixed interest rate equal to the Five-year U.S. Treasury Rate as of the day falling two business days prior to the notes reset date plus 197 bps per annum until the maturity date (or date of earlier redemption). (5) Refer to Note 2—Business Combinations and Note 5—Loans and Leases. Contractual maturities of long-term borrowings (borrowings with original maturities of more than one year) at December 31, 2025 are included in the following table. Long-term Borrowings Maturities (1) dollars in millions Year Ended December 31, 2026 $ ( 37 ) 2027 ( 39 ) 2028 33,889 2029 ( 1 ) 2030 ( 1 ) Thereafter 1,973 Total long-term borrowings $ 35,784 (1) Amounts in this table include amortization of purchase accounting adjustments and deferred issuance cost based on the scheduled periods of recognition. 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 $ 212 million and $ 211 million at December 31, 2025 and 2024, respectively, that were required minimum deposits under the Purchase Money Note. 143 NOTE 13 — DERIVATIVE FINANCIAL INSTRUMENTS Our derivatives designated as hedging instruments 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 and deposits. Our derivatives not designated as hedging instruments 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. 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 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 millions December 31, 2025 December 31, 2024 Notional Amount Asset Fair Value Liability Fair Value Notional Amount Asset Fair Value Liability Fair Value Derivatives designated as hedging instruments (Qualifying hedges) Fair Value Hedges Interest rate contracts hedging time deposits $ — $ — $ — $ 334 $ — $ — Interest rate contracts hedging long-term borrowings — — — 750 — — Total fair value hedges (1) (2) — — — 1,084 — — Cash Flow Hedges Interest rate contracts hedging loans (1) (2) 4,000 — — 3,500 1 — Total derivatives designated as hedging instruments $ 4,000 $ — $ — $ 4,584 $ 1 $ — Derivatives not designated as hedging instruments (Non-qualifying hedges) Interest rate contracts (1) (2) $ 28,741 $ 385 $ ( 381 ) $ 26,235 $ 491 $ ( 516 ) Foreign exchange contracts (3) 8,912 122 ( 113 ) 7,843 152 ( 108 ) Other contracts (4) 1,485 27 — 1,316 16 ( 1 ) Total derivatives not designated as hedging instruments $ 39,138 $ 534 $ ( 494 ) $ 35,394 $ 659 $ ( 625 ) Gross derivatives fair values presented in the Consolidated Balance Sheets $ 534 $ ( 494 ) $ 660 $ ( 625 ) Less: gross amount offset in the Consolidated Balance Sheets — — — — Net amount included in other assets and other liabilities in the Consolidated Balance Sheets $ 534 $ ( 494 ) $ 660 $ ( 625 ) (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 $ 252 million and $ 0 million, respectively, as of December 31, 2025, and $ 177 million and $ 0 million, respectively, as of December 31, 2024. (4) Other derivative contracts not designated as hedging instruments include risk participation agreements and equity warrants. 144 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 millions December 31, 2025 December 31, 2024 Asset Fair Value Liability Fair Value Asset Fair Value Liability Fair Value Derivatives designated as hedging instruments (Qualifying hedges) Gross fair value $ 19 $ — $ 15 $ — Cleared trades, variation margin netting ( 19 ) — ( 14 ) — Total derivatives designated as hedging instruments $ — $ — $ 1 $ — Derivatives not designated as hedging instruments (Non-qualifying hedges) Gross fair value $ 596 $ ( 529 ) $ 742 $ ( 647 ) Cleared trades, variation margin netting ( 62 ) 35 ( 83 ) 22 Total derivatives not designated as hedging instruments $ 534 $ ( 494 ) $ 659 $ ( 625 ) Gross derivatives fair values presented in the Consolidated Balance Sheets $ 534 $ ( 494 ) $ 660 $ ( 625 ) Amounts subject to master netting agreements (1) ( 118 ) 118 ( 48 ) 48 Cash collateral pledged (received) subject to master netting agreements (2) ( 204 ) 62 ( 539 ) 2 Total net derivative fair value $ 212 $ ( 314 ) $ 73 $ ( 575 ) (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 millions Year Ended December 31, Interest Expense 2025 2024 2023 (Loss) gain on hedging instruments - borrowings Borrowings $ — $ ( 4 ) $ 4 Gain (loss) on hedged item - time deposits Deposits 1 ( 1 ) — Gain (loss) on hedged item - borrowings Borrowings 2 3 ( 5 ) Net gain (loss) on fair value hedges Total interest expense $ 3 $ ( 2 ) $ ( 1 ) The following table presents the carrying value of hedged items and associated cumulative hedging adjustment related to fair value hedges as of December 31, 2024. There were no fair value hedges outstanding as of December 31, 2025. Carrying Value of Hedged Items dollars in millions Cumulative Fair Value Hedging Adjustment Included in the Carrying Value of Hedged Items Carrying Value of Hedged Items Currently Designated No Longer Designated December 31, 2024 Long-term borrowings $ 795 $ 2 $ — Deposits 335 1 — 145 Cash Flow Hedges The following table presents the pretax unrealized gain on hedging instruments in cash flow hedges, which are reported in other comprehensive income, and the pretax amount reclassified from AOCI to earnings: Unrealized Gain on Cash Flow Hedges dollars in millions Year Ended December 31, 2025 2024 2023 Other comprehensive income on cash flow hedge derivatives before reclassifications $ 12 $ 11 $ — Amounts reclassified from AOCI to earnings ( 4 ) — — Other comprehensive income on cash flow hedge derivatives $ 8 $ 11 $ — The following table presents other information for cash flow hedges: Other Information for Cash Flow Hedges dollars in millions December 31, 2025 December 31, 2024 Unrealized gain on cash flow hedge derivatives reported in AOCI, net of income taxes $ 14 $ 8 Estimate to be reclassified from AOCI to earnings during the next 12 months, net of income taxes (1) $ 9 $ 7 Maximum number of months over which forecasted cash flows are hedged (2) 27 24 (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 December 31, 2025 and 2024, respectively. Non-Qualifying Hedges The following table presents gains on non-qualifying hedges recognized on the Consolidated Statements of Income: Gains (Losses) on Non-Qualifying Hedges dollars in millions Year Ended December 31, Amounts Recognized 2025 2024 2023 Interest rate contracts Other noninterest income $ 14 $ 22 $ 32 Foreign currency forward contracts (1) Other noninterest income ( 50 ) 59 ( 8 ) Other contracts Other noninterest income 7 2 1 Total non-qualifying hedges - income statement impact $ ( 29 ) $ 83 $ 25 (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 14 — 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. 146 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 millions December 31, 2025 Total Level 1 Level 2 Level 3 Assets Investment securities available for sale U.S. Treasury $ 10,673 $ — $ 10,673 $ — Government agency 43 — 43 — Residential mortgage-backed securities 17,623 — 17,623 — Commercial mortgage-backed securities 3,299 — 3,299 — Corporate bonds 140 — 117 23 Municipal bonds 12 — 12 — Total investment securities available for sale $ 31,790 $ — $ 31,767 $ 23 Marketable equity securities 127 50 77 — Loans held for sale 87 — 87 — Loans 22 — 22 — Derivative assets (1) Total qualifying hedge assets $ — $ — $ — $ — Interest rate contracts — non-qualifying hedges $ 385 $ — $ 383 $ 2 Foreign exchange contracts — non-qualifying hedges 122 — 122 — Other derivative contracts — non-qualifying hedges 27 — — 27 Total non-qualifying hedge assets $ 534 $ — $ 505 $ 29 Total derivative assets $ 534 $ — $ 505 $ 29 Liabilities Derivative liabilities (1) Interest rate contracts — qualifying hedges $ — $ — $ — $ — Interest rate contracts — non-qualifying hedges $ 381 $ — $ 381 $ — Foreign exchange contracts — non-qualifying hedges 113 — 113 — Other derivative contracts — non-qualifying hedges — — — — Total non-qualifying hedge liabilities $ 494 $ — $ 494 $ — Total derivative liabilities $ 494 $ — $ 494 $ — (1) Derivative fair values include accrued interest. 147 dollars in millions December 31, 2024 Total Level 1 Level 2 Level 3 Assets Investment securities available for sale U.S. Treasury $ 13,903 $ — $ 13,903 $ — Government agency 77 — 77 — Residential mortgage-backed securities 15,620 — 15,620 — Commercial mortgage-backed securities 3,666 — 3,666 — Corporate bonds 467 — 299 168 Municipal bonds 17 — 17 — Total investment securities available for sale $ 33,750 $ — $ 33,582 $ 168 Marketable equity securities 101 48 53 — Loans held for sale 55 — 55 — Derivative assets (1) Total qualifying hedge assets $ 1 $ — $ 1 $ — Interest rate contracts — non-qualifying hedges $ 491 $ — $ 490 $ 1 Foreign exchange contracts — non-qualifying hedges 152 — 152 — Other derivative contracts — non-qualifying hedges 16 — — 16 Total non-qualifying hedge assets $ 659 $ — $ 642 $ 17 Total derivative assets $ 660 $ — $ 643 $ 17 Liabilities Derivative liabilities (1) Interest rate contracts — qualifying hedges $ — $ — $ — $ — Interest rate contracts — non-qualifying hedges $ 516 $ — $ 516 $ — Foreign exchange contracts — non-qualifying hedges 108 — 108 — Other derivative contracts — non-qualifying hedges 1 — — 1 Total non-qualifying hedge liabilities $ 625 $ — $ 624 $ 1 Total derivative liabilities $ 625 $ — $ 624 $ 1 (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. These securities are classified as Level 3. 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. 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 13—Derivative Financial Instruments for notional amounts and fair values. 148 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 Instrument Estimated Fair Value Valuation Technique Significant Unobservable Inputs December 31, 2025 December 31, 2024 Assets Corporate bonds $ 23 $ 168 Indicative bid provided by broker Multiple 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-qualifying hedges $ 29 $ 17 Internal valuation model Multiple factors, including but not limited to, private company valuation, illiquidity discount, and estimated life of the instrument. Liabilities Interest rate & other derivative — non-qualifying hedges $ — $ 1 Internal valuation model Not material 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 millions Year Ended December 31, 2025 Year Ended December 31, 2024 Corporate Bonds Other Derivative Assets — Non-Qualifying Other Derivative Liabilities — Non-Qualifying Corporate Bonds Other Derivative Assets — Non-Qualifying Other Derivative Liabilities — Non-Qualifying Beginning balance $ 168 $ 17 $ 1 $ 157 $ 7 $ 1 Purchases — 8 — — 9 — Changes in fair value included in earnings — 5 ( 1 ) ( 1 ) 2 — Changes in fair value included in comprehensive income 9 — — 12 — — Transfers out ( 24 ) — — — — — Maturity and settlements ( 130 ) ( 1 ) — — ( 1 ) — Ending balance $ 23 $ 29 $ — $ 168 $ 17 $ 1 Fair Value Option The following table summarizes the difference between the aggregate fair value and the UPB for residential mortgage loans originated for sale measured at fair value: Aggregate Fair Value and UPB - Residential Mortgage Loans dollars in millions December 31, 2025 December 31, 2024 Fair Value Unpaid Principal Balance Difference Fair Value Unpaid Principal Balance Difference Originated loans held for sale (1) $ 109 $ 109 $ — $ 55 $ 54 $ 1 (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 years ended December 31, 2025 and 2024. Interest earned on originated loans held for sale is recorded within interest income on loans and leases in the Consolidated Statements of Income. No originated loans held for sale were 90 or more days past due or on nonaccrual status as of December 31, 2025 or 2024. 149 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 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 millions Fair Value Measurements Total Level 1 Level 2 Level 3 Total Gains (Losses) December 31, 2025 Assets held for sale - loans $ 5 $ — $ — $ 5 $ ( 7 ) Loans - collateral dependent loans 186 — — 186 ( 157 ) Other real estate owned 104 — — 104 — Total $ 295 $ — $ — $ 295 $ ( 164 ) December 31, 2024 Assets held for sale - loans $ 13 $ — $ — $ 13 $ ( 7 ) Loans - collateral dependent loans 388 — — 388 ( 171 ) Other real estate owned 16 — — 16 6 Total $ 417 $ — $ — $ 417 $ ( 172 ) 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 7 % and 10 %, applied for estimated selling costs and other external factors that may impact the marketability of the property. At December 31, 2025 and 2024, the weighted average discount applied was 7.86 % and 9.45 %, 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. 150 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 millions December 31, 2025 Estimated Fair Value Carrying Value Level 1 Level 2 Level 3 Total Financial Assets Cash and due from banks $ 801 $ 801 $ — $ — $ 801 Interest-earning deposits at banks 19,801 19,801 — — 19,801 Securities purchased under agreements to resell 232 — 232 — 232 Investment in marketable equity securities 127 50 77 — 127 Investment securities available for sale 31,790 — 31,767 23 31,790 Investment securities held to maturity 9,647 — 8,491 — 8,491 Loans held for sale 799 — 781 18 799 Net loans 144,346 — 1,580 143,782 145,362 Accrued interest receivable 912 — 912 — 912 Federal Home Loan Bank stock 20 — 20 — 20 Mortgage servicing rights 32 — — 50 50 Derivative assets - non-qualifying hedges 534 — 505 29 534 Financial Liabilities Deposits with no stated maturity 150,342 — 150,342 — 150,342 Time deposits 11,236 — 11,227 — 11,227 Credit balances of factoring clients 1,148 — — 1,148 1,148 Securities sold under customer repurchase agreements 224 — 224 — 224 Long-term borrowings 35,712 — 35,795 — 35,795 Accrued interest payable 140 — 140 — 140 Derivative liabilities - non-qualifying hedges 494 — 494 — 494 December 31, 2024 Estimated Fair Value Carrying Value Level 1 Level 2 Level 3 Total Financial Assets Cash and due from banks $ 814 $ 814 $ — $ — $ 814 Interest-earning deposits at banks 21,364 21,364 — — 21,364 Securities purchased under agreements to resell 158 — 158 — 158 Investment in marketable equity securities 101 48 53 — 101 Investment securities available for sale 33,750 — 33,582 168 33,750 Investment securities held to maturity 10,239 — 8,702 — 8,702 Loans held for sale 82 — 55 27 82 Net loans 136,567 — 1,463 133,409 134,872 Accrued interest receivable 902 — 902 — 902 Federal Home Loan Bank stock 20 — 20 — 20 Mortgage servicing rights 27 — — 47 47 Derivative assets - qualifying hedges 1 — 1 — 1 Derivative assets - non-qualifying hedges 659 — 642 17 659 Financial Liabilities Deposits with no stated maturity 141,976 — 141,976 — 141,976 Time deposits 13,253 — 13,247 — 13,247 Credit balances of factoring clients 1,016 — — 1,016 1,016 Securities sold under customer repurchase agreements 367 — 367 — 367 Long-term borrowings 36,669 — 36,220 — 36,220 Accrued interest payable 134 — 134 — 134 Derivative liabilities - non-qualifying hedges 625 — 624 1 625 151 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 December 31, 2025 and December 31, 2024 included $ 212 million and $ 211 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 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 December 31, 2025 and December 31, 2024. 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. 152 NOTE 15 — STOCKHOLDERS' EQUITY A roll forward of common stock activity is presented in the following table: Number of Shares of Common Stock December 31, 2025 December 31, 2024 Common Stock Outstanding Common Stock Outstanding Class A Class B Class A Class B Common stock - beginning of period 12,712,436 1,005,185 13,514,933 1,005,185 Shares purchased under authorized repurchase plan ( 1,578,462 ) — ( 814,641 ) — Restricted stock units vested, net of shares held to cover taxes — — 12,144 — Common stock - end of period 11,133,974 1,005,185 12,712,436 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 while Class B common stockholders have 16 votes per share. Non-Cumulative Perpetual Preferred Stock On November 18, 2025, the Parent Company issued and sold 7.000 % non-cumulative perpetual preferred stock, series D, for a total of $ 500 million. As of December 31, 2025, the Parent Company had Series A, Series B, Series C, and Series D non-cumulative perpetual preferred stock (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 Stock Issuance Date Earliest Redemption Date Book Value (1) Par Value Per Share Shares Authorized, Issued and Outstanding Aggregate Liquidation Preference Liquidation Preference Per Share Depositary Shares (Fractional Interest) (2) Liquidation Preference Per Depositary Share Dividend Series A March 12, 2020 March 15, 2025 $ 340 $ 0.01 345,000 $ 345 $ 1,000 13,800,000 (1/40 th ) $ 25 5.375 % Series B (3) January 3, 2022 January 4, 2027 334 0.01 325,000 325 1,000 n/a n/a SOFR + 3.972 % Series C January 3, 2022 January 4, 2027 207 0.01 8,000,000 200 25 n/a n/a 5.625 % Series D (4) November 18, 2025 December 15, 2030 494 0.01 5,000 500 100,000 500,000 (1/100 th ) 1,000 7.000 % Total $ 1,375 8,675,000 $ 1,370 (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 original 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. 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. The Parent Company may redeem the BancShares Preferred Stock at its option, and subject to any required regulatory approval, at a redemption price equal to the “Liquidation Preference Per Share” in the table above, plus any declared and unpaid dividends to, but excluding, the redemption date, (i) in whole or in part, from time to time, 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. Issuance of Series E Non-Cumulative Perpetual Preferred Stock On February 5, 2026, the Parent Company issued and sold 6.625 % non-cumulative perpetual preferred stock, series E (“Series E Preferred Stock”), for a total of $ 400 million. The issuance and sale included 16,000,000 depositary shares, each representing a 1/40th ownership interest in a share of Series E Preferred Stock with a liquidation preference of $ 1,000 per share (equivalent to $ 25 per depository share). 153 NOTE 16 — ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME The following table includes the components of AOCI: Components of Accumulated Other Comprehensive Loss dollars in millions December 31, 2025 December 31, 2024 Pretax Income Taxes Net of Income Taxes Pretax Income Taxes Net of Income Taxes Unrealized loss on securities available for sale $ ( 162 ) $ 25 $ ( 137 ) $ ( 762 ) $ 178 $ ( 584 ) Unrealized loss on securities available for sale transferred to held to maturity ( 5 ) 1 ( 4 ) ( 6 ) 2 ( 4 ) Defined benefit pension items 282 ( 72 ) 210 182 ( 47 ) 135 Unrealized gain on cash flow hedge derivatives 19 ( 5 ) 14 11 ( 3 ) 8 Total accumulated other comprehensive income (loss) $ 134 $ ( 51 ) $ 83 $ ( 575 ) $ 130 $ ( 445 ) 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 millions Unrealized loss on securities available for sale Unrealized loss on securities available for sale transferred to held to maturity Defined benefit pension items Unrealized gain on cash flow hedge derivatives Total accumulated other comprehensive (loss) income Balance as of December 31, 2024 $ ( 584 ) $ ( 4 ) $ 135 $ 8 $ ( 445 ) AOCI activity before reclassifications 449 — 75 9 533 Amounts reclassified from AOCI to earnings ( 2 ) — — ( 3 ) ( 5 ) Other comprehensive income for the period 447 — 75 6 528 Balance as of December 31, 2025 $ ( 137 ) $ ( 4 ) $ 210 $ 14 $ 83 Balance as of December 31, 2023 $ ( 577 ) $ ( 5 ) $ 91 $ — $ ( 491 ) AOCI activity before reclassifications ( 7 ) — 44 8 45 Amounts reclassified from AOCI to earnings — 1 — — 1 Other comprehensive (loss) income for the period ( 7 ) 1 44 8 46 Balance as of December 31, 2024 $ ( 584 ) $ ( 4 ) $ 135 $ 8 $ ( 445 ) 154 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 millions Year Ended December 31, 2025 2024 Pretax Income Taxes Net of Income Taxes Pretax Income Taxes Net of Income Taxes Income Statement Line Items Unrealized loss on securities available for sale: AOCI activity before reclassifications $ 603 $ ( 154 ) $ 449 $ ( 10 ) $ 3 $ ( 7 ) Amounts reclassified from AOCI to earnings ( 3 ) 1 ( 2 ) — — — Realized gain on sale of investment securities, net Other comprehensive income (loss) on securities available for sale $ 600 $ ( 153 ) $ 447 $ ( 10 ) $ 3 $ ( 7 ) Unrealized loss on securities available for sale transferred to held to maturity: Amounts reclassified from AOCI to earnings $ 1 $ ( 1 ) $ — $ 1 $ — $ 1 Interest income on investment securities Defined benefit pension items: Actuarial gain $ 100 $ ( 25 ) $ 75 $ 60 $ ( 16 ) $ 44 Unrealized gain on cash flow hedge derivatives: AOCI activity before reclassifications $ 12 $ ( 3 ) $ 9 $ 11 $ ( 3 ) $ 8 Amounts reclassified from AOCI to earnings ( 4 ) 1 ( 3 ) — — — Interest income on loans and leases Other comprehensive income on cash flow hedge derivatives $ 8 $ ( 2 ) $ 6 $ 11 $ ( 3 ) $ 8 Total other comprehensive income $ 709 $ ( 181 ) $ 528 $ 62 $ ( 16 ) $ 46 NOTE 17 — REGULATORY CAPITAL BancShares and FCB are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on BancShares’ Consolidated Financial Statements. Certain activities, such as the ability to undertake new business initiatives, including acquisitions, the access to and cost of funding for new business initiatives, the ability to pay dividends, the ability to repurchase shares or other capital instruments, the level of deposit insurance costs, and the level and nature of regulatory oversight, largely depend on a financial institution’s capital strength. Federal banking agencies approved regulatory capital guidelines (“Basel III”) aimed at strengthening previous capital requirements for banking organizations. The following table includes the Basel III requirements for regulatory capital ratios. Basel III Minimums Basel III Conservation Buffers Basel III Requirements Regulatory capital ratios Total risk-based capital 8.00 % 2.50 % 10.50 % Tier 1 risk-based capital 6.00 2.50 8.50 Common equity Tier 1 4.50 2.50 7.00 Tier 1 leverage 4.00 — 4.00 155 The FDIC also has Prompt Corrective Action (“PCA”) thresholds for regulatory capital ratios. The regulatory capital ratios for BancShares and FCB are calculated in accordance with the guidelines of the federal banking authorities. The regulatory capital ratios for BancShares and FCB exceed the Basel III requirements and the PCA well capitalized thresholds as of December 31, 2025 and 2024 as summarized in the following table. dollars in millions December 31, 2025 December 31, 2024 Basel III Requirements PCA Well Capitalized Thresholds Amount Ratio Amount Ratio BancShares Total risk-based capital 10.50 % 10.00 % $ 24,945 13.71 % $ 24,610 15.04 % Tier 1 risk-based capital 8.50 8.00 21,660 11.91 22,137 13.53 Common equity Tier 1 7.00 6.50 20,285 11.15 21,256 12.99 Tier 1 leverage 4.00 5.00 21,660 9.29 22,137 9.90 FCB Total risk-based capital 10.50 % 10.00 % $ 24,739 13.62 % $ 23,975 14.66 % Tier 1 risk-based capital 8.50 8.00 22,796 12.55 21,852 13.37 Common equity Tier 1 7.00 6.50 22,796 12.55 21,852 13.37 Tier 1 leverage 4.00 5.00 22,796 9.79 21,852 9.78 As of December 31, 2025, BancShares and FCB had total risk-based capital ratio conservation buffers of 5.71 % and 5.62 %, respectively, which are in excess of the Basel III conservation buffer of 2.50 %. As of December 31, 2024, BancShares and FCB had total risk-based capital ratio conservation buffers of 7.04 % and 6.66 %, respectively. The capital ratio conservation buffers represent the excess of the regulatory capital ratio as of December 31, 2025 and 2024 over the Basel III minimum for the ratio that is the binding constraint. Additional Tier 1 capital for BancShares includes preferred stock discussed further in Note 15—Stockholders' Equity. Additional Tier 2 capital for BancShares and FCB primarily consists of qualifying ALLL and qualifying subordinated debt. 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 $ 6.57 billion while continuing to meet the requirements for well capitalized banks at December 31, 2025. Dividends declared by FCB and paid to the Parent Company amounted to $ 1.68 billion for the year ended December 31, 2025. 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. NOTE 18 — 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 Year Ended December 31, 2025 2024 2023 Net income $ 2,206 $ 2,777 $ 11,466 Preferred stock dividends 57 61 59 Net income available to common stockholders $ 2,149 $ 2,716 $ 11,407 Weighted average common shares outstanding Basic shares outstanding 13,002,455 14,341,872 14,527,902 Stock-based awards — 783 11,711 Diluted shares outstanding 13,002,455 14,342,655 14,539,613 Earnings per common share Basic $ 165.24 $ 189.42 $ 785.14 Diluted $ 165.24 $ 189.41 $ 784.51 156 NOTE 19 — INCOME TAXES The provision (benefit) for income taxes for the year ended December 31, 2025, 2024 and 2023 is comprised of the following: Provision (Benefit) for Income Taxes dollars in millions Year Ended December 31, 2025 2024 2023 Current U.S. federal income tax provision $ 585 $ 649 $ 400 Deferred U.S. federal income tax (benefit) / provision ( 38 ) 68 46 Total federal income tax provision 547 717 446 Current state and local income tax provision 286 157 372 Deferred state and local income tax benefit ( 79 ) ( 71 ) ( 222 ) Total state and local income tax provision 207 86 150 Total non-U.S. income tax provision 11 12 15 Total provision for income taxes $ 765 $ 815 $ 611 A reconciliation from the U.S. Federal statutory rate to BancShares’ actual effective income tax rate for the year ended December 31, 2025, 2024 and 2023 is presented below. Income tax expense (benefit) includes, if applicable, federal, state and foreign taxes: Effective Tax Rate Reconciliation dollars in millions Year Ended December 31, 2025 2024 2023 Amount Percent Amount Percent Amount Percent Pretax income domestic $ 2,926 $ 3,551 $ 12,043 Pretax income foreign 45 41 34 Total pretax income $ 2,971 $ 3,592 $ 12,077 US federal statutory income tax rate $ 624 21.0 % $ 754 21.0 % $ 2,536 21.0 % Domestic federal taxes Tax credits Low income housing ( 44 ) ( 1.5 ) ( 29 ) ( 0.8 ) ( 17 ) ( 0.1 ) Other ( 26 ) ( 0.9 ) ( 16 ) ( 0.4 ) ( 6 ) — Nontaxable and nondeductible items Gain on acquisition — — — — ( 1,874 ) ( 15.5 ) FDIC premiums 36 1.2 24 0.7 23 0.2 Other 4 0.1 — — 2 — Other 3 0.1 3 0.1 ( 7 ) ( 0.1 ) Domestic state and local income taxes, net of federal effect 149 5.0 33 0.9 ( 51 ) ( 0.4 ) Foreign tax effects 2 0.1 2 — 5 — Changes in unrecognized tax benefits 17 0.6 44 1.2 — — Total effective tax rate $ 765 25.7 % $ 815 22.7 % $ 611 5.1 % On July 4, 2025, President Trump signed into law H.R. 1, referred to as the One Big Beautiful Bill Act (the “OBBBA”). The OBBBA contains several provisions that impact corporate taxation. The enactment of the OBBBA did not have a material impact on our tax rate or results of operations. BancShares permanently reinvested eligible earnings of certain foreign subsidiaries and accordingly, does not accrue any U.S. or foreign taxes that would be due if those earnings were repatriated. As of December 31, 2025, this assertion resulted in an unrecognized net deferred tax liability of approximately $ 28 million. 157 Jurisdictions which make up the majority of state and local income tax are as follows: State and Local Jurisdictions Year Ended December 31, 2025 2024 2023 California California California New York New York New York New York City North Carolina Massachusetts The tax effects of temporary differences that give rise to deferred income tax assets and liabilities at December 31, 2025 and 2024 are presented below: Components of Deferred Income Tax Assets and Liabilities dollars in millions December 31, 2025 December 31, 2024 Deferred Tax Assets: Allowance for loan and lease losses $ 466 $ 500 Net unrealized loss on investment securities available for sale 67 226 Deferred compensation 129 128 Capitalized costs 21 110 Lease liabilities 77 84 Tax credits 75 79 Net operating loss carry forwards 67 76 Other 104 112 Total gross deferred tax assets 1,006 1,315 Deferred Tax Liabilities: Basis difference in loans ( 1,886 ) ( 2,243 ) Operating leases ( 1,938 ) ( 1,847 ) Loans and direct financing leases ( 311 ) ( 329 ) Pension assets ( 161 ) ( 129 ) Right of use assets for operating leases ( 64 ) ( 73 ) Other ( 130 ) ( 149 ) Total deferred tax liabilities ( 4,490 ) ( 4,770 ) Total net deferred tax liability before valuation allowances ( 3,484 ) ( 3,455 ) Less: valuation allowances ( 17 ) ( 17 ) Net deferred tax liability after valuation allowances $ ( 3,501 ) $ ( 3,472 ) Net Operating Loss Carryforwards and Valuation Adjustments As of December 31, 2025 , BancShares has DTAs totaling $ 67 million on its global net operating losses (“NOLs”). This includes: (1) DTAs of $ 50 million (net of federal expense) relating to cumulative state NOLs of $ 1.15 billion, including amounts of reporting entities that file in multiple jurisdictions, (2) DTAs of $ 12 million relating to cumulative non-U.S. NOLs of $ 55 million, and (3) DTAs of $ 5 million relating to cumulative federal NOLs of $ 23 million. The U.S. federal NOLs were substantially utilized in 2023 and the remaining federal NOLs are limited under Internal Revenue Code Sec. 382 and begin to expire in 2030. State NOLs begin to expire in 2026 and non-US NOLs will begin to expire in 2041. As of December 31, 2025 , BancShares has DTAs of $ 75 million from its global tax credits. This includes: (1) DTAs of $ 50 million from federal tax credits, which BancShares has committed to purchase in 2026, (2) DTAs of $ 20 million (net of federal expense) from state tax credits, and (3) DTAs of $ 5 million from non-U.S. tax credits. The federal tax credits begin to expire in 2046, the state tax credits begin to expire in 2026, and the non-U.S. credits begin to expire in 2035. During 2025, management updated BancShares’ forecast of future U.S. state taxable income. The updated forecast continues to support a valuation allowance of $ 17 million (net of federal benefit) on U.S. state DTAs relating to certain state NOLs as of December 31, 2025 . 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. 158 Liabilities for Unrecognized Tax Benefits A reconciliation of the beginning and ending amount of UTBs is as follows: Unrecognized Tax Benefits December 31, 2025 December 31, 2024 December 31, 2023 dollars in millions Liabilities for Unrecognized Tax Benefits Interest / Penalties Total Total Total Balance at beginning of period $ 77 $ 9 $ 86 $ 31 $ 30 Additions for tax positions related to current year 4 — 4 8 — Additions for tax positions related to prior years 14 6 20 48 5 Reductions for tax positions of prior years ( 17 ) — ( 17 ) — — Expiration of statutes of limitations ( 2 ) — ( 2 ) ( 1 ) ( 2 ) Settlements ( 1 ) ( 1 ) ( 2 ) — ( 2 ) Balance at end of period $ 75 $ 14 $ 89 $ 86 $ 31 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. During the year ended December 31, 2025 , BancShares recorded a net increase in UTBs, including interest and penalties. The net increase primarily related to additions for tax positions related to prior and current years and was partially offset by the reductions for tax positions of prior years, expiration of statutes of limitations, and settlements. As of December 31, 2025 , the accrued liability for interest and penalties is $ 14 million. BancShares recognizes accrued interest and penalties on UTBs in income tax expense. BancShares has UTBs relating to uncertain state tax positions in various state jurisdictions resulting from tax filings submitted to the states. No tax benefit has been recorded for these uncertain tax positions in the consolidated financial statements. The entire $ 89 million of UTBs including interest and penalties at December 31, 2025 , would lower BancShares’ effective income tax rate, if realized. Income Taxes Paid Federal, state, and foreign income taxes paid, net of refunds, for the years ended December 31, 2025, 2024 and 2023 are presented in the following table: Cash Taxes Paid dollars in millions Year Ended December 31, 2025 2024 2023 U.S. federal $ 231 $ 207 $ 169 U.S. state and local New York 26 * * New York City 24 * 27 California * 231 216 North Carolina * 47 * Massachusetts * 43 38 Illinois * 39 * Other 31 194 63 Total U.S. state and local 81 554 344 Foreign 3 2 1 Total taxes paid $ 315 $ 763 $ 514 *Immaterial amounts not required to be disclosed and are reflected in “Other.” 159 Income Tax Audits BancShares is subject to examinations by the U.S. Internal Revenue Service and other taxing authorities in jurisdictions where BancShares has significant business operations for the years ranging from 2015 through 2025. The tax years under examination vary by jurisdiction. BancShares does not expect completion of those audits to have a material impact on the firm’s financial condition, but it may be material to operating results for a particular period, depending, in part, on the operating results for that period. The table below presents the earliest tax years that remain subject to examination by major jurisdiction. Jurisdiction December 31, 2025 U.S. Federal 2022 New York State and City 2015 North Carolina 2016 California 2017 Canada 2018 NOTE 20 — EMPLOYEE BENEFIT PLANS BancShares’ benefit plans include noncontributory defined benefit pension plans and 401(k) savings plans, which are qualified under the Internal Revenue Code. BancShares also maintains agreements with certain executives providing supplemental benefits paid upon death or separation from service at an agreed-upon age. BancShares sponsors benefit plans for its qualifying employees and eligible former employees of First Citizens Bancorporation, Inc. (“Bancorporation”) and its former subsidiary, First Citizens Bank and Trust Company, Inc. (“First-Citizens South”). Bancorporation merged with BancShares, Inc. on October 1, 2014 and First-Citizens South merged with FCB on January 1, 2015. Certain benefit plans of CIT were assumed by BancShares on the CIT Merger Date. CIT sponsored both funded and unfunded noncontributory defined benefit pension plans, executive retirement plans, and a 401(k) savings plan covering certain employees as further discussed below. There were no benefit plans assumed in connection with the SVBB Acquisition. Retirement Plans Pension Plans BancShares sponsors three qualified noncontributory defined benefit pension plans (the “Pension Plans”), including the First-Citizens Bank & Trust Company and Adopting Related Employers Pension Plan (the “FCB Pension Plan”), the First Citizens Bank and Trust Company, Inc. Pension Plan (the “First-Citizens South Pension Plan”), and a plan assumed upon completion of the CIT Merger (the “CIT Pension Plan”). Participants in the FCB Pension Plan and First-Citizens South Pension Plan were fully vested after five years of service. Retirement benefits are based on years of service and highest annual compensation for five consecutive years during the last ten years of employment. The FCB Pension Plan and First-Citizens South Pension Plan were closed to new participants as of April 1, 2007 and September 1, 2007, respectively. On the CIT Merger Date, BancShares assumed the CIT Pension Plan which is also closed to new participants. There were no discretionary contributions made to the Pension Plans during 2025 or 2024. BancShares makes contributions to the Pension Plans in amounts between the minimum required for funding and the maximum amount deductible for federal income tax purposes. Management evaluates the need for its contributions to these plans on a periodic basis based upon numerous factors including, but not limited to, funded status, returns on plan assets, discount rates and the current economic environment. 160 Supplemental and Executive Retirement Plans Upon the CIT Merger Date, BancShares assumed a frozen U.S. non-contributory supplemental retirement plan (the “Supplemental Retirement Plan”) and an additional retirement plan for certain executives (the “Executive Retirement Plan”), which had been closed to new participants since 2006 and whose participants were all inactive. There were no discretionary contributions made to the Executive Retirement Plan or the Supplemental Retirement Plan in 2025 or 2024. Accumulated balances under the Executive Retirement Plan and the Supplemental Retirement Plan continue to receive periodic interest, subject to certain government limits. The interest credit was 4.8 % and 4.3 %, respectively, for the years ended December 31, 2025 and 2024. Funding for Retirement Plans The funding policy for the Pension Plans is to contribute an amount each year to meet all Employee Retirement Income Security Act (“ERISA”) minimum requirements, including amounts to meet quarterly funding requirements, avoid “at-risk” status and avoid any benefit restrictions. BancShares may also contribute additional voluntary amounts each year (up to the maximum tax-deductible amount) in order to achieve certain target funding levels in the plans, with consideration also given to current and future cash flow and tax positions. No contributions are currently expected for the year ending December 31, 2026. The tables and disclosures below address the following: (i) the Pension Plans, the Supplemental Retirement Plan, and the Executive Retirement Plan (collectively, the “Retirement Plans”). The Supplemental and Executive Retirement Plans are unfunded. Therefore, the tables and disclosures below regarding plan assets apply to the Pension Plans, which are funded. Obligations and Funded Status The following table provides the changes in benefit obligations, assets and the funded status of the Retirement Plans at December 31, 2025 and 2024. Obligations and Funded Status dollars in millions Retirement Plans 2025 2024 Change in benefit obligation Projected benefit obligation at January 1 $ 1,140 $ 1,169 Service cost 8 10 Interest cost 63 59 Actuarial loss (gain) 18 ( 30 ) Benefits paid ( 70 ) ( 68 ) Projected benefit obligation at December 31 1,159 1,140 Change in plan assets Fair value of plan assets at January 1 1,648 1,589 Actual return on plan assets 212 121 Employer contributions (1) 6 6 Benefits paid ( 70 ) ( 68 ) Fair value of plan assets at December 31 1,796 1,648 Funded status at December 31 $ 637 $ 508 Information for retirement plans with a benefit obligation in excess of plan assets Projected and accumulated benefit obligations $ 48 $ 49 Reported in Consolidated Balance Sheets Funded Pension Plans (other assets) 685 557 Unfunded Supplemental and Executive Retirement Plans (other liabilities) ( 48 ) ( 49 ) Net funded status of Retirement Plans $ 637 $ 508 (1) Represents contributions to cover benefits paid for unfunded Supplemental and Executive Retirement Plans. The following table includes the amounts recognized in AOCI, before income taxes, at December 31, 2025 and 2024. Refer to Note 16—Accumulated Other Comprehensive (Loss) Income for additional information. dollars in millions Retirement Plans 2025 2024 Net actuarial gain $ 282 $ 182 161 The accumulated benefit obligation for the Retirement Plans at December 31, 2025 and 2024 was $ 1.11 billion and $ 1.09 billion, respectively. The Retirement Plans use a measurement date of December 31. The following table shows the components of periodic benefit cost related to the Retirement Plans and changes in assets and benefit obligations of the Retirement Plans recognized in other comprehensive income, before income taxes, for the years ended December 31, 2025, 2024 and 2023. Refer to Note 16—Accumulated Other Comprehensive (Loss) Income for additional information. Net Periodic Benefit Costs and Other Amounts dollars in millions Retirement Plans Year Ended December 31 2025 2024 2023 Service cost $ 8 $ 10 $ 9 Interest cost 63 59 61 Expected return on assets ( 94 ) ( 91 ) ( 85 ) Total net periodic benefit ( 23 ) ( 22 ) ( 15 ) Actuarial gain recognized in other comprehensive income ( 100 ) ( 60 ) ( 109 ) Total recognized in net periodic benefit cost and other comprehensive income $ ( 123 ) $ ( 82 ) $ ( 124 ) The actuarial gain in 2025 was primarily due to return on assets greater than expected, partially offset by the impact of a lower discount rate. The actuarial gain in 2024 was primarily due to return on assets greater than expected and higher discount rates, partially offset by higher interest crediting rate. Amortization of the actuarial gain recognized in earnings is excluded from the table above as it was less than one million dollars in 2025, 2024, and 2023. Service costs and the amortization of prior service costs are recorded in personnel expense, while interest cost, expected return on assets and the amortization of actuarial gains or losses are recorded in other noninterest expense. Amortization of prior service cost is excluded from the table above as it was less than one million dollars in 2025, 2024, and 2023. The weighted average assumptions (as of the end of each year) used to determine the benefit obligations at December 31, 2025 and 2024 are as follows: Weighted Average Assumptions Retirement Plans 2025 2024 Discount rate 5.57 % 5.69 % Rate of compensation increase 4.60 4.60 Interest crediting rate (1) 4.25 4.50 (1) Specific to cash investments in the CIT Pension Plan. The weighted average assumptions (as of the beginning of each year) used to determine the net periodic benefit cost for the years ended December 31, 2025, 2024 and 2023, are as follows: Weighted Average Assumptions Retirement Plans 2025 2024 2023 Discount rate 5.69 % 5.17 % 5.57 % Rate of compensation increase 4.60 5.60 5.60 Expected long-term return on plan assets 6.20 6.18 6.14 Interest crediting rate (1) 4.50 4.00 4.25 (1) Specific to cash investments in the CIT Pension Plan. The estimated discount rate, which represents the interest rate that could be obtained for a suitable investment used to fund the benefit obligations, is based on a yield curve developed from high-quality corporate bonds across a full maturity spectrum. The projected cash flows of the Pension Plans are discounted based on this yield curve and a single discount rate is calculated to achieve the same present value. The decrease in the discount rate from 5.69 % at December 31, 2024 to 5.57 % at December 31, 2025 used to determine the benefit obligations is reflective of the market conditions. 162 The weighted average expected long-term rate of return on Pension Plans’ assets represents the average rate of return expected to be earned on the Pension Plans’ assets over the period the benefits included in the benefit obligation are to be paid. In developing the expected rate of return on the Pension Plans’ assets, historical and current returns, as well as investment allocation strategies, are considered. Assets of the Pension Plans For the Pension Plans, our primary total return objective is to achieve returns over the long term that will fund retirement liabilities and provide desired benefits of the Pension Plans in a manner that satisfies the fiduciary requirements of the ERISA. The Pension Plans’ assets have a long-term time horizon that runs concurrent with the average life expectancy of the participants. As such, the Pension Plans can assume a time horizon that extends well beyond a full market cycle and can assume a reasonable level of risk. It is expected, however, that both professional investment management and sufficient portfolio diversification will smooth volatility and help generate a consistent level of return. The investments are broadly diversified across global, economic and market risk factors in an attempt to reduce volatility and target multiple return sources. Within approved guidelines and restrictions, the investment manager has discretion over the timing and selection of individual investments. Depending on the investment type, Pension Plan assets may be held by BancShares’ trust department or held by a third-party servicer. Equity securities are measured at fair value using observable closing prices. These securities are classified as Level 1 as they are traded in an active market. Fixed income securities are generally estimated using a third-party pricing service. 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. Investments in collective investment funds, limited partnerships and common collective trusts were measured using the NAV per share practical expedient and are not required to be classified in the fair value hierarchy. There were no direct investments in equity securities of BancShares included in the Pension Plans’ assets in any of the years presented. 163 The following tables summarize the fair values and fair value hierarchy for the assets of the Pension Plans at December 31, 2025 and 2024. Fair Value Measurements dollars in millions December 31, 2025 Market Value Level 1 Level 2 Level 3 Not Classified (1) Weighted Average Target Allocation Pension Plans Actual % of Plans' Assets Cash and equivalents $ 68 $ 68 $ — $ — $ — — % - 5 % 4 % Equity securities 25 % - 65 % 45 % Common and preferred stock 363 363 — — — Mutual funds 221 221 — — — Exchange traded funds 223 223 — — — Fixed income 30 % - 65 % 46 % U.S. government and government agency securities 4 — 4 — — Corporate bonds 4 — 4 — — Collective investment funds (fixed income) 825 — — — 825 Alternative investments — % - 30 % 5 % Limited partnerships 88 — — — 88 Total pension assets $ 1,796 $ 875 $ 8 $ — $ 913 100 % December 31, 2024 Market Value Level 1 Level 2 Level 3 Not Classified (1) Weighted Average Target Allocation Pension Plans Actual % of Plans' Assets Cash and equivalents $ 56 $ 56 $ — $ — $ — — % - 5 % 3 % Equity securities 25 % - 65 % 48 % Common and preferred stock 145 145 — — — Mutual funds 182 182 — — — Exchange traded funds 458 458 — — — Fixed income 30 % - 65 % 45 % U.S. government and government agency securities 7 — 7 — — Corporate bonds 6 — 6 — — Collective investment funds (fixed income) 736 — — — 736 Alternative investments — % - 30 % 4 % Limited partnerships 58 — — — 58 Total pension assets $ 1,648 $ 841 $ 13 $ — $ 794 100 % (1) These investments have been measured using the NAV per share practical expedient and are not required to be classified in the above tables. Cash Flows The following table presents estimated future benefits projected to be paid for the next ten years from the Pension Plans’ assets or from BancShares’ general assets calculated using current actuarial assumptions. Actual benefit payments may differ from projected benefit payments. Projected Benefits dollars in millions Retirement Plans 2026 $ 75 2027 79 2028 81 2029 84 2030 86 2031-2035 441 164 401(k) Savings Plans BancShares sponsors two qualified defined contribution plans, the FCB 401(k) Plan and the FCB Legacy 401(k) Plan (the “Legacy 401(k) Plan,” and together with the FCB 401(k) Plan, the “401(k) Plans”), which allow employees to voluntarily defer a pre-tax and/or post-tax portion of their compensation for retirement and receive certain employer contributions as further described below. Employees are eligible to participate in only one of the 401(k) Plans, depending on their hire date and whether they were hired before the Pension Plans and 401(k) Plans were restructured in 2007 (the “Restructuring of the Plans”), and in accordance with their elections made at that time. Employees hired prior to the Restructuring of the Plans who elected to continue participation in their respective Pension Plan are eligible to make deferrals and receive employer matching contributions in accordance with the Legacy 401(k) Plan. Under the Legacy 401(k) Plan, FCB matches participants’ deferrals in an amount equal to 100 % of the first 3 %, and 50 % of the next 3 %, of the participant's compensation that he or she defers, up to and including a maximum matching contribution of 4.5 % of the participant’s eligible compensation. Employees hired prior to the Restructuring of the Plans who elected to participate in an “enhanced” 401(k) plan (now, the FCB 401(k) Plan) and associates hired or rehired after the Restructuring of the Plans (including former CIT and Silicon Valley Bank associates) can only participate in the FCB 401(k) Plan. Under the FCB 401(k) Plan, BancShares matches participants’ deferrals in an amount equal to 100 % of the first 6 % of the participant’s eligible compensation. The matching contribution immediately vests. In addition, BancShares may make discretionary nonelective employer contributions under the FCB 401(k) Plan to each eligible participant’s account, without regard to the amount of the participant’s deferrals. Historically, this nonelective employer contribution has been equal to 3 % of participants’ eligible compensation. The nonelective employer contribution vests after three years of service. BancShares recognized expense for contributions to the 401(k) Plans of $ 174 million, $ 165 million, and $ 114 million for the years ended December 31, 2025, 2024 and 2023, respectively. Additional Benefits for Executives, Directors, and Officers BancShares has entered into contractual agreements with certain executives providing payments for a period of no more than ten years following separation from service occurring no earlier than an agreed-upon age. These agreements also provide a death benefit in the event a participant dies prior to separation from service or during the payment period following separation from service. BancShares has also assumed liability for contractual obligations to directors and officers of previously acquired entities. The following table provides the accrued liability as of December 31, 2025 and 2024, and the changes in the accrued liability during the years then ended: dollars in millions 2025 2024 Accrued liability as of January 1 $ 33 $ 34 Benefit expense and interest cost 2 3 Benefits paid ( 3 ) ( 4 ) Accrued liability as of December 31 $ 32 $ 33 Discount rate at December 31 4.68 % 4.86 % 165 Other Compensation Plans BancShares offers various short-term and long-term incentive plans for certain employees. Compensation awarded under these plans may be based on defined formulas, performance criteria, or at the discretion of management. The incentive compensation programs were designed to motivate employees through a balanced approach of risk and reward for their contributions toward BancShares’ success. As of December 31, 2025 and 2024, the accrued liability for incentive compensation was $ 659 million and $ 705 million, respectively. Certain compensation awards converted to BancShares’ RSUs at completion of the CIT Merger. Compensation expense related to these awards was recognized over the vesting period or the requisite service period, which was generally three years for BancShares’ RSUs. The following table presents the vesting activity during 2024. There were no grants of stock-based compensation awards during 2025 or 2024 and there were no unvested awards as of December 31, 2025 and 2024, as 2024 was the last year of vesting. The fair value of RSUs that vested and settled in stock during 2024 were $ 31 million. Stock-Settled Awards Outstanding share amounts in whole dollars Stock-Settled Awards Number of Shares Weighted Average Grant Date Value (1) December 31, 2024 Unvested at beginning of period 20,255 $ 859.76 Forfeited / cancelled — 859.76 Vested / settled awards ( 20,255 ) 859.76 Unvested at end of period — $ 859.76 (1) Represents the share price of BancShares as of the CIT Merger Date. NOTE 21 — SEGMENT INFORMATION Effective January 1, 2025, we made changes to the composition of our reportable segments as further discussed in Note 1—Significant Accounting Policies and Basis of Presentation, and the segment disclosures below for 2024 and 2023 were recast to conform with those segment composition changes. 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. 166 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 CRA 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 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. As disclosed in Note 1—Significant Accounting Policies and Basis of Presentation, Commercial Bank now 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. Factoring entails the assumption of credit risk with respect to trade accounts receivable arising from the sale of goods from our factoring clients to their customers that have been factored (i.e., sold or assigned to the factor). Our factoring clients, which are generally manufacturers or importers of goods, are the counterparties on factoring, financing or receivables purchasing agreements to sell trade receivables to us. Our factoring clients’ customers, which are generally retailers, are the account debtors and obligors on trade accounts receivable that have been factored. 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. 167 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, Day 2 Provision for Credit Losses and discount accretion income for certain acquired loans. Corporate also includes the offsetting impacts of Allocated Expenses as discussed above. 168 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 millions Year Ended December 31, 2025 General Bank Commercial Bank Rail Corporate (1) BancShares (2) Net interest income (expense) $ 3,299 $ 3,205 $ ( 213 ) $ 523 $ 6,814 Rental income on operating lease equipment — 219 877 — 1,096 All other noninterest income 664 906 16 45 1,631 Total noninterest income 664 1,125 893 45 2,727 Total revenue 3,963 4,330 680 568 9,541 Depreciation on operating lease equipment — 175 223 — 398 Maintenance and other operating lease expenses — — 244 — 244 Personnel cost 838 737 26 1,693 3,294 Acquisition-related expenses — — — 141 141 All other noninterest expense (3) 1,493 1,686 72 ( 1,272 ) 1,979 Total noninterest expense 2,331 2,598 565 562 6,056 Provision for credit losses 77 437 — — 514 Income before income taxes 1,555 1,295 115 6 2,971 Income tax expense 380 320 28 37 765 Net income (loss) $ 1,175 $ 975 $ 87 $ ( 31 ) $ 2,206 Select Period End Balances Loans and leases $ 64,958 $ 82,910 $ 62 $ — $ 147,930 Operating lease equipment, net — 739 8,882 — 9,621 Investment securities — — — 41,564 41,564 Deposits 74,796 41,532 2 45,248 161,578 (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. 169 Year Ended December 31, 2024 General Bank Commercial Bank Rail Corporate (1) BancShares (2) Net interest income (expense) $ 2,951 $ 3,403 $ ( 186 ) $ 975 $ 7,143 Rental income on operating lease equipment — 227 821 — 1,048 All other noninterest income 612 882 14 59 1,567 Total noninterest income 612 1,109 835 59 2,615 Total revenue 3,563 4,512 649 1,034 9,758 Depreciation on operating lease equipment — 185 209 — 394 Maintenance and other operating lease expenses — — 219 — 219 Personnel cost 783 741 25 1,529 3,078 Acquisition-related expenses — — — 210 210 All other noninterest expense (3) 1,342 1,626 59 ( 1,193 ) 1,834 Total noninterest expense 2,125 2,552 512 546 5,735 Provision for credit losses 135 296 — — 431 Income before income taxes 1,303 1,664 137 488 3,592 Income tax expense 362 442 36 ( 25 ) 815 Net income $ 941 $ 1,222 $ 101 $ 513 $ 2,777 Select Period End Balances Loans and leases $ 64,887 $ 75,272 $ 62 $ — $ 140,221 Operating lease equipment, net — 750 8,573 — 9,323 Investment securities — — — 44,090 44,090 Deposits 72,956 40,026 18 42,229 155,229 dollars in millions Year Ended December 31, 2023 General Bank Commercial Bank Rail Corporate (1) BancShares (2) Net interest income (expense) $ 2,560 $ 2,682 $ ( 141 ) $ 1,611 $ 6,712 Rental income on operating lease equipment — 231 740 — 971 All other noninterest income 526 756 5 9,817 11,104 Total noninterest income 526 987 745 9,817 12,075 Total revenue 3,086 3,669 604 11,428 18,787 Depreciation on operating lease equipment — 179 192 — 371 Maintenance and other operating lease expenses — — 222 — 222 Personnel cost 734 599 22 1,281 2,636 Acquisition-related expenses — — — 470 470 All other noninterest expense (3) 1,259 1,468 50 ( 1,141 ) 1,636 Total noninterest expense 1,993 2,246 486 610 5,335 Provision for credit losses 53 606 — 716 1,375 Income before income taxes 1,040 817 118 10,102 12,077 Income tax expense 279 213 31 88 611 Net income $ 761 $ 604 $ 87 $ 10,014 $ 11,466 Select Period End Balances Loans and leases $ 61,245 $ 72,034 $ 23 $ — $ 133,302 Operating lease equipment, net — 780 7,966 — 8,746 Investment securities — — — 29,999 29,999 Deposits 68,507 38,179 13 39,155 145,854 (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. 170 NOTE 22 — 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 millions December 31, 2025 December 31, 2024 Financing Commitments Financing assets (excluding leases) $ 51,726 $ 53,250 Letters of Credit Financial standby letters of credit 2,583 2,188 Other letters of credit 227 103 Deferred Purchase Agreements 1,723 1,802 Purchase and Funding Commitments (1) 102 178 (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 December 31, 2025 and 2024, substantially all undrawn financing commitments were senior facilities. Financing commitments also include $ 360 million and $ 79 million at December 31, 2025 and 2024, 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 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 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 $ 211 million and $ 166 million at December 31, 2025 and 2024, 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. 171 The table above includes $ 1.71 billion and $ 1.74 billion of DPA exposures at December 31, 2025 and 2024, respectively, related to receivables on which BancShares has assumed the credit risk. The table also includes $ 13 million and $ 59 million available under DPA credit line agreements provided at December 31, 2025 and 2024, 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 of 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 December 31, 2025. 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 December 31, 2025, 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. 172 NOTE 23 — PARENT COMPANY FINANCIAL STATEMENTS The following tables present condensed stand-alone financial statements of the Parent Company: Parent Company Condensed Balance Sheets dollars in millions December 31, 2025 December 31, 2024 Assets Cash and due from banks $ 466 $ 310 Interest-earning deposits at banks 4 1 Investment in marketable equity securities 119 99 Note receivable from banking subsidiary — 200 Investment in banking subsidiary 23,371 21,932 Investment in other subsidiaries 185 97 Other assets 81 75 Total assets $ 24,226 $ 22,714 Liabilities and Stockholders' Equity Long-term borrowings $ 1,839 $ 350 Borrowings due to banking subsidiary — 44 Other liabilities 149 92 Total liabilities 1,988 486 Stockholders’ equity 22,238 22,228 Total liabilities and stockholders’ equity $ 24,226 $ 22,714 Parent Company Condensed Statements of Income Year Ended December 31 dollars in millions 2025 2024 2023 Income Dividends from banking subsidiary $ 1,680 $ 2,221 $ 367 Other income (loss) 25 25 ( 8 ) Total income 1,705 2,246 359 Expenses Interest expense 80 16 22 Other expenses 75 61 40 Total expenses 155 77 62 Income before income taxes and equity in undistributed net income of subsidiaries 1,550 2,169 297 Income tax benefit ( 16 ) ( 22 ) ( 14 ) Income before equity in undistributed net income of subsidiaries 1,566 2,191 311 Equity in undistributed net income of subsidiaries 640 586 11,155 Net income 2,206 2,777 11,466 Preferred stock dividends 57 61 59 Net income available to common stockholders $ 2,149 $ 2,716 $ 11,407 173 Parent Company Condensed Statements of Cash Flows Year Ended December 31 dollars in millions 2025 2024 2023 OPERATING ACTIVITIES Net income $ 2,206 $ 2,777 $ 11,466 Adjustments to reconcile net income to cash provided by operating activities: Undistributed net income of subsidiaries ( 640 ) ( 586 ) ( 11,155 ) Deferred tax expense (benefit) 16 2 ( 5 ) Fair value adjustment on marketable equity securities, net ( 22 ) ( 13 ) 11 Stock based compensation expense — — 5 Realized gain on sale of investment securities, net — ( 6 ) — Net change in other assets ( 13 ) ( 15 ) ( 17 ) Net change in other liabilities 18 ( 5 ) 3 Other operating activities 2 3 — Net cash provided by operating activities 1,567 2,157 308 INVESTING ACTIVITIES Net (increase) decrease in interest-earning deposits at banks ( 3 ) 4 ( 2 ) Purchase of marketable equity securities — ( 6 ) — Proceeds from sale of marketable equity securities 1 15 — Note receivable from banking subsidiary 200 ( 200 ) — Other investing activities ( 359 ) ( 23 ) — Net cash used in investing activities ( 161 ) ( 210 ) ( 2 ) FINANCING ACTIVITIES Repayment of long-term borrowings ( 350 ) ( 17 ) ( 87 ) Repayment of borrowings due to banking subsidiary ( 44 ) ( 1 ) ( 15 ) Net proceeds from issuance of long-term borrowings 1,838 — — Net proceeds from preferred stock issuance 494 — — Repurchase of Class A common stock ( 3,027 ) ( 1,648 ) — Cash dividends paid ( 161 ) ( 158 ) ( 117 ) Other financing activities — ( 13 ) ( 6 ) Net cash used in financing activities ( 1,250 ) ( 1,837 ) ( 225 ) Net change in cash and due from banks 156 110 81 Cash and due from banks at beginning of year 310 200 119 Cash and due from banks at end of year $ 466 $ 310 $ 200 CASH PAYMENTS (REFUNDS) FOR: Interest $ 51 $ 15 $ 23 Income taxes — ( 1 ) 470 174