FULLTEXT DEL 2 AV 3
10-Q – 2025-08-08 – fcnca-20250630.htm
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 construction Pass $ 1,095 $ 1,854 $ 1,276 $ 287 $ 152 $ 52 $ 148 $ — $ 4,864 Special Mention — 80 35 — 7 24 — — 146 Substandard — 8 47 20 7 17 — — 99 Doubtful — — — — — — — — — Ungraded — — — — — — — — — Total commercial construction 1,095 1,942 1,358 307 166 93 148 — 5,109 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 Doubtful — — — — — — — — — Ungraded — — — — — — — — — Total owner occupied commercial mortgage 2,773 2,525 2,953 2,721 2,304 3,294 242 30 16,842 Non-owner occupied commercial mortgage Pass 2,879 3,082 2,744 2,041 1,598 2,134 119 3 14,600 Special Mention — 66 293 43 4 86 — — 492 Substandard 12 15 171 39 116 653 — — 1,006 Doubtful — — — — 20 76 — — 96 Ungraded — — — — — — — — — Total non-owner occupied commercial mortgage 2,891 3,163 3,208 2,123 1,738 2,949 119 3 16,194 Commercial and industrial Pass 11,813 6,295 4,622 2,389 1,221 1,408 9,033 67 36,848 Special Mention 145 236 255 302 29 69 203 — 1,239 Substandard 155 347 614 332 195 207 454 4 2,308 Doubtful 5 23 42 15 1 18 103 — 207 Ungraded — — — — — — 135 — 135 Total commercial and industrial 12,118 6,901 5,533 3,038 1,446 1,702 9,928 71 40,737 Leases Pass 739 506 300 147 96 46 — — 1,834 Special Mention 13 17 29 5 4 — — — 68 Substandard 21 29 23 13 9 8 — — 103 Doubtful 1 3 2 2 1 — — — 9 Ungraded — — — — — — — — — Total leases 774 555 354 167 110 54 — — 2,014 Global fund banking Pass 892 179 147 20 14 12 26,588 36 27,888 Special Mention — — — — — — — — — Substandard — — 5 8 2 — 1 — 16 Doubtful — — — — — — — — — Ungraded — — — — — — — — — Total global fund banking 892 179 152 28 16 12 26,589 36 27,904 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 Ungraded — — — — — — — — — Total investor dependent 1,300 860 550 73 1 — 406 3 3,193 Total commercial $ 21,843 $ 16,125 $ 14,108 $ 8,457 $ 5,781 $ 8,104 $ 37,432 $ 143 $ 111,993 21 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 $ 2,178 $ 2,968 $ 5,264 $ 5,148 $ 2,913 $ 4,353 $ 4 $ — $ 22,828 30-59 days 3 13 19 23 31 95 — — 184 60-89 days 1 3 5 2 2 28 — — 41 90 days or greater — 4 6 7 9 73 — — 99 Total residential mortgage 2,182 2,988 5,294 5,180 2,955 4,549 4 — 23,152 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 Consumer 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 Consumer other 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 $ 2,952 $ 3,495 $ 5,676 $ 5,369 $ 3,030 $ 4,597 $ 2,982 $ 127 $ 28,228 22 Gross Charge-offs Gross charge-off vintage disclosures by origination year and loan class are summarized in the following tables: Six Months Ended June 30, 2025 Term Loans by Origination Year Revolving Converted to Term Loans dollars in millions 2025 2024 2023 2022 2021 2020 & Prior Revolving Total Commercial Owner occupied commercial mortgage $ — $ — $ — $ — $ — $ 1 $ — $ — $ 1 Non-owner occupied commercial mortgage — 23 2 17 — 17 — — 59 Commercial and industrial 15 11 32 33 6 3 56 1 157 Leases 1 2 2 2 2 2 — — 11 Investor dependent — 6 23 26 6 4 3 — 68 Total commercial 16 42 59 78 14 27 59 1 296 Consumer Consumer auto — 1 1 1 — — — — 3 Consumer other — 1 1 1 — — 9 — 12 Total consumer — 2 2 2 — — 9 — 15 Total loans and leases $ 16 $ 44 $ 61 $ 80 $ 14 $ 27 $ 68 $ 1 $ 311 Six Months Ended June 30, 2024 Term Loans by Origination Year Revolving Converted to Term Loans dollars in millions 2024 2023 2022 2021 2020 2019 & Prior Revolving Total Commercial Non-owner occupied commercial mortgage $ — $ — $ — $ — $ — $ 46 $ — $ — $ 46 Commercial and industrial 4 18 39 7 2 8 33 1 112 Leases — 6 10 5 2 2 — — 25 Investor dependent — 23 37 19 3 4 5 — 91 Total commercial 4 47 86 31 7 60 38 1 274 Consumer Consumer auto — 1 1 1 — — — — 3 Consumer other — 1 1 — — — 8 — 10 Total consumer — 2 2 1 — — 8 — 13 Total loans and leases $ 4 $ 49 $ 88 $ 32 $ 7 $ 60 $ 46 $ 1 $ 287 23 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, interest rate reductions, payment delays, principal forgiveness, or a combination thereof. Modifications are made in accordance with internal policies and guidelines to conform to regulatory guidance. The following tables present the amortized cost of loan modifications made to debtors experiencing financial difficulty, disaggregated by class and type of loan modification. The tables also provide financial effects by type of such loan modifications for the respective loan class. Loan modifications for principal forgiveness round to less than $ 1 million for all loan classes in all periods presented and are not presented in the following tables. Amortized Cost of Loans Modified during the three months ended June 30, 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 construction $ 24 $ — $ — $ — $ 10 $ — $ 34 0.60 % Owner occupied commercial mortgage 2 2 — 29 7 — 40 0.24 Non-owner occupied commercial mortgage 60 — — 64 — — 124 0.77 Commercial and industrial 23 60 — 2 10 5 100 0.24 Investor dependent 7 28 — — — — 35 1.27 Total commercial 116 90 — 95 27 5 333 0.29 Consumer Residential mortgage 5 — 3 1 24 — 33 0.14 Revolving mortgage 1 — — — — — 1 0.03 Total consumer 6 — 3 1 24 — 34 0.12 Total loans and leases $ 122 $ 90 $ 3 $ 96 $ 51 $ 5 $ 367 0.26 % (1) Term extensions include modifications in which the balloon principal payment was deferred to a later date or the loan amortization period was extended. (2) Consists of $ 5 million of commercial and industrial loans modified with a term extension, payment delay, and interest rate reduction. Amortized Cost of Loans Modified during the three months ended June 30, 2024 dollars in millions Term Extension (1) Payment Delay Interest Rate Reduction Term Extension (1) and Payment Delay Other Combinations (2) Total Percent of Total Loan Class Commercial Owner occupied commercial mortgage $ 8 $ — $ 3 $ — $ — $ 11 0.07 % Non-owner occupied commercial mortgage 41 — — — — 41 0.26 Commercial and industrial 30 93 31 10 4 168 0.42 Investor dependent 2 48 — 17 1 68 1.78 Total commercial 81 141 34 27 5 288 0.26 Consumer Residential mortgage 3 — — — — 3 0.01 Revolving mortgage 2 — — — — 2 0.11 Total consumer 5 — — — — 5 0.02 Total loans and leases $ 86 $ 141 $ 34 $ 27 $ 5 $ 293 0.21 % (1) Term extensions include modifications in which the balloon principal payment was deferred to a later date or the loan amortization period was extended. (2) Consists of $ 4 million commercial and industrial loans modified with a term extension and interest rate reduction as well as $ 1 million of investor dependent loans modified with a term extension, interest rate reduction, and payment delay. 24 Financial Effects of Loan Modifications made during the three months ended June 30, 2025 dollars in millions Weighted Average Term Extension (in Months) Weighted Average Interest Rate Reduction Weighted Average Payment Delay (in Months) Commercial Commercial construction 7 — % 6 Owner occupied commercial mortgage 12 1.93 5 Non-owner occupied commercial mortgage 27 0.60 — Commercial and industrial 13 1.06 15 Investor dependent 6 — 5 Total commercial 19 1.01 11 Consumer Residential mortgage 8 1.14 6 Revolving mortgage 43 4.40 — Consumer auto 19 — — Consumer other 60 8.94 — Total consumer 9 1.58 6 Total loans and leases 18 1.04 % 11 Financial Effects of Loan Modifications made during the three months ended June 30, 2024 dollars in millions Weighted Average Term Extension (in Months) Weighted Average Interest Rate Reduction Weighted Average Payment Delay (in Months) Commercial Commercial construction 60 — % — Owner occupied commercial mortgage 86 1.81 — Non-owner occupied commercial mortgage 20 — 6 Commercial and industrial 16 0.54 11 Leases — — 6 Investor dependent 9 2.75 8 Total commercial 22 0.69 10 Consumer Residential mortgage 120 — — Revolving mortgage 60 3.00 — Consumer auto 32 — — Consumer other — 7.53 — Total consumer 90 4.77 — Total loans and leases 24 0.69 % 10 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. 25 Amortized Cost of Loans Modified during the six months ended June 30, 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 construction $ 24 $ — $ — $ — $ 12 $ — $ 36 0.62 % Owner occupied commercial mortgage 11 4 — 29 20 — 64 0.37 Non-owner occupied commercial mortgage 61 — — 64 23 — 148 0.91 Commercial and industrial 82 77 — 3 22 5 189 0.47 Investor dependent 10 44 — — 6 — 60 2.15 Total commercial 188 125 — 96 83 5 497 0.44 Consumer Residential mortgage 9 — 3 2 25 — 39 0.17 Revolving mortgage 1 — — — — — 1 0.05 Total consumer 10 — 3 2 25 — 40 0.14 Total loans and leases $ 198 $ 125 $ 3 $ 98 $ 108 $ 5 $ 537 0.38 % (1) Term extensions include modifications in which the balloon principal payment was deferred to a later date or the loan amortization period was extended. (2) Consists of $ 5 million of commercial and industrial loans modified with a term extension, payment delay, and interest rate reduction. Amortized Cost of Loans Modified during the six months ended June 30, 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 construction $ 3 $ — $ — $ — $ — $ — $ 3 0.07 % Owner occupied commercial mortgage 23 — 4 1 9 — 37 0.23 Non-owner occupied commercial mortgage 78 — — — 26 — 104 0.67 Commercial and industrial 62 93 31 11 10 — 207 0.52 Investor dependent 2 74 — — 26 1 103 2.71 Total commercial 168 167 35 12 71 1 454 0.41 Consumer Residential mortgage 7 — — 2 — — 9 0.04 Revolving mortgage 3 — — 1 — — 4 0.18 Total consumer 10 — — 3 — — 13 0.05 Total loans and leases $ 178 $ 167 $ 35 $ 15 $ 71 $ 1 $ 467 0.34 % (1) Term extensions include modifications in which the balloon principal payment was deferred to a later date or the loan amortization period was extended. (2) Consists of $ 1 million of investor dependent loans modified with a term extension, interest rate reduction, and payment delay. 26 Financial Effects of Loan Modifications made during the six months ended June 30, 2025 Weighted Average Term Extension (in Months) Weighted Average Interest Rate Reduction Weighted Average Payment Delay (in Months) Commercial Commercial construction 7 — % 6 Owner occupied commercial mortgage 11 1.93 5 Non-owner occupied commercial mortgage 24 0.60 7 Commercial and industrial 16 1.03 13 Investor dependent 7 — 5 Total commercial 17 1.01 9 Consumer Residential mortgage 11 1.18 6 Revolving mortgage 47 3.75 5 Consumer auto 20 — — Consumer other 60 9.20 — Total consumer 12 1.67 6 Total loans and leases 17 1.05 % 9 Financial Effects of Loan Modifications made during the six months ended June 30, 2024 Weighted Average Term Extension (in Months) Weighted Average Interest Rate Reduction Weighted Average Payment Delay (in Months) Commercial Commercial construction 19 — % — Owner occupied commercial mortgage 39 1.42 20 Non-owner occupied commercial mortgage 24 — 48 Commercial and industrial 14 0.66 11 Leases — — 6 Investor dependent 12 2.75 8 Total commercial 21 0.77 14 Consumer Residential mortgage 73 1.51 — Revolving mortgage 60 4.08 — Consumer auto 30 0.26 — Consumer other 46 8.79 — Total consumer 68 2.45 — Total loans and leases 23 0.86 % 14 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 before loan modifications occur. An assessment of whether a borrower is experiencing financial difficulty is reassessed or performed on the date of a modification. Since the effect of most modifications made to borrowers experiencing financial difficulty is already included in the ALLL because of the measurement methodologies used to estimate the ALLL, a change to the ALLL is generally not recorded upon modification. Upon BancShares’ determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged off. At June 30, 2025, there were $ 78 million of loans modified in the twelve months ended June 30, 2025, which defaulted subsequent to modification. 27 The following tables present the amortized cost and performance of loans to borrowers experiencing financial difficulties for which the terms of the loan were modified during the referenced periods. The period of delinquency is based on the number of days the scheduled payment is contractually past due. Modified Loans Payment Status (twelve months ended June 30, 2025) dollars in millions Current 30–59 Days Past Due 60–89 Days Past Due 90 Days or Greater Past Due Total Commercial Commercial construction $ 36 $ — $ — $ — $ 36 Owner occupied commercial mortgage 71 1 1 3 76 Non-owner occupied commercial mortgage 260 14 — 43 317 Commercial and industrial 270 2 4 1 277 Investor dependent 76 — 3 — 79 Total commercial 713 17 8 47 785 Consumer Residential mortgage 37 3 2 3 45 Revolving mortgage 7 — — — 7 Total consumer 44 3 2 3 52 Total loans and leases $ 757 $ 20 $ 10 $ 50 $ 837 Modified Loans Payment Status (twelve months ended June 30, 2024) dollars in millions Current 30–59 Days Past Due 60–89 Days Past Due 90 Days or Greater Past Due Total Commercial Commercial construction $ 3 $ — $ — $ — $ 3 Owner occupied commercial mortgage 35 — 2 1 38 Non-owner occupied commercial mortgage 222 — 1 10 233 Commercial and industrial 238 3 1 1 243 Investor dependent 113 — — 9 122 Total commercial 611 3 4 21 639 Consumer Residential mortgage 11 4 2 1 18 Revolving mortgage 6 — — — 6 Total consumer 17 4 2 1 24 Total loans and leases $ 628 $ 7 $ 6 $ 22 $ 663 At June 30, 2025, there were $ 13 million of commitments to lend additional funds to debtors experiencing financial difficulty for which the terms of the loan were modified during the six months ended June 30, 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 . 28 Loans Pledged The following table provides information regarding loans pledged as collateral for borrowing capacity through the FHLB of Atlanta, the Federal Reserve Bank (“FRB”) and FDIC. Loans Pledged dollars in millions June 30, 2025 December 31, 2024 FHLB of Atlanta Lendable collateral value of pledged non-PCD loans $ 18,552 $ 17,873 Less: advances — — Less: letters of credit 700 1,450 Available borrowing capacity $ 17,852 $ 16,423 Pledged non-PCD loans $ 30,835 $ 30,421 FRB Lendable collateral value of pledged non-PCD loans $ 10,561 $ 5,475 Less: advances — — Available borrowing capacity $ 10,561 $ 5,475 Pledged non-PCD loans $ 12,026 $ 6,309 FDIC Lendable collateral value of pledged loans $ 36,711 $ 41,282 Less: advances — — Less: Purchase Money Note 35,991 35,991 Available borrowing capacity (1) $ — $ 5,291 Pledged loans (1) $ 36,711 $ 41,040 (1) The draw period ended on March 27, 2025, therefore there is no available borrowing capacity at June 30, 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. Under borrowing arrangements with the FRB, BancShares has access to the FRB Discount Window on a secured basis. There were no outstanding borrowings with the FRB Discount Window at June 30, 2025 or December 31, 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. Refer to Note 2—Business Combinations for further discussion of these agreements and Note 9—Borrowings for the outstanding carrying value of the Purchase Money Note. 29 NOTE 5 — 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 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) investment securities available for sale, if any, is reported in the Consolidated Statements of Income as provision or benefit for credit losses. The ALLL activity for loans and leases is summarized in the following table: Allowance for Loan and Lease Losses dollars in millions Three Months Ended June 30, 2025 Three Months Ended June 30, 2024 Commercial Consumer Total Commercial Consumer Total Balance at beginning of period $ 1,517 $ 163 $ 1,680 $ 1,582 $ 155 $ 1,737 Provision for loan and lease losses 111 — 111 94 1 95 Charge-offs ( 137 ) ( 7 ) ( 144 ) ( 153 ) ( 6 ) ( 159 ) Recoveries 21 4 25 24 3 27 Balance at end of period $ 1,512 $ 160 $ 1,672 $ 1,547 $ 153 $ 1,700 dollars in millions Six Months Ended June 30, 2025 Six Months Ended June 30, 2024 Commercial Consumer Total Commercial Consumer Total Balance at beginning of period $ 1,518 $ 158 $ 1,676 $ 1,581 $ 166 $ 1,747 Provision (benefit) for loan and lease losses 249 10 259 193 ( 5 ) 188 Charge-offs ( 296 ) ( 15 ) ( 311 ) ( 274 ) ( 13 ) ( 287 ) Recoveries 41 7 48 47 5 52 Balance at end of period $ 1,512 $ 160 $ 1,672 $ 1,547 $ 153 $ 1,700 The decrease of $ 8 million in the ALLL at June 30, 2025 compared to March 31, 2025 primarily reflected decreases related to Hurricane Helene, other credit quality improvements, and a modest shift in our weighting from the downside to baseline economic scenario, partially offset by higher specific reserves for individually evaluated loans. The decrease of $ 4 million in the ALLL at June 30, 2025 compared to December 31, 2024 was mainly due to decreases discussed above and the result of a mix shift from investor dependent loans to global fund banking loans, which has a lower loss rate relative to our other loan portfolios, partially offset by the impact of loan growth. The following table presents the components of the provision for credit losses: Provision for Credit Losses dollars in millions Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Provision for loan and lease losses $ 111 $ 95 $ 259 $ 188 Provision (benefit) for off-balance sheet credit exposure 4 — 10 ( 29 ) Provision for credit losses $ 115 $ 95 $ 269 $ 159 30 NOTE 6 — 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 June 30, 2025 December 31, 2024 Lease assets: Operating lease ROU assets Other assets $ 318 $ 316 Finance leases Premises and equipment 60 15 Total lease assets $ 378 $ 331 Lease liabilities: Operating leases Other liabilities $ 356 $ 357 Finance leases Other borrowings 63 15 Total lease liabilities $ 419 $ 372 Weighted-average remaining lease terms: Operating leases 7.2 years 7.4 years Finance leases 8.0 years 11.7 years Weighted-average discount rate: Operating leases 2.97 % 2.94 % Finance leases 4.33 3.96 As of June 30, 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 Three Months Ended June 30, Six Months Ended June 30, Classification 2025 2024 2025 2024 Operating lease cost Occupancy expense $ 18 $ 19 $ 36 $ 37 Finance lease ROU asset amortization Equipment expense 2 — 3 1 Interest on lease liabilities Interest expense - other borrowings 1 — 1 — Variable lease cost (1) Occupancy expense 5 6 12 15 Sublease income Occupancy expense ( 1 ) ( 2 ) ( 3 ) ( 3 ) Net lease cost (1) $ 25 $ 23 $ 49 $ 50 (1) Includes short-term lease cost. Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term. For finance leases, the right of use (“ROU”) asset is amortized straight-line over the lease term as equipment expense and interest on the lease liability is recognized separately. Variable lease cost includes common area maintenance, property taxes, utilities, and other operating expenses related to leased premises recognized in the period in which the expense was incurred. Certain of our lease agreements also include rental payments adjusted periodically for inflation. While lease liabilities are not remeasured because of these changes, these adjustments are treated as variable lease costs and recognized in the period in which the expense is incurred. Sublease income results from leasing excess building space that BancShares is no longer utilizing under operating leases, which have remaining lease terms of up to 11 years. 31 The following table presents supplemental cash flow information related to leases: Supplemental Cash Flow Information dollars in millions Six Months Ended June 30, 2025 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 40 $ 37 Operating cash flows from finance leases 1 — Financing cash flows from finance leases 2 1 ROU assets obtained in exchange for new operating lease liabilities 41 22 ROU assets obtained in exchange for new finance lease liabilities 48 — Lessor BancShares leases equipment to commercial end-users under operating lease and finance lease arrangements. The majority of operating lease equipment is long-lived rail equipment, which is typically leased several times over its life. We also lease technology and office equipment, and large and small industrial, medical, and transportation equipment under both operating leases and finance leases. Our Rail operating leases typically do not include purchase options. Many of our finance leases, and other equipment operating leases, offer the lessee the option to purchase the equipment at fair market value or for a nominal fixed purchase option. Many of the leases that do not have a nominal purchase option include renewal provisions resulting in some leases continuing beyond the initial contractual term. Our leases typically do not include early termination options. Continued rent payments are due if leased equipment is not returned at the end of the lease. The table that follows presents lease income related to BancShares’ operating and finance leases: Lease Income dollars in millions Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Lease income – operating leases $ 258 $ 241 $ 512 $ 478 Variable lease income – operating leases (1) 14 18 30 36 Rental income on operating leases 272 259 542 514 Interest income – sales type and direct financing leases 44 44 87 87 Variable lease income included in other noninterest income (2) 16 15 30 31 Interest income – leveraged leases 1 1 2 2 Total lease income $ 333 $ 319 $ 661 $ 634 (1) Primarily includes per diem railcar operating lease rental income earned on a time or mileage usage basis. (2) Includes revenue related to insurance coverage on leased equipment and leased equipment property tax reimbursements due from customers. NOTE 7 — GOODWILL AND CORE DEPOSIT INTANGIBLES Goodwill BancShares had goodwill of $ 346 million at June 30, 2025 and December 31, 2024. There was no goodwill impairment during the six months ended June 30, 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 Six Months Ended June 30, dollars in millions 2025 Balance at beginning of period, net of accumulated amortization $ 249 Less: amortization for the period 28 Balance at end of period, net of accumulated amortization $ 221 32 The following table summarizes the accumulated amortization balance for core deposit intangibles: Core Deposit Intangible Accumulated Amortization dollars in millions June 30, 2025 December 31, 2024 Gross balance $ 501 $ 501 Less: accumulated amortization 280 252 Balance, net of accumulated amortization $ 221 $ 249 The following table summarizes the expected amortization expense as of June 30, 2025 in subsequent periods for core deposit intangibles: Core Deposit Intangible Expected Amortization dollars in millions Remainder 2025 $ 26 2026 46 2027 39 2028 34 2029 30 2030 28 Thereafter 18 Balance, net of accumulated amortization $ 221 NOTE 8 — VARIABLE INTEREST ENTITIES Unconsolidated VIEs 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. The table below provides a summary of the assets and liabilities included on the Consolidated Balance Sheets associated with unconsolidated VIEs. The table also presents our maximum exposure to loss which consists of outstanding book basis and unfunded commitments for future investments, and 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. Unconsolidated VIEs Carrying Value dollars in millions June 30, 2025 December 31, 2024 Affordable housing tax credit investments $ 2,430 $ 2,357 Other tax credit equity investments 2 2 Total tax credit equity investments $ 2,432 $ 2,359 Other unconsolidated investments 160 157 Total affordable housing tax credit and other unconsolidated investments (maximum loss exposure) (1) $ 2,592 $ 2,516 Liabilities for commitments to fund tax credit investments (2) $ 1,163 $ 1,214 (1) Included in other assets. (2) Represents commitments to invest in qualified affordable housing investments and other investments qualifying for community reinvestment tax credits. These commitments are payable on demand and included in other liabilities. We have investments in qualified affordable housing projects, primarily to support our Community Reinvestment Act (“CRA”) initiatives and obtain tax credits. These investments are accounted for using the PAM and provide tax benefits in the form of tax deductions from operating losses and tax credits. Under the PAM, the initial cost of the investment is amortized in proportion to the tax credits and other tax benefits received, and the net investment performance is recognized on the Consolidated Statements of Income as a component of income tax expense. 33 The table below summarizes the amortization of our affordable housing tax credit investments and the related tax credits and other tax benefits that are recognized in income tax expense on the Consolidated Statements of Income. Tax Credit Investments Recognized in Income Tax Expense dollars in millions Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Amortization of affordable housing tax credit investments (1) $ 70 $ 59 $ 134 $ 118 Tax credits from affordable housing tax credit investments ( 67 ) ( 58 ) ( 135 ) ( 115 ) Other tax benefits from affordable housing tax credit investments ( 16 ) ( 10 ) ( 23 ) ( 21 ) Net income tax benefit from affordable housing tax credit investments (2) $ ( 13 ) $ ( 9 ) $ ( 24 ) $ ( 18 ) (1) Amortization is included in depreciation, amortization, and accretion, net as an adjustment to reconcile net income to net cash provided by operating activities on the Consolidated Statements of Cash Flows. (2) Net income tax benefit impact is included in net income in cash flows from operating activities on the Consolidated Statements of Cash Flows. Changes in income taxes payable are reported in the net change in other liabilities as an adjustment to reconcile net income to net cash provided by operating activities. NOTE 9 — BORROWINGS Short-term Borrowings Securities Sold under Agreements to Repurchase BancShares held $ 471 million and $ 367 million at June 30, 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 0.52 % and 0.59 % at June 30, 2025 and December 31, 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 $ 553 million and $ 435 million at June 30, 2025 and December 31, 2024, respectively. 34 Long-term Borrowings 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. 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 June 30, 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-to-Fixed Subordinated Notes at 6.254 % (3) March 2040 745 — Subsidiaries: Senior: Fixed Senior Unsecured Notes at 6.00 % April 2036 58 58 Subordinated: Fixed Subordinated Notes at 6.125 % March 2028 437 445 Secured: Purchase Money Note to FDIC fixed at 3.50 % (4) March 2028 35,841 35,816 Capital lease obligations Maturities through May 2057 63 15 Total long-term borrowings $ 37,641 $ 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 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). (4) Refer to Note 2—Business Combinations and Note 4—Loans and Leases. Pledged Assets Refer to the “Loans Pledged” section in Note 4—Loans and Leases for information on loans pledged as collateral to secure borrowings. NOTE 10 — 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 11—Fair Value for further information on derivatives. 35 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 June 30, 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 $ 134 $ — $ — $ 334 $ — $ — Interest rate contracts hedging long-term borrowings 200 — — 750 — — Total fair value hedges (1) (2) 334 — — 1,084 — — Cash Flow Hedges Interest rate contracts hedging loans (1) (2) 3,000 — — 3,500 1 — Total derivatives designated as hedging instruments $ 3,334 $ — $ — $ 4,584 $ 1 $ — Derivatives not designated as hedging instruments (Non-qualifying hedges) Interest rate contracts (1) (2) $ 27,721 $ 418 $ ( 411 ) $ 26,235 $ 491 $ ( 516 ) Foreign exchange contracts (3) 8,408 188 ( 219 ) 7,843 152 ( 108 ) Other contracts (4) 1,520 20 ( 1 ) 1,316 16 ( 1 ) Total derivatives not designated as hedging instruments $ 37,649 $ 626 $ ( 631 ) $ 35,394 $ 659 $ ( 625 ) Gross derivatives fair values presented in the Consolidated Balance Sheets $ 626 $ ( 631 ) $ 660 $ ( 625 ) Less: gross amounts offset in the Consolidated Balance Sheets — — — — Net amount presented in other assets and other liabilities in the Consolidated Balance Sheets $ 626 $ ( 631 ) $ 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 $ 300 million and $ 0 million, respectively, as of June 30, 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. 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 June 30, 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 $ 20 $ — $ 15 $ — Cleared trades, variation margin netting ( 20 ) — ( 14 ) — Total derivatives designated as hedging instruments $ — $ — $ 1 $ — Derivatives not designated as hedging instruments (Non-qualifying hedges) Gross fair value $ 688 $ ( 670 ) $ 742 $ ( 647 ) Cleared trades, variation margin netting ( 62 ) 39 ( 83 ) 22 Total derivatives not designated as hedging instruments $ 626 $ ( 631 ) $ 659 $ ( 625 ) Gross derivatives fair values presented in the Consolidated Balance Sheets $ 626 $ ( 631 ) $ 660 $ ( 625 ) Amounts subject to master netting agreements (1) ( 146 ) 146 ( 48 ) 48 Cash collateral pledged (received) subject to master netting agreements (2) ( 222 ) 108 ( 539 ) 2 Total net derivative fair value $ 258 $ ( 377 ) $ 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. 36 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 Three Months Ended June 30, Six Months Ended June 30, Interest Expense 2025 2024 2025 2024 Gain (loss) on hedging instruments - time deposits Deposits $ — $ ( 1 ) $ — $ ( 1 ) Loss on hedging instruments - borrowings Borrowings — ( 1 ) — ( 6 ) Gain (loss) on hedged item - time deposits Deposits — 1 — 1 Gain on hedged item - borrowings Borrowings 1 — 2 5 Net gain on fair value hedges Total interest expense $ 1 $ ( 1 ) $ 2 $ ( 1 ) The following table presents the carrying value of hedged items and associated cumulative hedging adjustment related to fair value hedges: 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 June 30, 2025 Long-term borrowings $ 219 $ — $ — Deposits 134 — — December 31, 2024 Long-term borrowings 795 2 — Deposits 335 1 — 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 accumulated other comprehensive income (“AOCI”) to earnings: Unrealized Gain on Cash Flow Hedges dollars in millions Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Other comprehensive income on cash flow hedge derivatives before reclassifications $ — $ 3 $ 12 $ 3 Amounts reclassified from AOCI to earnings ( 1 ) — ( 4 ) — Other comprehensive income on cash flow hedge derivatives $ ( 1 ) $ 3 $ 8 $ 3 The following table presents other information for cash flow hedges: Other Information for Cash Flow Hedges dollars in millions June 30, 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) $ 6 $ 7 Maximum number of months over which forecasted cash flows are hedged 25 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. 37 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 Three Months Ended June 30, Six Months Ended June 30, Amounts Recognized 2025 2024 2025 2024 Interest rate contracts Other noninterest income $ 7 $ 3 $ 6 $ 11 Foreign currency forward contracts (1) Other noninterest income ( 45 ) 11 ( 64 ) 23 Other contracts Other noninterest income 2 — 2 ( 1 ) Total non-qualifying hedges - income statement impact $ ( 36 ) $ 14 $ ( 56 ) $ 33 (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 11 — 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. 38 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 June 30, 2025 Total Level 1 Level 2 Level 3 Assets Investment securities available for sale U.S. Treasury $ 12,170 $ — $ 12,170 $ — Government agency 60 — 60 — Residential mortgage-backed securities 16,924 — 16,924 — Commercial mortgage-backed securities 3,536 — 3,536 — Corporate bonds 353 — 215 138 Municipal bonds 17 — 17 — Total investment securities available for sale $ 33,060 $ — $ 32,922 $ 138 Marketable equity securities 97 42 55 — Loans held for sale 83 — 83 — Loans 23 — 23 — Derivative assets (1) Total qualifying hedge assets $ — $ — $ — $ — Interest rate contracts — non-qualifying hedges $ 418 $ — $ 415 $ 3 Foreign exchange contracts — non-qualifying hedges 188 — 188 — Other derivative contracts — non-qualifying hedges 20 — — 20 Total non-qualifying hedge assets $ 626 $ — $ 603 $ 23 Total derivative assets $ 626 $ — $ 603 $ 23 Liabilities Derivative liabilities (1) Interest rate contracts — qualifying hedges $ — $ — $ — $ — Interest rate contracts — non-qualifying hedges $ 411 $ — $ 411 $ — Foreign exchange contracts — non-qualifying hedges 219 — 219 — Other derivative contracts — non-qualifying hedges 1 — — 1 Total non-qualifying hedge liabilities $ 631 $ — $ 630 $ 1 Total derivative liabilities $ 631 $ — $ 630 $ 1 (1) Derivative fair values include accrued interest. 39 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. The valuation also considers the amount of market activity by examining trade volume. 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 10—Derivative Financial Instruments for notional amounts and fair values. 40 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 June 30, 2025 December 31, 2024 Assets Corporate bonds $ 138 $ 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 $ 23 $ 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 $ 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 Six Months Ended June 30, 2025 Six Months Ended June 30, 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 — 4 — — 5 — Changes in fair value included in earnings — 3 — — ( 1 ) — Changes in fair value included in comprehensive income 5 — — 4 — — Maturity and settlements ( 35 ) ( 1 ) — — — — Ending balance $ 138 $ 23 $ 1 $ 161 $ 11 $ 1 Fair Value Option The following table summarizes the difference between the aggregate fair value and the unpaid principal balance (“UPB”) for residential mortgage loans originated for sale measured at fair value: Aggregate Fair Value and UPB - Residential Mortgage Loans dollars in millions June 30, 2025 December 31, 2024 Fair Value Unpaid Principal Balance Difference Fair Value Unpaid Principal Balance Difference Originated loans held for sale (1) $ 106 $ 106 $ — $ 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 three and six months ended June 30, 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 June 30, 2025 or December 31, 2024. 41 Assets Measured at Estimated Fair Value on a Non-recurring Basis Certain assets or liabilities are required to be measured at estimated fair value on a non-recurring basis subsequent to initial recognition. Generally, these adjustments are the result of lower of cost or fair value (“LOCOM”) or other impairment accounting. The following table presents carrying value of assets measured at estimated fair value on a non-recurring basis for which gains and losses have been recorded in the periods. The gains and losses reflect amounts recorded for the respective periods, regardless of whether the asset is still held at period end. Assets Measured at Fair Value - Non-recurring Basis dollars in millions Fair Value Measurements Total Level 1 Level 2 Level 3 Total Gains (Losses) June 30, 2025 Assets held for sale - loans $ 2 $ — $ — $ 2 $ ( 6 ) Loans - collateral dependent loans 275 — — 275 ( 113 ) Other real estate owned 76 — — 76 ( 7 ) Total $ 354 $ — $ — $ 354 $ ( 126 ) 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. The fair value of Level 2 assets was primarily 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 June 30, 2025 and December 31, 2024, the weighted average discount applied was 9.46 % 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. 42 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 June 30, 2025 Estimated Fair Value Carrying Value Level 1 Level 2 Level 3 Total Financial Assets Cash and due from banks $ 889 $ 889 $ — $ — $ 889 Interest-earning deposits at banks 26,184 26,184 — — 26,184 Securities purchased under agreements to resell 300 — 300 — 300 Investment in marketable equity securities 97 42 55 — 97 Investment securities available for sale 33,060 — 32,922 138 33,060 Investment securities held to maturity 10,189 — 8,888 — 8,888 Loans held for sale 123 — 83 40 123 Net loans 137,605 — 1,538 136,582 138,120 Accrued interest receivable 902 — 902 — 902 Federal Home Loan Bank stock 19 — 19 — 19 Mortgage servicing rights 29 — — 48 48 Derivative assets - non-qualifying hedges 626 — 603 23 626 Financial Liabilities Deposits with no stated maturity 148,693 — 148,693 — 148,693 Time deposits 11,242 — 11,244 — 11,244 Credit balances of factoring clients 1,077 — — 1,077 1,077 Securities sold under customer repurchase agreements 471 — 471 — 471 Long-term borrowings 37,578 — 37,507 — 37,507 Accrued interest payable 120 — 120 — 120 Derivative liabilities - non-qualifying hedges 631 — 630 1 631 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 43 The methods and assumptions used to estimate the fair value of each class of financial instruments not discussed elsewhere are as follows: Interest-earning Deposits at Banks. The carrying value of interest-earning deposits at banks approximates its fair value due to its short-term nature and is classified on the fair value hierarchy as Level 1. The balances at June 30, 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 mortgage servicing rights (“MSRs”) is determined using a pooling methodology. Similar loans are pooled together and a model which relies on discount rates, estimates of prepayment rates and the weighted average cost to service the loans is used to determine the fair value. The inputs used in the fair value measurement for MSRs are considered Level 3 inputs. Deposits. The estimated fair value of deposits with no stated maturity, such as demand deposit accounts, money market accounts, and savings accounts was the amount payable on demand at the reporting date. The fair value of time deposits was estimated based on a discounted cash flow technique using Level 2 inputs appropriate to the contractual maturity. Credit balances of factoring clients. The impact of the time value of money from the unobservable discount rate for credit balances of factoring clients is inconsequential due to the short term nature of these balances, therefore, the fair value approximated carrying value, and the credit balances are classified as Level 3. Short-term borrowed funds. The fair value of short-term borrowed funds, which includes repurchase agreements, approximates carrying value and are classified as Level 2. Long-term borrowings. For certain long-term senior and subordinated unsecured borrowings, the fair values are sourced from a third-party pricing service. The fair values of other long-term borrowings are determined by discounting future cash flows using current interest rates for similar financial instruments. The inputs used in the fair value measurement for FHLB borrowings, senior and subordinated debentures, and other borrowings are classified as Level 2. For all other financial assets and financial liabilities, the carrying value is a reasonable estimate of the fair value as of June 30, 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. 44 NOTE 12 — STOCKHOLDERS' EQUITY A roll forward of common stock activity is presented in the following table: Number of Shares of Common Stock June 30, 2025 Common Stock Outstanding Class A Class B Common stock - March 31, 2025 12,409,753 1,005,185 Shares repurchased under authorized repurchase plan ( 338,959 ) — Common stock - June 30, 2025 12,070,794 1,005,185 Common stock - December 31, 2024 12,712,436 1,005,185 Shares purchased under authorized repurchase plan ( 641,642 ) — Common stock - June 30, 2025 12,070,794 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 The following table summarizes BancShares’ non-cumulative perpetual preferred stock: Preferred Stock dollars in millions, except per share and par value data Preferred Stock Issuance Date Earliest Redemption Date Par Value Shares Authorized, Issued and Outstanding Liquidation Preference Per Share Total Liquidation Preference Dividend Series A March 12, 2020 March 15, 2025 $ 0.01 345,000 $ 1,000 $ 345 5.375 % Series B (1) January 3, 2022 January 4, 2027 0.01 325,000 1,000 325 SOFR + 3.972 % Series C January 3, 2022 January 4, 2027 0.01 8,000,000 25 200 5.625 % (1) Upon conversion to SOFR in 2023, BancShares began paying a credit spread adjustment in addition to the stated dividend. Dividends on BancShares Series A, B, and C preferred stock (together, “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. For further description of BancShares’ Preferred Stock, refer to Note 16—Stockholders’ Equity in the Notes to the Consolidated Financial Statements included in the 2024 Form 10-K. 45 NOTE 13 — ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME The following table details the components of AOCI: Components of Accumulated Other Comprehensive Loss dollars in millions June 30, 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 $ ( 321 ) $ 65 $ ( 256 ) $ ( 762 ) $ 178 $ ( 584 ) Unrealized loss on securities available for sale transferred to held to maturity ( 6 ) 2 ( 4 ) ( 6 ) 2 ( 4 ) Defined benefit pension items 178 ( 46 ) 132 182 ( 47 ) 135 Unrealized gain on cash flow hedge derivatives 19 ( 5 ) 14 11 ( 3 ) 8 Total accumulated other comprehensive loss $ ( 130 ) $ 16 $ ( 114 ) $ ( 575 ) $ 130 $ ( 445 ) The following table details 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 Balance as of December 31, 2024 $ ( 584 ) $ ( 4 ) $ 135 $ 8 $ ( 445 ) AOCI activity before reclassifications 328 — ( 3 ) 9 334 Amounts reclassified from AOCI to earnings — — — ( 3 ) ( 3 ) Other comprehensive income (loss) for the period 328 — ( 3 ) 6 331 Balance as of June 30, 2025 $ ( 256 ) $ ( 4 ) $ 132 $ 14 $ ( 114 ) Balance as of December 31, 2023 $ ( 577 ) $ ( 5 ) $ 91 $ — $ ( 491 ) Other comprehensive loss (income) for the period ( 113 ) — ( 8 ) 2 ( 119 ) Balance as of June 30, 2024 $ ( 690 ) $ ( 5 ) $ 83 $ 2 $ ( 610 ) 46 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 Three Months Ended June 30, 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: Other comprehensive income (loss) on securities available for sale $ 119 $ ( 30 ) $ 89 $ ( 30 ) $ 8 $ ( 22 ) Defined benefit pension items: Other comprehensive loss for defined benefit pension items $ ( 4 ) $ 1 $ ( 3 ) $ ( 10 ) $ 2 $ ( 8 ) Unrealized gain on cash flow hedge derivatives: AOCI activity before reclassifications $ — $ ( 1 ) $ ( 1 ) $ 3 $ ( 1 ) $ 2 Amounts reclassified from AOCI to earnings ( 1 ) 1 — — — — Interest and fees on loans Other comprehensive (loss) income on cash flow hedge derivatives $ ( 1 ) $ — $ ( 1 ) $ 3 $ ( 1 ) $ 2 Total other comprehensive income (loss) $ 114 $ ( 29 ) $ 85 $ ( 37 ) $ 9 $ ( 28 ) dollars in millions Six Months Ended June 30, 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: Other comprehensive income (loss) on securities available for sale $ 441 $ ( 113 ) $ 328 $ ( 154 ) $ 41 $ ( 113 ) Defined benefit pension items: Other comprehensive loss for defined benefit pension items $ ( 4 ) $ 1 $ ( 3 ) $ ( 10 ) $ 2 $ ( 8 ) Unrealized gain on cash flow hedge derivatives: AOCI activity before reclassifications $ 12 $ ( 3 ) $ 9 $ 3 $ ( 1 ) $ 2 Amounts reclassified from AOCI to earnings ( 4 ) 1 ( 3 ) — — — Interest and fees on loans Other comprehensive income on cash flow hedge derivatives $ 8 $ ( 2 ) $ 6 $ 3 $ ( 1 ) $ 2 Total other comprehensive income (loss) $ 445 $ ( 114 ) $ 331 $ ( 161 ) $ 42 $ ( 119 ) 47 NOTE 14 — 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 per share data Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net income $ 575 $ 707 $ 1,058 $ 1,438 Preferred stock dividends 14 16 29 31 Net income available to common stockholders $ 561 $ 691 $ 1,029 $ 1,407 Weighted average common shares outstanding Basic shares outstanding 13,237,226 14,534,499 13,405,295 14,533,900 Stock-based awards — — — 1,572 Diluted shares outstanding 13,237,226 14,534,499 13,405,295 14,535,472 Earnings per common share Basic $ 42.36 $ 47.54 $ 76.73 $ 96.81 Diluted $ 42.36 $ 47.54 $ 76.73 $ 96.80 NOTE 15 — INCOME TAXES BancShares’ global effective income tax rates (“ETRs”) were 24.1 % and 27.8 % for the three months ended June 30, 2025 and 2024, respectively, and 24.9 % and 27.5 % for the six months ended June 30, 2025 and 2024, respectively. The decrease in the ETR for the three and six months ended June 30, 2025 compared to 2024 was mostly due to a reduction in the state and local income tax rate. The quarterly income tax expense is based on a projection of BancShares’ annual ETR. This annual ETR is applied to the year-to-date consolidated pretax income to determine the interim provision for income taxes before discrete items. The ETR each period is also impacted by a number of factors, including the relative mix of domestic and international earnings, effects of changes in enacted tax laws, adjustments to the valuation allowances, and discrete items. The currently forecasted ETR may vary from the actual year-end 2025 ETR due to the changes in these factors. On July 4, 2025, President Trump signed into law H.R. 1, referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA contains several provisions that impact corporate taxation. BancShares is in the process of evaluating the impact of the OBBBA on its financial statements. Uncertain Tax Benefits BancShares’ recognizes tax benefits when it is more likely than not that the position will prevail, based solely on the technical merits under the tax law of the relevant jurisdiction. BancShares will recognize the tax benefit if the position meets this recognition threshold determined based on the largest amount of the benefit that is more than likely to be realized. Deferred Tax Assets and Valuation Adjustments BancShares’ ability to recognize deferred tax assets (“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, adjustments to the valuation allowance adjustments may be required. 48 NOTE 16 — EMPLOYEE BENEFIT PLANS BancShares sponsors non-contributory defined benefit pension plans for its qualifying employees. The service cost component of net periodic benefit cost is included in salaries and wages, while all other non-service cost components are included in other noninterest expense. The components of net periodic benefit cost are as follows: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Service cost $ 2 $ 3 $ 4 $ 5 Interest cost 16 15 32 30 Expected return on assets ( 23 ) ( 23 ) ( 47 ) ( 46 ) Net periodic benefit $ ( 5 ) $ ( 5 ) $ ( 11 ) $ ( 11 ) NOTE 17 — 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 were recast to conform with those segment composition changes. BancShares’ segments include the General Bank, the Commercial Bank, SVB Commercial, 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. Certain noninterest expenses are directly incurred by a segment, while others are not. Noninterest expenses not directly incurred by a segment are included in Corporate unless allocated to a segment (“Allocated Expenses”). Under our segment expense allocation methodology, Allocated Expenses increase noninterest expense of the applicable segment(s), with an offsetting decrease to Corporate noninterest expense. “All other noninterest expense” in the segment reporting tables below includes the effect of Allocated Expenses, resulting in a reduction to expense (or “Contra Expense”) for Corporate. General Bank The General Bank segment delivers products and services to consumers and businesses 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 and 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 service. Private banking and wealth management 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, and premium wine clients. The General Bank segment offers 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 channel that supports deposit, cash management and lending to homeowner associations and property management companies. Revenue is primarily generated from interest earned on loans. Noninterest income is primarily generated from fees for banking and advisory services, including lending-related fees, most of BancShares’ income related to deposit fees and service charges, 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. 49 Commercial Bank The Commercial Bank segment provides a range of lending, leasing, capital markets, asset management, and other financial and advisory services, primarily to small and middle market companies in a wide range of industries, including energy, healthcare, technology media and telecommunications, asset-backed lending, capital finance, maritime, aerospace and defense, and sponsor finance. 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 (“CRE”) professionals. Additionally, we provide small business loans and leases, including both capital and operating leases, through a highly automated credit approval, documentation and funding process. We provide factoring, receivable management 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 and fees on loans. Noninterest income is mostly generated from rental income on operating lease equipment, lending-related fees, including most of BancShares’ capital market fees, and other revenue from banking services. Rental income is generally influenced by the size of the operating lease portfolio. Noninterest income also includes all of the commissions earned on factoring-related activities. We derive most of our commercial lending business through direct marketing to borrowers, lessees, manufacturers, vendors, and distributors. We also utilize referrals as a source for commercial lending business. We may periodically buy participations or syndications of loans and lines of credit and 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. 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. SVB Commercial The SVB Commercial segment offers products and services to commercial clients and investors across stages, sectors and regions in the innovation ecosystem, as well as private equity and venture capital firms. The SVB Commercial segment provides solutions to the financial needs of commercial clients. Loan products consist of capital call lines of credit, investor dependent loans, and commercial and industrial loans made primarily to technology, life science and healthcare companies. Revenue is primarily generated from interest earned on loans. Noninterest income is mostly generated from fees, including essentially all of client investment fees and most of the international fees, and other revenue from lending-related activities and banking services. Deposit products include business and analysis checking accounts, money market accounts, multi-currency accounts, bank accounts, sweep accounts, and positive pay services. Services are provided through online and mobile banking platforms as well as branch locations. 50 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. 51 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 Three Months Ended June 30, 2025 General Bank Commercial Bank SVB Commercial Rail Corporate (1) BancShares (2) Net interest income (expense) $ 824 $ 299 $ 490 $ ( 53 ) $ 135 $ 1,695 Rental income on operating lease equipment — 54 — 218 — 272 All other noninterest income 164 98 130 3 11 406 Total noninterest income 164 152 130 221 11 678 Total revenue 988 451 620 168 146 2,373 Depreciation on operating lease equipment — 44 — 56 — 100 Maintenance and other operating lease expenses — — — 55 — 55 Personnel cost 210 69 110 6 415 810 Acquisition-related expenses — — — — 38 38 All other noninterest expense (3) 370 154 272 26 ( 325 ) 497 Total noninterest expense 580 267 382 143 128 1,500 Provision for credit losses 13 47 55 — — 115 Income before income taxes 395 137 183 25 18 758 Income tax expense (benefit) 101 35 47 6 ( 6 ) 183 Net income $ 294 $ 102 $ 136 $ 19 $ 24 $ 575 Select Period End Balances Loans and leases $ 64,987 $ 38,691 $ 37,529 $ 62 $ — $ 141,269 Operating lease equipment, net — 750 — 8,716 — 9,466 Deposits 73,499 2,899 37,798 3 45,736 159,935 Three Months Ended June 30, 2024 General Bank Commercial Bank SVB Commercial Rail Corporate (1) BancShares (2) Net interest income (expense) $ 730 $ 311 $ 553 $ ( 45 ) $ 272 $ 1,821 Rental income on operating lease equipment — 58 — 201 — 259 All other noninterest income 152 77 134 2 15 380 Total noninterest income 152 135 134 203 15 639 Total revenue 882 446 687 158 287 2,460 Depreciation on operating lease equipment — 48 — 50 — 98 Maintenance and other operating lease expenses — — — 60 — 60 Personnel cost 185 63 123 6 368 745 Acquisition-related expenses — — — — 44 44 All other noninterest expense (3) 316 135 246 15 ( 273 ) 439 Total noninterest expense 501 246 369 131 139 1,386 Provision for credit losses 37 39 19 — — 95 Income before income taxes 344 161 299 27 148 979 Income tax expense 92 44 85 8 43 272 Net income $ 252 $ 117 $ 214 $ 19 $ 105 $ 707 Select Period End Balances Loans and leases $ 63,327 $ 36,835 $ 39,117 $ 62 $ — $ 139,341 Operating lease equipment, net — 767 — 8,178 — 8,945 Deposits 71,261 3,294 35,773 10 40,741 151,079 (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 Accounting Standards Codification (“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. 52 dollars in millions Six Months Ended June 30, 2025 General Bank Commercial Bank SVB Commercial Rail Corporate (1) BancShares (2) Net interest income (expense) $ 1,612 $ 592 $ 983 $ ( 105 ) $ 276 $ 3,358 Rental income on operating lease equipment — 110 — 432 — 542 All other noninterest income 328 167 262 5 9 771 Total noninterest income 328 277 262 437 9 1,313 Total revenue 1,940 869 1,245 332 285 4,671 Depreciation on operating lease equipment — 88 — 110 — 198 Maintenance and other operating lease expenses — — — 113 — 113 Personnel cost 424 141 224 14 825 1,628 Acquisition-related expenses — — — — 80 80 All other noninterest expense (3) 721 313 537 40 ( 637 ) 974 Total noninterest expense 1,145 542 761 277 268 2,993 Provision for credit losses 59 132 78 — — 269 Income before income taxes 736 195 406 55 17 1,409 Income tax expense (benefit) 189 50 104 14 ( 6 ) 351 Net income $ 547 $ 145 $ 302 $ 41 $ 23 $ 1,058 Six Months Ended June 30, 2024 General Bank Commercial Bank SVB Commercial Rail Corporate (1) BancShares (2) Net interest income (expense) $ 1,414 $ 611 $ 1,076 $ ( 88 ) $ 625 $ 3,638 Rental income on operating lease equipment — 115 — 399 — 514 All other noninterest income 297 160 268 6 21 752 Total noninterest income 297 275 268 405 21 1,266 Total revenue 1,711 886 1,344 317 646 4,904 Depreciation on operating lease equipment — 94 — 100 — 194 Maintenance and other operating lease expenses — — — 105 — 105 Personnel cost 392 137 242 14 704 1,489 Acquisition-related expenses — — — — 102 102 All other noninterest expense (3) 637 275 493 29 ( 562 ) 872 Total noninterest expense 1,029 506 735 248 244 2,762 Provision for credit losses 58 59 42 — — 159 Income before income taxes 624 321 567 69 402 1,983 Income tax expense 171 86 160 19 109 545 Net income $ 453 $ 235 $ 407 $ 50 $ 293 $ 1,438 (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. 53 NOTE 18 — 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 June 30, 2025 December 31, 2024 Financing Commitments Financing assets (excluding leases) $ 52,806 $ 53,250 Letters of Credit Standby letters of credit 2,258 2,188 Other letters of credit 66 103 Deferred Purchase Agreements 1,463 1,802 Purchase and Funding Commitments (1) 57 178 (1) BancShares’ purchase and funding commitments relate to the equipment leasing businesses’ commitments to fund Rail’s railcar manufacturer purchase and upgrade commitments. Financing Commitments Commitments to extend credit are legally binding agreements to lend to customers. These commitments generally have fixed expiration dates or other termination clauses and may require payment of fees. Established credit standards control the credit risk exposure associated with these commitments. In some cases, BancShares requires collateral be pledged to secure the commitment, including cash deposits, securities and other assets. Financing commitments, referred to as net unfunded loan commitments or lines of credit, primarily reflect BancShares’ agreements to lend to its customers, subject to the customers’ compliance with contractual obligations. At June 30, 2025 and December 31, 2024, substantially all undrawn financing commitments were senior facilities. Financing commitments also include $ 172 million and $ 79 million at June 30, 2025 and December 31, 2024, respectively, related to off-balance sheet commitments to fund equity investments. Commitments to fund equity investments 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 deferred purchase agreement (“DPA”) is provided in conjunction with factoring, whereby a client is provided with credit protection for trade receivables without purchasing the receivables. The trade receivables terms generally require payment in 90 days or less. If the client’s customer is unable to pay an undisputed receivable solely as the result of credit risk, BancShares is then required to purchase the receivable from the client, less any borrowings for such client based on such defaulted receivable. The outstanding amount in the table above, less $ 176 million and $ 166 million at June 30, 2025 and December 31, 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. 54 The table above includes $ 1.42 billion and $ 1.74 billion of DPA exposures at June 30, 2025 and December 31, 2024, respectively, related to receivables on which BancShares has assumed the credit risk. The table also includes $ 42 million and $ 59 million available under DPA credit line agreements provided at June 30, 2025 and December 31, 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. Based on currently available information, BancShares does not believe that the outcome of Litigation that is currently pending will have a material impact on BancShares’ consolidated financial statements. The actual results of resolving such matters may be substantially higher than the amounts reserved. For certain Litigation matters in which BancShares is involved, BancShares is able to estimate a range of reasonably possible losses in excess of established reserves and insurance. For other matters for which a loss is probable or reasonably possible, such an estimate cannot be determined. For Litigation and other matters where losses are reasonably possible and estimable, management currently estimates an aggregate range of reasonably possible losses to be up to approximately $ 10 million in excess of any established reserves and any insurance we reasonably believe we will collect related to those matters. This estimate represents reasonably possible losses (in excess of established reserves and insurance) over the life of such Litigation, which may span a currently indeterminable number of years, and is based on information currently available as of June 30, 2025. The Litigation matters underlying the estimated range will change from time to time, and actual results may vary significantly from this estimate. Those Litigation matters for which an estimate is not reasonably possible or as to which a loss does not appear to be reasonably possible, based on current information, 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. 55 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Management’s discussion and analysis (“MD&A”) of earnings and related financial data is presented to assist in understanding the financial condition and results of operations of First Citizens BancShares, Inc. (the “Parent Company” and, when including all of its subsidiaries on a consolidated basis, “we,” “us,” “our,” or “BancShares”) and its banking subsidiary, First-Citizens Bank & Trust Company (“FCB”). Unless otherwise noted, the terms “we,” “us,” “our,” and “BancShares” in this section refer to the consolidated financial position and consolidated results of operations for BancShares. This MD&A is expected to provide our investors with a view of our financial condition and results of operations from our management’s perspective. This MD&A should be read in conjunction with the unaudited consolidated financial statements and related notes presented within this Quarterly Report on Form 10-Q (this “Form 10-Q”), along with our consolidated financial statements and related MD&A of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”). Throughout this MD&A, references to a specific “Note” refer to Notes to the Unaudited Consolidated Financial Statements in Item 1. Financial Statements. Intercompany accounts and transactions have been eliminated. Although certain amounts for prior years have been reclassified to conform with financial statement presentations for 2025, the reclassifications had no effect on stockholders’ equity or net income as previously reported. Refer to Note 1—Significant Accounting Policies and Basis of Presentation. Management uses certain financial measures that are not presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) in its analysis of the financial condition and results of operations of BancShares. Refer to the "Non-GAAP Financial Measurements" section of this MD&A for a reconciliation of these financial measures to the most directly comparable financial measures in accordance with GAAP. EXECUTIVE OVERVIEW The Parent Company is a bank holding company (“BHC”) and financial holding company. The Parent Company is regulated by the Board of Governors of the Federal Reserve System (“Federal Reserve”) under the U.S. Bank Holding Company Act of 1956, as amended. The Parent Company is also registered under the BHC laws of North Carolina and is subject to supervision, regulation and examination by the North Carolina Office of the Commissioner of Banks (the “NCCOB”). BancShares conducts its banking operations through its wholly owned subsidiary, FCB, a state-chartered bank organized under the laws of the state of North Carolina. FCB is regulated by the NCCOB. In addition, FCB, as an insured depository institution, is supervised by the Federal Deposit Insurance Corporation (the “FDIC”). BancShares provides financial services for a wide range of consumer and commercial clients. This includes retail and mortgage banking, wealth management, small and middle market banking, factoring and leasing. BancShares provides commercial factoring, receivables management and secured financing services to businesses (generally manufacturers or importers of goods) that operate in various industries, including apparel, textile, furniture, home furnishings and consumer electronics. BancShares also provides deposit, cash management and lending to homeowner associations and property management companies. BancShares also owns a fleet of railcars and locomotives that are leased to railroads and shippers. BancShares delivers banking products and services to its customers through an extensive branch network and additionally operates a nationwide digital banking platform that delivers deposit products to consumers (the “Direct Bank”). Services offered at most branches include accepting deposits, cashing checks and providing for consumer and commercial cash needs. Consumer and business customers may also conduct banking transactions through various digital channels. In addition to our banking operations, we provide various investment products and services through FCB’s wholly owned subsidiaries, including First Citizens Investor Services, Inc. (“FCIS”) and First Citizens Asset Management, Inc. (“FCAM”), and a non-bank subsidiary First Citizens Capital Securities, LLC (“FCCS”). As a registered broker-dealer, FCIS provides a full range of investment products, including annuities, brokerage services and third-party mutual funds. As registered investment advisers, FCIS and FCAM provide investment management services and advice. FCCS is a broker-dealer that also provides underwriting and private placement services. We also have other wholly owned subsidiaries, including SVB Wealth LLC, SVB Asset Management, and First Citizens Institutional Asset Management, LLC, which are active investment advisers. Refer to Note 17—Segment Information for further information regarding the products and services we provide. Refer to the 2024 Form 10-K for a discussion of our strategy. 56 Recent Events Share Repurchase Programs On July 25, 2025, BancShares announced that the Board of Directors (the “Board”) authorized a new share repurchase program (the “2025 SRP”), which will allow BancShares to repurchase shares of its Class A common stock in an aggregate amount up to $4.0 billion through December 31, 2026. Repurchases under the 2025 SRP may commence upon the completion of the $3.5 billion share repurchase program announced in July 2024 (the “2024 SRP”). The total capacity remaining under the 2024 SRP was $611 million as of June 30, 2025 and $302 million as of July 31, 2025. During the second quarter of 2025, we repurchased 338,959 shares of our Class A common stock for approximately $613 million. Shares repurchased during the second quarter of 2025 represented 2.73% of Class A common shares and 2.53% of total Class A and Class B common shares outstanding at March 31, 2025. From inception of the 2024 SRP through June 30, 2025, we have repurchased 1,456,283 shares of our Class A common stock for approximately $2.89 billion, representing 10.77% of Class A common shares and 10.02% of total Class A and Class B common shares outstanding as of June 30, 2024. Subsequent to June 30, 2025, BancShares purchased an additional 147,365 shares of Class A common stock through July 31, 2025 under the 2024 SRP. Refer to Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds for additional information regarding monthly repurchase activity during the second quarter of 2025. 2025 Loan Class Changes During the second quarter of 2025, the loan classes which were reported in the Silicon Valley Bank (“SVB”) portfolio in the Linked Quarter Form 10-Q and 2024 Form 10-K, were recast to the Commercial portfolio (the “2025 Loan Class Changes”) as further discussed in 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-Q were recast to reflect the 2025 Loan Class Changes. Loan disclosures in the “Results by Segment” section of this MD&A were not recast as a result of the 2025 Loan Class Changes because the composition of reportable segments is separate and distinct from the identification of loan classes. Debt Transactions 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 2031 and $750 million aggregate principal amount of its 6.254% Fixed-to-Fixed Rate Subordinated Notes due 2040 in a public offering (the “Linked Quarter Debt Issuances”). On June 15, 2025, the Parent Company executed a callable feature and redeemed all $350 million aggregate principal amount of 3.375% Fixed-to-Floating Rate Subordinated Notes due in 2030 (the “Current Quarter Debt Redemption”). Termination of the Shared-Loss Agreement with the FDIC On April 7, 2025, FCB and the FDIC entered into an agreement (the “Shared-Loss Termination Agreement”) to terminate the Shared-Loss Agreement (as defined in Note 2—Business Combinations). 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 (each as defined in Note 2—Business Combinations in our 2024 Form 10-K). The decision to enter into the Shared-Loss Termination Agreement was motivated, in part, by FCB’s determination that the likelihood of reaching the $5 billion loss threshold during the five-year period covered by the Shared-Loss Agreement was remote. Additionally, the Shared-Loss Termination Agreement eliminated the reporting responsibilities associated with the Shared-Loss Agreement. 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 (as defined in Note 2—Business Combinations in our 2024 Form 10-K). The risk-based capital ratio impacts resulting from the Shared-Loss Termination Agreement are discussed in the “Capital” section of this MD&A. 57 Changes to the Composition of Reportable Segments We updated our segment reporting during the first quarter of 2025 as further discussed in Note 1—Significant Accounting Policies and Basis of Presentation. We transferred certain components from the SVB Commercial and General Bank segments to the Commercial Bank segment and modified our segment expense allocation methodology. Segment disclosures for 2024 periods included in this Form 10-Q were recast to reflect the segment reporting updates. Refer to Note 17—Segment Information for descriptions of segment products and services and the “Results by Segment” section of this MD&A. Recent Economic, Industry and Regulatory Developments Entering 2025, the Federal Open Market Committee (“FOMC”) had reduced the benchmark federal funds rate to a range between 4.25% - 4.50%. In its statement in July 2025, the FOMC cited that uncertainty about the economic outlook remains elevated in its decision to maintain the range for the benchmark federal funds rate. The Trump administration has imposed, modified and paused tariffs multiple times since the beginning of 2025. Actual and threatened changes to U.S. trade policies have resulted in some countries enacting retaliatory measures. The imposition of increased tariffs and trade restrictions has contributed to uncertainty and volatility in the global financial markets. The current tariff environment is dynamic, and we are closely monitoring both the impact and potential impact of such measures on our business, our customers and on overall economic conditions in the United States. On July 4, 2025, President Trump signed into law H.R. 1, referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA contains several provisions that impact corporate taxation. BancShares is in the process of evaluating the impact of the OBBBA on its financial statements. Financial Performance Summary The following tables in this MD&A include financial data for the three months ended June 30, 2025 (the “Current Quarter”), March 31, 2025 (the “Linked Quarter”) and June 30, 2024 (the “Prior Year Quarter”), along with the six months ended June 30, 2025 (“Current YTD”), and the six months ended June 30, 2024 (“Prior YTD”). In accordance with Item 303(c) of Regulation S-K, we focus our discussion of quarterly results of operations on changes compared to the Linked Quarter for the narrative discussion and analysis as we believe this provides investors and other users of our data with the most relevant information. We focus the discussion of our financial position by comparing balances as of June 30, 2025 to December 31, 2024, however the tables also provide the Linked Quarter balances. 58 Table 1 Selected Financial Data dollars in millions, except share data Three Months Ended Six Months Ended June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Results of Operations: Interest income $ 2,945 $ 2,895 $ 3,130 $ 5,840 $ 6,214 Interest expense 1,250 1,232 1,309 2,482 2,576 Net interest income 1,695 1,663 1,821 3,358 3,638 Provision for credit losses 115 154 95 269 159 Net interest income after provision for credit losses 1,580 1,509 1,726 3,089 3,479 Noninterest income 678 635 639 1,313 1,266 Noninterest expense 1,500 1,493 1,386 2,993 2,762 Income before income taxes 758 651 979 1,409 1,983 Income tax expense 183 168 272 351 545 Net income 575 483 707 1,058 1,438 Preferred stock dividends 14 15 16 29 31 Net income available to common stockholders $ 561 $ 468 $ 691 $ 1,029 $ 1,407 Per Common Share Information: Weighted average common shares outstanding (diluted) 13,237,226 13,575,231 14,534,499 13,405,295 14,535,472 Diluted earnings per common share $ 42.36 $ 34.47 $ 47.54 $ 76.73 $ 96.80 Key Performance Metrics: Return on average assets 1.01 % 0.87 % 1.30 % 0.94 % 1.33 % Net interest margin (1) 3.26 3.26 3.64 3.26 3.66 Net interest margin, excluding purchase accounting accretion or amortization (1)(2) 3.14 3.12 3.36 3.13 3.36 Select Average Balances: Investment securities $ 43,935 $ 43,555 $ 36,445 $ 43,746 $ 34,546 Total loans and leases (3) 141,952 140,882 137,514 141,420 135,636 Operating lease equipment, net 9,419 9,350 8,888 9,385 8,847 Total assets 227,552 225,449 218,891 226,506 217,486 Total deposits 157,664 156,378 150,246 157,024 148,980 Total borrowings 38,379 37,398 37,480 37,892 37,530 Total stockholders’ equity 22,488 22,457 22,052 22,472 21,775 As of the Period Ending June 30, 2025 March 31, 2025 June 30, 2024 December 31, 2024 Select Ending Balances: Investment securities $ 43,346 $ 44,319 $ 37,666 $ 44,090 Total loans and leases 141,269 141,358 139,341 140,221 Operating lease equipment, net 9,466 9,371 8,945 9,323 Total assets 229,653 228,822 219,827 223,720 Total deposits 159,935 159,325 151,079 155,229 Total borrowings 38,112 38,406 37,458 37,051 Total stockholders’ equity 22,296 22,295 22,487 22,228 Loan to deposit ratio 88.33 % 88.72 % 92.23 % 90.33 % Noninterest-bearing deposits to total deposits 25.56 25.59 26.49 24.89 Capital Ratios: Total risk-based capital 14.25 % 15.23 % 15.45 % 15.04 % Tier 1 risk-based capital 12.63 13.35 13.87 13.53 Common equity Tier 1 12.12 12.81 13.33 12.99 Tier 1 leverage 9.62 9.75 10.29 9.90 Select Asset Quality Metrics: Ratio of nonaccrual loans to total loans 0.93 % 0.85 % 0.82 % 0.84 % Allowance for loan and lease losses to loans ratio 1.18 1.19 1.22 1.20 (1) Calculated net of average credit balances of factoring clients to appropriately reflect the interest-earning portion of factoring receivables. (2) Net interest margin (“NIM”), excluding purchase accounting accretion or amortization (“PAA”), is a non-GAAP financial measure. Refer to the “NII, NIM, and Interest and Fees on Loans, Excluding PAA” discussion in the “Non-GAAP Financial Measurements” section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure. (3) Average loan balances include loans held for sale and nonaccrual loans. 59 Financial highlights are summarized below. Further details are discussed in the “Results of Operations” and “Balance Sheet Analysis” sections of this MD&A. Second Quarter Income Statement Highlights • Net income for the Current Quarter was $575 million , an increase of $92 million or 19% from $483 million for the Linked Quarter. Net income available to common stockholders for the Current Quarter was $561 million, an increase of $93 million or 20% from $468 million for the Linked Quarter. Earnings per basic and diluted common share for the Current Quarter was $42.36, an increase from $34.47 for the Linked Quarter. The increase in net income available to common stockholders was largely due to higher noninterest income, a decrease in the provision for credit losses, and higher net interest income (“NII”), partially offset by a modest increase in noninterest expense as further discussed below. • NII for the Current Quarter was $1.70 billion, an increase of $32 million or 2% from $1.66 billion for the Linked Quarter, largely due to increases in interest income on loans and interest-earning deposits at banks, mainly a result of higher average balances and a higher day count, partially offset by an increase in interest expense on borrowings due to a higher average balance and rate paid as the Linked Quarter Debt Issuances were outstanding for the entire Current Quarter. • NIM for the Current Quarter and Linked Quarter was 3.26% as the favorable impact of a lower rate paid on interest-bearing deposits was offset by the unfavorable impacts of a higher average balance of interest-bearing deposits and borrowings, a higher rate paid on borrowings, and lower PAA. ◦ PAA for the Current Quarter was $66 million, a decrease of $9 million from $75 million for the Linked Quarter. NIM, excluding PAA (1) for the Current Quarter was 3.14%, an increase of 2 basis points (“bps”) from 3.12% for the Linked Quarter. • Noninterest income for the Current Quarter was $678 million , an increase of $43 million or 7% from $635 million for the Linked Quarter, primarily the result of an increase in other noninterest income of $28 million, mainly attributable to the positive impacts from fair value changes in customer derivative positions and other non-marketable investments, as well as the Linked Quarter write-down of a held for sale asset. The remaining net increase included a favorable change in the fair value of marketable equity securities of $7 million. • Noninterest expense for the Current Quarter was $1.50 billion, an increase of $7 million or 1% from $1.49 billion for the Linked Quart er, mainly due to other noninterest expense accruals totaling $15 million and an increase in professional fees of $5 million, partially offset by decreases in personnel cost of $8 million, equipment expense of $5 million, and acquisition-related expenses of $4 million. • Provision for credit losses for the Current Quarter was $115 million, a decrease of $39 million from $154 million for the Linked Quarter . ◦ The provision for loan and lease losses for the Current Quarter was $111 million, a decrease of $37 million from $148 million for the Linked Quarter, mainly attributable to a decrease in net charge-offs of $25 million and a decrease of $8 million in the ALLL for the Current Quarter, compared to an increase of $4 million in the ALLL for the Linked Quarter. Changes in the ALLL are discussed in the “Provision for Credit Losses” section of this MD&A. ◦ The provision for off-balance sheet credit exposure for the Current Quarter was $4 million, a decrease of $2 million compared to $6 million for the Linked Quarter, mostly due to the modest shift in our scenario weighting as further discussed in the “ALLL Methodology” section of this MD&A. • Income tax expense for the Current Quarter was $183 million, an increase of $15 million from $168 million for the Linked Quart er, mostly reflecting higher income before income taxes. • Return on average assets for the Current Quarter was 1.01%, an increase of 14 bps from 0.87% for the Linked Quarter due to the increase in net income discussed above . (1) NIM, excluding PAA is a non-GAAP measure. Refer to the “NII, NIM, and Interest and Fees on Loans, Excluding PAA” discussion in the “Non-GAAP Financial Measurements” section of this MD&A for further discussion. 60 Year-to-Date Income Statement Highlights • Net income for the Current YTD was $1.06 billion, a decrease of $380 million or 27% from $1.44 billion for the Prior YTD. Net income available to common stockholders for the Current YTD was $1.03 billion, a decrease of 27% from $1.41 billion for the Prior YTD. Earnings per diluted common share for the Current YTD was $76.73, a decrease from $96.80 for the Prior YTD. The decrease in net income available to common stockholders was due to lower NII, higher noninterest expense and higher provision for credit losses, partially offset by lower income tax expense and higher noninterest income as further discussed below. • NII for the Current YTD was $3.36 billion, a decrease of $280 million or 8% from $3.64 billion for the Prior YTD. NIM for the Current YTD was 3.26%, a decrease of 40 bps from 3.66% for the Prior YTD. The decreases in NII and NIM were mainly due to lower yields on loans and interest-earning deposits at banks, a mix shift from interest-earning deposits at banks to investment securities, a higher average balance of interest-bearing deposits, and a higher average balance and rate paid for borrowings, partially offset by a decline in the rate paid on interest-bearing deposits and a higher average balance of loans. ◦ PAA for the Current YTD was $142 million, a decrease of $156 million from $298 million for the Prior YTD. NIM, excluding PAA, (1) for the Current YTD was 3.13%, a decrease of 23 bps from 3.36% for the Prior YTD. • Noninterest income for the Current YTD was $1.31 billion, an increase of $47 million from $1.27 billion for the Prior YTD, mostly due to increases in rental income on operating lease equipment of $28 million, lending-related fees of $13 million, wealth management services of $8 million, and international fees of $8 million, partially offset by a decrease in other noninterest income of $21 million. • Noninterest expense for the Current YTD was $2.99 billion, an increase of $231 million or 8% from $2.76 billion for the Prior YTD, mostly due to increases in personnel cost of $139 million, marketing expense of $32 million, equipment expense of $27 million, third-party processing fees of $8 million, and other noninterest expense of $32 million, partially offset by a decrease in acquisition-related expenses of $22 million. • Provision for credit losses for the Current YTD was $269 million, an increase of $110 million from $159 million for the Prior YTD. ◦ The provision for loan and lease losses for the Current YTD was $259 million, an increase of $71 million from $188 million for the Prior YTD, mainly attributable to a $43 million decline in the ALLL reserve release for the Current YTD, and an increase in net charge-offs of $28 million. Changes in the ALLL are discussed in the “Provision for Credit Losses” section of this MD&A. ◦ The provision for off-balance sheet credit exposure for the Current YTD was $10 million, compared to a benefit of $29 million for the Prior YTD. The increase in expense of $39 million was mostly due to trends in the volume of unfunded commitments, partially offset by a modest shift in our weighting from the downside to baseline economic scenario as further discussed in the “ALLL Methodology” section of this MD&A. • Income tax expense for the Current YTD was $351 million, a decrease of $194 million from $545 million for the Prior YTD, primarily due to lower income before income taxes and a lower effective income tax rate (“ETR”). • Return on average assets for the Current YTD was 0.94% compared to 1.33% for the Prior YTD due to the decrease in net income explained above . (1) NIM, excluding PAA is a non-GAAP measure. Refer to the “NII, NIM, and Interest and Fees on Loans, Excluding PAA” discussion in the “Non-GAAP Financial Measurements” section of this MD&A for further discussion. 61 Balance Sheet Highlights • Loans and leases at June 30, 2025 were $141.27 billion, an increase of $1.05 billion or 1% from $140.22 billion at December 31, 2024. Loan growth in the Commercial Bank segment of $793 million was mainly in our industry vertical, primarily technology media and telecommunications (“TMT”) and healthcare, and in the equipment finance portfolios. Loan growth of $155 million in the SVB Commercial segment was concentrated in the global fund banking portfolio, partially offset by a decline in our investor dependent portfolio. Loan growth of $100 million in the General Bank segment was primarily in the wealth portfolio. • Investment securities at June 30, 2025 were $43.35 billion, a decrease of $744 million or 2% from $44.09 billion at December 31, 2024, as maturities and paydowns more than offset net purchases. • Deposits at June 30, 2025 were $159.94 billion, an increase of $4.71 billion or 3% from $155.23 billion at December 31, 2024. As shown in Table 3 below, the increase from December 31, 2024 was mainly attributable to deposit growth in Corporate of $3.51 billion (which primarily includes the Direct Bank), the SVB Commercial segment of $1.27 billion, and the General Bank segment of $543 million, partially offset by a decline of $603 million in the Commercial Bank segment. • Borrowings at June 30, 2025 were $38.11 billion, an increase of $1.06 billion or 3% from $37.05 billion at December 31, 2024, primarily due to the Linked Quarter Debt Issuances with aggregate principal amounts totaling $1.25 billion, partially offset by the $350 million Current Quarter Debt Redemption. • The ALLL at June 30, 2025 was $1.67 billion, a decrease of $4 million from $1.68 billion at December 31, 2024 as discussed above in the Second Quarter and Year-to-Date Income Statement Highlights. The ALLL as a percentage of loans was 1.18% at June 30, 2025, a decrease of 2 bps from 1.20% at December 31, 2024. • At June 30, 2025, BancShares remained well capitalized with a total risk-based capital ratio of 14.25%, a Tier 1 risk-based capital ratio of 12.63%, a common equity Tier 1 (“CET1”) ratio of 12.12% and a Tier 1 leverage ratio of 9.62%. Funding, Liquidity and Capital Overview Deposit Composition and Trends We fund our business primarily through deposits. Deposits represented approximately 81% of total funding at June 30, 2025. The following table summarizes the composition, average size and uninsured percentages of our deposits: Table 2 Select Deposit Data Deposits as of June 30, 2025 Ending Balance (in millions) Average Size (in thousands) Uninsured % General Bank segment $ 73,499 $ 36 35 % Commercial Bank segment 2,899 603 80 SVB Commercial segment 37,798 533 68 Corporate and Rail segment (1) 45,739 59 9 Total $ 159,935 55 36 (1) The average size is reflective of the Direct Bank deposits and excludes brokered deposits and rail. The General Bank segment mainly includes deposits in our Branch Network, which deploys a relationship-based approach to deposit gathering. The Commercial Bank segment includes deposits of commercial customers, and the SVB Commercial segment includes deposits related to its commercial customer base. Deposits in Corporate mainly included $45.11 billion in our Direct Bank, with the balance including brokered and other deposits. As displayed in the table above, the average size of deposits varies across our business segments. The uninsured percentage is the percentage of uninsured deposits to total deposits at period end for the respective segments and Corporate. Total uninsured deposits were approximately $57.80 billion or 36% of total deposits at June 30, 2025 and $59.51 billion or 38% at December 31, 2024. 62 Table 3 Deposit Trends dollars in millions Deposit Balance June 30, 2025 March 31, 2025 December 31, 2024 General Bank segment $ 73,499 $ 74,309 $ 72,956 Commercial Bank segment 2,899 2,994 3,502 SVB Commercial segment 37,798 37,020 36,524 Corporate and Rail segment 45,739 45,002 42,247 Total deposits $ 159,935 $ 159,325 $ 155,229 Deposit trends for the segments and Corporate at June 30, 2025 compared to December 31, 2024 are discussed below: • General Bank segment deposit growth of $543 million was primarily in the Branch Network. • SVB Commercial segment deposits increased $1.27 billion, despite the strategic decision to move $2.4 billion in select cash sweep deposits to off-balance sheet client funds during the Linked Quarter. Deposit growth was mainly in noninterest-bearing deposits, partially offset by declines in interest-bearing checking. • Corporate deposit growth of $3.51 billion was mainly in the Direct Bank. • Commercial Bank segment deposit decline of $603 million was mostly in noninterest-bearing deposits. Refer to the “Results by Segments” for a discussion of deposits at June 30, 2025 compared to March 31, 2025. Liquidity Position We strive to maintain a strong liquidity position and our risk appetite for liquidity is low. At June 30, 2025, we had $63.62 billion in high-quality liquid assets consisting of $25.33 billion in cash and interest-earning deposits at banks (primarily held at the Federal Reserve Bank (“FRB”)) and $38.28 billion in high-quality liquid securities (“HQLS”). HQLS are mainly composed of U.S. agency mortgage-backed and U.S. Treasury investment securities. Additionally, we have unused borrowing capacity with the Federal Home Loan Bank (“FHLB”) and FRB of $17.85 billion and $10.56 billion, respectively. In connection with the SVBB Acquisition (as defined and described in Note 2—Business Combinations), FCB and the FDIC, as lender and as collateral agent, entered into the Advance Facility Agreement (as defined and described in Note 2—Business Combinations). The draw period under the Advance Facility Agreement ended March 27, 2025, as of which date, FCB had no outstanding amounts under the facility. During the Current Quarter, we increased our borrowing capacity under agreements with the FRB through expansion of the eligible loan population to targeted loans historically not pledged to the FRB. Refer to the “Liquidity Risk” section of this MD&A for further discussion. Also in connection with the SVBB Acquisition, FCB issued a five-year, 3.50% fixed rate Purchase Money Note (as defined in Note 2—Business Combinations), which had a carrying value of $35.84 billion at June 30, 2025. While scheduled principal payments are not required until maturity in March 2028, FCB may voluntarily prepay principal without a premium or penalty. We will continue to monitor the interest rate environment and assess whether any voluntary prepayments are prudent considering the fixed rate of 3.50%. Potential sources that could fund voluntary prepayments or the amount due at maturity include excess liquidity (primarily comprised of interest-earning deposits at banks and proceeds from maturities and paydowns of investment securities), FHLB advances, deposit growth, and issuance of unsecured debt or other borrowings. At the time of voluntary prepayment or maturity, the interest rates for the potential interest-bearing sources of repayment could be higher than the 3.50% rate. 63 Investment Securities Duration At June 30, 2025, our investment securities portfolio primarily consisted of debt securities available for sale and held to maturity as summarized below. We manage debt security market risk by monitoring the average duration of our investment securities portfolio. The duration of our investment securities was approximately 2.7 years at June 30, 2025. The investment securities available for sale portfolio had an average duration of 2.3 years and the held to maturity portfolio had an average duration of 4.2 years. Refer to the “Interest-earning Assets—Investment Securities” section of this MD&A and Note 3—Investment Securities for further information. Table 4 Investment Securities dollars in millions June 30, 2025 Composition (1) Amortized Cost Fair Value Fair Value to Amortized Cost Total investment securities available for sale 78.6 % $ 33,381 $ 33,060 99.0 % Total investment securities held to maturity 21.2 10,189 8,888 87.2 Investment in marketable equity securities 0.2 78 97 124.4 Total investment securities 100 % $ 43,648 $ 42,045 (1) Calculated as a percentage of the total fair value of investment securities. Capital Position At June 30, 2025, all regulatory capital ratios for BancShares and FCB exceeded the Prompt Corrective Action (“PCA”) well capitalized thresholds and Basel III requirements as further discussed in the “Capital” section of this MD&A. RESULTS OF OPERATIONS Net Interest Income and Net Interest Margin NII is affected by changes in interest rates and changes in the amount and composition of interest-earning assets and interest-bearing liabilities. Interest income and expense and the respective yields and rates include amortization of premiums, accretion of discounts, and impacts from hedging activities. The following tables present the average balances of interest-earning assets and interest-bearing liabilities with the associated yields and rates, interest income and expense, and changes therein due to changes in volume and yields or rates. Changes in interest income and expense due to changes in (i) volume (average balances of interest-earning assets and interest-bearing liabilities) and (ii) yields or rates are based on the following: • The change in NII due to volume is calculated as the change in average balance multiplied by the yield or rate from the prior period. • The change in NII due to yield or rate is calculated as the change in yield or rate multiplied by the average balance from the prior period. • The change in NII due to changes in both volume and yield or rate (i.e., portfolio mix) is calculated as the change in rate multiplied by the change in volume. This component is allocated between the changes due to volume and yield or rate based on the ratio each component bears to the absolute dollar amounts of their total. • Tax equivalent NII was not materially different from NII, therefore we present NII in our analysis. 64 Table 5 Average Balances, Yields and Rates, NII, and NIM (Current Quarter to Linked Quarter) dollars in millions Average Balance Yield / Rate Interest Income / Expense Three Months Ended Increase (Decrease) Three Months Ended Three Months Ended Increase (Decrease) due to: Jun 30, 2025 Mar 31, 2025 Jun 30, 2025 Mar 31, 2025 Increase (decrease) bps Jun 30, 2025 Mar 31, 2025 Increase (Decrease) Volume (1) Yield /Rate (1) Loans and leases (1)(2) $ 140,699 $ 139,491 $ 1,208 1 % 6.47 % 6.49 % (2) $ 2,270 $ 2,236 $ 34 $ 36 $ (2) Investment securities 43,935 43,555 380 1 3.79 3.79 — 416 411 5 5 — Securities purchased under agreements to resell 237 283 (46) (16) 4.34 4.37 (3) 3 3 — — — Interest-earning deposits at banks 23,304 22,699 605 3 4.40 4.38 2 256 245 11 9 2 Total interest-earning assets (2) $ 208,175 $ 206,028 $ 2,147 1 5.67 5.68 (1) $ 2,945 $ 2,895 $ 50 $ 50 $ — Noninterest-earning assets 19,377 19,421 (44) — Total assets $ 227,552 $ 225,449 $ 2,103 1 Interest-bearing deposits Checking with interest $ 22,929 $ 23,931 $ (1,002) (4) % 1.69 % 1.77 % (8) $ 97 $ 104 $ (7) $ (3) $ (4) Money market 37,980 36,760 1,220 3 2.84 2.83 1 269 257 12 11 1 Savings 46,163 43,918 2,245 5 3.72 3.85 (13) 428 417 11 24 (13) Time deposits 11,510 12,615 (1,105) (9) 3.48 3.71 (23) 100 115 (15) (9) (6) Total interest-bearing deposits 118,582 117,224 1,358 1 3.02 3.09 (7) 894 893 1 23 (22) Borrowings: Securities sold under customer repurchase agreements 471 428 43 10 0.57 0.52 5 — 1 (1) (1) — Senior unsecured borrowings 555 169 386 229 5.27 4.88 39 8 2 6 5 1 Subordinated debt 1,473 959 514 54 5.23 3.36 187 19 8 11 5 6 Other borrowings 35,880 35,842 38 — 3.66 3.66 — 329 328 1 1 — Long-term borrowings 37,908 36,970 938 3 3.74 3.66 8 356 338 18 11 7 Total borrowings 38,379 37,398 981 3 3.71 3.62 9 356 339 17 10 7 Total interest-bearing liabilities $ 156,961 $ 154,622 $ 2,339 2 3.19 3.22 (3) $ 1,250 $ 1,232 $ 18 $ 33 $ (15) Noninterest-bearing liabilities $ 48,103 $ 48,370 $ (267) (1) Stockholders' equity 22,488 22,457 31 — Total liabilities and stockholders’ equity $ 227,552 $ 225,449 $ 2,103 1 Net interest spread (2) 2.48 % 2.46 % 2 Net interest margin and net interest income (2) 3.26 % 3.26 % — $ 1,695 $ 1,663 $ 32 (1) Loans and leases include nonaccrual loans and loans held for sale. Interest income on loans and leases includes accretion income and loan fees. (2) The average balances and yields for loans and leases are calculated net of average credit balances of factoring clients to appropriately reflect the interest-earning portion of factoring receivables. 65 NII, NIM, and Average Balances (Current Quarter Compared to Linked Quarter) The table above quantifies the increases or decreases for the Current Quarter compared to the Linked Quarter for NII and NIM, as well as average balances of interest-earning assets and interest-bearing liabilities, and the respective yields earned and rates paid. The main reasons for the increases and decreases are explained below: NII and NIM • NII for the Current Quarter was $1.70 billion, an increase of $32 million or 2% from $1.66 billion for the Linked Quarter. NII, excluding PAA, (1) was $1.63 billion for the Current Quarter, an increase of $41 million from $1.59 billion for the Linked Quarter. The main reasons for the increases in NII and NII, excluding PAA, (1) are explained below: ◦ Interest and fees on loans for the Current Quarter was $2.27 billion, an increase of $34 million or 2% from $2.24 billion for the Linked Quarter. The increase was primarily due to a higher average balance and a higher day count. ▪ Loan PAA was $75 million for the Current Quarter, a decrease of $9 million from $84 million for the Linked Quarter . ▪ Interest and fees on loans, excluding loan PAA, (1) was $2.20 billion for the Current Quarter, an increase of $43 million from $2.15 billion for the Linked Quarter . ◦ Interest income on interest-earning deposits at banks for the Current Quarter was $256 million, an increase of $11 million or 4% from $245 million for the Linked Quarter, primarily due to a higher average balance and day count. ◦ Interest income on investment securities (including securities purchased under agreements to resell) for the Current Quarter was $419 million, an increase of $5 million or 1% from $414 million for the Linked Quarter, mostly due to a higher average balance. ◦ Interest expense on borrowings for the Current Quarter was $356 million, an increase of $17 million or 5% from $339 million for the Linked Quarter, primarily due to a higher average balance and rate paid as the Linked Quarter Debt Issuances were outstanding for the entire Current Quarter. Refer to the “Recent Events” section of this MD&A for further discussion. ◦ Interest expense on interest-bearing deposits for the Current Quarter was $894 million, a modest increase of $1 million from $893 million for the Linked Quarter, as the impacts of a higher average balance and a higher day count were mostly offset by a lower rate paid. • NIM for the Current Quarter and Linked Quarter was 3.26%, as a lower rate paid on interest-bearing deposits was offset by a higher average balance of interest-bearing deposits and borrowings, a higher rate paid on borrowings, and lower PAA. NIM, excluding PAA, (1) was 3.14% for the Current Quarter, an increase of 2 bps from 3.12% for the Linked Quarter . ◦ The yield on average interest-earning assets for the Current Quarter was 5.67%, a decrease of 1 bp from 5.68% for the Linked Quarter, mainly due to lower loan PAA. ◦ The rate paid on average interest-bearing liabilities for the Current Quarter was 3.19%, a decrease of 3 bps from 3.22% for the Linked Quarter, primarily due to a lower rate paid on interest-bearing deposits, partially offset by the impacts of a higher average balance of interest-bearing deposits and borrowings, and a higher rate paid on borrowings. Refer to the “Financial Performance Summary—Balance Sheet Highlights,” “Interest-earning Assets,” and “Interest-bearing Liabilities” sections of this MD&A for discussions of balance sheet trends that impact average interest-earning assets, average interest-bearing liabilities, and the related yields earned and rates paid. (1) Refer to the “NII, NIM, and Interest and Fees on Loans, Excluding PAA” discussion in the “Non-GAAP Financial Measurements” section of this MD&A for further information. 66 Table 6 Average Balances, Yields and Rates, NII, and NIM (Current Quarter to Prior Year Quarter) dollars in millions Average Balance Yield / Rate Interest Income / Expense Three Months Ended Increase (Decrease) from Prior Year Quarter Three Months Ended Three Months Ended Increase (Decrease) due to: Jun 30, 2025 Jun 30, 2024 Jun 30, 2025 Jun 30, 2024 Increase (decrease) bps Jun 30, 2025 Jun 30, 2024 Increase (Decrease) Volume (1) Yield /Rate (1) Loans and leases (1)(2) $ 140,699 $ 135,965 $ 4,734 4 % 6.47 % 7.15 % (68) $ 2,270 $ 2,422 $ (152) $ 83 $ (235) Investment securities 43,935 36,445 7,490 21 3.79 3.60 19 416 327 89 71 18 Securities purchased under agreements to resell 237 236 1 — 4.34 5.37 (103) 3 3 — — — Interest-earning deposits at banks 23,304 28,059 (4,755) (17) 4.40 5.42 (102) 256 378 (122) (58) (64) Total interest-earning assets (2) $ 208,175 $ 200,705 $ 7,470 4 5.67 6.26 (59) $ 2,945 $ 3,130 $ (185) $ 96 $ (281) Noninterest-earning assets 19,377 18,186 1,191 7 Total assets $ 227,552 $ 218,891 $ 8,661 4 Interest-bearing deposits Checking with interest $ 22,929 $ 24,427 $ (1,498) (6) % 1.69 % 2.26 % (57) $ 97 $ 137 $ (40) $ (8) $ (32) Money market 37,980 32,003 5,977 19 2.84 3.14 (30) 269 250 19 44 (25) Savings 46,163 38,429 7,734 20 3.72 4.35 (63) 428 415 13 78 (65) Time deposits 11,510 16,043 (4,533) (28) 3.48 4.33 (85) 100 173 (73) (43) (30) Total interest-bearing deposits 118,582 110,902 7,680 7 3.02 3.54 (52) 894 975 (81) 71 (152) Borrowings: Securities sold under customer repurchase agreements 471 380 91 24 0.57 0.46 11 — — — — — Senior unsecured borrowings 555 375 180 48 5.27 2.49 278 8 3 5 1 4 Subordinated debt 1,473 901 572 64 5.23 3.32 191 19 7 12 6 6 Other borrowings 35,880 35,824 56 — 3.66 3.61 5 329 324 5 1 4 Long-term borrowings 37,908 37,100 808 2 3.74 3.60 14 356 334 22 8 14 Total borrowings 38,379 37,480 899 2 3.71 3.56 15 356 334 22 8 14 Total interest-bearing liabilities $ 156,961 $ 148,382 $ 8,579 6 3.19 3.54 (35) $ 1,250 $ 1,309 $ (59) $ 79 $ (138) Noninterest-bearing liabilities $ 48,103 $ 48,457 $ (354) (1) Stockholders' equity 22,488 22,052 436 2 Total liabilities and stockholders’ equity $ 227,552 $ 218,891 $ 8,661 4 Net interest spread (2) 2.48 % 2.72 % (24) Net interest margin and net interest income (2) 3.26 % 3.64 % (38) $ 1,695 $ 1,821 $ (126) (1) Loans and leases include nonaccrual loans and loans held for sale. Interest income on loans and leases includes accretion income and loan fees. (2) The average balances and yields for loans and leases are calculated net of average credit balances of factoring clients to appropriately reflect the interest-earning portion of factoring receivables. 67 Table 7 Average Balances, Yields and Rates, NII, and NIM (Current YTD to Prior Year YTD) dollars in millions Average Balance Yield / Rate Interest Income / Expense Six Months Ended Increase (Decrease) from Prior Year Quarter Six Months Ended Six Months Ended Increase (Decrease) due to: Jun 30, 2025 Jun 30, 2024 Jun 30, 2025 Jun 30, 2024 Increase (decrease) bps Jun 30, 2025 Jun 30, 2024 Increase (Decrease) Volume (1) Yield /Rate (1) Loans and leases (1)(2) $ 140,099 $ 134,139 $ 5,960 4 % 6.48 % 7.15 % (67) $ 4,506 $ 4,776 $ (270) $ 200 $ (470) Investment securities 43,746 34,546 9,200 27 3.79 3.51 28 827 606 221 171 50 Securities purchased under agreements to resell 260 240 20 8 4.36 5.38 (102) 6 6 — 1 (1) Interest-earning deposits at banks 23,003 30,721 (7,718) (25) 4.39 5.41 (102) 501 826 (325) (186) (139) Total interest-earning assets (2) $ 207,108 $ 199,646 $ 7,462 4 5.67 6.25 (58) $ 5,840 $ 6,214 $ (374) $ 186 $ (560) Noninterest-earning assets 19,398 17,840 1,558 9 Total assets $ 226,506 $ 217,486 $ 9,020 4 Interest-bearing deposits Checking with interest $ 23,427 $ 24,195 $ (768) (3) % 1.73 % 2.22 % (49) $ 201 $ 267 $ (66) $ (8) $ (58) Money market 37,373 31,470 5,903 19 2.84 3.08 (24) 526 482 44 84 (40) Savings 45,046 37,456 7,590 20 3.79 4.33 (54) 845 806 39 149 (110) Time deposits 12,060 16,361 (4,301) (26) 3.60 4.27 (67) 215 348 (133) (83) (50) Total interest-bearing deposits 117,906 109,482 8,424 8 3.06 3.50 (44) 1,787 1,903 (116) 142 (258) Borrowings: Securities sold under customer repurchase agreements 450 406 44 11 0.55 0.47 8 1 1 — — — Senior unsecured borrowings 363 376 (13) (3) 5.16 2.50 266 10 5 5 — 5 Subordinated debt 1,218 906 312 34 4.49 3.30 119 27 15 12 6 6 Other borrowings 35,861 35,842 19 — 3.66 3.64 2 657 652 5 1 4 Long-term borrowings 37,442 37,124 318 1 3.70 3.62 8 694 672 22 7 15 Total borrowings 37,892 37,530 362 1 3.66 3.58 8 695 673 22 7 15 Total interest-bearing liabilities $ 155,798 $ 147,012 $ 8,786 6 3.20 3.52 (32) $ 2,482 $ 2,576 $ (94) $ 149 $ (243) Noninterest-bearing liabilities $ 48,236 $ 48,699 $ (463) (1) Stockholders' equity 22,472 21,775 697 3 Total liabilities and stockholders’ equity $ 226,506 $ 217,486 $ 9,020 4 Net interest spread (2) 2.47 % 2.73 % (26) Net interest margin and net interest income (2) 3.26 % 3.66 % (40) $ 3,358 $ 3,638 $ (280) (1) Loans and leases include nonaccrual loans and loans held for sale. Interest income on loans and leases includes accretion income and loan fees. (2) The average balances and yields for loans and leases are calculated net of average credit balances of factoring clients to appropriately reflect the interest-earning portion of factoring receivables. 68 NII and NIM - Current YTD compared to Prior YTD The table above quantifies the increases or decreases for the Current YTD compared to the Prior YTD for NII and NIM, as well as average balances of interest-earning assets and interest-bearing liabilities, and the respective yields earned and rates paid. The main reasons for the increases and decreases are explained below: NII and NIM • NII for the Current YTD was $3.36 billion, a decrease of $280 million or 8% from $3.64 billion for the Prior YTD. NII, excluding PAA, (1) was $3.22 billion for the Current YTD, a decrease of $124 million from $3.34 billion for the Prior YTD. The main reasons for the decreases in NII and NII, excluding PAA, (1) are explained below: ◦ Interest and fees on loans for the Current YTD was $4.51 billion, a decrease of $270 million or 6% from $4.78 billion for the Prior YTD, mainly due to lower yields and loan PAA, partially offset by the impact of a higher average balance. • Loan PAA was $159 million in the Current YTD, a decrease of $149 million from $308 million for the Prior YTD. • Interest and fees on loans, excluding loan PAA, (1) was $4.35 billion for the Current YTD, a decrease of $121 million from $4.47 billion for the Prior YTD . ◦ Interest income on investment securities (including securities purchased under agreements to resell) for the Current YTD was $833 million, an increase of $221 million or 36% from $612 million for the Prior YTD. The increase was mainly due to a higher yield and average balance. ◦ Interest income on interest-earning deposits at banks for the Current YTD was $501 million, a decrease of $325 million or 39% from $826 million for the Prior YTD, due to a lower average balance and a decline in the federal funds rate. ◦ Interest expense on interest-bearing deposits for the Current YTD was $1.79 billion, a decrease of $116 million or 6% from $1.90 billion for the Prior YTD, as a lower rate paid was partially offset by the impact of a higher average balance. ◦ Interest expense on borrowings for the Current YTD was $695 million, an increase of $22 million or 3% from $673 million for the Prior YTD, primarily due to a higher average balance and rate paid as a result of the Linked Quarter Debt Issuances. • NIM for the Current YTD was 3.26%, a decrease of 40 bps from 3.66% for the Prior YTD. NIM compression was mainly due to the unfavorable impacts of lower yields on loans and interest-earning deposits at banks, a mix shift from interest-earning deposits at banks to investment securities, a higher average balance of interest-bearing deposits, lower PAA, and a higher average balance and rate paid on borrowings, partially offset by the favorable impacts of a decline in the rate paid on interest-bearing deposits and a higher average balance of loans. NIM, excluding PAA, (1) was 3.13% for the Current YTD, a decrease of 23 bps from 3.36% for the Prior YTD. ◦ The yield on average interest-earning assets for the Current YTD was 5.67%, a decrease of 58 bps from 6.25% for the Prior YTD, mainly due to declines in yields on loans and interest-earning deposits at banks, as well as lower loan PAA, partially offset by a higher yield on investment securities. ◦ The rate paid on average interest-bearing liabilities for the Current YTD was 3.20%, a decrease of 32 bps from 3.52% for the Prior YTD, primarily due to a lower rate paid on interest-bearing deposits, partially offset by the impacts of a higher average balance of interest-bearing deposits, and a higher average balance and rate paid for borrowings as a result of the Linked Quarter Debt Issuances. Refer to the “Financial Performance Summary—Balance Sheet Highlights,” “Interest-earning Assets,” and “Interest-bearing Liabilities” sections of this MD&A for discussions of balance sheet trends that impact average interest-earning assets, average interest-bearing liabilities, and the related yields and rates paid. (1) Refer to the “NII, NIM, and Interest and Fees on Loans, Excluding PAA” discussion in the “Non-GAAP Financial Measurements” section of this MD&A for further information. The following table shows the types of average interest-earning assets as a percentage of total average interest-earning assets. Table 8 Average Interest-earning Asset Mix Three Months Ended Six Months Ended June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Loans and leases 68 % 68 % 68 % 68 % 67 % Investment securities 21 21 18 21 17 Interest-earning deposits at banks 11 11 14 11 16 Total interest-earning assets 100 % 100 % 100 % 100 % 100 % 69 The following table shows the types of average interest-bearing liabilities as a percentage of total average interest-bearing liabilities. Table 9 Average Interest-bearing Liability Mix Three Months Ended Six Months Ended June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Total interest-bearing deposits 76 % 76 % 75 % 76 % 75 % Long-term borrowings 24 24 25 24 25 Total interest-bearing liabilities 100 % 100 % 100 % 100 % 100 % Provision for Credit Losses Table 10 Provision for Credit Losses dollars in millions Three Months Ended Increase (Decrease) from Linked Quarter Six Months Ended Increase (Decrease) Year to Date June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Provision for loan and lease losses $ 111 $ 148 $ 95 $ (37) (26) % $ 259 $ 188 $ 71 38 % Provision (benefit) for off-balance sheet credit exposure 4 6 — (2) (23) 10 (29) 39 136 Provision for credit losses $ 115 $ 154 $ 95 $ (39) (26) % $ 269 $ 159 $ 110 70 % The provision for credit losses for the Current Quarter was $115 million, a decrease of $39 million from $154 million for the Linked Quarter . • The provision for loan and lease losses for the Current Quarter was $111 million, a decrease of $37 million from $148 million for the Linked Quarter, mainly attributable to a decrease in net charge-offs of $25 million and a decrease of $8 million in the ALLL for the Current Quarter, compared to an increase of $4 million in the ALLL for the Linked Quarter. ◦ The decrease of $8 million in the ALLL at June 30, 2025 compared to March 31, 2025 primarily reflected decreases related to Hurricane Helene, other credit quality improvements, and a modest shift in our weighting from the downside to baseline economic scenario as further discussed in the “ALLL Methodology” section of this MD&A, partially offset by higher specific reserves for individually evaluated loans. • The provision for off-balance sheet credit exposure for the Current Quarter was $4 million, a decrease of $2 million compared to $6 million for the Linked Quarter, mostly due to the modest shift in our scenario weighting discussed above. The provision for credit losses for the Current YTD was $269 million, an increase of $110 million from $159 million for the Prior YTD. • The provision for loan and lease losses for the Current YTD was $259 million, an increase of $71 million from $188 million for the Prior YTD, mainly attributable to a $43 million decline in the ALLL reserve release for the Current YTD, and an increase in net charge-offs of $28 million. ◦ The decrease of $4 million in the ALLL at June 30, 2025 compared to December 31, 2024 reflected the decreases discussed above in the Linked Quarter comparison and the result of a mix shift from the investor dependent portfolio to the global fund banking portfolio, which has a lower loss rate relative to our other loan portfolios, partially offset by the impact of loan growth. • The provision for off-balance sheet credit exposure for the Current YTD was $10 million, compared to a benefit of $29 million for the Prior YTD. The increase in expense of $39 million was mostly due to trends in the volume of unfunded commitments (which declined in the Prior YTD resulting in the benefit of $29 million), partially offset by a modest shift in our weighting from the downside to baseline economic scenario as further discussed in the “ALLL Methodology” section of this MD&A. The ALLL and net charge-offs are further discussed in the “Risk Management—Credit Risk” section of this MD&A and in Note 5—Allowance for Loan and Lease Losses. 70 Noninterest Income The primary sources of noninterest income consist of rental income on operating lease equipment, lending-related fees, deposit fees and service charges, client investment fees, wealth management services, international fees, factoring commissions, cardholder and merchant services, and insurance commissions. Table 11 Noninterest Income dollars in millions Three Months Ended Increase (Decrease) from Linked Quarter Six Months Ended Increase (Decrease) Year to Date June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Rental income on operating lease equipment $ 272 $ 270 $ 259 $ 2 1 % $ 542 $ 514 $ 28 6 % Lending-related fees 69 66 63 3 5 135 122 13 11 Deposit fees and service charges 59 58 57 1 3 117 115 2 2 Client investment fees 52 53 54 (1) (4) 105 104 1 — Wealth management services 55 56 52 (1) (2) 111 103 8 8 International fees 33 32 29 1 1 65 57 8 14 Factoring commissions 18 17 19 1 3 35 36 (1) (2) Cardholder services, net 41 41 40 — — 82 80 2 2 Merchant services, net 13 14 12 (1) (10) 27 24 3 11 Insurance commissions 14 14 13 — 2 28 28 — — Fair value adjustment on marketable equity securities, net 2 (5) (2) 7 146 (3) (6) 3 56 Gain on sale of leasing equipment, net 8 5 4 3 23 13 14 (1) (3) Loss on extinguishment of debt — — — — — — (2) 2 100 Other noninterest income 42 14 39 28 219 56 77 (21) (28) Total noninterest income $ 678 $ 635 $ 639 $ 43 7 % $ 1,313 $ 1,266 $ 47 4 % Noninterest income for the Current Quarter was $678 million, an increase of $43 million or 7%, from $635 million for the Linked Quarter, primarily due to the following: • The increase in other noninterest income of $28 million was mainly attributable to the positive impacts from fair value changes in customer derivative positions and other non-marketable investments, as well as the Linked Quarter write-down of a held for sale asset. • The favorable change of $7 million in the fair value of marketable equity securities. Noninterest income for the Current YTD was $1.31 billion, an increase of $47 million or 4%, from $1.27 billion for the Prior YTD as further discussed below: • The increase in rental income on operating lease equipment of $28 million was mainly the result of growth in the railcar portfolio. • The increase in lending-related fees of $13 million was primarily due to higher syndication fees. • The increase in wealth management services of $8 million reflected growth in assets under management. • The increase in international fees of $8 million reflected higher volumes and commissions on foreign currency exchange transactions. • The decrease in other noninterest income of $21 million was largely due a lower favorable impact from the fair value changes in customer derivative positions, as well as the write-down of a held for sale asset in the Current YTD, partially offset by favorable changes in the fair value of non-marketable equity securities. 71 Noninterest Expense Table 12 Noninterest Expense dollars in millions Three Months Ended Increase (Decrease) from Linked Quarter Six Months Ended Increase (Decrease) Year to Date June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Depreciation on operating lease equipment $ 100 $ 98 $ 98 $ 2 1 % $ 198 $ 194 $ 4 2 % Maintenance and other operating lease expenses 55 58 60 (3) (3) 113 105 8 8 Personnel cost 810 818 745 (8) (1) 1,628 1,489 139 9 Net occupancy expense 61 58 58 3 7 119 120 (1) — Equipment expense 131 136 126 (5) (4) 267 240 27 11 Professional fees 30 25 24 5 17 55 49 6 14 Third-party processing fees 63 63 58 — 1 126 118 8 7 FDIC insurance expense 38 38 33 — — 76 74 2 3 Marketing expense 32 32 18 — 1 64 32 32 102 Acquisition-related expenses 38 42 44 (4) (10) 80 102 (22) (21) Intangible asset amortization 13 15 15 (2) (12) 28 32 (4) (12) Other noninterest expense 129 110 107 19 17 239 207 32 15 Total noninterest expense $ 1,500 $ 1,493 $ 1,386 $ 7 1 % $ 2,993 $ 2,762 $ 231 8 % Noninterest expense for the Current Quarter was $1.50 billion, an increase of $7 million or 1%, from $1.49 billion for the Linked Quarter as further discussed below: • The increase in other noninterest expense of $19 million was mainly due to accruals totaling $15 million resulting from a vendor dispute and an increase in litigation reserves. • The increase in professional fees of $5 million was mostly related to higher consulting costs. • The decrease in personnel cost of $8 million was mainly due to seasonal increases in the Linked Quarter associated with employee benefits and payroll taxes, partially offset by the impact of annual merit increases being included for the entire Current Quarter. • The decrease in equipment expense of $5 million was mainly due to lower software-related costs, mostly related to accelerated depreciation in the Linked Quarter. • The decrease in acquisition-related expenses of $4 million is summarized in the table below. Noninterest expense for the Current YTD was $2.99 billion, an increase of $231 million or 8% from $2.76 billion for the Prior YTD as further discussed below: • The increase in personnel cost of $139 million was mainly due to annual merit increases and promotions, as well as net staff additions. • The increase in marketing expense of $32 million was primarily due to marketing for Direct Bank deposits. • The increase in other noninterest expense of $32 million was due to increases in various noninterest expense line items, as well as the other noninterest expense accruals discussed above. • The increase in equipment expense of $27 million was mostly due to higher software-related costs, including accelerated depreciation. • The increase in depreciation on operating lease equipment of $4 million and the increase of $8 million in maintenance and other operating lease expenses are discussed in the “Results by Segment” section of this MD&A. • The decrease in acquisition-related expenses of $22 million is summarized in Table 13 below. 72 Table 13 Acquisition-related Expenses dollars in millions Three Months Ended Six Months Ended June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Personnel cost $ 15 $ 15 $ 12 $ 30 $ 41 Professional fees 20 26 23 46 49 Other acquisition-related expense 3 1 9 4 12 Total acquisition-related expense $ 38 $ 42 $ 44 $ 80 $ 102 Acquisition-related personnel cost primarily includes severance and retention costs for employees associated with business combinations. These amounts are recognized over the requisite service period, if any. Acquisition-related professional fees mainly include consulting, legal and accounting costs associated with business combinations and the related integration, optimization, and business process reengineering, including enhancements to technology. These amounts are expensed as incurred. Income Taxes Table 14 Income Tax Data dollars in millions Three Months Ended Increase (Decrease) from Linked Quarter Six Months Ended Increase (Decrease) Year to Date June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Income before income taxes $ 758 $ 651 $ 979 $ 107 17 % $ 1,409 $ 1,983 $ (574) (29) % Income tax expense $ 183 $ 168 $ 272 $ 15 9 % $ 351 $ 545 $ (194) (36) % Effective income tax rate 24.1 % 25.8 % 27.8 % 24.9 % 27.5 % The ETR was 24.1% for the Current Quarter compared to 25.8% for the Linked Quarter. The lower ETR for the Current Quarter was mostly due to the revaluation of the deferred tax liability due to a change in state law enacted in the Current Quarter. The ETR was 24.9% for the Current YTD compared to 27.5% for the Prior YTD. The decrease for the Current YTD ETR compared to the Prior YTD was primarily due to a reduction in the state and local income tax rate. The ETR is impacted by a number of factors, including the relative mix of domestic and international earnings, effects of changes in enacted tax laws, adjustments to valuation allowances, and discrete items. The ETR in future periods may vary from the Current Quarter ETR due to changes in these factors. BancShares monitors and evaluates the potential impact of current events on the estimates used to establish income tax expense and income tax liabilities. On a periodic basis, we evaluate our income tax positions based on current tax law and positions taken by various tax auditors within the jurisdictions where BancShares is required to file income tax returns, as well as potential or pending audits or assessments by tax auditors. Refer to Note 15—Income Taxes for additional information. Refer to the “Executive Overview—Recent Events” for a brief discussion on tax reform legislation enacted on July 4, 2025. RESULTS BY SEGMENT We made changes to the composition of our reportable segments during the first quarter of 2025 as further discussed in Note 1—Significant Accounting Policies and Basis of Presentation and briefly summarized in the “Recent Events” section earlier in this MD&A. Segment disclosures for 2024 periods included in this Form 10-Q were recast to reflect the changes. BancShares’ segments include the General Bank, the Commercial Bank, SVB Commercial, and Rail. All other financial information not included in the segments is reported in the Corporate section of the segment disclosures. Certain noninterest expenses are directly incurred by a segment, while others are not. Noninterest expenses not directly incurred by a segment are included in Corporate unless allocated to a segment (“Allocated Expenses”). 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. Refer to Note 17—Segment Information for descriptions of segment products and services. 73 General Bank Table 15 General Bank: Financial Data dollars in millions Three Months Ended Increase (Decrease) from Linked Quarter Six Months Ended Increase (Decrease) Year to Date Earnings Summary June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Net interest income $ 824 $ 788 $ 730 $ 36 5 % $ 1,612 $ 1,414 $ 198 14 % Total noninterest income 164 164 152 — — 328 297 31 11 Total revenue 988 952 882 36 4 1,940 1,711 229 13 Personnel cost 210 214 185 (4) (1) 424 392 32 8 All other noninterest expense 370 351 316 19 5 721 637 84 13 Total noninterest expense 580 565 501 15 3 1,145 1,029 116 11 Provision for credit losses 13 46 37 (33) (73) 59 58 1 4 Income before income taxes 395 341 344 54 16 736 624 112 18 Income tax expense 101 88 92 13 15 189 171 18 10 Net income $ 294 $ 253 $ 252 $ 41 17 $ 547 $ 453 $ 94 21 Pre-provision net revenue (“PPNR”) (1) $ 408 $ 387 $ 381 $ 21 5 % $ 795 $ 682 $ 113 17 % Select Period End Balances Loans and leases $ 64,987 $ 64,847 $ 63,327 $ 140 — % $ 64,987 $ 63,327 $ 1,660 3 % Deposits 73,499 74,309 71,261 (810) (1) 73,499 71,261 2,238 3 (1) PPNR is a non-GAAP measure. Refer to the “Non-GAAP Financial Measurements” section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure. General Bank segment net income for the Current Quarter increased $41 million compared to the Linked Quarter, primarily due to higher NII and lower provision for credit losses, partially offset by increases in all other noninterest expenses and income tax expense . • The $36 million increase in NII was largely due to lower rates paid on interest-bearing deposits and loan growth. • The $33 million decrease in provision for credit losses reflected the decreases related to Hurricane Helene and the modest shift in our weighting from the downside to baseline economic scenario as further discussed in the “ALLL Methodology” section of this MD&A. • The $19 million net increase in all other noninterest expenses is spread amongst various accounts, including Allocated Expenses. Refer to the “Noninterest Expense” discussion in the “Results of Operations” section of this MD&A for further information regarding trends in consolidated noninterest expense. • The $13 million increase in income tax expense reflected higher income before income taxes. General Bank segment loans were $64.99 billion at June 30, 2025, an increase of $140 million compared to $64.85 billion at March 31, 2025, largely related to loan growth in Wealth, partially offset by a decline in business and commercial loans in the Branch Network. General Bank segment deposits were $73.50 billion at June 30, 2025, a decrease of $810 million compared to $74.31 billion at March 31, 2025, mostly related to declines in the Branch Network and Wealth due to seasonal tax outflows, and lower net growth. General Bank segment net income for the Current YTD increased $94 million compared to the Prior YTD, primarily due to higher NII and noninterest income, partially offset by increases in personnel cost, all other noninterest expenses, and income tax expense. • The $198 million increase in NII was mainly due to lower rates paid on interest-bearing deposits and loan growth , partially offset by the impact of deposit growth. • The $31 million increase in total noninterest income was mostly due to increases in wealth management services, deposit fees and service charges, and cardholder services. • The $32 million increase in personnel cost was mainly due to annual merit increases and promotions. • The $84 million net increase in all other noninterest expenses is spread amongst various accounts, including Allocated Expenses. Refer to the “Noninterest Expense” discussion in the “Results of Operations” section of this MD&A for further information regarding trends in consolidated noninterest expense. • The $18 million increase in income tax expense reflected higher income before income taxes. 74 Commercial Bank Table 16 Commercial Bank: Financial Data dollars in millions Three Months Ended Increase (Decrease) from Linked Quarter Six Months Ended Increase (Decrease) Year to Date Earnings Summary June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Net interest income $ 299 $ 293 $ 311 $ 6 2 % $ 592 $ 611 $ (19) (3) % Noninterest Income Rental income on operating lease equipment 54 56 58 (2) (2) 110 115 (5) (3) Less: depreciation on operating lease equipment 44 44 48 — — 88 94 (6) (6) Net rental income on operating lease equipment (1) 10 12 10 (2) (17) 22 21 1 5 All other noninterest income 98 69 77 29 42 167 160 7 3 Total noninterest income (2) 152 125 135 27 22 277 275 2 1 Noninterest income, net of depreciation (1) 108 81 87 27 33 189 181 8 4 Total revenue 451 418 446 33 8 869 886 (17) (2) Revenue, net of depreciation (1) 407 374 398 33 9 781 792 (11) (1) Noninterest Expense Personnel cost 69 72 63 (3) (6) 141 137 4 3 All other noninterest expense 154 159 135 (5) (2) 313 275 38 14 Total noninterest expense (3) 267 275 246 (8) (3) 542 506 36 7 Noninterest expense, net of depreciation (1) 223 231 198 (8) (3) 454 412 42 10 Provision for credit losses 47 85 39 (38) (44) 132 59 73 123 Income before income taxes 137 58 161 79 138 195 321 (126) (39) Income tax expense 35 15 44 20 136 50 86 (36) (42) Net income $ 102 $ 43 $ 117 $ 59 139 % $ 145 $ 235 $ (90) (38) % PPNR (1) $ 184 $ 143 $ 200 $ 41 30 % $ 327 $ 380 $ (53) (14) % Select Period End Balances Loans and leases $ 38,691 $ 38,631 $ 36,835 $ 60 — % $ 38,691 $ 36,835 $ 1,856 5 % Operating lease equipment, net 750 731 767 19 3 750 767 (17) (2) Deposits 2,899 2,994 3,294 (95) (3) 2,899 3,294 (395) (12) (1) Net rental income on operating lease equipment; noninterest income, net of depreciation; revenue, net of depreciation; noninterest expense, net of depreciation; and PPNR are non-GAAP measures. Refer to the “Non-GAAP Financial Measurements” section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure. (2) Total noninterest income includes rental income on operating lease equipment and all other noninterest income. (3) Total noninterest expense includes depreciation on operating lease equipment. Commercial Bank segment net income for the Current Quarter increased $59 million compared to the Linked Quarter, mostly due to lower provision for credit losses and higher noninterest income, partially offset by higher income tax expense. • The $38 million decrease in provision for credit losses was mainly due to lower net charge-offs compared to the Linked Quarter and a modest shift in our weighting from the downside to baseline economic scenario as further discussed in the “ALLL Methodology” section of this MD&A. • The $29 million increase in all other noninterest income was mainly attributable to the positive impacts from fair value changes in customer derivative positions, higher lending-related fees and other non-marketable investments, as well as the Linked Quarter write-down of a held for sale asset. • The $20 million increase in income tax expense reflected higher income before income taxes. Commercial Bank segment loans were $38.69 billion at June 30, 2025, an increase of $60 million compared to $38.63 billion at March 31, 2025, primarily due to growth in the real estate finance and equipment finance portfolios. Commercial Bank segment deposits were $2.90 billion at June 30, 2025, a decrease of $95 million from $2.99 billion at March 31, 2025, mostly due to a decline in checking with interest. Commercial Bank segment net income for the Current YTD decreased $90 million compared to the Prior YTD, primarily due to higher provision for credit losses, higher noninterest expense, and lower NII, partially offset by lower income tax expense. 75 • The $73 million increase in provision for credit losses was mainly due to higher net charge-offs in the Current YTD and the impact of loan growth, partially offset by the modest shift in our scenario weighting as further discussed in the “ALLL Methodology” section of this MD&A. • The $38 million net increase in all other noninterest expenses is spread amongst various accounts, including Allocated Expenses. Refer to the “Noninterest Expense” discussion in the “Results of Operations” section of this MD&A for further information regarding trends in consolidated noninterest expense. • The $19 million decrease in NII was mostly due to lower loan yields, partially offset by the impact of loan growth. • The $36 million decrease in income tax expense reflected lower income before income taxes. SVB Commercial Table 17 SVB Commercial: Financial Data dollars in millions Three Months Ended Increase (Decrease) from Linked Quarter Six Months Ended Increase (Decrease) Year to Date Earnings Summary June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Net interest income $ 490 $ 493 $ 553 $ (3) (1) % $ 983 $ 1,076 $ (93) (9) % Total noninterest income 130 132 134 (2) (1) 262 268 (6) (2) Total revenue 620 625 687 (5) (1) 1,245 1,344 (99) (7) Personnel cost 110 114 123 (4) (4) 224 242 (18) (8)