Item 1. Financial Statements
ITEM 1. FINANCIAL STATEMENTS
TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(in thousands except share data) September 30, 2026 December 31, 2025
Assets
Cash and due from banks $ 195,086 $ 201,315
Interest bearing cash and cash equivalents 2,479,073 1,897,803
Available-for-sale debt securities 4,095,855 3,951,455
Held-to-maturity debt securities 672,881 725,722
Equity securities 42,007 41,998
Trading debt securities
— 3,924
Debt and equity securities
4,810,743 4,723,099
Loans held for sale 28,676 4,361
Loans held for investment, mortgage finance 5,441,689 6,064,019
Loans held for investment 18,641,301 17,976,183
Less: Allowance for credit losses on loans 270,333 270,557
Loans held for investment, net 23,812,657 23,769,645
Premises and equipment, net 89,012 88,003
Accrued interest receivable and other assets 928,364 854,552
Goodwill and intangibles, net 1,496 1,496
Total assets $ 32,345,107 $ 31,540,274
Liabilities and Stockholders’ Equity
Liabilities:
Non-interest bearing deposits $ 7,006,314 $ 6,959,097
Interest bearing deposits 20,709,341 19,489,670
Total deposits 27,715,655 26,448,767
Accrued interest payable 8,556 6,716
Other liabilities 646,036 502,834
Short-term borrowings — 330,000
Long-term debt 487,270 620,575
Total liabilities 28,857,517 27,908,892
Stockholders’ equity:
Preferred stock, $ 0.01 par value, $ 1,000 liquidation value:
Authorized shares - 10,000,000
Issued shares - 300,000 at September 30, 2026 and December 31, 2025
300,000 300,000
Common stock, $ 0.01 par value:
Authorized shares - 100,000,000
Issued shares - 52,023,856 and 51,786,456 at September 30, 2026 and December 31, 2025, respectively
520 518
Additional paid-in capital 1,086,246 1,074,496
Retained earnings 3,040,853 2,808,645
Treasury stock - 9,594,199 and 7,532,768 shares at cost at September 30, 2026 and December 31, 2025, respectively
( 689,410 ) ( 487,692 )
Accumulated other comprehensive loss, net of taxes ( 250,619 ) ( 64,585 )
Total stockholders’ equity 3,487,590 3,631,382
Total liabilities and stockholders’ equity $ 32,345,107 $ 31,540,274
See accompanying notes to consolidated financial statements.
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TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME AND OTHER
COMPREHENSIVE INCOME - UNAUDITED
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands except per share data) 2026 2025 2026 2025
Interest income
Interest and fees on loans $ 379,297 $ 379,017 $ 1,095,733 $ 1,077,525
Debt and equity securities
50,927 49,396 146,824 141,952
Interest bearing cash and cash equivalents 26,936 32,202 73,627 107,994
Total interest income 457,160 460,615 1,316,184 1,327,471
Interest expense
Deposits 174,517 180,779 495,448 530,513
Short-term borrowings 84 534 5,996 12,224
Long-term debt 7,576 7,531 24,661 23,534
Total interest expense 182,177 188,844 526,105 566,271
Net interest income 274,983 271,771 790,079 761,200
Provision for credit losses 17,000 12,000 51,000 44,000
Net interest income after provision for credit losses 257,983 259,771 739,079 717,200
Non-interest income
Service charges on deposit accounts 9,418 8,111 27,494 24,133
Wealth management and trust fee income 4,562 3,989 14,086 11,683
Brokered loan fees 2,075 2,419 6,184 6,766
Investment banking and advisory fees 35,294 33,985 98,832 74,572
Trading income 11,417 7,238 32,981 21,073
Available-for-sale debt securities gains/(losses) — — — ( 1,886 )
Other 18,877 12,841 46,450 30,755
Total non-interest income 81,643 68,583 226,027 167,096
Non-interest expense
Salaries and benefits 121,625 119,856 384,311 371,651
Occupancy expense 13,230 11,828 37,994 34,816
Marketing 4,266 3,412 14,024 12,045
Legal and professional 12,000 12,474 38,680 38,532
Communications and technology 32,029 24,594 87,695 72,550
Federal Deposit Insurance Corporation insurance assessment 5,234 5,198 14,697 15,635
Other 15,540 13,213 45,584 38,642
Total non-interest expense 203,924 190,575 622,985 583,871
Income before income taxes 135,702 137,779 342,121 300,425
Income tax expense 31,997 32,569 79,680 70,840
Net income 103,705 105,210 262,441 229,585
Preferred stock dividends 4,313 4,313 12,938 12,938
Net income available to common stockholders $ 99,392 $ 100,897 $ 249,503 $ 216,647
Other comprehensive income
Change in unrealized gain/(loss) $ ( 199,835 ) $ 30,909 $ ( 249,538 ) $ 101,226
Amounts reclassified into net income
2,772 6,172 7,935 26,498
Other comprehensive income/(loss)
( 197,063 ) 37,081 ( 241,603 ) 127,724
Income tax expense/(benefit)
( 45,324 ) 8,374 ( 55,569 ) 28,841
Other comprehensive income/(loss), net of tax
( 151,739 ) 28,707 ( 186,034 ) 98,883
Comprehensive income/(loss) $ ( 48,034 ) $ 133,917 $ 76,407 $ 328,468
Basic earnings per common share
$ 2.30 $ 2.21 $ 5.72 $ 4.72
Diluted earnings per common share
$ 2.28 $ 2.18 $ 5.66 $ 4.67
See accompanying notes to consolidated financial statements.
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TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - UNAUDITED
Preferred Stock Common Stock Additional Treasury Stock Accumulated Other
Paid-in Retained Comprehensive
(in thousands except share and per share data) Shares Amount Shares Amount Capital Earnings Shares Amount Income/(Loss) Total
Balance at June 30, 2025 300,000 $ 300,000 51,747,305 $ 517 $ 1,065,083 $ 2,611,401 ( 6,000,469 ) $ ( 354,000 ) $ ( 112,931 ) $ 3,510,070
Comprehensive income/(loss):
Net income — — — — — 105,210 — — — 105,210
Change in other comprehensive income/(loss), net of taxes — — — — — — — — 28,707 28,707
Total comprehensive income 133,917
Preferred stock dividends — — — — — ( 4,313 ) — — — ( 4,313 )
Stock-based compensation expense recognized in earnings — — — — 5,146 — — — — 5,146
Issuance of stock related to stock-based awards — — 20,114 1 ( 647 ) — — — — ( 646 )
Repurchase of common stock — — — — — — ( 87,087 ) ( 7,076 ) — ( 7,076 )
Balance at September 30, 2025 300,000 $ 300,000 51,767,419 $ 518 $ 1,069,582 $ 2,712,298 ( 6,087,556 ) $ ( 361,076 ) $ ( 84,224 ) $ 3,637,098
Balance at June 30, 2026 300,000 $ 300,000 52,012,706 $ 520 $ 1,082,419 $ 2,950,049 ( 8,542,539 ) $ ( 586,401 ) $ ( 98,880 ) $ 3,647,707
Comprehensive income/(loss):
Net income — — — — — 103,705 — — — 103,705
Change in other comprehensive income/(loss), net of taxes — — — — — — — — ( 151,739 ) ( 151,739 )
Total comprehensive loss ( 48,034 )
Common stock dividends ($ 0.20 per share)
— — — — — ( 8,588 ) — — — ( 8,588 )
Preferred stock dividends — — — — — ( 4,313 ) — — — ( 4,313 )
Stock-based compensation expense recognized in earnings — — — — 4,344 — — — — 4,344
Issuance of stock related to stock-based awards — — 11,150 — ( 517 ) — — — — ( 517 )
Repurchase of common stock — — — — — — ( 1,051,660 ) ( 103,009 ) — ( 103,009 )
Balance at September 30, 2026 300,000 $ 300,000 52,023,856 $ 520 $ 1,086,246 $ 3,040,853 ( 9,594,199 ) $ ( 689,410 ) $ ( 250,619 ) $ 3,487,590
See accompanying notes to consolidated financial statements.
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TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - UNAUDITED
Preferred Stock Common Stock Additional Treasury Stock Accumulated Other
Paid-in Retained Comprehensive
(in thousands except share and per share data) Shares Amount Shares Amount Capital Earnings Shares Amount Income/(Loss) Total
Balance at December 31, 2024 (audited)
300,000 $ 300,000 51,520,315 $ 515 $ 1,056,719 $ 2,495,651 ( 5,286,503 ) $ ( 301,842 ) $ ( 183,107 ) $ 3,367,936
Comprehensive income/(loss):
Net income — — — — — 229,585 — — — 229,585
Change in other comprehensive income/(loss), net of taxes
— — — — — — — — 98,883 98,883
Total comprehensive income
328,468
Preferred stock dividends — — — — — ( 12,938 ) — — — ( 12,938 )
Stock-based compensation expense recognized in earnings
— — — — 20,425 — — — — 20,425
Issuance of stock related to stock-based awards
— — 247,104 3 ( 7,562 ) — — — — ( 7,559 )
Repurchase of common stock — — — — — — ( 801,053 ) ( 59,234 ) — ( 59,234 )
Balance at September 30, 2025 300,000 $ 300,000 51,767,419 $ 518 $ 1,069,582 $ 2,712,298 ( 6,087,556 ) $ ( 361,076 ) $ ( 84,224 ) $ 3,637,098
Balance at December 31, 2025 (audited)
300,000 $ 300,000 51,786,456 $ 518 $ 1,074,496 $ 2,808,645 ( 7,532,768 ) $ ( 487,692 ) $ ( 64,585 ) $ 3,631,382
Comprehensive income/(loss):
Net income — — — — — 262,441 — — — 262,441
Change in other comprehensive income/(loss), net of taxes — — — — — — — — ( 186,034 ) ( 186,034 )
Total comprehensive income 76,407
Common stock dividends ($ 0.40 per share)
— — — — — ( 17,295 ) — — — ( 17,295 )
Preferred stock dividends — — — — — ( 12,938 ) — — — ( 12,938 )
Stock-based compensation expense recognized in earnings — — — — 21,470 — — — — 21,470
Issuance of stock related to stock-based awards — — 237,400 2 ( 9,720 ) — — — — ( 9,718 )
Repurchase of common stock — — — — — — ( 2,061,431 ) ( 201,718 ) — ( 201,718 )
Balance at September 30, 2026 300,000 $ 300,000 52,023,856 $ 520 $ 1,086,246 $ 3,040,853 ( 9,594,199 ) $ ( 689,410 ) $ ( 250,619 ) $ 3,487,590
See accompanying notes to consolidated financial statements.
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TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
Nine Months Ended September 30,
(in thousands) 2026 2025
Operating activities
Net income $ 262,441 $ 229,585
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses 51,000 44,000
Depreciation and amortization 40,068 36,291
Net loss on available-for-sale debt securities — 1,886
Net (gain)/loss on equity securities ( 4,773 ) ( 2,265 )
Sales/(purchases) of trading debt securities, net 3,924 ( 2,219 )
Loss on redemption of long-term debt 2,157 —
Stock-based compensation expense 35,125 28,614
Sales/(purchases) of loans held for sale, net ( 2,982 ) —
Changes in operating assets and liabilities:
Accrued interest receivable and other assets ( 32,319 ) ( 39,949 )
Accrued interest payable and other liabilities 43,647 ( 66,283 )
Net cash provided by operating activities 398,288 229,660
Investing activities
Purchases of available-for-sale debt securities ( 877,772 ) ( 843,190 )
Proceeds from sales of available-for-sale debt securities — 280,402
Proceeds from maturities, redemptions and pay-downs of available-for-sale debt securities 533,969 385,694
Proceeds from maturities, redemptions and pay-downs of held-to-maturity debt securities 55,181 55,555
Sales/(purchases) of equity securities, net 4,764 22,472
Originations of loans held for investment, mortgage finance ( 74,373,445 ) ( 71,110,334 )
Proceeds from pay-offs of loans held for investment, mortgage finance 74,995,775 70,268,104
Decrease/(increase) in loans held for investment, excluding mortgage finance, net ( 734,430 ) ( 936,069 )
Purchase of premises and equipment, net ( 10,498 ) ( 12,910 )
Net cash used in investing activities ( 406,456 ) ( 1,890,276 )
Financing activities
Net increase/(decrease) in deposits, net 1,266,888 2,266,799
Issuance of stock related to stock-based awards ( 9,718 ) ( 7,559 )
Common stock dividends paid ( 17,295 ) —
Preferred stock dividends paid ( 12,938 ) ( 12,938 )
Repurchase of common stock ( 201,718 ) ( 59,234 )
Net increase/(decrease) in short-term borrowings, net ( 330,000 ) ( 610,000 )
Redemption of long-term debt ( 509,525 ) ( 40,435 )
Issuance of long-term debt 397,515 —
Net cash provided by financing activities
583,209 1,536,633
Net increase/(decrease) in cash and cash equivalents 575,041 ( 123,983 )
Cash and cash equivalents at beginning of period 2,099,118 3,188,808
Cash and cash equivalents at end of period $ 2,674,159 $ 3,064,825
Supplemental disclosures of cash flow information
Cash paid during the period for interest $ 541,377 $ 580,591
Cash paid during the period for income taxes $ 100,163 $ 67,402
Transfers of loans from held for investment to held for sale $ 21,333 $ —
See accompanying notes to consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
(1) Operations and Summary of Significant Accounting Policies
Organization and Nature of Business
Texas Capital Bancshares, Inc. (“TCBI” or the “Company”) is a registered bank holding company and a full-service financial services firm that delivers customized solutions to businesses, entrepreneurs and individual customers. TCBI is headquartered in Dallas, with primary banking offices in Austin, Dallas, Fort Worth, Houston and San Antonio, and has built a network of clients across the country.
The Company’s business activities are conducted primarily through its wholly-owned bank subsidiary Texas Capital Bank (the “Bank”) and its wholly-owned non-bank subsidiary, TCBI Securities Inc., doing business as Texas Capital Securities. The Bank is a Texas state-chartered bank. Texas Capital Securities is a registered broker-dealer with the U.S. Securities and Exchange Commission (“SEC”) and a member of the Financial Industry Regulatory Authority and Municipal Securities Rulemaking Board.
The Company was incorporated as a Delaware corporation in 1996 and commenced banking operations in 1998.
Basis of Presentation
The Company’s accounting and reporting policies conform to accounting principles generally accepted in the United States (“GAAP”) and to generally accepted practices within the banking industry. Certain prior period balances have been reclassified to conform to the current period presentation.
The consolidated interim financial statements are unaudited, and certain information and disclosures in the notes to consolidated unaudited financial statements that are presented in accordance with GAAP have been condensed or omitted. In the opinion of management, the interim financial statements include all normal and recurring adjustments and the disclosures made present a fair presentation of the Company’s financial position and results of operations. The consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q adopted by the SEC. Accordingly, the financial statements and the notes to the consolidated unaudited financial statements required by GAAP for complete annual financial statements do not include all of the information and should be read in conjunction with the consolidated financial statements, and notes thereto, for the year ended December 31, 2025, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The allowance for credit losses, the fair value of financial instruments and the status of contingencies are particularly susceptible to significant change.
(2) Earnings Per Share
The following table presents the computation of basic and diluted earnings per share:
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands except share and per share data) 2026 2025 2026 2025
Numerator:
Net income
$ 103,705 $ 105,210 $ 262,441 $ 229,585
Preferred stock dividends 4,313 4,313 12,938 12,938
Net income available to common stockholders
$ 99,392 $ 100,897 $ 249,503 $ 216,647
Denominator:
Basic earnings per common share—weighted average common shares 43,124,320 45,708,185 43,598,025 45,873,276
Effect of dilutive outstanding stock-settled awards 489,951 524,982 467,942 474,960
Dilutive earnings per common share—weighted average diluted common shares 43,614,271 46,233,167 44,065,967 46,348,236
Basic earnings per common share
$ 2.30 $ 2.21 $ 5.72 $ 4.72
Diluted earnings per common share
$ 2.28 $ 2.18 $ 5.66 $ 4.67
Anti-dilutive outstanding stock-settled awards 21,054 — 36,142 207
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(3) Debt and Equity Securities
The following is a summary of the Company’s debt and equity securities:
(in thousands) Amortized
Cost(1) Gross
Unrealized
Gains Gross
Unrealized
Losses Estimated
Fair
Value
September 30, 2026
Available-for-sale debt securities:
Residential mortgage-backed securities $ 4,084,245 $ 193 $ ( 234,221 ) $ 3,850,217
Commercial mortgage-backed securities
248,437 — ( 12,918 ) 235,519
Credit risk transfer securities
10,452 — ( 333 ) 10,119
Total available-for-sale debt securities 4,343,134 193 ( 247,472 ) 4,095,855
Held-to-maturity debt securities:
Residential mortgage-backed securities 672,881 — ( 97,497 ) 575,384
Total held-to-maturity debt securities 672,881 — ( 97,497 ) 575,384
Equity securities 42,007
Trading debt securities
—
Total debt and equity securities(2)
$ 4,810,743
December 31, 2025
Available-for-sale debt securities:
Residential mortgage-backed securities $ 3,743,234 $ 41,037 $ ( 91,625 ) $ 3,692,646
Commercial mortgage-backed securities
244,457 3,555 — 248,012
Credit risk transfer securities
11,248 — ( 451 ) 10,797
Total available-for-sale debt securities 3,998,939 44,592 ( 92,076 ) 3,951,455
Held-to-maturity debt securities:
Residential mortgage-backed securities 725,722 — ( 70,890 ) 654,832
Total held-to-maturity debt securities
725,722 — ( 70,890 ) 654,832
Equity securities 41,998
Trading debt securities
3,924
Total debt and equity securities(2)
$ 4,723,099
(1) Excludes accrued interest receivable of $ 17.6 million and $ 16.1 million at September 30, 2026 and December 31, 2025, respectively, related to available-for-sale debt securities and $ 1.1 million and $ 1.2 million at September 30, 2026 and December 31, 2025, respectively, related to held-to-maturity debt securities that is recorded in accrued interest receivable and other assets on the consolidated balance sheets.
(2) Includes available-for-sale debt securities, equity securities and trading debt securities at estimated fair value and held-to-maturity debt securities at amortized cost.
Debt Securities
The amortized cost and estimated fair value as of September 30, 2026, excluding accrued interest receivable, of available-for-sale and held-to-maturity debt securities are presented below by contractual maturity. Actual maturities may differ from contractual maturities of mortgage-backed securities because borrowers may have the right to call or prepay obligations with or without prepayment penalties.
Available-for-sale Held-to-maturity
(in thousands) Amortized Cost Fair Value Amortized Cost Fair Value
Due within one year $ — $ — $ — $ —
Due after one year through five years 10,452 10,119 — —
Due after five years through ten years 249,090 236,181 — —
Due after ten years 4,083,592 3,849,555 672,881 575,384
Total $ 4,343,134 $ 4,095,855 $ 672,881 $ 575,384
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The table below presents the weighted average yields for the Company’s available-for-sale debt securities as of September 30, 2026. Weighted average yields are calculated based on amortized cost on a tax-exempt basis assuming a 21% federal tax rate, where applicable.
Residential mortgage-backed securities Commercial mortgage-backed securities
Credit risk transfer securities
Due within one year — % — % — %
Due after one year through five years — — 4.01
Due after five years through ten years 3.91 4.80 —
Due after ten years 4.81 — —
Total 4.81 % 4.80 % 4.01 %
The following table discloses the Company’s available-for-sale debt securities that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more months:
Less Than 12 Months 12 Months or Longer Total
(in thousands) Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss
September 30, 2026
Residential mortgage-backed securities $ 2,912,259 $ ( 114,687 ) $ 667,046 $ ( 119,534 ) $ 3,579,305 $ ( 234,221 )
Commercial mortgage-backed securities
235,519 ( 12,918 ) — — 235,519 ( 12,918 )
Credit risk transfer securities
— — 10,119 ( 333 ) 10,119 ( 333 )
Total $ 3,147,778 $ ( 127,605 ) $ 677,165 $ ( 119,867 ) $ 3,824,943 $ ( 247,472 )
December 31, 2025
Residential mortgage-backed securities $ 203,193 $ ( 97 ) $ 934,222 $ ( 91,528 ) $ 1,137,415 $ ( 91,625 )
Commercial mortgage-backed securities
— — — — — —
Credit risk transfer securities
— — 10,797 ( 451 ) 10,797 ( 451 )
Total $ 203,193 $ ( 97 ) $ 945,019 $ ( 91,979 ) $ 1,148,212 $ ( 92,076 )
At September 30, 2026, the Company had 92 available-for-sale debt securities in an unrealized loss position, comprised of 83 residential mortgage-backed securities, seven commercial mortgage-backed securities and two credit risk transfer securities. The unrealized losses on the available-for-sale debt securities were the result of changes in market interest rates compared to the date the securities were acquired rather than the credit quality of the issuers or underlying loans. The Company does not currently intend to sell and based on current conditions it does not believe it is likely that the Company will be required to sell these available-for-sale debt securities before recovery of the amortized cost of such securities in an unrealized loss position and has therefore recorded the unrealized losses related to this portfolio in accumulated other comprehensive income (“AOCI”). Held-to-maturity debt securities consist of government guaranteed securities for which no loss is expected. At September 30, 2026 and December 31, 2025, no allowance for credit losses was established for available-for-sale or held-to-maturity debt securities.
At September 30, 2026 and December 31, 2025, debt securities with carrying values of approximately $ 820,000 and $ 937,000 , respectively, were pledged to secure certain customer deposits.
Equi ty Securities
The following is a summary of unrealized and realized gains/(losses) recognized on equity securities included in other non-interest income on the consolidated statements of income and other comprehensive income:
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2026 2025 2026 2025
Net gains/(losses) recognized during the period $ 1,252 $ 2,369 $ 4,773 $ 2,265
Less: Realized net gains/(losses) recognized on securities sold 2,414 831 4,266 1,862
Unrealized net gains/(losses) recognized on securities still held $ ( 1,162 ) $ 1,538 $ 507 $ 403
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(4) Loans and Allowance for Credit Losses on Loans
Loans are summarized by portfolio segment as follows:
(in thousands) September 30, 2026 December 31, 2025
Loans held for investment(1)(2):
Commercial $ 13,428,328 $ 12,163,545
Mortgage finance 5,441,689 6,064,019
Commercial real estate 4,786,513 5,378,712
Consumer 426,460 433,926
Loans held for investment 24,082,990 24,040,202
Allowance for credit losses on loans ( 270,333 ) ( 270,557 )
Total loans held for investment, net $ 23,812,657 $ 23,769,645
(1) Excludes accrued interest receivable of $ 106.9 million and $ 107.3 million at September 30, 2026 and December 31, 2025, respectively, that is recorded in accrued interest receivable and other assets on the consolidated balance sheets.
(2) Loans are presented net of deferred loan fees and costs totaling $ 108.0 million and $ 106.8 million at September 30, 2026 and December 31, 2025, respectively.
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The following tables summarize loans held for investment by year of origination and internally assigned credit grades:
(in thousands) 2026 2025 2024 2023 2022 2021
and prior Revolving lines of credit Revolving lines of credit converted to term loans Total
September 30, 2026
Commercial
(1-7) Pass $ 1,792,251 $ 1,586,431 $ 819,811 $ 513,166 $ 497,666 $ 145,659 $ 7,534,860 $ 11,601 $ 12,901,445
(8) Special mention 3,341 55,680 40,812 14,904 19 1,262 194,606 96 310,720
(9) Substandard - accruing 1,804 23,114 38,598 363 10,927 34,906 23,606 — 133,318
(9+) Non-accrual 3,135 13,642 — 17,024 19,985 11,483 17,576 — 82,845
Total commercial $ 1,800,531 $ 1,678,867 $ 899,221 $ 545,457 $ 528,597 $ 193,310 $ 7,770,648 $ 11,697 $ 13,428,328
Mortgage finance
(1-7) Pass $ — $ — $ — $ — $ — $ — $ 5,441,689 $ — $ 5,441,689
(8) Special mention — — — — — — — — —
(9) Substandard - accruing — — — — — — — — —
(9+) Non-accrual — — — — — — — — —
Total mortgage finance $ — $ — $ — $ — $ — $ — $ 5,441,689 $ — $ 5,441,689
Commercial real estate
(1-7) Pass $ 882,493 $ 871,100 $ 615,750 $ 691,454 $ 697,574 $ 625,658 $ 143,648 $ 5,232 $ 4,532,909
(8) Special mention — — 4,323 — 142,393 60,002 7,000 — 213,718
(9) Substandard - accruing — — — 362 — 101 — — 463
(9+) Non-accrual — — 18,500 — 20,923 — — — 39,423
Total commercial real estate $ 882,493 $ 871,100 $ 638,573 $ 691,816 $ 860,890 $ 685,761 $ 150,648 $ 5,232 $ 4,786,513
Consumer
(1-7) Pass $ 17,932 $ 28,487 $ 30,948 $ 22,296 $ 42,979 $ 162,237 $ 119,660 $ — $ 424,539
(8) Special mention — — — — — 1,502 350 — 1,852
(9) Substandard - accruing — — — — — — — — —
(9+) Non-accrual — — — — — 69 — — 69
Total consumer $ 17,932 $ 28,487 $ 30,948 $ 22,296 $ 42,979 $ 163,808 $ 120,010 $ — $ 426,460
Total $ 2,700,956 $ 2,578,454 $ 1,568,742 $ 1,259,569 $ 1,432,466 $ 1,042,879 $ 13,482,995 $ 16,929 $ 24,082,990
Gross charge-offs $ 184 $ 3,201 $ 7,314 $ 16,359 $ 7,636 $ 3,857 $ 10,885 $ — $ 49,436
(in thousands) 2025 2024 2023 2022 2021 2020
and prior Revolving lines of credit Revolving lines of credit converted to term loans Total
December 31, 2025
Commercial
(1-7) Pass $ 2,038,311 $ 1,164,863 $ 671,070 $ 670,995 $ 107,970 $ 143,631 $ 6,977,639 $ 9,359 $ 11,783,838
(8) Special mention 7,659 16,204 16,093 42,441 15,346 1,239 39,073 — 138,055
(9) Substandard - accruing 25,513 8,824 44,506 — 34,641 4,192 27,830 — 145,506
(9+) Non-accrual 11,293 — 2,959 36,390 — 11,639 33,865 — 96,146
Total commercial $ 2,082,776 $ 1,189,891 $ 734,628 $ 749,826 $ 157,957 $ 160,701 $ 7,078,407 $ 9,359 $ 12,163,545
Mortgage finance
(1-7) Pass $ — $ — $ — $ — $ — $ — $ 6,064,019 $ — $ 6,064,019
(8) Special mention — — — — — — — — —
(9) Substandard - accruing — — — — — — — — —
(9+) Non-accrual — — — — — — — — —
Total mortgage finance $ — $ — $ — $ — $ — $ — $ 6,064,019 $ — $ 6,064,019
Commercial real estate
(1-7) Pass $ 781,062 $ 565,727 $ 941,760 $ 1,543,106 $ 423,708 $ 608,352 $ 254,480 $ 5,305 $ 5,123,500
(8) Special mention 743 45,137 728 90,752 61,132 1,530 7,800 766 208,588
(9) Substandard - accruing 10 25,880 — — — — — — 25,890
(9+) Non-accrual — — — 20,734 — — — — 20,734
Total commercial real estate $ 781,815 $ 636,744 $ 942,488 $ 1,654,592 $ 484,840 $ 609,882 $ 262,280 $ 6,071 $ 5,378,712
Consumer
(1-7) Pass $ 36,507 $ 37,851 $ 28,181 $ 50,765 $ 72,924 $ 113,440 $ 94,258 $ — $ 433,926
(8) Special mention — — — — — — — — —
(9) Substandard - accruing — — — — — — — — —
(9+) Non-accrual — — — — — — — — —
Total Consumer $ 36,507 $ 37,851 $ 28,181 $ 50,765 $ 72,924 $ 113,440 $ 94,258 $ — $ 433,926
Total $ 2,901,098 $ 1,864,486 $ 1,705,297 $ 2,455,183 $ 715,721 $ 884,023 $ 13,498,964 $ 15,430 $ 24,040,202
Gross charge-offs $ 11,233 $ 704 $ 4,234 $ 8,958 $ 28 $ 2,011 $ 25,715 $ — $ 52,883
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The following table details activity in the allowance for credit losses on loans. Allocation of a portion of the allowance to one category does not preclude its availability to absorb losses in other categories.
(in thousands) Commercial Mortgage
Finance Commercial Real Estate Consumer Total
Nine Months Ended September 30, 2026
Beginning balance $ 202,029 $ 6,221 $ 60,559 $ 1,748 $ 270,557
Provision for credit losses on loans 74,869 ( 2,837 ) ( 24,286 ) 9 47,755
Charge-offs 42,338 — 7,098 — 49,436
Recoveries 1,266 — 184 7 1,457
Net charge-offs (recoveries) 41,072 — 6,914 ( 7 ) 47,979
Ending balance $ 235,826 $ 3,384 $ 29,359 $ 1,764 $ 270,333
Nine Months Ended September 30, 2025
Beginning balance $ 198,423 $ 2,755 $ 68,825 $ 1,706 $ 271,709
Provision for credit losses on loans 35,106 5,944 ( 2,306 ) 75 38,819
Charge-offs 37,011 — 931 — 37,942
Recoveries 1,019 — 413 8 1,440
Net charge-offs (recoveries) 35,992 — 518 ( 8 ) 36,502
Ending balance $ 197,537 $ 8,699 $ 66,001 $ 1,789 $ 274,026
The Company recorded a $ 47.8 million provision for credit losses on loans for the nine months ended September 30, 2026, compared to $ 38.8 million for the same period of 2025. The $ 47.8 million provision for credit losses on loans resulted primarily from an increase in criticized loans and $ 48.0 million in net charge-offs recorded during the nine months ended September 30, 2026. Criticized loans totaled $ 782.4 million at September 30, 2026, compared to $ 634.9 million at December 31, 2025.
A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. At September 30, 2026, the Company had $ 25.7 million in collateral-dependent commercial loans, collateralized by business assets, and $ 39.4 million in collateral-dependent commercial real estate loans, collateralized by real estate.
The table below provides an age analysis of loans held for investment:
(in thousands) 30-59 Days
Past Due 60-89 Days
Past Due 90 Days or More Past Due Total Past
Due Non-accrual(1) Current Total Non-accrual With No Allowance
September 30, 2026
Commercial $ 1,576 $ 21,888 $ 52,807 $ 76,271 $ 82,845 $ 13,269,212 $ 13,428,328 $ 13,324
Mortgage finance — — — — — 5,441,689 5,441,689 —
Commercial real estate 1,584 1,115 — 2,699 39,423 4,744,391 4,786,513 18,500
Consumer 2,226 — 400 2,626 69 423,765 426,460 —
Total $ 5,386 $ 23,003 $ 53,207 $ 81,596 $ 122,337 $ 23,879,057 $ 24,082,990 $ 31,824
(1) As of September 30, 2026, $ 676,000 of non-accrual loans were earning interest income on a cash basis compared to $ 470,000 as of December 31, 2025. Additionally, $ 175,000 interest income was recognized on non-accrual loans for the nine months ended September 30, 2026 compared to $ 630,000 recognized for the same period in 2025. Accrued interest of $ 6.2 million and $ 1.5 million was reversed during the nine months ended September 30, 2026 and September 30, 2025, respectively.
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Modifications to Borrowers Experiencing Financial Difficulty
The table below details loans held for investment made to borrowers experiencing financial difficulty that were modified during the three and nine months ended September 30, 2026 and September 30, 2025, by type of modification granted and the financial effect of those modifications:
Financial Statement Impact
($ in thousands) Payment
Deferral Term
Extension Payment
Deferral
and Term
Extension Total Percentage of Loans Held for Investment Interest Rate Reduction Term Extension (in months) Payment Deferrals
Three Months Ended September 30, 2026
Commercial $ 1,100 $ 15,976 $ — $ 17,076 0.07 % — % 7 to 8
$ 18
Total $ 1,100 $ 15,976 $ — $ 17,076 0.07 %
Three Months Ended September 30, 2025
Commercial $ 791 $ 8,948 $ 758 $ 10,497 0.04 % — % 3 to 6
$ 814
Commercial real estate — — 17,505 17,505 0.07 % — % 6 737
Total $ 791 $ 8,948 $ 18,263 $ 28,002 0.12 %
Nine Months Ended September 30, 2026
Commercial $ 81,102 $ 26,874 $ — $ 107,976 0.45 % — % 4 to 8
$ 5,356
Commercial real estate — — 16,859 16,859 0.07 % — % 6
737
Total $ 81,102 $ 26,874 $ 16,859 $ 124,835 0.52 %
Nine Months Ended September 30, 2025
Commercial $ 12,100 $ 19,950 $ 23,126 $ 55,176 0.23 % — % 3 to 26
$ 6,711
Commercial real estate 18,163 — 17,505 35,668 0.15 % — % 6 $ 1,106
Total $ 30,263 $ 19,950 $ 40,631 $ 90,844 0.37 %
The table below details loans held for investment that experienced a default during the periods presented subsequent to being granted a modification in the prior twelve months. Default is defined as movement to nonperforming status, foreclosure or charge-off, whichever occurs first.
(in thousands)
Payment
Deferral Term
Extension Payment Deferral
and Term Extension
Total
Three Months Ended September 30, 2026
Commercial $ 6,688 $ — $ — $ 6,688
Total $ 6,688 $ — $ — $ 6,688
Three Months Ended September 30, 2025
Commercial $ 179 $ 3,000 $ 14,613 $ 17,792
Total
$ 179 $ 3,000 $ 14,613 $ 17,792
Nine Months Ended September 30, 2026
Commercial $ 17,936 $ 416 $ — $ 18,352
Total $ 17,936 $ 416 $ — $ 18,352
Nine Months Ended September 30, 2025
Commercial $ 25,675 $ 9,537 $ 14,613 $ 49,825
Commercial real estate — — 13,500 13,500
Total $ 25,675 $ 9,537 $ 28,113 $ 63,325
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The table below provides an age analysis of loans held for investment made to borrowers experiencing financial difficulty that were modified in the prior twelve months:
(in thousands) 30-89 Days
Past Due 90+ Days
Past Due Non-Accrual Current Total
September 30, 2026
Commercial $ 15,226 $ 18,000 $ 45,023 $ 33,300 $ 111,549
Commercial real estate
— — 16,295 — 16,295
Total $ 15,226 $ 18,000 $ 61,318 $ 33,300 $ 127,844
September 30, 2025
Commercial $ 758 $ — $ 47,849 $ 18,157 $ 66,764
Commercial real estate
— — 17,506 — 17,506
Total $ 758 $ — $ 65,355 $ 18,157 $ 84,270
(5) Short-Term Borrowings and Long-Term Debt
The table below presents a summary of short-term borrowings:
(in thousands) September 30, 2026 December 31, 2025
Federal funds purchased $ — $ 30,000
Federal Home Loan Bank (“FHLB”) borrowings
— 300,000
Total short-term borrowings $ — $ 330,000
The table below presents a summary of long-term debt:
(in thousands) September 30, 2026 December 31, 2025
Bank-issued 5.25 % fixed rate subordinated notes due 2026
$ — $ 134,509
Company-issued 4.00 % fixed rate subordinated notes due 2031
— 372,660
Company-issued 5.301 % fixed-to-floating rate senior notes due February 2032
373,864 —
Trust preferred floating rate subordinated debentures due November 2032 to December 2036 113,406 113,406
Total long-term debt $ 487,270 $ 620,575
In the first quarter of 2026, the Bank-issued 5.25 % fixed rate subordinated notes due 2026 matured and were repaid in full. In the second quarter of 2026, the Company-issued 4.00 % fixed rate subordinated notes due 2031 were redeemed and repaid in full.
On February 27, 2026, the Company issued $ 400.0 million of fixed-to-floating senior notes. The notes are redeemable, in whole or in part, on February 27, 2031 and mature on February 27, 2032. The notes bear interest at a fixed annual rate of 5.301 %, payable semi-annually, for an initial five-year period and at a floating rate per annum equal to the compounded Secured Overnight Financing Rate (“SOFR”) plus 1.94 %, payable quarterly, for the final year.
(6) Financial Instruments with Off-Balance Sheet Risk
The table below presents the Company’s financial instruments with off-balance sheet risk, as well as the activity in the allowance for off-balance sheet credit losses related to those financial instruments.
(in thousands) Commercial Mortgage
Finance Commercial
Real Estate Consumer Total
Nine Months Ended September 30, 2026
Beginning balance $ 58,209 $ 16 $ 3,979 $ 51 $ 62,255
Provision for off-balance sheet credit losses 4,871 18 ( 1,645 ) 1 3,245
Ending balance $ 63,080 $ 34 $ 2,334 $ 52 $ 65,500
Nine Months Ended September 30, 2025
Beginning balance $ 47,907 $ 23 $ 5,351 $ 51 $ 53,332
Provision for off-balance sheet credit losses 5,717 2 ( 522 ) ( 16 ) 5,181
Ending balance $ 53,624 $ 25 $ 4,829 $ 35 $ 58,513
(in thousands) September 30, 2026 December 31, 2025
Commitments to extend credit - period end balance $ 11,732,168 $ 12,193,441
Standby letters of credit - period end balance 819,492 610,178
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(7) Regulatory Ratios and Capital
The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory (and possibly additional discretionary) actions by regulators that, if undertaken, could have a direct material adverse effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s and the Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
The Basel III Capital Rules adopted by U.S. federal banking agencies, among other things, (i) establish the capital measure called “Common Equity Tier 1” (“CET1”), (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 Capital” instruments meeting stated requirements, (iii) require that most deductions/adjustments to regulatory capital measures be made to CET1 and not to other components of capital and (iv) define the scope of the deductions/adjustments to the capital measures.
Additionally, the Basel III Capital Rules require that the Company maintain a 2.5 % capital conservation buffer comprised of CET1, with respect to each of CET1, Tier 1 and total capital to risk-weighted asset ratios. A financial institution with a conservation buffer of less than the required amount is subject to limitations on capital distributions, including dividend payments and stock repurchases, and certain discretionary bonus payments to executive officers. During the nine months ended September 30, 2026, the Company declared and paid common stock dividends of $ 17.3 million, representing $ 0.40 per common share. No common stock dividends were paid in 2025. On October 21, 2026, the Company’s board of directors declared a cash dividend of $ 0.20 per common share payable on December 15, 2026, to holders of record at the close of business on December 1, 2026.
Effective December 12, 2025, the Company’s board of directors authorized a share repurchase program under which the Company may repurchase up to $200.0 million in shares of its outstanding common stock, excluding the effect of excise tax expense incurred on the net stock repurchases. Effective October 20, 2026, the Company’s board of directors authorized a new share repurchase program under which the Company may repurchase up to $ 200.0 million in shares of its outstanding common stock, excluding the effect of excise tax expense incurred on the net stock repurchases. The new share repurchase program will expire on October 31, 2027, but may be suspended or discontinued at any time. The remaining repurchase authorization under the December 12, 2025 share repurchase program was terminated upon authorization of this new program.
During the nine months ended September 30, 2026, the Company repurchased 2,061,431 shares of its common stock for an aggregate purchase price, including excise tax expense, of $ 201.7 million, at a weighted average price of $ 97.00 per share.
Because the Bank had less than $ 15.0 billion in total consolidated assets as of December 31, 2009, it is allowed to continue to classify the trust preferred securities, all of which were issued prior to May 19, 2010, as Tier 1 capital.
The table below summarizes the Company’s and the Bank’s actual and required capital ratios under the Basel III Capital Rules and other standards. As shown in the table below, the Company’s and Bank’s capital ratios exceeded the regulatory definition of well capitalized as of September 30, 2026 and December 31, 2025.
September 30, 2026 December 31, 2025
($ in thousands) Minimum Capital Required(2) Capital Required to be Well Capitalized Capital Amount Ratio Capital Amount Ratio
The Company
CET1 capital (to risk-weighted assets) 7.00 % N/A $ 3,436,713 12.20 % $ 3,394,471 12.13 %
Tier 1 capital (to risk-weighted assets) 8.50 % 6.00 % 3,846,713 13.65 % 3,804,471 13.60 %
Total capital (to risk-weighted assets) 10.50 % 10.00 % 4,182,546 14.84 % 4,509,943 16.12 %
Tier 1 capital (to average assets)(1) 4.00 % N/A 3,846,713 11.65 % 3,804,471 11.65 %
The Bank
CET1 capital (to risk-weighted assets) 7.00 % 6.50 % $ 3,610,018 12.89 % $ 3,618,691 13.01 %
Tier 1 capital (to risk-weighted assets) 8.50 % 8.00 % 3,610,018 12.89 % 3,618,691 13.01 %
Total capital (to risk-weighted assets) 10.50 % 10.00 % 3,945,851 14.08 % 3,951,503 14.20 %
Tier 1 capital (to average assets)(1) 4.00 % 5.00 % 3,610,018 11.03 % 3,618,691 11.18 %
(1) The Tier 1 capital ratio (to average assets) is not impacted by the Basel III Capital Rules; however, the Federal Reserve Board and the Federal Deposit Insurance Corporation may require the Company and the Bank, respectively, to maintain a Tier 1 capital ratio (to average assets) above the required minimum.
(2) Percentages represent the minimum capital ratios plus, as applicable, the fully phased-in 2.5% CET1 capital buffer under the Basel III Capital Rules.
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(8) Stock-Based Compensation
The Company has long-term incentive plans under which stock-based compensation awards are granted to employees and directors by the Company’s board of directors or its designated committee. Grants are subject to vesting requirements and may include, among other things, nonqualified stock options, stock appreciation rights, restricted stock units (“RSUs”), restricted stock and performance units, or any combination thereof.
The table below summarizes the Company’s stock-based compensation expense:
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2026 2025 2026 2025
Stock-settled RSUs $ 4,344 $ 5,146 $ 21,470 $ 20,425
Cash-settled units 3,508 3,091 13,655 8,189
Total $ 7,852 $ 8,237 $ 35,125 $ 28,614
(in thousands except period data) September 30, 2026
Unrecognized compensation expense related to unvested stock-settled RSUs $ 26,056
Weighted average period over which stock-settled RSUs expense is expected to be recognized, in years 1.9
Unrecognized compensation expense related to cash-settled units $ 25,272
Weighted average period over which cash-settled units expense is expected to be recognized, in years 1.9
(9) Fair Value Disclosures
The Company determines the fair market values of its assets and liabilities measured at fair value on a recurring and nonrecurring basis using the fair value hierarchy as prescribed in Accounting Standards Codification 820, Fair Value Measurement. See Note 1 - Operations and Summary of Significant Accounting Policies in the 2025 Form 10-K for information regarding the fair value hierarchy and a description of the methods and significant assumptions used by the Company in estimating its fair value disclosures for financial statements.
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Assets and liabilities measured at fair value are as follows:
Fair Value Measurements Using
(in thousands) Level 1 Level 2 Level 3
September 30, 2026
Available-for-sale debt securities:(1)
Residential mortgage-backed securities $ — $ 3,850,217 $ —
Commercial mortgage-backed securities
— 235,519 —
Credit risk transfer securities
— — 10,119
Equity securities(1)
32,007 10,000 —
Loans held for investment(2)
— — 26,865
Derivative assets(1) — 14,461 —
Other trading assets(1) 40 — —
Derivative liabilities(1) — 140,096 —
Securities sold not yet purchased(1) 12,297 — —
Non-qualified deferred compensation plan liabilities(3) 18,015 — —
December 31, 2025
Available-for-sale debt securities:(1)
Residential mortgage-backed securities $ — $ 3,692,646 $ —
Commercial mortgage-backed securities
— 248,012 —
Credit risk transfer securities
— — 10,797
Equity securities(1)
31,998 10,000 —
Trading debt securities(1) — 3,924 —
Loans held for investment(2)
— — 20,844
Derivative assets(1) — 40,892 —
Derivative liabilities(1) — 24,458 —
Securities sold not yet purchased(1) 12,026 — —
Non-qualified deferred compensation plan liabilities(3) 18,989 — —
(1) Assets and liabilities measured at fair value on a recurring basis, generally monthly.
(2) Includes collateral-dependent loans held for investment for which a specific allocation of the allowance for credit losses is based upon the fair value of the loan’s underlying collateral, measured on a nonrecurring basis, generally annually or more often as warranted by market and economic conditions.
(3) Non-qualified deferred compensation plan liabilities represent the fair value of the obligation to the employee, which generally corresponds to the fair value of the invested assets, and are measured at fair value on a recurring basis, generally monthly.
Level 3 Valuations
The following table presents a reconciliation of the level 3 fair value category measured at fair value on a recurring basis:
Net Gains/(Losses)
(in thousands) Balance at Beginning of Period Purchases / Additions Sales / Reductions Realized Unrealized Balance at End of Period
Three Months Ended September 30, 2026
Available-for-sale debt securities:(1)
Credit risk transfer securities
$ 10,281 $ — $ ( 220 ) $ — $ 58 $ 10,119
Three Months Ended September 30, 2025
Available-for-sale debt securities:(1)
Credit risk transfer securities
$ 11,367 $ — $ ( 382 ) $ — $ 8 $ 10,993
Nine Months Ended September 30, 2026
Available-for-sale debt securities:(1)
Credit risk transfer securities
$ 10,797 $ — $ ( 796 ) $ — $ 118 $ 10,119
Nine Months Ended September 30, 2025
Available-for-sale debt securities:(1)
Credit risk transfer securities
$ 11,926 $ — $ ( 1,019 ) $ — $ 86 $ 10,993
(1) Unrealized gains/(losses) on available-for-sale debt securities are recorded in AOCI. Realized gains/(losses) are recorded in other non-interest income on the consolidated statements of income and other comprehensive income.
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Credit risk transfer securities
The fair value of credit risk transfer securities is based on a discounted cash flow model, which utilizes Level 3 inputs, the most significant of which were a discount rate and weighted-average life. At September 30, 2026, the discount rates utilized ranged from 5.72 % to 6.85 % and the weighted-average life ranged from 3.76 years to 5.40 years. On a combined amortized cost weighted-average basis a discount rate of 6.24 % and a weighted-average life of 4.52 years were utilized to determine the fair value of these securities at September 30, 2026. At December 31, 2025, the combined weighted-average discount rate and weighted-average life utilized were 5.16 % and 4.65 years, respectively.
Loans held for investment
Certain collateral-dependent loans held for investment are reported at fair value when, based upon an individual evaluation, the specific allocation of the allowance for credit losses that is deducted from the loan's amortized cost is based upon the fair value of the loan's underlying collateral. The $ 26.9 million fair value of loans held for investment at September 30, 2026 reported above includes impaired loans with a carrying value of $ 46.6 million that were reduced by specific allowance allocations totaling $ 19.7 million based on collateral valuations utilizing Level 3 inputs. The $ 20.8 million fair value of loans held for investment at December 31, 2025 reported above includes impaired loans with a carrying value of $ 30.1 million that were reduced by specific allowance allocations totaling $ 9.3 million based on collateral valuations utilizing Level 3 inputs.
Fair Value of Financial Instruments
A summary of the carrying amounts and estimated fair values of financial instruments is as follows:
Carrying
Amount Estimated Fair Value
(in thousands) Total Level 1 Level 2 Level 3
September 30, 2026
Financial assets:
Cash and cash equivalents $ 2,674,159 $ 2,674,159 $ 2,674,159 $ — $ —
Available-for-sale debt securities 4,095,855 4,095,855 — 4,085,736 10,119
Held-to-maturity debt securities 672,881 575,384 — 575,384 —
Equity securities 42,007 42,007 32,007 10,000 —
Loans held for sale 28,676 28,813 — 28,813 —
Loans held for investment, net 23,812,657 23,536,212 — — 23,536,212
Derivative assets 14,461 14,461 — 14,461 —
Other trading assets
40 40 40 — —
Financial liabilities:
Total deposits 27,715,655 27,788,533 — — 27,788,533
Long-term debt 487,270 470,958 — 470,958 —
Derivative liabilities 140,096 140,096 — 140,096 —
Securities sold not yet purchased 12,297 12,297 12,297 — —
December 31, 2025
Financial assets:
Cash and cash equivalents $ 2,099,118 $ 2,099,118 $ 2,099,118 $ — $ —
Available-for-sale debt securities 3,951,455 3,951,455 — 3,940,658 10,797
Held-to-maturity debt securities 725,722 654,832 — 654,832 —
Equity securities 41,998 41,998 31,998 10,000 —
Trading debt securities
3,924 3,924 — 3,924 —
Loans held for sale 4,361 4,361 4,361
Loans held for investment, net 23,769,645 23,604,206 — — 23,604,206
Derivative assets 40,892 40,892 — 40,892 —
Financial liabilities:
Total deposits 26,448,767 26,450,932 — — 26,450,932
Short-term borrowings 330,000 330,000 — 330,000 —
Long-term debt 620,575 593,610 — 593,610 —
Derivative liabilities 24,458 24,458 — 24,458 —
Securities sold not yet purchased 12,026 12,026 12,026 — —
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(10) Derivative Financial Instruments
The notional amounts and estimated fair values of derivative positions outstanding are presented in the following table.
September 30, 2026 December 31, 2025
Estimated Fair Value Estimated Fair Value
(in thousands) Notional
Amount Asset Derivative Liability Derivative Notional
Amount Asset Derivative Liability Derivative
Derivatives designated as hedges
Cash flow hedges:
Interest rate contracts:
Swaps hedging loans $ 3,200,000 $ — $ 42,433 $ 2,050,000 $ 4,067 $ 770
Fair value hedges:
Interest rate contracts:
Swaps hedging long-term debt 400,000 — 23,228 — — —
Non-hedging derivatives
Customer-initiated and other derivatives:
Foreign currency forward contracts 1,026,335 8,327 7,751 265,943 1,212 984
Commodity contracts 232,235 7,258 6,517 — — —
Interest rate contracts:
Swaps 7,322,926 63,651 63,651 6,669,382 31,587 31,587
Caps and floors written 2,852,851 202 9,314 2,740,883 3,718 1,054
Caps and floors purchased 2,894,131 9,331 219 2,782,162 1,179 3,842
Forward contracts 28,748,524 299,355 293,157 22,454,928 40,214 40,021
Gross derivatives 388,124 446,270 81,977 78,258
Netting adjustment - offsetting derivative assets/liabilities ( 206,671 ) ( 206,671 ) ( 33,926 ) ( 33,926 )
Netting adjustment - cash collateral received/posted ( 166,992 ) ( 99,503 ) ( 7,159 ) ( 19,874 )
Net derivatives included on the consolidated balance sheets $ 14,461 $ 140,096 $ 40,892 $ 24,458
In the second quarter of 2026, the Company entered into commodity contract derivative instruments with customers while at the same time entering into offsetting commodity contract derivative instruments with another financial institution. These transactions allow customers to effectively manage their exposure to commodity value fluctuations. Any changes in the fair value of the underlying derivative instruments substantially offset each other, with any difference recorded in trading income on the consolidated statements of income and other comprehensive income.
The Company’s credit exposure on derivative instruments is limited to the net favorable value and interest payments by each counterparty. In some cases, collateral may be required from the counterparties involved if the net value of the derivative instruments exceeds a nominal amount. The Company’s credit exposure associated with these instruments, net of any collateral pledged, was approximately $ 14.5 million at September 30, 2026 and approximately $ 40.9 million at December 31, 2025. Collateral levels are monitored and adjusted on a regular basis for changes in the value of derivative instruments. At September 30, 2026, the Company had $ 113.1 million in cash collateral pledged to counterparties included in interest bearing cash and cash equivalents on the consolidated balance sheet and $ 52.9 million in cash collateral received from counterparties included in interest bearing deposits on the consolidated balance sheet. The comparative amounts at December 31, 2025, were $ 29.5 million in cash collateral pledged to counterparties and $ 7.6 million cash collateral received from counterparties.
The Company also enters into credit risk participation agreements with financial institution counterparties for interest rate swaps related to loans in which the Company is either a participant or a lead bank. The risk participation agreements entered into by the Company as a participant bank provide credit protection to the financial institution counterparty should the borrower fail to perform on its interest rate derivative contract with that financial institution. The Company is party to 26 risk participation agreements where it acts as a participant bank with a notional amount of $ 520.0 million at September 30, 2026, compared to 23 risk participation agreements with a notional amount of $ 338.1 million at December 31, 2025. The maximum estimated exposure to these agreements, assuming 100% default by all obligors, was approximately $ 9.8 million at September 30, 2026 and $ 510,000 at December 31, 2025. The fair value of these exposures was insignificant to the consolidated financial statements at both September 30, 2026 and December 31, 2025. Risk participation agreements entered into by the Company as the lead bank provide credit protection should the borrower fail to perform on its interest rate derivative contract. The Company is party to 51 risk participation agreements where the Company acts as the lead bank having a notional amount of $ 636.1 million at September 30, 2026, compared to 47 agreements having a notional amount of $ 603.1 million at December 31, 2025.
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Derivatives Designated as Cash Flow Hedges
The Company enters into interest rate derivative contracts that are designated as qualifying cash flow hedges to hedge the exposure to variability in expected future cash flows attributable to changes in a contractually specified interest rate.
During the nine months ended September 30, 2026, the Company recorded $ 49.7 million in unrealized losses to adjust its cash flow hedges to fair value, which was recorded net of tax to AOCI, and reclassified $ 3.4 million from AOCI as a decrease to interest income on loans. Based on current market conditions, the Company estimates that during the next 12 months, an additional $ 24.7 million will be reclassified from AOCI as a decrease to interest income. As of September 30, 2026, the maximum length of time over which forecasted transactions are hedged is 2.00 years.
Derivatives Designated as Fair Value Hedges
The Company enters into interest rate derivative contracts that are designated as qualifying fair value hedges to hedge the exposure to variability in fair value attributable to changes in a contractually specified interest rate. To qualify for hedge accounting the hedging relationship, both at inception and on an ongoing basis, must be expected to be highly effective in achieving offsetting fair value adjustments attributable to the hedged risk during the term of the hedge if a fair value hedge. As of September 30, 2026, all of the Company’s fair value hedges are accounted for using the shortcut method. The shortcut method assumes perfect hedge effectiveness and eliminates the quantitative aspect of assessing hedge effectiveness. The fair value hedges are recorded at fair value in other assets and other liabilities on the consolidated balance sheets with changes in fair value recorded in the same income statement line item as the offsetting unrealized loss or gain on the hedged item attributable to the risk being hedged.
During the first quarter of 2026, the Company entered into a receive-fixed, pay-variable interest rate swap contract to hedge the change in the fair value due to fluctuations in market interest rates for the $ 400.0 million Company-issued 5.301 % fixed-to-floating rate senior notes. The change in fair value of the fair value hedge is recorded through earnings with an exact offset against the change in the fair value of the hedged item within interest expense on long-term debt in the consolidated statements of income and other comprehensive income. During the nine months ended September 30, 2026, the Company recorded $ 870,000 in interest expense on long-term debt related to interest settlements on derivatives. As of September 30, 2026, the carrying amount of the hedged liability was $ 373.9 million, which included a $ 23.2 million cumulative basis reduction related to the application of hedge accounting.
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(11) Accumulated Other Comprehensive Income
The following table provides the change in AOCI by component:
(in thousands) Cash Flow Hedges Available-for-Sale Securities Held-to-Maturity Securities Total
Three Months Ended September 30, 2026
Beginning balance $ ( 14,255 ) $ ( 55,809 ) $ ( 28,816 ) $ ( 98,880 )
Change in unrealized gain/(loss) ( 25,035 ) ( 174,800 ) — ( 199,835 )
Amounts reclassified into net income 1,214 — 1,558 2,772
Total other comprehensive income/(loss) ( 23,821 ) ( 174,800 ) 1,558 ( 197,063 )
Income tax expense/(benefit) ( 5,478 ) ( 40,204 ) 358 ( 45,324 )
Total other comprehensive income/(loss), net of tax ( 18,343 ) ( 134,596 ) 1,200 ( 151,739 )
Ending balance $ ( 32,598 ) $ ( 190,405 ) $ ( 27,616 ) $ ( 250,619 )
Three Months Ended September 30, 2025
Beginning balance $ ( 1,372 ) $ ( 77,761 ) $ ( 33,798 ) $ ( 112,931 )
Change in unrealized gain/(loss) 78 30,831 — 30,909
Amounts reclassified into net income 4,525 — 1,647 6,172
Total other comprehensive income/(loss) 4,603 30,831 1,647 37,081
Income tax expense/(benefit) 1,040 6,962 372 8,374
Total other comprehensive income/(loss), net of tax 3,563 23,869 1,275 28,707
Ending balance $ 2,191 $ ( 53,892 ) $ ( 32,523 ) $ ( 84,224 )
Nine Months Ended September 30, 2026
Beginning balance $ 3,100 $ ( 36,563 ) $ ( 31,122 ) $ ( 64,585 )
Change in unrealized gain/(loss) ( 49,743 ) ( 199,795 ) — ( 249,538 )
Amounts reclassified into net income 3,382 — 4,553 7,935
Total other comprehensive income/(loss)
( 46,361 ) ( 199,795 ) 4,553 ( 241,603 )
Income tax expense/(benefit)
( 10,663 ) ( 45,953 ) 1,047 ( 55,569 )
Total other comprehensive income/(loss), net of tax
( 35,698 ) ( 153,842 ) 3,506 ( 186,034 )
Ending balance $ ( 32,598 ) $ ( 190,405 ) $ ( 27,616 ) $ ( 250,619 )
Nine Months Ended September 30, 2025
Beginning balance $ ( 15,275 ) $ ( 131,531 ) $ ( 36,301 ) $ ( 183,107 )
Change in unrealized gain/(loss) 943 100,283 — 101,226
Amounts reclassified into net income 21,618 — 4,880 26,498
Total other comprehensive income/(loss) 22,561 100,283 4,880 127,724
Income tax expense/(benefit) 5,095 22,644 1,102 28,841
Total other comprehensive income/(loss), net of tax 17,466 77,639 3,778 98,883
Ending balance $ 2,191 $ ( 53,892 ) $ ( 32,523 ) $ ( 84,224 )
(12) New Accounting Standards
Accounting Standards Update 2026-03 “Fair Value Measurement (Topic 820): Investment Companies with Equity Securities Subject to Contractual Sale Restrictions” (“ASU 2026-03”) requires investment companies holding equity securities with contractual restrictions on their sale to consider the effect of the contractual sale restriction when measuring an equity security’s fair value. ASU 2026-03 will be effective for the Company beginning January 1, 2028, including interim periods within that fiscal year with early adoption permitted, and is not expected to have a significant impact on the Company’s financial statements.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.