10-Q – 2026-04-30 – umbf-20260331.htm

unemployment and retail sales. The ACL for Commercial credit cards is measured using roll-rate loss rate method based on days past due.
The ACL for the State and political HTM securities segment is measured using a loss rate method based on historical bond rating transitions. Primary risk drivers within the segment are bond ratings in the portfolio along with changes of macro-economic conditions. There is no ACL for the U.S. Treasury, U.S. Agency, and GSE mortgage-backed HTM securities portfolios as they are considered to be agency-backed securities with no risk of loss as they are either explicitly or implicitly guaranteed by the U.S. government. For further discussion on these securities, including the aging and amortized cost balance of HTM securities, see Note 5, “Securities.”
See the credit quality indicators presented previously for a summary of current risk in the Company’s portfolio. Changes in economic forecasts will affect all portfolio segments, updated financial records from borrowers will affect portfolio segments by risk rating, updated credit scores will affect consumer credit cards, payment performance will affect consumer and commercial credit card portfolio segments, and updated bond credit ratings will affect held-to-maturity securities. The Company actively monitors all credit quality indicators for risk changes that will influence the current estimate.
Expected credit losses are estimated over the contractual term of the loans, adjusted for prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a concessionary loan term has been granted to a borrower experiencing financial difficulty or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancelable by the Company.
Credit card receivables do not have stated maturities. In determining the estimated life of a credit card receivable, management first estimates the future cash flows expected to be received and then applies those expected future cash flows to the credit card balance. Expected credit losses for credit cards are determined by estimating the amount and timing of principal payments expected to be received as payment for the balance outstanding as of the reporting period until the expected payments have been fully allocated. The ACL is recorded for the excess of the balance outstanding as of the reporting period over the expected principal payments.
Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually include loans on nonaccrual, loans that include modifications deemed concessionary made to borrowers experiencing financial difficulty, or any loans specifically identified, and are excluded from the collective evaluation. When it is determined that payment of interest or recovery of all principal is questionable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for undiscounted selling costs as appropriate. All loans are classified as collateral dependent if placed on non-accrual or include modifications made to borrowers experiencing financial difficulty.

 
29

 

ALLOWANCE FOR CREDIT LOSSES AND RECORDED INVESTMENT IN LOANS
This table provides a rollforward of the allowance for credit losses by portfolio segment for the three months ended March 31, 2026 and March 31, 2025 (in thousands):
 

 

 

Three Months Ended March 31, 2026

 

 

 

Commercial and industrial

 

 

Specialty lending

 

 

Commercial real estate

 

 

Consumer real estate

 

 

Consumer

 

 

Credit cards

 

 

Leases and other

 

 

Total - Loans

 

 

HTM

 

 

Total

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

240,324

 

 

$

—

 

 

$

151,060

 

 

$

6,938

 

 

$

1,387

 

 

$

18,042

 

 

$

1,727

 

 

$

419,478

 

 

$

1,684

 

 

$

421,162

 

Charge-offs

 

 

( 3,349

)

 

 

—

 

 

 

( 10,764

)

 

 

( 513

)

 

 

( 1,085

)

 

 

( 5,876

)

 

 

—

 

 

 

( 21,587

)

 

 

—

 

 

 

( 21,587

)

Recoveries

 

 

1,090

 

 

 

—

 

 

 

3

 

 

 

19

 

 

 

299

 

 

 

1,227

 

 

 

20

 

 

 

2,658

 

 

 

—

 

 

 

2,658

 

Provision

 

 

14,604

 

 

 

—

 

 

 

6,136

 

 

 

( 1,310

)

 

 

718

 

 

 

5,138

 

 

 

41

 

 

 

25,327

 

 

 

1,673

 

 

 

27,000

 

Ending balance - ACL

 

$

252,669

 

 

$

—

 

 

$

146,435

 

 

$

5,134

 

 

$

1,319

 

 

$

18,531

 

 

$

1,788

 

 

$

425,876

 

 

$

3,357

 

 

$

429,233

 

Allowance for credit losses on off-balance sheet credit exposures:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

2,886

 

 

$

—

 

 

$

2,548

 

 

$

154

 

 

$

91

 

 

$

—

 

 

$

27

 

 

$

5,706

 

 

$

15

 

 

$

5,721

 

Provision

 

 

979

 

 

 

—

 

 

 

( 940

)

 

 

( 38

)

 

 

( 14

)

 

 

—

 

 

 

4

 

 

 

( 9

)

 

 

9

 

 

 

—

 

Ending balance - ACL on off-balance sheet

 

$

3,865

 

 

$

—

 

 

$

1,608

 

 

$

116

 

 

$

77

 

 

$

—

 

 

$

31

 

 

$

5,697

 

 

$

24

 

 

$

5,721

 

 

 

Three Months Ended March 31, 2025

 

 

 

Commercial and industrial

 

 

Specialty lending

 

 

Commercial real estate

 

 

Consumer real estate

 

 

Consumer

 

 

Credit cards

 

 

Leases and other

 

 

Total - Loans

 

 

HTM

 

 

Total

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

161,553

 

 

$

—

 

 

$

77,340

 

 

$

4,327

 

 

$

966

 

 

$

14,272

 

 

$

631

 

 

$

259,089

 

 

$

2,645

 

 

$

261,734

 

PCD allowance for credit loss at acquisition

 

 

35,143

 

 

 

—

 

 

 

26,764

 

 

 

206

 

 

 

13

 

 

 

—

 

 

 

—

 

 

 

62,126

 

 

 

—

 

 

 

62,126

 

Charge-offs

 

 

( 25,996

)

 

 

—

 

 

 

( 2,324

)

 

 

( 1,229

)

 

 

( 742

)

 

 

( 6,676

)

 

 

—

 

 

 

( 36,967

)

 

 

—

 

 

 

( 36,967

)

Recoveries

 

 

69

 

 

 

—

 

 

 

—

 

 

 

16

 

 

 

119

 

 

 

891

 

 

 

—

 

 

 

1,095

 

 

 

—

 

 

 

1,095

 

Provision

 

 

21,986

 

 

 

—

 

 

 

47,565

 

 

 

1,478

 

 

 

1,132

 

 

 

11,508

 

 

 

( 90

)

 

 

83,579

 

 

 

1,921

 

 

 

85,500

 

Ending balance - ACL

 

$

192,755

 

 

$

—

 

 

$

149,345

 

 

$

4,798

 

 

$

1,488

 

 

$

19,995

 

 

$

541

 

 

$

368,922

 

 

$

4,566

 

 

$

373,488

 

Allowance for credit losses on off-balance sheet credit exposures:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

2,234

 

 

$

—

 

 

$

1,741

 

 

$

70

 

 

$

16

 

 

$

—

 

 

$

63

 

 

$

4,124

 

 

$

14

 

 

$

4,138

 

Initial allowance for credit loss at acquisition

 

 

2,166

 

 

 

—

 

 

 

1,192

 

 

 

63

 

 

 

41

 

 

 

—

 

 

 

114

 

 

 

3,576

 

 

 

7

 

 

 

3,583

 

Provision

 

 

1,135

 

 

 

—

 

 

 

( 521

)

 

 

5

 

 

 

34

 

 

 

—

 

 

 

( 142

)

 

 

511

 

 

 

( 11

)

 

 

500

 

Ending balance - ACL on off-balance sheet

 

$

5,535

 

 

$

—

 

 

$

2,412

 

 

$

138

 

 

$

91

 

 

$

—

 

 

$

35

 

 

$

8,211

 

 

$

10

 

 

$

8,221

 

 

 
Purchased loans that reflect a more than insignificant credit deterioration since origination at the date of acquisition are classified as PCD loans. PCD loans are recorded at fair value plus the ACL expected at the time of acquisition. Upon the acquisition of HTLF, the Company recorded $ 62.1 million to establish the PCD ACL. During th e second and third quarters o f 2025, the Company recorded an additional $ 15.2 million and $ 8.0 million, respectively, to the PCD ACL based on credit factors that were determined to be in existence as of the date of acquisition.
 
The allowance for credit losses on off-balance sheet credit exposures is recorded in the Accrued expenses and taxes line of the Company’s Consolidated Balance Sheets. See Note 10 “Commitments, Contingencies and Guarantees.”

 
30

 

Collateral Dependent Financial Assets
The following tables provide the amortized cost balance of financial assets considered collateral dependent as of March 31, 2026 and December 31, 2025 (in thousands) :
 

 

 

March 31, 2026

 

Loan Segment and Type

 

Amortized Cost of Collateral Dependent Assets

 

 

Related Allowance for Credit Losses

 

 

Amortized Cost of Collateral Dependent Assets with no related Allowance

 

Commercial and industrial:

 

 

 

 

 

 

 

 

 

Equipment/Accounts Receivable/Inventory

 

$

53,449

 

 

$

18,535

 

 

$

11,458

 

Agriculture

 

 

1,681

 

 

 

500

 

 

 

1,181

 

NDFIs

 

 

845

 

 

 

844

 

 

 

1

 

Total Commercial and industrial

 

 

55,975

 

 

 

19,879

 

 

 

12,640

 

Specialty lending:

 

 

 

 

 

 

 

 

 

Asset-based lending

 

 

—

 

 

 

—

 

 

 

—

 

Total Specialty lending

 

 

—

 

 

 

—

 

 

 

—

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

Owner-occupied

 

 

16,496

 

 

 

6,427

 

 

 

10,069

 

Non-owner-occupied

 

 

28,907

 

 

 

4,486

 

 

 

5,306

 

Farmland

 

 

3,655

 

 

 

—

 

 

 

3,655

 

5+ Multi-family

 

 

14,324

 

 

 

—

 

 

 

14,324

 

1-4 Family construction

 

 

—

 

 

 

—

 

 

 

—

 

General construction

 

 

193

 

 

 

—

 

 

 

193

 

Total Commercial real estate

 

 

63,575

 

 

 

10,913

 

 

 

33,547

 

Consumer real estate:

 

 

 

 

 

 

 

 

 

HELOC

 

 

5,421

 

 

 

—

 

 

 

5,421

 

First lien: 1-4 family

 

 

24,827

 

 

 

52

 

 

 

23,818

 

Junior lien: 1-4 family

 

 

855

 

 

 

—

 

 

 

855

 

Total Consumer real estate

 

 

31,103

 

 

 

52

 

 

 

30,094

 

Consumer:

 

 

 

 

 

 

 

 

 

Revolving line

 

 

34

 

 

 

—

 

 

 

34

 

Auto

 

 

45

 

 

 

—

 

 

 

45

 

Other

 

 

68

 

 

 

—

 

 

 

68

 

Total Consumer

 

 

147

 

 

 

—

 

 

 

147

 

Leases and other:

 

 

 

 

 

 

 

 

 

Leases

 

 

—

 

 

 

—

 

 

 

—

 

Other

 

 

—

 

 

 

—

 

 

 

—

 

Total Leases and other

 

 

—

 

 

 

—

 

 

 

—

 

Total loans

 

$

150,800

 

 

$

30,844

 

 

$

76,428

 

 

 
31

 

 

 

December 31, 2025

 

Loan Segment and Type

 

Amortized Cost of Collateral Dependent Assets

 

 

Related Allowance for Credit Losses

 

 

Amortized Cost of Collateral Dependent Assets with no related Allowance

 

Commercial and industrial:

 

 

 

 

 

 

 

 

 

Equipment/Accounts Receivable/Inventory

 

$

23,594

 

 

$

10,741

 

 

$

9,274

 

Agriculture

 

 

2,186

 

 

 

687

 

 

 

743

 

NDFIs

 

 

853

 

 

 

—

 

 

 

853

 

Total Commercial and industrial

 

 

26,633

 

 

 

11,428

 

 

 

10,870

 

Specialty lending:

 

 

 

 

 

 

 

 

 

Asset-based lending

 

 

—

 

 

 

—

 

 

 

—

 

Total Specialty lending

 

 

—

 

 

 

—

 

 

 

—

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

Owner-occupied

 

 

10,905

 

 

 

2,240

 

 

 

3,746

 

Non-owner-occupied

 

 

50,955

 

 

 

9,093

 

 

 

8,957

 

Farmland

 

 

3,389

 

 

 

—

 

 

 

3,389

 

5+ Multi-family

 

 

14,324

 

 

 

—

 

 

 

14,324

 

1-4 Family construction

 

 

—

 

 

 

—

 

 

 

—

 

General construction

 

 

7,408

 

 

 

161

 

 

 

5,700

 

Total Commercial real estate

 

 

86,981

 

 

 

11,494

 

 

 

36,116

 

Consumer real estate:

 

 

 

 

 

 

 

 

 

HELOC

 

 

5,319

 

 

 

—

 

 

 

5,319

 

First lien: 1-4 family

 

 

23,969

 

 

 

205

 

 

 

22,720

 

Junior lien: 1-4 family

 

 

622

 

 

 

—

 

 

 

622

 

Total Consumer real estate

 

 

29,910

 

 

 

205

 

 

 

28,661

 

Consumer:

 

 

 

 

 

 

 

 

 

Revolving line

 

 

633

 

 

 

—

 

 

 

633

 

Auto

 

 

47

 

 

 

—

 

 

 

47

 

Other

 

 

97

 

 

 

—

 

 

 

97

 

Total Consumer

 

 

777

 

 

 

—

 

 

 

777

 

Leases and other:

 

 

 

 

 

 

 

 

 

Leases

 

 

—

 

 

 

—

 

 

 

—

 

Other

 

 

—

 

 

 

—

 

 

 

—

 

Total Leases and other

 

 

—

 

 

 

—

 

 

 

—

 

Total loans

 

$

144,301

 

 

$

23,127

 

 

$

76,424

 

 
Modifications made to Borrowers Experiencing Financial Difficulty
In the normal course of business, the Company may execute loan modifications with borrowers. These modifications are analyzed to determine whether the modification is considered concessionary, long term and made to a borrower experiencing financial difficulty. The Company’s modifications generally include interest rate adjustments, principal reductions, and amortization and maturity date extensions. These modifications allow the borrower short-term cash relief to allow them to improve their financial condition. If a loan modification is determined to be made to a borrower experiencing financial difficulty, the loan is considered collateral dependent and evaluated as part of the ACL as described above in the Allowance for Credit Losses section of this note.

 
32

 

For the three months ended March 31, 2026, the Company had three new modifications on residential real estate loans made to borrowers experiencing financial difficulty with a total pre-modification loan balance of $ 534 thousand and a total post-modification loan balance of $ 538 thousand . For the three months ended March 31, 2025, the Company had one modifications on residential real estate loans made to a borrower experiencing financial difficulty with a total pre- and post-modification loan balance of $ 225 thousand.
The Company had no commitments to lend to borrowers experiencing financial difficulty for which the Company has modified an existing loan as of March 31, 2026 and 2025. The Company monitors loan payments on an on-going basis to determine if a loan is considered to have a payment default. Determination of payment default involves analyzing the economic conditions that exist for each customer and their ability to generate positive cash flows during the loan term. For the three months ended March 31, 2026 and 2025, the Company had no loan modifications made to borrowers experiencing financial difficulty for which there was a payment default within the 12 months following the modification date.

5. Securities
Securities Available for Sale
This table provides detailed information about securities available for sale at March 31, 2026 and December 31, 2025 (in thousands):

March 31, 2026

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

U.S. Treasury

 

$

2,252,751

 

 

$

8,082

 

 

$

( 3,120

)

 

$

2,257,713

 

U.S. Agencies

 

 

49,834

 

 

 

200

 

 

 

( 66

)

 

 

49,968

 

Mortgage-backed

 

 

8,589,349

 

 

 

42,549

 

 

 

( 344,025

)

 

 

8,287,873

 

State and political subdivisions

 

 

2,448,080

 

 

 

17,379

 

 

 

( 94,003

)

 

 

2,371,456

 

Corporates

 

 

142,631

 

 

 

267

 

 

 

( 3,217

)

 

 

139,681

 

Collateralized loan obligations

 

 

554,875

 

 

 

151

 

 

 

( 831

)

 

 

554,195

 

Total

 

$

14,037,520

 

 

$

68,628

 

 

$

( 445,262

)

 

$

13,660,886

 

December 31, 2025

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

U.S. Treasury

 

$

2,301,248

 

 

$

20,008

 

 

$

( 441

)

 

$

2,320,815

 

U.S. Agencies

 

 

62,069

 

 

 

401

 

 

 

( 100

)

 

 

62,370

 

Mortgage-backed

 

 

8,427,197

 

 

 

71,827

 

 

 

( 331,151

)

 

 

8,167,873

 

State and political subdivisions

 

 

2,494,537

 

 

 

24,898

 

 

 

( 72,847

)

 

 

2,446,588

 

Corporates

 

 

180,854

 

 

 

349

 

 

 

( 4,088

)

 

 

177,115

 

Collateralized loan obligations

 

 

533,995

 

 

 

504

 

 

 

( 119

)

 

 

534,380

 

Total

 

$

13,999,900

 

 

$

117,987

 

 

$

( 408,746

)

 

$

13,709,141

 

 
The following table presents contractual maturity information for securities available for sale at March 31, 2026 (in thousands):

 

 

Amortized

 

 

Fair

 

 

 

Cost

 

 

Value

 

Due in 1 year or less

 

$

776,270

 

 

$

777,228

 

Due after 1 year through 5 years

 

 

2,284,188

 

 

 

2,279,354

 

Due after 5 years through 10 years

 

 

599,727

 

 

 

589,950

 

Due after 10 years

 

 

1,787,986

 

 

 

1,726,481

 

Total

 

 

5,448,171

 

 

 

5,373,013

 

Mortgage-backed securities

 

 

8,589,349

 

 

 

8,287,873

 

Total securities available for sale

 

$

14,037,520

 

 

$

13,660,886

 

 

 
33

 

Securities may be disposed of before contractual maturities due to sales by the Company or because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
The following table presents the sales of securities available for sale for the three months ended March 31, 2026 and 2025 (in thousands):
 

 

 

Three Months Ended March 31,

 

 

 

2026

 

 

2025

 

Proceeds from sales

 

$

51,771

 

 

$

611,423

 

Gross realized gains

 

 

403

 

 

 

390

 

Gross realized losses

 

 

—

 

 

 

—

 

There were $ 12.7 billion and $ 13.4 billion of securities pledged to secure U.S. Government deposits, other public deposits, certain trust deposits, derivative transactions, and repurchase agreements at March 31, 2026 and December 31, 2025, respectively.
Accrued interest on securities available for sale totaled $ 74.5 million and $ 82.9 million as of March 31, 2026 and December 31, 2025, respectively, and is included in the Accrued income line on the Company’s Consolidated Balance Sheets. The total amount of accrued interest is excluded from the amortized cost of available-for-sale securities presented above. Further, the Company has elected not to measure an ACL for accrued interest receivable.
The following table shows the Company’s available-for-sale investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2026 and December 31, 2025 (in thousands):

 

 

Less than 12 months

 

 

12 months or more

 

 

Total

 

March 31, 2026

 

Count

 

 

Fair Value

 

 

Unrealized
Losses

 

 

Count

 

 

Fair Value

 

 

Unrealized
Losses

 

 

Count

 

 

Fair Value

 

 

Unrealized
Losses

 

Description of Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

 

77

 

 

$

594,413

 

 

$

( 2,942

)

 

 

1

 

 

$

14,815

 

 

$

( 178

)

 

 

78

 

 

$

609,228

 

 

$

( 3,120

)

U.S. Agencies

 

 

1

 

 

 

7,569

 

 

 

( 66

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1

 

 

 

7,569

 

 

 

( 66

)

Mortgage-backed

 

 

212

 

 

 

1,987,192

 

 

 

( 18,766

)

 

 

798

 

 

 

2,696,163

 

 

 

( 325,259

)

 

 

1,010

 

 

 

4,683,355

 

 

 

( 344,025

)

State and political subdivisions

 

 

474

 

 

 

631,510

 

 

 

( 14,306

)

 

 

837

 

 

 

806,914

 

 

 

( 79,697

)

 

 

1,311

 

 

 

1,438,424

 

 

 

( 94,003

)

Corporates

 

 

—

 

 

 

—

 

 

 

—

 

 

 

89

 

 

 

120,650

 

 

 

( 3,217

)

 

 

89

 

 

 

120,650

 

 

 

( 3,217

)

Collateralized loan obligations

 

 

32

 

 

 

317,287

 

 

 

( 788

)

 

 

2

 

 

 

12,963

 

 

 

( 43

)

 

 

34

 

 

 

330,250

 

 

 

( 831

)

Total

 

 

796

 

 

$

3,537,971

 

 

$

( 36,868

)

 

 

1,727

 

 

$

3,651,505

 

 

$

( 408,394

)

 

 

2,523

 

 

$

7,189,476

 

 

$

( 445,262

)

 

 

 

Less than 12 months

 

 

12 months or more

 

 

Total

 

December 31, 2025

 

Count

 

 

Fair Value

 

 

Unrealized
Losses

 

 

Count

 

 

Fair Value

 

 

Unrealized
Losses

 

 

Count

 

 

Fair Value

 

 

Unrealized
Losses

 

Description of Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

 

8

 

 

$

72,013

 

 

$

( 88

)

 

 

2

 

 

$

30,234

 

 

$

( 353

)

 

 

10

 

 

$

102,247

 

 

$

( 441

)

U.S. Agencies

 

 

1

 

 

 

7,855

 

 

 

( 100

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1

 

 

 

7,855

 

 

 

( 100

)

Mortgage-backed

 

 

82

 

 

 

757,160

 

 

 

( 5,682

)

 

 

817

 

 

 

2,871,729

 

 

 

( 325,469

)

 

 

899

 

 

 

3,628,889

 

 

 

( 331,151

)

State and political subdivisions

 

 

152

 

 

 

515,364

 

 

 

( 11,181

)

 

 

1,142

 

 

 

809,113

 

 

 

( 61,666

)

 

 

1,294

 

 

 

1,324,477

 

 

 

( 72,847

)

Corporates

 

 

1

 

 

 

2,990

 

 

 

( 10

)

 

 

134

 

 

 

164,108

 

 

 

( 4,078

)

 

 

135

 

 

 

167,098

 

 

 

( 4,088

)

Collateralized loan obligations

 

 

20

 

 

 

164,531

 

 

 

( 112

)

 

 

1

 

 

 

2,999

 

 

 

( 7

)

 

 

21

 

 

 

167,530

 

 

 

( 119

)

Total

 

 

264

 

 

$

1,519,913

 

 

$

( 17,173

)

 

 

2,096

 

 

$

3,878,183

 

 

$

( 391,573

)

 

 

2,360

 

 

$

5,398,096

 

 

$

( 408,746

)

 
34

 

The unrealized losses in the Company’s investments were caused by changes in interest rates, and not from a decline in credit of the underlying issuers. The U.S. Treasury, U.S. Agency, and GSE mortgage-backed securities are all considered to be agency-backed securities with no risk of loss as they are either explicitly or implicitly guaranteed by the U.S. government. The changes in fair value in the agency-backed portfolios are solely driven by change in interest rates caused by changing economic conditions. The Company has no knowledge of any underlying credit issues and the cash flows underlying the debt securities have not changed and are not expected to be impacted by changes in interest rates.
For the State and political subdivision portfolio, the majority of the Company’s holdings are in general obligation bonds, which have a very low historical default rate due to issuers generally having unlimited taxing authority to service the debt. For the State and political, Corporates, and Collateralized loan obligations portfolios, the Company has a robust process for monitoring credit risk, including both pre-purchase and ongoing post-purchase credit reviews and analysis. The Company monitors credit ratings of all bond issuers in these segments and reviews available financial data, including market and sector trends.
As of March 31, 2026 and December 31, 2025 , there was no ACL rel ated to the Company’s available-for-sale securities as the decline in fair value did not result from credit issues.
Securities Held to Maturity
The following table provides detailed information about securities held to maturity at March 31, 2026 and December 31, 2025, respectively (in thousands):

March 31, 2026

 

Amortized Cost

 

 

Gross Unrealized Gains

 

 

Gross Unrealized Losses

 

 

Fair Value

 

 

Allowance for Credit Losses

 

 

Net Carrying Amount

 

U.S. Treasury

 

$

38,256

 

 

$

—

 

 

$

( 298

)

 

$

37,958

 

 

$

—

 

 

$

38,256

 

Mortgage-backed

 

 

2,463,304

 

 

 

87

 

 

 

( 307,694

)

 

 

2,155,697

 

 

 

—

 

 

 

2,463,304

 

State and political subdivisions

 

 

3,201,678

 

 

 

12,919

 

 

 

( 235,688

)

 

 

2,978,909

 

 

 

( 3,357

)

 

 

3,198,321

 

Total

 

$

5,703,238

 

 

$

13,006

 

 

$

( 543,680

)

 

$

5,172,564

 

 

$

( 3,357

)

 

$

5,699,881

 

December 31, 2025

 

Amortized Cost

 

 

Gross Unrealized Gains

 

 

Gross Unrealized Losses

 

 

Fair Value

 

 

Allowance for Credit Losses

 

 

Net Carrying Amount

 

U.S. Treasury

 

$

38,253

 

 

$

27

 

 

$

( 37

)

 

$

38,243

 

 

$

—

 

 

$

38,253

 

Mortgage-backed

 

 

2,513,667

 

 

 

335

 

 

 

( 305,040

)

 

 

2,208,962

 

 

 

—

 

 

 

2,513,667

 

State and political subdivisions

 

 

3,172,307

 

 

 

26,713

 

 

 

( 195,760

)

 

 

3,003,260

 

 

 

( 1,684

)

 

 

3,170,623

 

Total

 

$

5,724,227

 

 

$

27,075

 

 

$

( 500,837

)

 

$

5,250,465

 

 

$

( 1,684

)

 

$

5,722,543

 

The following table presents contractual maturity information for securities held to maturity at March 31, 2026 (in thousands):
 

 

 

Amortized

 

 

Fair

 

 

 

Cost

 

 

Value

 

Due in 1 year or less

 

$

124,608

 

 

$

124,506

 

Due after 1 year through 5 years

 

 

420,999

 

 

 

410,094

 

Due after 5 years through 10 years

 

 

862,412

 

 

 

823,822

 

Due after 10 years

 

 

1,831,915

 

 

 

1,658,445

 

Total

 

 

3,239,934

 

 

 

3,016,867

 

Mortgage-backed securities

 

 

2,463,304

 

 

 

2,155,697

 

Total securities held to maturity

 

$

5,703,238

 

 

$

5,172,564

 

 
Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 
35

 

There were no sales of securities held to maturity during three months ended March 31, 2026 or 2025.
During the year ended December 31, 2022, securities with an amortized cost of $ 4.1 billion and a fair value of $ 3.8 billion were transferred from the available-for-sale classification to the held-to-maturity classification as the Company has the positive intent and ability to hold these securities to maturity. The transfers of securities were made at fair value at the time of transfer. The unrealized holding gain or loss at the time of transfer is retained in AOCI and will be amortized over the remaining life of the securities, offsetting the related amortization of discount or premium on the transferred securities. No gains or losses were recognized at the time of the transfers. The amortized cost balance of securities held to maturity in the tables above includes a net unamortized unrealized loss of $ 132.1 million and $ 139.2 million at March 31, 2026 and December 31, 2025, respectively.
Accrued interest on securities held to maturity totaled $ 25.2 millio n and $ 28.0 million as of March 31, 2026 and December 31, 2025, respectively, and is included in the Accrued income line on the Company’s Consolidated Balance Sheets. The total amount of accrued interest is excluded from the amortized cost of held-to-maturity securities presented above. Further, the Company has elected not to measure an ACL for accrued interest receivable.
The following table shows the Company’s held-to-maturity investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2026 and December 31, 2025, respectively (in thousands):
 

 

 

Less than 12 months

 

 

12 months or more

 

 

Total

 

March 31, 2026

 

Count

 

 

Fair Value

 

 

Unrealized Losses

 

 

Count

 

 

Fair Value

 

 

Unrealized Losses

 

 

Count

 

 

Fair Value

 

 

Unrealized Losses

 

U.S. Treasury

 

 

7

 

 

$

37,958

 

 

$

( 298

)

 

 

—

 

 

$

—

 

 

$

—

 

 

 

7

 

 

$

37,958

 

 

$

( 298

)

Mortgage-backed

 

 

14

 

 

 

172,121

 

 

 

( 1,682

)

 

 

262

 

 

 

1,951,706

 

 

 

( 306,012

)

 

 

276

 

 

 

2,123,827

 

 

 

( 307,694

)

State and political subdivisions

 

 

260

 

 

 

949,911

 

 

 

( 55,117

)

 

 

1,353

 

 

 

1,493,930

 

 

 

( 180,571

)

 

 

1,613

 

 

 

2,443,841

 

 

 

( 235,688

)

Total

 

 

281

 

 

$

1,159,990

 

 

$

( 57,097

)

 

 

1,615

 

 

$

3,445,636

 

 

$

( 486,583

)

 

 

1,896

 

 

$

4,605,626

 

 

$

( 543,680

)

 

 

 

Less than 12 months

 

 

12 months or more

 

 

Total

 

December 31, 2025

 

Count

 

 

Fair Value

 

 

Unrealized
Losses

 

 

Count

 

 

Fair Value

 

 

Unrealized
Losses

 

 

Count

 

 

Fair Value

 

 

Unrealized
Losses

 

U.S. Treasury

 

 

3

 

 

$

15,913

 

 

$

( 37

)

 

 

—

 

 

$

—

 

 

$

—

 

 

 

3

 

 

$

15,913

 

 

$

( 37

)

Mortgage-backed

 

 

10

 

 

 

147,066

 

 

 

( 918

)

 

 

262

 

 

 

1,998,984

 

 

 

( 304,122

)

 

 

272

 

 

 

2,146,050

 

 

 

( 305,040

)

State and political subdivisions

 

 

146

 

 

 

687,180

 

 

 

( 41,122

)

 

 

1,354

 

 

 

1,480,709

 

 

 

( 154,638

)

 

 

1,500

 

 

 

2,167,889

 

 

 

( 195,760

)

Total

 

 

159

 

 

$

850,159

 

 

$

( 42,077

)

 

 

1,616

 

 

$

3,479,693

 

 

$

( 458,760

)

 

 

1,775

 

 

$

4,329,852

 

 

$

( 500,837

)

 

The unrealized losses in the Company’s held-to-maturity portfolio were caused by changes in the interest rate environment. The U.S. Treasury and GSE mortgage-backed securities are considered to be agency-backed securities with no risk of loss as they are either explicitly or implicitly guaranteed by the U.S. government. Therefore, the Company’s expected lifetime loss for these portfolios is zero and there is no ACL recorded for these portfolios. The Company has no knowledge of any underlying credit issues and the cash flows underlying the debt securities have not changed and are not expected to be impacted by changes in interest rates.
For the State and political subdivision portfolio, the Company’s holdings are in general obligation bonds as well as private placement bonds, which have very low historical default rates due to issuers generally having unlimited taxing authority to service the debt. The Company has a robust process for monitoring credit risk, including both pre-purchase and ongoing post-purchase credit reviews and analysis. The Company monitors credit ratings of all bond issuers in these segments and reviews available financial data, including market and sector trends. The underlying bonds are evaluated for credit losses in conjunction with management’s estimate of the ACL based on credit rating.

 
36

 

The following tables show the amortized cost basis by credit rating of the Company’s held-to-maturity State and political subdivisions bond investments at March 31, 2026 and December 31, 2025 (in thousands):
 

 

 

Amortized Cost Basis by Credit Rating - HTM Debt Securities

 

March 31, 2026

 

AAA

 

 

AA

 

 

A

 

 

BBB

 

 

BB

 

 

B

 

 

CCC-C

 

 

Total

 

State and political subdivisions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Competitive

 

$

47,376

 

 

$

51,712

 

 

$

372,892

 

 

$

804,924

 

 

$

30,295

 

 

$

23,100

 

 

$

13,604

 

 

$

1,343,903

 

Utilities

 

 

827,336

 

 

 

902,260

 

 

 

110,407

 

 

 

15,316

 

 

 

2,456

 

 

 

—

 

 

 

—

 

 

 

1,857,775

 

Total state and political subdivisions

 

$

874,712

 

 

$

953,972

 

 

$

483,299

 

 

$

820,240

 

 

$

32,751

 

 

$

23,100

 

 

$

13,604

 

 

$

3,201,678

 

 

 

 

Amortized Cost Basis by Credit Rating - HTM Debt Securities

 

December 31, 2025

 

AAA

 

 

AA

 

 

A

 

 

BBB

 

 

BB

 

 

B

 

 

CCC-C

 

 

Total

 

State and political subdivisions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Competitive

 

$

46,933

 

 

$

51,390

 

 

$

379,973

 

 

$

812,061

 

 

$

34,105

 

 

$

23,326

 

 

$

14,424

 

 

$

1,362,212

 

Utilities

 

 

899,088

 

 

 

777,880

 

 

 

114,845

 

 

 

15,824

 

 

 

2,458

 

 

 

—

 

 

 

—

 

 

 

1,810,095

 

Total state and political subdivisions

 

$

946,021

 

 

$

829,270

 

 

$

494,818

 

 

$

827,885

 

 

$

36,563

 

 

$

23,326

 

 

$

14,424

 

 

$

3,172,307

 

 
Competitive held-to-maturity securities include not-for-profit enterprises that provide public functions such as housing, higher education or healthcare, but do so in a competitive environment. It also includes project financings that can have relatively high enterprise risk, such as deals backed by revenues from sports or convention facilities or start-up transportation revenues.
Utilities are public enterprises providing essential services with a monopoly or near-monopoly over the service area. This includes environmental utilities (water, sewer, solid waste), power utilities (electric distribution and generation, gas), and transportation utilities (airports, parking, toll roads, mass transit, ports).
 
The following table presents the aging of past due held-to-maturity securities at March 31, 2026 (in thousands) :
 

March 31, 2026

 

30-89
Days Past
Due and
Accruing

 

 

Greater than
90 Days Past
Due and
Accruing

 

 

Non-
Accrual

 

 

Total
Past Due

 

 

Current

 

 

Total

 

State and political subdivisions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Competitive

 

$

131

 

 

$

16,470

 

 

$

—

 

 

$

16,601

 

 

$

1,327,302

 

 

$

1,343,903

 

Utilities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,857,775

 

 

 

1,857,775

 

Total state and political subdivisions

 

$

131

 

 

$

16,470

 

 

$

—

 

 

$

16,601

 

 

$

3,185,077

 

 

$

3,201,678

 

All held-to-maturity securities were current and not past due at December 31, 2025.
Trading Securities
There were net unrealized losses of $ 6 thousand and $ 15 thousand on trading securities at March 31, 2026 and 2025 , respectively. Net unrealized gains and losses are included in trading and investment banking income on the Company’s Consolidated Statements of Income. Securities sold not yet purchased totaled $ 8.3 million and $ 4.1

 
37

 

million at March 31, 2026 and December 31, 2025, respectively, and are classified within the Other liabilities line of the Company’s Consolidated Balance Sheets.
Other Securities
The table below provides detailed information for Other securities at March 31, 2026 and December 31, 2025 (in thousands):
 

 

 

March 31, 2026

 

 

December 31, 2025

 

FRB and FHLB stock

 

$

137,660

 

 

$

137,498

 

Equity securities with readily determinable fair values

 

 

12,604

 

 

 

14,690

 

Equity securities without readily determinable fair values

 

 

535,326

 

 

 

524,112

 

Total

 

$

685,590

 

 

$

676,300

 

Investment in FRB stock is based on the capital structure of the investing bank, and investment in FHLB stock is mainly tied to the level of borrowings from the FHLB. These holdings are carried at cost. Equity securities with readily determinable fair values are generally traded on an exchange and market prices are readily available. Equity securities without readily determinable fair values include equity investments which are held by a subsidiary qualified as a Small Business Investment Company, as well as investments in low-income housing partnerships within the areas the Company serves. Unrealized gains or losses on equity securities with and without readily determinable fair values are recognized in the Investment securities gains, net line of the Company’s Consolidated Statements of Income.
 
The table below presents the changes in equity securities without readily determinable fair values for the three months ended March 31, 2026 and 2025 (in thousands) :
 

 

 

Three Months Ended March 31,

 

 

 

2026

 

 

2025

 

Beginning balance

 

$

524,112

 

 

$

416,750

 

Acquisition of HTLF

 

 

—

 

 

 

121,769

 

Purchases of securities

 

 

33,664

 

 

 

24,003

 

Observable upward price adjustments

 

 

3,568

 

 

 

1,022

 

Observable downward price adjustments

 

 

( 636

)

 

 

( 6,273

)

Sales of securities and other activity

 

 

( 25,382

)

 

 

( 17,341

)

Ending balance

 

$

535,326

 

 

$

539,930

 

 
Investment Securities Gains, Net
The following table presents the components of Investment securities gains (losses), net for the three months ended March 31, 2026 and March 31, 2025 (in thousands):
 

 

 

Three Months Ended March 31,

 

 

 

2026

 

 

2025

 

Investment securities gains (losses), net

 

 

 

 

 

 

Available-for-sale debt securities:

 

 

 

 

 

 

Gains realized on sales

 

$

403

 

 

$

390

 

Equity securities with readily determinable fair values:

 

 

 

 

 

 

Fair value adjustments, net

 

 

( 287

)

 

 

144

 

Equity securities without readily determinable fair values:

 

 

 

 

 

 

Fair value adjustments, net

 

 

315

 

 

 

( 5,243

)

Sales

 

 

2,615

 

 

 

( 73

)

Total investment securities gains (losses), net

 

$

3,046

 

 

$

( 4,782

)

 

 
38

 

6. Goodwill and Other Intangibles
Changes in the carrying amount of goodwill for the periods ended March 31, 2026 and December 31, 2025 by reportable segment are as follows (in thousands):

 

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Total

 

Balances as of January 1, 2026

 

$

1,042,577

 

 

$

76,492

 

 

$

720,756

 

 

$

1,839,825

 

Acquisition of HTLF

 

 

( 1,339

)

 

 

—

 

 

 

( 892

)

 

 

( 2,231

)

Balances as of March 31, 2026

 

$

1,041,238

 

 

$

76,492

 

 

$

719,864

 

 

$

1,837,594

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances as of January 1, 2025

 

$

63,113

 

 

$

76,492

 

 

$

67,780

 

 

$

207,385

 

Acquisition of HTLF

 

 

979,464

 

 

 

—

 

 

 

652,976

 

 

 

1,632,440

 

Balances as of December 31, 2025

 

$

1,042,577

 

 

$

76,492

 

 

$

720,756

 

 

$

1,839,825

 

 
The following table lists the finite-lived intangible assets that continue to be subject to amortization as of March 31, 2026 and December 31, 2025 (in thousands) :
 

 

 

As of March 31, 2026

 

 

 

Core Deposit Intangible Assets

 

 

Customer Relationships

 

 

Total

 

Gross carrying amount

 

$

481,294

 

 

$

124,085

 

 

$

605,379

 

Accumulated amortization

 

 

101,011

 

 

 

40,959

 

 

 

141,970

 

Net carrying amount

 

$

380,283

 

 

$

83,126

 

 

$

463,409

 

 

 

As of December 31, 2025

 

 

 

Core Deposit Intangible Assets

 

 

Customer Relationships

 

 

Total

 

Gross carrying amount

 

$

481,294

 

 

$

124,085

 

 

$

605,379

 

Accumulated amortization

 

 

81,203

 

 

 

37,307

 

 

 

118,510

 

Net carrying amount

 

$

400,091

 

 

$

86,778

 

 

$

486,869

 

Related to the acquisition of HTLF, the Company recognized an adjustment of $ 2.2 million to goodwill during the period ended March 31, 2026. During 2025, the Company recognized $ 1.6 billion of goodwill, a $ 474.1 million core deposit intangible asset, wealth customer list of $ 26.0 million, and purchased credit card relationships of $ 10.9 million. See Note 13, “Acquisition” for additional information.
On September 2, 2025, the Company acquired a healthcare savings account business, which included $ 32.5 million of deposits. The purchase resulted in recognition of a $ 4.8 million core deposit intangible asset.
The following table has the aggregate amortization expense recognized in each period (in thousands) :

 

 

Three Months Ended March 31,

 

 

 

2026

 

 

2025

 

Aggregate amortization expense

 

$

23,460

 

 

$

17,482

 

 

 
39

 

The following table discloses the estimated amortization expense of intangible assets in future periods (in thousands):

For the nine months ending December 31, 2026

 

$

69,660

 

For the year ending December 31, 2027

 

 

82,528

 

For the year ending December 31, 2028

 

 

70,461

 

For the year ending December 31, 2029

 

 

61,515

 

For the year ending December 31, 2030

 

 

52,901

 

 
7. Borrowed Funds
The components of the Company’s borrowed funds are as follows (in thousands) :
 

 

 

March 31, 2026

 

 

December 31, 2025

 

Long-term debt:

 

 

 

 

 

 

Trust preferred securities

 

$

221,176

 

 

$

220,034

 

Subordinated notes 6.25 %, net of issuance costs

 

 

109,361

 

 

 

109,255

 

Subordinated notes 2.75 %

 

 

146,627

 

 

 

144,940

 

Total long-term debt

 

 

477,164

 

 

 

474,229

 

Total borrowed funds

 

$

477,164

 

 

$

474,229

 

 

 
40

 

The following table presents details of outstanding trust preferred securities as of March 31, 2026 (in thousands):
 

 

 

Amount Outstanding

 

 

Issuance Date

 

Interest Rate

 

Interest Rate as of March 31, 2026

 

 

Maturity Date

Marquette Capital Trust I

 

$

19,410

 

 

12/28/2005

 

1.33 % over 3-month term SOFR

 

 

5.26

%

 

1/7/2036

Marquette Capital Trust II

 

 

19,876

 

 

12/28/2005

 

1.33 % over 3-month term SOFR

 

 

5.26

 

 

1/7/2036

Marquette Capital Trust III

 

 

7,803

 

 

5/30/2006

 

1.50 % over 3-month term SOFR

 

 

5.45

 

 

6/23/2036

Marquette Capital Trust IV

 

 

31,468

 

 

6/30/2006

 

1.60 % over 3-month term SOFR

 

 

5.54

 

 

9/15/2036

Heartland Financial Statutory Trust IV

 

 

9,709

 

 

3/17/2004

 

2.75 % over 3-month term SOFR

 

 

6.69

 

 

3/17/2034

Heartland Financial Statutory Trust V

 

 

17,596

 

 

1/27/2006

 

1.33 % over 3-month term SOFR

 

 

5.26

 

 

4/7/2036

Heartland Financial Statutory Trust VI

 

 

17,048

 

 

6/21/2007

 

1.48 % over 3-month term SOFR

 

 

5.42

 

 

9/15/2037

Heartland Financial Statutory Trust VII

 

 

14,917

 

 

6/26/2007

 

1.48 % over 3-month term SOFR

 

 

5.41

 

 

9/1/2037

Morrill Statutory Trust I

 

 

10,012

 

 

12/19/2002

 

3.25 % over 3-month term SOFR

 

 

7.22

 

 

12/26/2032

Morrill Statutory Trust II

 

 

9,774

 

 

12/17/2003

 

2.85 % over 3-month term SOFR

 

 

6.79

 

 

12/17/2033

Sheboygan Statutory Trust I

 

 

7,378

 

 

9/17/2003

 

2.95 % over 3-month term SOFR

 

 

6.89

 

 

9/17/2033

CBNM Capital Trust I

 

 

4,866

 

 

9/10/2004

 

3.25 % over 3-month term SOFR

 

 

7.19

 

 

12/15/2034

Citywide Capital Trust III

 

 

6,829

 

 

12/19/2003

 

2.80 % over 3-month term SOFR

 

 

6.73

 

 

12/19/2033

Citywide Capital Trust IV

 

 

4,721

 

 

9/30/2004

 

2.20 % over 3-month term SOFR

 

 

6.13

 

 

9/30/2034

Citywide Capital Trust V

 

 

13,200

 

 

5/31/2006

 

1.54 % over 3-month term SOFR

 

 

5.48

 

 

7/25/2036

OCGI Statutory Trust III

 

 

3,030

 

 

6/27/2002

 

3.65 % over 3-month term SOFR

 

 

7.58

 

 

9/30/2032

OCGI Statutory Trust IV

 

 

5,693

 

 

9/23/2004

 

2.50 % over 3-month term SOFR

 

 

6.44

 

 

12/15/2034

BVBC Capital Trust II

 

 

7,477

 

 

4/10/2003

 

3.25 % over 3-month term SOFR

 

 

7.18

 

 

4/24/2033

BVBC Capital Trust III

 

 

10,369

 

 

7/29/2005

 

1.60 % over 3-month term SOFR

 

 

5.56

 

 

9/30/2035

Total trust preferred securities

 

$

221,176

 

 

 

 

 

 

 

 

 

 

In September 2022, the Company issued $ 110.0 million of 6.25 % fixed-to-fixed rate subordinated notes that mature on September 28, 2032 . The notes bear interest at the rate of 6.25 % per annum, payable semi-annually on each March 28 and September 28. The Company may redeem the notes, in whole or in part, on September 28, 2027 , or on any interest payment date thereafter. Unamortized debt issuance costs related to these notes totaled $ 0.6 million and $ 0.7 million as of March 31, 2026 and December 31, 2025, respectively. Proceeds from the issuance of the notes were used for general corporate purposes, including contributing Tier 1 capital into the Bank.

 
41

 

As part of the acquisition of HTLF, the Company acquired $ 150.0 million of 2.75 % fixed-to-fixed rate subordinated notes that mature on September 15, 2031 . The notes bear interest at the rate of 2.75 % per annum, payable semi-annually on each March 15 and September 15. The Company may redeem the notes, in whole or in part, on September 15, 2026, or on any interest payment date thereafter.
The remainder of the Company’s long-term debt was assumed from the acquisitions of Marquette Financial Companies in 2015 and HTLF in 2025 and consists of debt obligations payable to 19 unconsolidated trusts that previously issued trust preferred securities, as summarized in the table above. These long-term debt obligations had an aggregate contractual balance of $ 262.9 million and a carrying value of $ 221.2 million as of March 31, 2026. As of December 31, 2025 , these debt obligations had an aggregate contractual balance of $ 262.9 million and had a carrying value of $ 220.0 million.
The Company is a member bank of the FHLB and through this relationship, the Company owns FHLB stock and has access to additional liquidity and funding sources through FHLB advances. The Company’s borrowing capacity is dependent upon the amount of collateral the Company places at the FHLB. As of both March 31, 2026 and December 31, 2025 , the Company owned $ 10.3 million of FHLB stock. The Company had no outstanding advances at the FHLB Des Moines as of March 31, 2026 or December 31, 2025. As of March 31, 2026 , the Company had four letters of credit outstanding with the FHLB of Des Moines to secure deposits. These letters of credit have an aggregate amount of $ 210.0 million and have various maturity dates through August 31, 2026 . The Company’s remaining borrowing capacity with the FHLB was $ 2.3 billion as of March 31, 2026.
The Company utilizes repurchase agreements to facilitate the needs of customers and to facilitate secured short-term funding needs. Repurchase agreements are stated at the amount of cash received in connection with the transaction. The Company monitors collateral levels on a continuous basis and may be required to provide additional collateral based on the fair value of the underlying securities. Securities pledged as collateral under repurchase agreements are maintained with the Company’s safekeeping agents.
The table below presents the remaining contractual maturities of repurchase agreements outstanding at March 31, 2026 and December 31, 2025, in addition to the various types of marketable securities that have been pledged as collateral for these borrowings (in thousands):
 

 

 

As of March 31, 2026

 

 

 

Remaining Contractual Maturities of the Agreements

 

 

 

Overnight

 

 

30-90 Days

 

 

Over 90 Days

 

 

Total

 

Repurchase agreements, secured by:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

$

1,152,251

 

 

$

—

 

 

$

—

 

 

$

1,152,251

 

U.S. Agencies

 

 

1,594,690

 

 

 

761,715

 

 

 

3,000

 

 

 

2,359,405

 

Total repurchase agreements

 

$

2,746,941

 

 

$

761,715

 

 

$

3,000

 

 

$

3,511,656

 

 

 

 

As of December 31, 2025

 

 

 

Remaining Contractual Maturities of the Agreements

 

 

 

2-29 Days

 

 

30-90 Days

 

 

Over 90 Days

 

 

Total

 

Repurchase agreements, secured by:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

$

1,355,233

 

 

$

—

 

 

$

—

 

 

$

1,355,233

 

U.S. Agencies

 

 

1,177,072

 

 

 

759,500

 

 

 

1,000

 

 

 

1,937,572

 

Total repurchase agreements

 

$

2,532,305

 

 

$

759,500

 

 

$

1,000

 

 

$

3,292,805

 

 
8. Business Segment Reporting
The Company has strategically aligned its operations into the following three reportable segments: Commercial Banking, Institutional Banking, and Personal Banking (collectively, the Business Segments, and each, a Business Segment). These segments reflect the type of customer served, how products and services are provided, how executive management responsibilities are assigned, and reflect the manner in which financial information is evaluated by the chief operating decision maker (CODM). The Company’s CODM is comprised of a group of senior executive officers led by the Company’s chief executive officer, chief administrative officer, chief financial officer, and the Bank’s chief executive officer.

 
42

 

Business Segment financial information is produced using an internal reporting system which is based on a series of management estimates for funds transfer pricing (FTP), and allocations of noninterest expense and income taxes. The process for determining FTP is based on a number of factors and assumptions, including prevailing market interest rates, the expected lives of various assets and liabilities, and the Company’s broader funding profile. These estimates and allocations are periodically reviewed and refined. The CODM uses the Business Segment net income in deciding how to allocate resources and assess performance for individual Business Segments, including evaluating the cost or opportunity value of funds within each Business Segment and identifying areas of focus for organic growth or acquisition. For comparability purposes, amounts in all periods are based on methodologies in effect at March 31, 2026. Previously reported results have been reclassified in this filing to conform to the current organizational structure.
The following summaries provide information about the activities of each Business Segment:
Commercial Banking serves the commercial banking and treasury management needs of the Company’s small to middle-market businesses through a variety of products and services. Such services include commercial loans, commercial real estate financing, commercial credit cards, letters of credit, loan syndication services, and consultative services. In addition, the Company’s specialty lending group offers a variety of business solutions including asset-based lending, mezzanine debt and minority equity investments. Treasury management services include depository services, account reconciliation and cash management tools such as, accounts payable and receivable solutions, electronic fund transfer and automated payments, controlled disbursements, lockbox services and remote deposit capture services.
Institutional Banking is a combination of banking services, fund services, asset management services and healthcare services provided to institutional clients. This segment also provides fixed income sales, trading and underwriting, corporate trust and escrow services, as well as institutional custody. Institutional Banking includes UMB Fund Services, which provides fund administration and accounting, investor services and transfer agency, and other services to mutual funds and alternative investment groups. Healthcare services provides healthcare payment solutions including custodial services for health savings accounts (HSAs) and private label, multipurpose debit cards to insurance carriers, third-party administrators, software companies, employers, and financial institutions.
Personal Banking combines consumer banking and wealth management services offered to clients and delivered through personal relationships and the Company’s bank branches, ATM network and internet banking. Products offered include deposit accounts, retail credit cards, private banking, installment loans, home equity lines of credit, and residential mortgages. The range of client services extends from a basic checking account to estate planning and trust services and includes private banking, brokerage services, and insurance services in addition to a full spectrum of investment advisory, trust, and custody services.

 
43

 

Business Segment Information
Business Segment financial results for the three months ended March 31, 2026 and March 31, 2025 were as follows (in thousands):
 

 

 

Three Months Ended March 31, 2026

 

 

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Total

 

Net interest income

 

$

365,342

 

 

$

77,287

 

 

$

91,737

 

 

$

534,366

 

Provision for credit losses

 

 

23,777

 

 

 

497

 

 

 

2,726

 

 

 

27,000

 

Noninterest income

 

 

46,289

 

 

 

121,829

 

 

 

36,675

 

 

 

204,793

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

56,426

 

 

 

50,637

 

 

 

39,924

 

 

 

146,987

 

Processing fees

 

 

4,028

 

 

 

10,670

 

 

 

4,382

 

 

 

19,080

 

Bankcard

 

 

2,848

 

 

 

6,512

 

 

 

2,510

 

 

 

11,870

 

Amortization of other intangible assets

 

 

—

 

 

 

1,972

 

 

 

75

 

 

 

2,047

 

Allocated technology, service, overhead

 

 

85,636

 

 

 

33,876

 

 

 

44,404

 

 

 

163,916

 

Other segment items*

 

 

16,514

 

 

 

9,264

 

 

 

11,205

 

 

 

36,983

 

Noninterest expense

 

 

165,452

 

 

 

112,931

 

 

 

102,500

 

 

 

380,883

 

Income before taxes

 

 

222,402

 

 

 

85,688

 

 

 

23,186

 

 

 

331,276

 

Income tax expense

 

 

46,886

 

 

 

18,064

 

 

 

4,888

 

 

 

69,838

 

Net income

 

$

175,516

 

 

$

67,624

 

 

$

18,298

 

 

$

261,438

 

Average assets

 

$

34,938,000

 

 

$

21,498,000

 

 

$

13,992,000

 

 

$

70,428,000

 

*Other segment items include occupancy, equipment, supplies and services, marketing and business development costs, legal and consulting, and regulatory fees.
 

 

 

Three Months Ended March 31, 2025

 

 

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Total

 

Net interest income

 

$

273,916

 

 

$

61,159

 

 

$

62,564

 

 

$

397,639

 

Provision for credit losses

 

 

66,751

 

 

 

435

 

 

 

18,814

 

 

 

86,000

 

Noninterest income

 

 

37,218

 

 

 

103,797

 

 

 

25,183

 

 

 

166,198

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

53,586

 

 

 

47,186

 

 

 

35,999

 

 

 

136,771

 

Processing fees

 

 

3,664

 

 

 

10,649

 

 

 

4,443

 

 

 

18,756

 

Bankcard

 

 

3,173

 

 

 

6,037

 

 

 

3,585

 

 

 

12,795

 

Amortization of other intangible assets

 

 

—

 

 

 

1,786

 

 

 

103

 

 

 

1,889

 

Allocated technology, service, overhead

 

 

101,125

 

 

 

32,245

 

 

 

52,464

 

 

 

185,834

 

Other segment items*

 

 

11,463

 

 

 

9,365

 

 

 

7,914

 

 

 

28,742

 

Noninterest expense

 

 

173,011

 

 

 

107,268

 

 

 

104,508

 

 

 

384,787

 

Income (loss) before taxes

 

 

71,372

 

 

 

57,253

 

 

 

( 35,575

)

 

 

93,050

 

Income tax expense (benefit)

 

 

8,987

 

 

 

7,210

 

 

 

( 4,480

)

 

 

11,717

 

Net income (loss)

 

$

62,385

 

 

$

50,043

 

 

$

( 31,095

)

 

$

81,333

 

Average assets

 

$

30,029,000

 

 

$

18,324,000

 

 

$

11,624,000

 

 

$

59,977,000

 

 
 

 
9. Revenue Recognition
The following is a description of the principal activities from which the Company generates revenue that are within the scope of ASC 606, Revenue from Contracts with Customers :
 
Trust and securities processing – Trust and securities processing income consists of fees earned on personal and corporate trust accounts, custody of securities services, trust investments and wealth management services, and

 
44

 

mutual fund and alternative asset servicing. The performance obligations related to this revenue include items such as performing full bond trustee service administration, investment advisory services, custody and record-keeping services, and fund administrative and accounting services. These fees are part of long-term contractual agreements and the performance obligations are satisfied upon completion of service and fees are generally a fixed flat monthly rate or based on a percentage of the account’s market value per the contract with the customer. These fees are primarily recorded within the Company’s Institutional and Personal Banking segments.
Trading and investment banking – Trading and investment banking income consists of income earned related to the Company’s trading securities portfolio, including futures hedging, dividends, bond underwriting, and other securities incomes. The vast majority of this revenue is recognized in accordance with ASC 320, Investments–Debt Securities , and ASC 321, Investments–Equity Securities , and is out of the scope of ASC 606. A portion of trading and investment banking represents fees earned for management fees, commissions, and underwriting of corporate bond issuances. The performance obligations related to these fees include reviewing the credit worthiness of the customer, ensuring appropriate regulatory approval and participating in due diligence. The fees are fixed per the bond prospectus and the performance obligations are satisfied upon registration approval of the bonds by the applicable regulatory agencies. Revenue is recognized at the point in time upon completion of service and when approval is granted by the regulators.
Service charges on deposits – Service charges on deposit accounts represent monthly analysis fees recognized for the services related to customer deposit accounts, including account maintenance and depository transactions processing fees. Commercial Banking and Institutional Banking depository accounts charge fees in accordance with the customer’s pricing schedule while Personal Banking account holders are generally charged a flat service fee per month. Deposit service charges for the healthcare accounts included in the Institutional Banking segment are priced according to either standard pricing schedules with individual account holders or according to service agreements between the Company and employer groups or third-party administrators. The Company satisfies the performance obligation related to providing depository accounts monthly as transactions are processed and deposit service charge revenue is recorded monthly. These fees are recognized within all Business Segments.
Insurance fees and commissions – Insurance fees and commissions includes all insurance-related fees earned, including commissions for individual life, variable life, group life, health, group health, fixed annuity, and variable annuity insurance contracts. The performance obligations related to these revenues primarily represent the placement of insurance policies with the insurance company partners. The fees are based on the contracts with insurance company partners and the performance obligations are satisfied when the terms of the policy have been agreed to and the insurance policy becomes effective.
Brokerage fees – Brokerage fees represent income earned related to providing brokerage transaction services, including commissions on equity and commodity trades, and fees for investment management, advisory and administration. The performance obligations related to transaction services are executing the specified trade and are priced according to the customer’s fee schedule. Such income is recognized at a point in time as the trade occurs and the performance obligation is fulfilled. The performance obligations related to investment management, advisory and administration include allocating customer assets across a wide range of mutual funds and other investments, on-going account monitoring and re-balancing of the portfolio. These performance obligations are satisfied over time and the related revenue is calculated monthly based on the assets under management of each customer. All material performance obligations are satisfied as of the end of each accounting period.
Bankcard fees – Bankcard fees primarily represent income earned from interchange revenue from MasterCard and Visa for the Company’s processing of debit, credit, HSA, and flexible spending account transactions. Additionally, the Company earns income and incentives related to various referrals of customers to card programs. The performance obligation for interchange revenue is the processing of each transaction through the Company’s access to the banking system. This performance obligation is completed for each individual transaction and income is recognized per transaction in accordance with interchange rates established by MasterCard and Visa. The performance obligations for various referral and incentive programs include either referring customers to certain card products or issuing exclusively branded cards for certain customer segments. The pricing of these incentive and referral programs are in accordance with the agreement with the individual card partner. These performance obligations are completed as the referrals are made or over a period of time when the Company is exclusively issuing branded cards. For the three months ended March 31, 2026 and March 31, 2025 , the Company had $ 12.2 millio n and $ 11.8 million of expense, respectively, recorded within the Bankcard fees line on the Company’s

 
45

 

Consolidated Statements of Income related to rebates and rewards programs that are outside of the scope of ASC 606. All material performance obligations are satisfied as of the end of each accounting period.
Investment securities gains, net – In the regular course of business, the Company recognizes gains and losses on the sale of available-for-sale securities. Additionally, the Company recognizes gains and losses on equity securities with readily determinable fair values and equity securities without readily determinable fair values. These gains and losses are recognized in accordance with ASC 320, Investments–Debt Securities, and ASC 321, Investments–Equity Securities , and are outside of the scope of ASC 606.
Other income – The Company recognizes other miscellaneous income through a variety of other revenue streams, the most material of which include letter of credit fees, certain loan origination fees, gains on the sale of assets, derivative income, and bank-owned and company-owned life insurance income. These revenue streams are outside of the scope of ASC 606 and are recognized in accordance with the applicable U.S. GAAP. The remainder of Other income is primarily earned through transactions with personal banking customers, including wire transfer service charges, stop payment charges, and fees for items like money orders and cashier’s checks. The performance obligations of these types of fees are satisfied as transactions are completed and revenue is recognized upon transaction execution according to established fee schedules with the customers.
The Company had no material contract assets, contract liabilities, or remaining performance obligations as of March 31, 2026 . Total receivables from revenue recognized under the scope of ASC 606 were $ 113.2 mill ion and $ 116.1 million as of March 31, 2026 and December 31, 2025, respectively. These receivables are included as part of the Other assets line on the Company’s Consolidated Balance Sheets.
The following tables depict the disaggregation of revenue according to revenue stream and Business Segment for the three months ended March 31, 2026 and March 31, 2025. As stated in Note 8, “Business Segment Reporting,” for comparability purposes, amounts in all periods are based on methodologies in effect at March 31, 2026 and previously reported results have been reclassified in this Form 10-Q to conform to the Company’s current organizational structure.
Disaggregated revenue is as follows (in thousands):
 

 

 

Three Months Ended March 31, 2026

 

NONINTEREST INCOME

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Revenue (Expense) out of Scope of ASC 606

 

 

Total

 

Trust and securities processing

 

$

761

 

 

$

73,325

 

 

$

20,581

 

 

$

—

 

 

$

94,667

 

Trading and investment banking

 

 

—

 

 

 

122

 

 

 

—

 

 

 

7,618

 

 

 

7,740

 

Service charges on deposit accounts

 

 

16,144

 

 

 

10,857

 

 

 

2,441

 

 

 

32

 

 

 

29,474

 

Insurance fees and commissions

 

 

—

 

 

 

—

 

 

 

255

 

 

 

—

 

 

 

255

 

Brokerage fees

 

 

87

 

 

 

18,365

 

 

 

2,637

 

 

 

—

 

 

 

21,089

 

Bankcard fees

 

 

26,086

 

 

 

7,894

 

 

 

7,071

 

 

 

( 12,173

)

 

 

28,878

 

Investment securities gains, net

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,046

 

 

 

3,046

 

Other

 

 

1,164

 

 

 

738

 

 

 

842

 

 

 

16,900

 

 

 

19,644

 

Total Noninterest income

 

$

44,242

 

 

$

111,301

 

 

$

33,827

 

 

$

15,423

 

 

$

204,793

 

 

 
46

 

 

 

 

Three Months Ended March 31, 2025

 

NONINTEREST INCOME

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Revenue (Expense) out of Scope of ASC 606

 

 

Total

 

Trust and securities processing

 

$

479

 

 

$

61,248

 

 

$

18,054

 

 

$

—

 

 

$

79,781

 

Trading and investment banking

 

 

—

 

 

 

329

 

 

 

—

 

 

 

5,582

 

 

 

5,911

 

Service charges on deposit accounts

 

 

14,581

 

 

 

10,859

 

 

 

1,978

 

 

 

39

 

 

 

27,457

 

Insurance fees and commissions

 

 

—

 

 

 

—

 

 

 

178

 

 

 

—

 

 

 

178

 

Brokerage fees

 

 

67

 

 

 

15,372

 

 

 

2,663

 

 

 

—

 

 

 

18,102

 

Bankcard fees

 

 

24,164

 

 

 

7,242

 

 

 

6,683

 

 

 

( 11,796

)

 

 

26,293

 

Investment securities losses, net

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 4,782

)

 

 

( 4,782

)

Other

 

 

1,279

 

 

 

682

 

 

 

782

 

 

 

10,515

 

 

 

13,258

 

Total Noninterest income

 

$

40,570

 

 

$

95,732

 

 

$

30,338

 

 

$

( 442

)

 

$

166,198

 

 
 

 
10. Commitments, Contingencies and Guarantees
In the normal course of business, the Company is a party to financial instruments with off-balance-sheet risk in order to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit, commercial letters of credit, standby letters of credit, and futures contracts. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Consolidated Balance Sheets. The contractual or notional amount of those instruments reflects the extent of involvement the Company has in particular classes of financial instruments. Many of the commitments expire without being drawn upon; therefore, the total amount of these commitments does not necessarily represent the future cash requirements of the Company.
The Company’s exposure to credit loss in the event of nonperformance by the counterparty to the financial instruments for commitments to extend credit, commercial letters of credit, and standby letters of credit is represented by the contractual or notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.
The following table summarizes the Company’s off-balance sheet financial instruments as described above (in thousands):
 

 

 

Contractual or Notional Amount

 

 

 

March 31,

 

 

December 31,

 

 

 

2026

 

 

2025

 

Commitments to extend credit for loans (excluding credit card loans)

 

$

18,049,199

 

 

$

17,819,711

 

Commitments to extend credit under credit card loans

 

 

5,163,320

 

 

 

5,994,640

 

Commercial letters of credit

 

 

2,144

 

 

 

217

 

Standby letters of credit

 

 

483,578

 

 

 

468,384

 

Forward contracts

 

 

151,279

 

 

 

119,978

 

Spot foreign exchange contracts

 

 

67,479

 

 

 

34,233

 

Commitments to extend credit for securities purchased under agreements to resell

 

 

876,000

 

 

 

191,000

 

 
Allowance for Credit Losses on Off-Balance Sheet Credit Exposure
The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancelable by the Company. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The estimate is based on expected

 
47

 

utilization rates by portfolio segment. Utilization rates are influenced by historical trends and current conditions. The expected utilization rates are applied to the total commitment to determine the expected amount to be funded. The allowance for off-balance sheet credit exposure is calculated by applying portfolio segment expected credit loss rates to the expected amount to be funded.
The following categories of off-balance sheet credit exposures have been identified:
Revolving Lines of Credit: includes commercial, construction, agricultural, personal, and home-equity. Risks inherent to revolving lines of credit often are related to the susceptibility of an individual or business experiencing unpredictable cash flow or financial troubles, thus leading to payment default. During these financial troubles, the borrower could have less than desirable assets collateralizing the revolving line of credit. The financial strain the borrower is experiencing could lead to drawing against the line without the ability to pay the line down.
Non-Revolving Lines of Credit: includes commercial and personal. Lines that do not carry a revolving feature are generally associated with a specific expenditure or project, such as to purchase equipment or the construction of real estate. The predominate risk associated with non-revolving lines is the diversion of funds for other expenditures. If the funds get diverted, the contributory value to collateral suffers.
Letters of Credit: includes standby letters of credit. Generally, a standby letter of credit is established to provide assurance to the beneficiary that the applicant will perform certain obligations arising out of a separate transaction between the beneficiary and the applicant. These obligations might be the performance of a service or delivery of a product. If the obligations are not met, it gives the beneficiary, the right to draw on the letter of credit.
The ACL for off-balance sheet credit exposures was $ 5.7 million at both March 31, 2026 and December 31, 2025, and was recorded in the Accrued expenses and taxes line of the Company’s Consolidated Balance Sheets. For the three months ended March 31, 2026, there was no provision recorded for off-balance sheet credit exposures. As part of the acquisition of HTLF, the Company recorded an ACL of $ 3.6 million related to acquired off-balance sheet credit exposures as of the Acquisition Date. Additionally, provision for off-balance sheet credit exposures of $ 500 thousand was recorded for the three months ended March 31, 2025 . Provision for off-balance sheet credit exposures is recorded in the Provision for credit losses line of the Company’s Consolidated Statements of Income.

 
11. Derivatives and Hedging Activities
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s loans and borrowings. The Company also has interest rate and commodity derivatives that result from a service provided to certain qualifying customers and, therefore, are not used to manage interest rate risk of the Company’s assets or liabilities. The Company has entered into an offsetting position for each of these derivative instruments with a matching instrument from another financial institution in order to minimize its net risk exposure resulting from such transactions.
Fair Values of Derivative Instruments on the Consolidated Balance Sheets
The table below presents the fair value of the Company’s derivative financial instruments as of March 31, 2026 and December 31, 2025. The Company’s derivative assets and derivative liabilities are located within Other assets and Other liabilities, respectively, on the Company’s Consolidated Balance Sheets.
Derivative fair values are determined using valuation techniques including discounted cash flow analysis on the expected cash flows from each derivative. This analysis reflects the contractual terms of the derivatives,

 
48

 

including the period to maturity, and uses observable market-based inputs, including interest rate curves, foreign exchange rates, and implied volatilities. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.
This table provides a summary of the fair value of the Company’s derivative assets and liabilities as of March 31, 2026 and December 31, 2025 ( in thousands ):

 

 

Derivative Assets

 

 

Derivative Liabilities

 

 

 

March 31,

 

 

December 31,

 

 

March 31,

 

 

December 31,

 

Fair Value

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Interest Rate Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments

 

$

114,918

 

 

$

126,423

 

 

$

118,641

 

 

$

130,122

 

Derivatives designated as hedging instruments

 

 

123,773

 

 

 

148,550

 

 

 

—

 

 

 

36

 

Total interest rate derivatives

 

 

238,691

 

 

 

274,973

 

 

 

118,641

 

 

 

130,158

 

Commodity Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments

 

 

27,908

 

 

 

6,356

 

 

 

27,788

 

 

 

6,294

 

Total commodity derivatives

 

 

27,908

 

 

 

6,356

 

 

 

27,788

 

 

 

6,294

 

Total

 

$

266,599

 

 

$

281,329

 

 

$

146,429

 

 

$

136,452

 

 
Fair Value Hedges of Interest Rate Risk
The Company is exposed to changes in the fair value of certain of its fixed-rate assets and liabilities due to changes in interest rates. Interest rate swaps designated as fair value hedges involve making fixed rate payments to a counterparty in exchange for the Company receiving variable rate payments over the life of the agreements without the exchange of the underlying notional amount. As of both March 31, 2026 and December 31, 2025 , the Company did no t have any interest rate swaps that were designated as fair value hedges of interest rate risk.
During 2022 and 2023, the Company terminated 10 fair value hedges of interest rate risk associated with the Company's municipal bond securities. For the three months ended March 31, 2026 and 2025 the Company reclassified $ 1.7 million and $ 1.2 million, respectively, from AOCI to Interest income in connection with these terminated hedges. The unrealized gain on the terminated fair value hedges remaining in AOCI was $ 45.1 million net of tax, and $ 46.7 million net of tax, as of March 31, 2026 and December 31, 2025, respectively. The hedging adjustments will be amortized through the contractual maturity date of each respective hedged item.
For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in Interest income in the Consolidated Statements of Income.
Cash Flow Hedges of Interest Rate Risk
The Company’s objective in using interest rate derivatives is to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps, floors, and floor spreads as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of March 31, 2026 and December 31, 2025 , the Company had two interest rate swaps that were designated as cash flow hedges of interest rate risk associated with the Company’s variable-rate subordinated debentures issued by Marquette Capital Trusts III and IV. These swaps had an aggregate notional amount of $ 51.5 million at both March 31, 2026 and December 31, 2025.
Interest rate floors designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty if interest rates fall below the strike rate on the contract in exchange for an upfront premium. Interest

 
49

 

rate floor spreads designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty if interest rates fall below the purchased floor rate on the contract in exchange for an upfront premium, and involve payment of variable-rate amounts to the counterparty if interest rates fall below the sold floor rate on the contract. As of both March 31, 2026 and December 31, 2025 , the Company had 13 interest rate floors and floor spreads with an aggregate notional amount of $ 3.0 billion that were designated as cash flow hedges of interest rate risk.
For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in AOCI and is subsequently reclassified into interest expense and interest income in the period during which the hedged forecasted transaction affects earnings. Amounts reported in AOCI related to interest rate swap derivatives will be reclassified to Interest expense as interest payments are received or paid on the Company’s hedged items. Amounts reported in AOCI related to interest rate floor and floor spread derivatives will be reclassified to Interest income as interest payments are received or paid on the Company’s hedged items. The Company expects to reclassify $ 0.6 million from AOCI as a reduction to Interest expense and $ 3.7 million from AOCI as a reduction to Interest income during the next 12 months. As of March 31, 2026 , the Company is hedging its exposure to the variability in future cash flows for forecasted transactions over a maximum period of 10.5 years.
Non-designated Hedges
The remainder of the Company’s derivatives are not designated in qualifying hedging relationships. Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain customers.
Interest Rate Derivatives
The Company executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously offset by interest rate swaps that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. The changes in the fair value of both the customer swaps and the offsetting swaps are recognized in Other noninterest income in the Consolidated Statements of Income. As of March 31, 2026 , the Company had 836 interest rate swaps with an aggregate notional amount of $ 12.0 billion related to this program. As of December 31, 2025 , the Company had 830 interest rate swaps with an aggregate notional amount of $ 11.7 billion.
Commodity Derivatives
The Company executes commodity swap and option contracts with commercial banking customers to facilitate their respective risk management strategies. The Company simultaneously enters into an offsetting contract with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the commodity swaps and option contracts associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. The changes in the fair value of both the customer swaps and the offsetting swaps are recognized in Other noninterest income in the Consolidated Statements of Income. As of March 31, 2026, the Company had 164 commodity swaps and option contracts with an aggregate remaining volume of 4.4 million oil barrels and 31.9 million British Thermal Units related to this program. As of December 31, 2025 , the Company had 26 commodity swaps and option contracts with an aggregate remaining volume of 2.1 million oil barrels and 3.6 million British Thermal Units.

 
50

 

Effect of Derivative Instruments on the Consolidated Statements of Income and Accumulated Other Comprehensive Income
This table provides a summary of the amount of gain or loss recognized in Other noninterest income in the Consolidated Statements of Income related to the Company’s derivative assets and liabilities for the three months ended March 31, 2026 and March 31, 2025 (in thousands) :

 

 

Amount of (Loss) Gain Recognized

 

 

 

For the Three Months Ended

 

 

 

March 31,

 

 

March 31,

 

 

 

2026

 

 

2025

 

Interest Rate Derivatives

 

 

 

 

 

 

Derivatives not designated as hedging instruments

 

$

( 29

)

 

$

( 90

)

Total

 

$

( 29

)

 

$

( 90

)

Commodity Derivatives

 

 

 

 

 

 

Derivatives not designated as hedging instruments

 

$

76

 

 

$

—

 

Total

 

$

76

 

 

$

—

 

 
These tables provide a summary of the effect of hedges on AOCI in the Consolidated Statements of Comprehensive Income related to the Company’s derivative assets and liabilities for the three months ended March 31, 2026 and March 31, 2025 (in thousands) :
 

 

 

For the Three Months Ended March 31, 2026

 

Derivatives in Cash Flow Hedging Relationships

 

(Loss) Gain Recognized in OCI on Derivative

 

 

(Loss) Gain Recognized in OCI Included Component

 

 

Gain Recognized in OCI Excluded Component

 

 

(Loss) Gain Reclassified from AOCI into Earnings

 

 

(Loss) Gain Reclassified from AOCI into Earnings Included Component

 

 

Loss Reclassified from AOCI into Earnings Excluded Component

 

Interest rate floors and floor spreads

 

$

( 16,250

)

 

$

( 20,686

)

 

$

4,436

 

 

$

( 1,109

)

 

$

( 531

)

 

$

( 578

)

Interest rate swaps

 

 

197

 

 

 

197

 

 

 

—

 

 

 

155

 

 

 

155

 

 

 

—

 

Total

 

$

( 16,053

)

 

$

( 20,489

)

 

$

4,436

 

 

$

( 954

)

 

$

( 376

)

 

$

( 578

)

 

 

 

For the Three Months Ended March 31, 2025

 

Derivatives in Cash Flow Hedging Relationships

 

Gain (Loss) Recognized in OCI on Derivative

 

 

Gain (Loss) Recognized in OCI Included Component

 

 

Loss Recognized in OCI Excluded Component

 

 

(Loss) Gain Reclassified from AOCI into Earnings

 

 

(Loss) Gain Reclassified from AOCI into Earnings Included Component

 

 

Loss Reclassified from AOCI into Earnings Excluded Component

 

Interest rate floors and floor spreads

 

$

23,735

 

 

$

45,152

 

 

$

( 21,417

)

 

$

( 1,395

)

 

$

( 817

)

 

$

( 578

)

Interest rate swaps

 

 

( 1,089

)

 

 

( 1,089

)

 

 

—

 

 

 

243

 

 

 

243

 

 

 

—

 

Total

 

$

22,646

 

 

$

44,063

 

 

$

( 21,417

)

 

$

( 1,152

)

 

$

( 574

)

 

$

( 578

)

 
 

Credit-risk-related Contingent Features
The Company has agreements with certain of its derivative counterparties that contain a provision that if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.

 
51

 

As of March 31, 2026 , the termination value of derivatives in a net liability position, which includes accrued interest, related to these agreements was $ 11.3 million. The Company has minimum collateral posting thresholds with certain of its derivative counterparties. At March 31, 2026, the Company had posted $ 10.6 million of collateral. If the Company had breached any of these provisions at March 31, 2026 , it could have been required to settle its obligations under the agreements at the termination value.

12. Fair Value Measurements
The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2026, and December 31, 2025, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value.
Fair values determined by Level 1 inputs utilize quoted prices in active markets for identical assets and liabilities that the Company has the ability to access. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the hierarchy. In such cases, the fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Assets and liabilities measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025 (in thousands):

 

 

Fair Value Measurement at March 31, 2026

 

Description

 

March 31, 2026

 

 

Quoted Prices in Active Markets for Identical Assets (Level 1)

 

 

Significant Other Observable Inputs (Level 2)

 

 

Significant Unobservable Inputs (Level 3)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

U.S. Agencies

 

 

5,397

 

 

 

—

 

 

 

5,397

 

 

 

—

 

Mortgage-backed

 

 

5,172

 

 

 

—

 

 

 

5,172

 

 

 

—

 

State and political subdivisions

 

 

6,123

 

 

 

—

 

 

 

6,123

 

 

 

—

 

Corporates

 

 

7,086

 

 

 

7,086

 

 

 

—

 

 

 

—

 

Trading – other

 

 

427

 

 

 

427

 

 

 

—

 

 

 

—

 

Trading securities

 

 

24,205

 

 

 

7,513

 

 

 

16,692

 

 

 

—

 

U.S. Treasury

 

 

2,257,713

 

 

 

2,257,713

 

 

 

—

 

 

 

—

 

U.S. Agencies

 

 

49,968

 

 

 

—

 

 

 

49,968

 

 

 

—

 

Mortgage-backed

 

 

8,287,873

 

 

 

—

 

 

 

8,287,873

 

 

 

—

 

State and political subdivisions

 

 

2,371,456

 

 

 

—

 

 

 

2,371,456

 

 

 

—

 

Corporates

 

 

139,681

 

 

 

139,681

 

 

 

—

 

 

 

—

 

Collateralized loan obligations

 

 

554,195

 

 

 

—

 

 

 

554,195

 

 

 

—

 

Available-for-sale securities

 

 

13,660,886

 

 

 

2,397,394

 

 

 

11,263,492

 

 

 

—

 

Equity securities with readily determinable fair values

 

 

12,604

 

 

 

12,604

 

 

 

—

 

 

 

—

 

Derivatives

 

 

266,599

 

 

 

—

 

 

 

266,599

 

 

 

—

 

Total

 

$

13,964,294

 

 

$

2,417,511

 

 

$

11,546,783

 

 

$

—

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives

 

$

146,429

 

 

$

—

 

 

$

146,429

 

 

$

—

 

Securities sold not yet purchased

 

 

8,290

 

 

 

—

 

 

 

8,290

 

 

 

—

 

Total

 

$

154,719

 

 

$

—

 

 

$

154,719

 

 

$

—

 

 

 
52

 

 

 

Fair Value Measurement at December 31, 2025

 

Description

 

December 31, 2025

 

 

Quoted Prices in Active Markets for Identical Assets (Level 1)

 

 

Significant Other Observable Inputs (Level 2)

 

 

Significant Unobservable Inputs (Level 3)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

$

2,636

 

 

$

2,636

 

 

$

—

 

 

$

—

 

U.S. Agencies

 

 

13,489

 

 

 

—

 

 

 

13,489

 

 

 

—

 

State and political subdivisions

 

 

3,697

 

 

 

—

 

 

 

3,697

 

 

 

—

 

Corporates

 

 

2,192

 

 

 

2,192

 

 

 

—

 

 

 

—

 

Trading – other

 

 

317

 

 

 

317

 

 

 

—

 

 

 

—

 

Trading securities

 

 

22,331

 

 

 

5,145

 

 

 

17,186

 

 

 

—

 

U.S. Treasury

 

 

2,320,815

 

 

 

2,320,815

 

 

 

—

 

 

 

—

 

U.S. Agencies

 

 

62,370

 

 

 

—

 

 

 

62,370

 

 

 

—

 

Mortgage-backed

 

 

8,167,873

 

 

 

—

 

 

 

8,167,873

 

 

 

—

 

State and political subdivisions

 

 

2,446,588

 

 

 

—

 

 

 

2,446,588

 

 

 

—

 

Corporates

 

 

177,115

 

 

 

177,115

 

 

 

—

 

 

 

—

 

Collateralized loan obligations

 

 

534,380

 

 

 

—

 

 

 

534,380

 

 

 

—

 

Available for sale securities

 

 

13,709,141

 

 

 

2,497,930

 

 

 

11,211,211

 

 

 

—

 

Equity securities with readily determinable fair values

 

 

14,690

 

 

 

14,690

 

 

 

—

 

 

 

—

 

Derivatives

 

 

281,329

 

 

 

—

 

 

 

281,329

 

 

 

—

 

Total

 

$

14,027,491

 

 

$

2,517,765

 

 

$

11,509,726

 

 

$

—

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives

 

$

136,452

 

 

$

—

 

 

$

136,452

 

 

$

—

 

Securities sold not yet purchased

 

 

4,052

 

 

 

—

 

 

 

4,052

 

 

 

—

 

Total

 

$

140,504

 

 

$

—

 

 

$

140,504

 

 

$

—

 

Valuation methods for instruments measured at fair value on a recurring basis
The following methods and assumptions were used to estimate the fair value of each class of financial instruments measured on a recurring basis:
Trading Securities Fair values for trading securities (including financial futures), are based on quoted market prices where available. If quoted market prices are not available, fair values are based on quoted market prices for similar securities.
Securities Available for Sale Fair values are based on quoted market prices or dealer quotes, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. Prices are provided by third-party pricing services and are based on observable market inputs. On an annual basis, the Company compares a sample of these prices to other independent sources for the same securities. Additionally, throughout the year, if securities are sold, comparisons are made between the pricing services prices and the market prices at which the securities were sold. Variances are analyzed, and, if appropriate, additional research is conducted with the third-party pricing services. Based on this research, the pricing services may affirm or revise their quoted price. No significant adjustments have been made to the prices provided by the pricing services. The pricing services also provide documentation on an ongoing basis that includes reference data, inputs and methodology by asset class, which is reviewed to ensure that security placement within the fair value hierarchy is appropriate.
Equity securities with readily determinable fair values Fair values are based on quoted market prices.
Derivatives Fair values are determined using valuation techniques including discounted cash flow analysis on the expected cash flows from each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, foreign

 
53

 

exchange rates, and implied volatilities. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.
Securities sold not yet purchased Fair values are based on quoted market prices or dealer quotes, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. Prices are provided by third-party pricing services and are based on observable market inputs.
Assets measured at fair value on a non-recurring basis as of March 31, 2026 and December 31, 2025 (in thousands):
 

 

 

Fair Value Measurement at March 31, 2026 Using

 

Description

 

March 31, 2026

 

 

Quoted Prices in Active Markets for Identical Assets (Level 1)

 

 

Significant Other Observable Inputs (Level 2)

 

 

Significant Unobservable Inputs (Level 3)

 

 

Total (Losses) Gains Recognized During the Three Months Ended March 31

 

Collateral dependent assets

 

$

56,390

 

 

$

—

 

 

$

—

 

 

$

56,390

 

 

$

( 17,333

)

Other real estate owned

 

 

354

 

 

 

—

 

 

 

—

 

 

 

354

 

 

 

8

 

Total

 

$

56,744

 

 

$

—

 

 

$

—

 

 

$

56,744

 

 

$

( 17,325

)

 

 

Fair Value Measurement at December 31, 2025 Using

 

Description

 

December 31, 2025

 

 

Quoted Prices in Active Markets for Identical Assets (Level 1)

 

 

Significant Other Observable Inputs (Level 2)

 

 

Significant Unobservable Inputs (Level 3)

 

 

Total (Losses) Gains Recognized During the Twelve Months Ended December 31

 

Collateral dependent assets

 

$

70,012

 

 

$

—

 

 

$

—

 

 

$

70,012

 

 

$

( 29,420

)

Other real estate owned

 

 

3,009

 

 

 

—

 

 

 

—

 

 

 

3,009

 

 

 

178

 

Total

 

$

73,021

 

 

$

—

 

 

$

—

 

 

$

73,021

 

 

$

( 29,242

)

Valuation methods for instruments measured at fair value on a non-recurring basis
The following methods and assumptions were used to estimate the fair value of each class of financial instruments measured on a non-recurring basis:

Collateral Dependent Assets Collateral dependent assets are assets evaluated as part of the ACL on an individual basis. Those assets for which there is an associated allowance are considered financial assets measured at fair value on a non-recurring basis. Adjustments are recorded on certain assets to reflect write-downs that are based on the external appraised value of the underlying collateral. The external appraisals are generally based on recent sales of comparable properties which are then adjusted for the unique characteristics of the property being valued. In the case of non-real estate collateral, reliance is placed on a variety of sources, including external estimates of value and judgments based on the experience and expertise of internal specialists within the Company’s property management group and the Company’s credit department. The valuation of collateral dependent assets are reviewed on a quarterly basis. Because many of these inputs are not observable, the measurements are classified as Level 3.
Other real estate owned Other real estate owned consists of loan collateral which has been repossessed through foreclosure. This collateral is comprised of commercial and residential real estate and other non-real estate

 
54

 

property, including auto, recreational and marine vehicles. Other real estate owned is recorded as held for sale initially at the fair value of the collateral less estimated selling costs. The initial valuation of the foreclosed property is obtained through an appraisal process similar to the process described in the collateral dependent assets paragraph above. Subsequent to foreclosure, valuations are reviewed quarterly and updated periodically, and the assets may be marked down further, reflecting a new cost basis. Fair value measurements may be based upon appraisals, third-party price opinions, or internally developed pricing methods and those measurements are classified as Level 3.
Fair value disclosures require disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis.
The estimated fair value of the Company’s financial instruments at March 31, 2026 and December 31, 2025 are as follows (in thousands):
 

 

 

Fair Value Measurement at March 31, 2026 Using

 

 

 

Carrying Amount

 

 

Quoted Prices in Active Markets for Identical Assets (Level 1)

 

 

Significant Other Observable Inputs (Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

 

Total
Estimated
Fair Value

 

FINANCIAL ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and short-term investments

 

$

7,915,788

 

 

$

6,391,119

 

 

$

1,524,669

 

 

$

—

 

 

$

7,915,788

 

Securities available for sale

 

 

13,660,886

 

 

 

2,397,394

 

 

 

11,263,492

 

 

 

—

 

 

 

13,660,886

 

Securities held to maturity (exclusive of allowance for credit losses)

 

 

5,703,238

 

 

 

—

 

 

 

5,172,564

 

 

 

—

 

 

 

5,172,564

 

Trading securities

 

 

24,205

 

 

 

7,513

 

 

 

16,692

 

 

 

—

 

 

 

24,205

 

Other securities

 

 

685,590

 

 

 

12,604

 

 

 

672,986

 

 

 

—

 

 

 

685,590

 

Loans (exclusive of allowance for credit losses)

 

 

40,138,796

 

 

 

—

 

 

 

40,652,688

 

 

 

—

 

 

 

40,652,688

 

Derivatives

 

 

266,599

 

 

 

—

 

 

 

266,599

 

 

 

—

 

 

 

266,599

 

FINANCIAL LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time deposits

 

 

3,210,518

 

 

 

—

 

 

 

3,210,518

 

 

 

—

 

 

 

3,210,518

 

Other borrowings

 

 

3,550,738

 

 

 

39,082

 

 

 

3,511,656

 

 

 

—

 

 

 

3,550,738

 

Long-term debt

 

 

477,164

 

 

 

—

 

 

 

526,828

 

 

 

—

 

 

 

526,828

 

Derivatives

 

 

146,429

 

 

 

—

 

 

 

146,429

 

 

 

—

 

 

 

146,429

 

OFF-BALANCE SHEET ARRANGEMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments to extend credit for loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,631

 

Commitments to extend resell agreements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

104

 

Commercial letters of credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16

 

Standby letters of credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,330

 

 

 
55

 

 

 

Fair Value Measurement at December 31, 2025 Using

 

 

 

Carrying Amount

 

 

Quoted Prices in Active Markets for Identical Assets (Level 1)

 

 

Significant Other Observable Inputs (Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

 

Total
Estimated
Fair Value

 

FINANCIAL ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and short-term investments

 

$

9,441,175

 

 

$

7,893,082

 

 

$

1,548,093

 

 

$

—

 

 

$

9,441,175

 

Securities available for sale

 

 

13,709,141

 

 

 

2,497,930

 

 

 

11,211,211

 

 

 

—

 

 

 

13,709,141

 

Securities held to maturity (exclusive of allowance for credit losses)

 

 

5,724,227

 

 

 

—

 

 

 

5,250,465

 

 

 

—

 

 

 

5,250,465

 

Trading securities

 

 

22,331

 

 

 

5,145

 

 

 

17,186

 

 

 

—

 

 

 

22,331

 

Other securities

 

 

676,300

 

 

 

14,690

 

 

 

661,610

 

 

 

—

 

 

 

676,300

 

Loans (exclusive of allowance for credit losses)

 

 

38,781,438

 

 

 

—

 

 

 

39,041,201

 

 

 

—

 

 

 

39,041,201

 

Derivatives

 

 

281,329

 

 

 

—

 

 

 

281,329

 

 

 

—

 

 

 

281,329

 

FINANCIAL LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time deposits

 

 

3,760,862

 

 

 

—

 

 

 

3,760,862

 

 

 

—

 

 

 

3,760,862

 

Other borrowings

 

 

3,324,938

 

 

 

32,133

 

 

 

3,292,805

 

 

 

—

 

 

 

3,324,938

 

Long-term debt

 

 

474,229

 

 

 

—

 

 

 

523,545

 

 

 

—

 

 

 

523,545

 

Derivatives

 

 

136,452

 

 

 

—

 

 

 

136,452

 

 

 

—

 

 

 

136,452

 

OFF-BALANCE SHEET ARRANGEMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments to extend credit for loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,972

 

Commitments to extend resell agreements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

106

 

Commercial letters of credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

130

 

Standby letters of credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,483

 

Cash and short-term investments The carrying amounts of cash and due from banks, federal funds sold and resell agreements are reasonable estimates of their fair values.
Securities held to maturity For U.S. Treasury and mortgage-backed securities, as well as general obligation bonds in the State and political subdivision portfolio, fair values are based on quoted market prices or dealer quotes, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. Prices are provided by third-party pricing services and are based on observable market inputs. On an annual basis, the Company compares a sample of these prices to other independent sources for the same securities. Variances are analyzed, and, if appropriate, additional research is conducted with the third-party pricing services. Based on this research, the pricing services may affirm or revise their quoted price. No significant adjustments have been made to the prices provided by the pricing services. The pricing services also provide documentation on an ongoing basis that includes reference data, inputs and methodology by asset class, which is reviewed to ensure that security placement within the fair value hierarchy is appropriate. For private placement bonds in the State and political subdivision portfolio, fair values are estimated by discounting the future cash flows using current market rates.
Other securities Amount consists of FRB and FHLB stock held by the Company, equity securities with readily determinable fair values, and equity securities without readily determinable fair values, including equity-method investments and other miscellaneous investments. The carrying amount of the FRB and FHLB stock equals its fair value because the shares can only be redeemed by the FRB and FHLB at their carrying amount. Equity securities with readily determinable fair values are measured at fair value using quoted market prices. Equity securities without readily determinable fair values are carried at cost, which approximates fair value.
Loans Fair values are estimated for portfolios with similar financial characteristics. Loans are segregated by type, such as commercial, real estate, consumer, and credit card. Each loan category is further segmented into fixed and variable interest rate categories. The fair value of loans is estimated by discounting the future cash flows. The discount rates used are estimated using comparable market rates for similar types of instruments adjusted to be commensurate with the credit risk, overhead costs, and optionality of such instruments.

 
56

 

Time deposits The fair value of fixed-maturity certificates of deposit is estimated by discounting the future cash flows using the rates that are currently offered for deposits of similar remaining maturities.
Other borrowings The carrying amounts of federal funds purchased, repurchase agreements and other short-term debt are reasonable estimates of their fair value because of the short-term nature of their maturities. Federal funds purchased are classified as Level 1 based on availability of quoted market prices and repurchase agreements and other short-term debt are classified as Level 2.
Long-term debt Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate fair value of existing debt.
Other off-balance sheet instruments The fair value of loan commitments and letters of credit are determined based on the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreement and the present creditworthiness of the counterparties. Neither the fees earned during the year on these instruments nor their fair value at period-end are significant to the Company’s consolidated financial position.

13. Acquisition
On January 31, 2025 (Acquisition Date), the Company acquired all of the outstanding stock of Heartland Financial USA, Inc., a Delaware corporation (HTLF), in an all-stock transaction, issuing a total of 23.6 million shares of the Company’s common stock and 4.6 million depositary shares, each representing a 1/400th interest in a share of the Company’s 7.00 % Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A (the Series A preferred stock). Pursuant to the Agreement and Plan of Merger, dated as of April 28, 2024 , (i) HTLF merged with and into the Company, with the Company continuing as the surviving corporation and (ii) one day after the closing date of the acquisition of HTLF by the Company, HTLF’s wholly owned bank subsidiary, a Colorado-chartered bank (HTLF Bank), merged with and into UMB Bank, National Association, the Company’s national bank subsidiary (the Bank), with the Bank continuing as the surviving bank.
Total consideration for the acquisition was $ 2.9 billion, consisting of the Company’s common stock valued at $ 2.8 billion (based on the Company’s common stock price of $ 117.90 ) and the Company’s Series A preferred stock valued at $ 115.2 million (based on the Company’s Series A preferred stock price of $ 25.05 ) as of close of business on the Acquisition Date. Each HTLF common stock share was converted into 0.55 shares of the Company’s common stock. Each HTLF preferred stock share was converted into a share of the Company’s Series A preferred stock.
The acquisition of HTLF was accounted for as a business combination using the purchase method of accounting in accordance with FASB ASC Topic 805, Business Combinations. Accordingly, the purchase price was allocated based on the estimated fair market values of the assets and liabilities acquired.

 
57

 

The following table summarizes the net assets acquired (at fair value) and consideration transferred for HTLF as of January 31, 2025 (in thousands, except for per share data):
 

 

Fair Value
January 31, 2025

 

Assets

 

 

Loans, net of allowance for credit losses on loans

$

9,734,711

 

Investment securities

 

3,648,445

 

Interest-bearing due from banks

 

965,003

 

Cash and due from banks

 

174,985

 

Premises and equipment, net

 

174,579

 

Identifiable intangible assets

 

511,021

 

Other assets

 

906,712

 

Total assets acquired

$

16,115,456

 

 

 

 

Liabilities

 

 

Noninterest-bearing deposits

$

3,761,997

 

Interest-bearing deposits

 

10,586,989

 

Long-term debt

 

278,018

 

Other liabilities

 

199,532

 

Total liabilities assumed

$

14,826,536

 

 

 

 

Net identifiable assets acquired

$

1,288,920

 

Preliminary goodwill

 

1,630,209

 

Net assets acquired

$

2,919,129

 

 

 

 

Consideration

 

 

Common stock consideration:

 

 

Company's common shares issued

 

23,609

 

Purchase price per share of the Company's common stock

$

117.90

 

Fair value of common stock consideration

$

2,783,510

 

Preferred stock consideration

 

115,230

 

Stock-based compensation consideration

 

20,389

 

Fair value of total consideration transferred

$

2,919,129

 

The Company finalized its review of the fair value of the acquired assets and liabilities noted in the table above as of January 31, 2026. After December 31, 2025 but before the end of the preliminary measurement period, the Company recorded an adjustment of $ 2.2 million to the valuation allowance against certain state deferred tax assets.
 
The amount of goodwill arising from the acquisition reflects the Company’s increased market share and related synergies that are expected to result from combining the operations of UMB and HTLF. In accordance with ASC 350, Intangibles-Goodwill and Other , goodwill will not be amortized, but will be subject to at least an annual impairment test. The Company has approximately $ 44.0 million of tax-deductible goodwill that arose in previous transactions completed by HTLF which carries over. The remaining goodwill related to the acquisition is not expected to be deductible for tax purposes. Of the $ 1.6 billion in goodwill arising from the acquisition, $ 978.1 million was assigned to the Commercial Banking segment and $ 652.1 million was assigned to the Personal Banking segment. The fair value of the acquired identifiable intangible assets of $ 511.0 million is comprised of a core deposit intangible of $ 474.1 million, a customer list of $ 26.0 million and purchased credit card relationships of $ 10.9 million.
 
The following is a description of the methods used to determine the fair values of significant assets and liabilities presented above.
 

 
58

 

Loans A valuation of the loans was performed by a third party as of the Acquisition Date to assess the fair value. The fair value of loans was based on a discounted cash flow method that considered the loans’ underlying characteristics including account type, remaining terms of loan, annual interest rates or coupon, fixed or variable interest rate, past delinquencies, risk rating, timing of principal and interest payments, current market rates, loan to value ratios, loss exposure, more specifically the probability of default and loss given default, and remaining balance. Loans were aggregated according to similar characteristics when applying the valuation method.
 
The Company's accounting methods for acquired Non-PCD and PCD loans are discussed in Note 1, "Summary of Significant Accounting Policies". At the Acquisition Date, the fair value of Non-PCD loans was $ 6.7 billion, compared to the unpaid principal balance of $ 7.1 billion.
 
The following table presents the unpaid principal balance and fair value of the loans acquired in the HTLF acquisition as of the Acquisition Date ( in thousands ):
 

 

Unpaid Principal Balance

 

Fair Value

 

Non-PCD loans

$

7,067,238

 

$

6,688,190

 

PCD loans

 

3,237,332

 

 

3,046,521

 

Total loans

$

10,304,570

 

$

9,734,711

 

At the Acquisition Date, of the $ 9.7 billion of loans acquired from HTLF, $ 3.0 billion were accounted for as PCD loans.
The following table provides a summary of PCD loans purchased as part of the HTLF acquisition as of the Acquisition Date ( in thousands ):
 

 

January 31, 2025

 

Principal of PCD loans acquired

$

3,237,332

 

PCD ACL at acquisition

 

( 85,299

)

Non-credit discount on PCD loans

 

( 105,512

)

Fair value of PCD Loans

$

3,046,521

 

Investment securities The portion of the investment securities portfolio that was classified as available-for-sale was valued utilizing third-party pricing services for those securities retained and valued using the actual sales prices for those securities that were sold shortly after the close of the acquisition. The portion of the investment securities portfolio that was classified as held-to-maturity as of the Acquisition Date were priced by a third party using a discounted cash flow methodology similar to the methodology described above for the valuation of loans.
Interest-bearing due from banks and Cash and due from banks The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these assets.
 
Core deposit intangible Core deposit intangibles represent the value of relationships with deposit clients and the cost savings derived from available core deposits relative to an alternative funding source. The fair value of the core deposit intangible was estimated using a net cost savings method, a variation of the income approach. This approach considers expected client attrition rates, average life and balance inflation, alternative cost of funds, the interest cost and net maintenance cost associated with the client deposit base, and a discount rate used to discount the future economic benefits of the core deposit intangible asset to present value.
Deposits The fair value for demand and savings deposits is the amount payable on demand at the Acquisition Date. The fair value for time deposits was valued by a third party using a discounted cash flow calculation that applied interest rates currently being offered to the contractual interest rates on such time deposits.
Long-term debt The fair value of long-term debt instruments was valued by a third party based on quoted market prices for the instrument if available, or for similar instruments if not available, or by using discounted cash flow analyses, based on current incremental borrowing rates for similar types of instruments.
 

 
59

 

The Company assumed long-term debt obligations with an aggregate balance of $ 159.8 million and an aggregate fair value of $ 139.3 million as of the Acquisition Date payable to fifteen unconsolidated trusts that have issued trust preferred securities. The interest rates on the acquired trust preferred securities ranged from 5.89 % to 8.21 % as of the Acquisition Date and reset quarterly. The acquired trust preferred securities have maturity dates ranging from September 2032 to September 2037 .
 
The Company assumed $ 150.0 million in aggregate subordinated notes due September 2031 . The subordinated notes have a fixed interest rate of 2.75 % until September 2026, at which time the interest rate will reset quarterly. The subordinated notes had an acquired fair value of $ 138.8 million as of January 31, 2025.
The results of HTLF are included in the results of the Company subsequent to the Acquisition Date. Transaction costs incurred after the Acquisition Date totaled $ 140.1 million, primarily in Salaries and employee benefits and Legal and consulting in the Consolidated Statements of Income, as well as $ 62.0 million in Provision expense to establish an ACL on the HTLF loans designated as non-PCD as of the Acquisition Date (Day 1 Provision expense). Additional transaction and integration costs will be expensed in future periods as incurred.
The following unaudited pro forma information combines the historical results of HTLF and the Company. The unaudited pro forma financial information does not include the potential impacts of possible business model changes, current market conditions, revenue enhancements, expense efficiencies, or other factors. If the HTLF acquisition had been completed on January 1, 2024, total revenue would have been approximately $ 2.7 billion and $ 2.5 billion for the years ended December 31, 2025 and December 31, 2024, respectively. Net income available to common shareholders would have been approximately $ 843.3 million and $ 504.0 million, respectively, for the same periods. Basic earnings per share would have been $ 11.20 and $ 6.96 for the same periods, respectively.
The unaudited pro forma information above reflects adjustments made to exclude the impact of acquisition-related expenses of $ 142.0 million for the year ended December 31, 2025 and include such expenses in the year ended December 31, 2024. Day 1 provision expense of $ 62.0 million was included in 2024 to reflect the assumption of the acquisition timing noted above. Adjustments also included adjusting net interest income by the estimated net accretion of fair value marks on acquired loans, HTM securities, time deposits and long-term debt of $ 12.8 million and $ 153.1 million for the years ended December 31, 2025 and December 31, 2024, respectively, and adjusting noninterest expense for the estimated net amortization of intangibles and fair value marks on premises and equipment of $ 8.0 million and $ 96.0 million for the years ended December 31, 2025 and December 31, 2024, respectively.
The unaudited pro forma information is theoretical in nature and not necessarily indicative of future consolidated results of operations of the Company or the consolidated results of operations which would have resulted had the Company acquired HTLF during the periods presented.
The Company has determined that it is impractical to report the amounts of revenue and earnings of legacy HTLF since the Acquisition Date due to the integration of operations shortly after the Acquisition Date. Accordingly, reliable and separate complete revenue and earnings information is no longer available. In addition, such amounts would require significant estimates related to the proper allocation of merger cost savings that cannot be objectively made.

 

 
60

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations highlights the material changes in the results of operations and changes in financial condition of the Company for the three months ended March 31, 2026. It should be read in conjunction with the accompanying Consolidated Financial Statements, Notes to Consolidated Financial Statements and other financial information appearing elsewhere in this Form 10-Q and the Form 10-K. Results of operations for the periods included in this review are not necessarily indicative of results to be attained during any future period.
CAUTIONARY NOTICE ABOUT FORWARD-LOOKING STATEMENTS
From time to time the Company has made, and in the future will make, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “outlook,” “forecast,” “target,” “trend,” “plan,” “goal,” or other words of comparable meaning or future-tense or conditional verbs such as “may,” “will,” “should,” “would,” or “could.” Forward-looking statements convey the Company’s expectations, intentions, or forecasts about future events, circumstances, results, or aspirations, in each case as of the date such forward-looking statements are made.
This Form 10-Q, including any information incorporated by reference in this Form 10-Q, contains forward-looking statements. The Company also may make forward-looking statements in other documents that are filed or furnished with the Securities and Exchange Commission. In addition, the Company may make forward-looking statements orally or in writing to investors, analysts, members of the media, or others.
All forward-looking statements, by their nature, are subject to assumptions, risks, and uncertainties, which may change over time and many of which are beyond the Company’s control. You should not rely on any forward-looking statement as a prediction or guarantee about the future. Actual future objectives, strategies, plans, prospects, performance, conditions, or results may differ materially from those set forth in any forward-looking statement. While no list of assumptions, risks, or uncertainties could be complete, some of the factors that may cause actual results or other future events, circumstances, or aspirations to differ from those in forward-looking statements include:
• local, regional, national, or international business, economic, or political conditions or events;

• changes in laws or the regulatory environment, including as a result of financial-services legislation or regulation;

• changes in monetary, fiscal, or trade laws or policies, including as a result of actions by central banks or supranational authorities;

• the pace and magnitude of interest rate movements;

• changes in accounting standards or policies;

• shifts in investor sentiment or behavior in the securities, capital, or other financial markets, including changes in market liquidity or volatility or changes in interest or currency rates;

• changes in spending, borrowing, or saving by businesses or households;

• the Company’s ability to effectively manage capital or liquidity or to effectively attract or deploy deposits;

• changes in any credit rating assigned to the Company or its affiliates;

• adverse publicity or other reputational harm to the Company;

• changes in the Company’s corporate strategies, the composition of its assets, or the way in which it funds those assets;

 
61

 

• the Company’s ability to develop, maintain, or market products or services or to absorb unanticipated costs or liabilities associated with those products or services;

• the Company’s ability to innovate to anticipate the needs of current or future customers, to successfully compete in its chosen business lines, to increase or hold market share in changing competitive environments, or to deal with pricing or other competitive pressures;

• changes in the credit, liquidity, or other condition of the Company’s customers, counterparties, or competitors;

• the Company’s ability to effectively deal with economic, business, or market slowdowns or disruptions;

• judicial, regulatory, or administrative investigations, proceedings, disputes, or rulings that create uncertainty for, or are adverse to, the Company or the financial-services industry;

• the Company’s ability to address changing or stricter regulatory or other governmental supervision or requirements;

• the Company’s ability to maintain secure and functional financial, accounting, technology, data processing, or other operating systems or facilities, including its capacity to withstand cyber-attacks;

• the adequacy of the Company’s corporate governance, risk-management framework, compliance programs, or internal controls, including its ability to control lapses or deficiencies in financial reporting or to effectively mitigate or manage operational risk;

• the efficacy of the Company’s methods or models in assessing business strategies or opportunities or in valuing, measuring, monitoring, or managing positions or risk;

• the Company’s ability to keep pace with changes in technology that affect the Company or its customers, counterparties, or competitors, including technology changes with respects to digital assets;

• an increase of competitors that provide products or services offered by the Company, including competitors that may be subject to different regulatory standards or requirements;

• mergers, acquisitions, or dispositions, including the Company’s ability to integrate acquisitions and divest assets;

• the Company’s ability to manage the expenses associated with the merger with HTLF and the impact these expenses may have on the Company’s financial results;

• the benefits from the merger with HTLF may not be fully realized or may take longer to realize than expected;

• the Company’s ability to promptly and effectively integrate the merger of HTLF;

• the adequacy of the Company’s succession planning for key executives or other personnel;

• the Company’s ability to grow revenue, control expenses, or attract and retain qualified employees;

• natural disasters, war, terrorist activities, including instability in the Middle East and Russia's military action in Ukraine and developments in Latin America, pandemics, and their effects on economic and business environments in which the Company operates;

• macroeconomic and adverse developments and uncertainties related to the collateral effects of the collapse of, and challenges for, domestic and international banks, including the impacts to the U.S. and global economies and reputational harm to the U.S. banking system; or

• other assumptions, risks, or uncertainties described in the Notes to Consolidated Financial Statements (Item 1) and Management’s Discussion and Analysis of Financial Condition and Results of Operations (Item 2) in this Form 10-Q, in the Risk Factors (Item 1A) in the Form 10-K, or in any of the Company’s quarterly or current reports.

 
Any forward-looking statement made by the Company or on its behalf speaks only as of the date that it was made. The Company does not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except as required by applicable

 
62

 

securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that the Company may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, or Current Report on Form 8-K.
Overview
On January 31, 2025, the Company completed its previously announced acquisition of Heartland Financial, USA, Inc. (HTLF). The acquisition added assets with a fair value of approximately $16.1 billion, $9.7 billion of loans, net of the allowance for credit losses, and $14.3 billion of deposits. The combined company retains its #1 deposit market share in Missouri and now ranks in the top 10 in Colorado, New Mexico, Kansas, and Arizona.
 
The Company focuses on the following four core financial objectives. Management believes these objectives will guide its efforts to achieve its vision, to deliver the Unparalleled Customer Experience, all while seeking to improve net income and strengthen the balance sheet while undertaking prudent risk management.
 
The first financial objective is to continuously improve operating efficiencies. The Company has focused on identifying efficiencies that simplify our organizational and reporting structures, streamline back-office functions, and take advantage of synergies and newer technologies among various platforms and distribution networks. During the fourth quarter of 2025, the Company successfully completed the conversion of the technology and branding of HTLF customers. The Company has identified and expects to continue identifying ongoing efficiencies through the normal course of business that, when combined with increased revenue, will contribute to improved operating leverage. During the first quarter of 2026, total revenue increased $175.3 million, or 31.1%, as compared to the first quarter of 2025, while noninterest expense decreased $3.9 million, or 1.0%, for the same period. Included in noninterest expense for the first quarter of 2025 is $53.2 million in acquisition-related expense compared to $4.4 million in the first quarter of 2026 . Revenue is also impacted by one additional month of revenue from HTLF in 2026, including accretion and amortization of the fair value adjustments discussed in Note 13, “Acquisition” above. As part of the initiative to improve operating efficiencies, the Company continues to invest in technological advances that it believes will help management drive operating leverage in the future through improved data analysis and automation. The Company also continues to evaluate core systems and will invest in enhancements that it believes will yield operating efficiencies.
 
The second financial objective is to increase net interest income through profitable loan and deposit growth and the optimization of the balance sheet. During the first quarter of 2026, the Company had an increase in net interest income of $136.7 million, or 34.4%, from the same period in 2025. The change in net interest income was primarily driven by an additional month of HTLF operations, higher purchase accounting accretion benefits, favorable repricing of deposits and loans in conjunction with lower short-term interest rates, and increases of $7.1 billion, or 21.9%, in average loans and $4.2 billion, or 26.2% in average securities. These increases were partially offset by a decrease of $2.6 billion, or 38.4% in average interest-bearing due from banks. The funding for these assets was driven primarily by an increase of 14.5% in average deposits compared to the first quarter of 2025, reflecting strong organic growth as well as the impact of acquired HTLF balances. Average interest-bearing deposits increased 15.2%, and noninterest-bearing demand deposit balances increased 12.5% compared to the first quarter of 2025. Net interest margin, on a tax-equivalent basis, increased 42 basis points compared to the same period in 2025, driven by favorable repricing of deposits and loans in conjunction with lower short-term interest rates. Net interest spread increased 55 basis points during the same period. The Company expects to see continued volatility in the economic markets resulting from governmental responses to inflation and recessionary signs in the economy, as well as uncertainty about the impacts of the conflict in Iran and tariffs. These changing conditions could have impacts on the balance sheet and income statement of the Company for the remainder of the year.
 
The third financial objective is to grow the Company’s revenue from noninterest sources. The Company seeks to grow noninterest revenues throughout all economic and interest rate cycles, while positioning itself to benefit in periods of economic growth. Noninterest income increased $38.6 million, or 23.2%, to $204.8 million for the three months ended March 31, 2026, compared to the same period in 2025. See greater detail below under Noninterest Income. The change is partially driven by one additional month in 2026 of HTLF-related fee income from trust income, deposit service charges, and bankcard fees. The Company continues to emphasize its asset management, brokerage, bankcard services, healthcare services, and treasury management businesses. For the three months ended March 31, 2026, noninterest income represented 27.7% of total revenue, compared to 29.5% for the same period in

 
63

 

2025. The recent economic changes have impacted fee income, especially those with assets tied to market values and interest rates.
 
The fourth financial objective is effective capital management. The Company places a significant emphasis on maintaining a strong capital position, which management believes promotes investor confidence, provides access to funding sources under favorable terms, and enhances the Company’s ability to capitalize on business growth and acquisition opportunities. The Company continues to maximize shareholder value through a mix of reinvesting in organic growth, evaluating acquisition opportunities that complement the Company’s strategies, increasing dividends over time, and appropriately utilizing a share repurchase program. At March 31, 2026, the Company had $7.8 billion in total shareholders’ equity. This is an increase of $1.1 billion, or 16.0%, compared to total shareholders’ equity at March 31, 2025. At March 31, 2026, the Company had a total risk-based capital ratio of 13.53%. The Company repurchased 178,249 shares of common stock during the first quarter of 2026 at an average price of $111.62 for a total of $19.9 million. The Company also acquired shares pursuant to the share-based incentive programs during the first quarter of 2026.
Earnings Summary
The following is a summary regarding the Company’s earnings for the first quarter of 2026. The changes identified in the summary are explained in greater detail below. The Company recorded net income available to common shareholders of $255.6 million for the three-month period ended March 31, 2026, compared to net income available to common shareholders of $79.3 million for the same period a year earlier. Basic earnings per common share for the first quarter of 2026 were $3.36 per share ($3.35 per share fully-diluted) compared to $1.22 per common share ($1.21 per share fully-diluted) for the first quarter of 2025. Return on average assets and return on average common shareholders’ equity for the three-month period ended March 31, 2026 were 1.47% and 13.70%, respectively, compared to 0.54% and 5.86%, respectively, for the three-month period ended March 31, 2025.
Net interest income for the three-month period ended March 31, 2026 increased $136.7 million, or 34.4% compared to the same period in 2025. For the three-month period ended March 31, 2026, average earning assets increased by $9.6 billion, or 17.3% compared to the same period in 2025. Net interest margin, on a tax-equivalent basis, increased to 3.38% for the three-month period ended March 31, 2026, compared to 2.96%, respectively, for the same period in 2025.
The provision for credit losses decreased by $59.0 million for the three-month period ended March 31, 2026 as compared to the same period in 2025. Provision expense in 2025 included $62.0 million to establish an allowance for credit losses on the acquired loans designated as non-PCD loans at the close of the transaction. See Note 13, “Acquisition” above. The remainder of the increase in provision was driven by loan growth, portfolio credit metric changes, and changes in macro-economic metrics in the current period as compared to the prior periods. The Company’s nonperforming loans increased $50.4 million to $151.3 million at March 31, 2026, compared to March 31, 2025. The ACL on loans as a percentage of total loans increased three basis points to 1.06% as of March 31, 2026, compared to March 31, 2025. For a description of the Company’s methodology for computing the ACL, please see the summary discussion in the “Provision and Allowance for Credit Losses” section included below.
Noninterest income increased by $38.6 million, or 23.2%, for the three-month period ended March 31, 2026, compared to the same period in 2025. These changes are discussed in greater detail below under Noninterest Income.
Noninterest expense decreased by $3.9 million, or 1.0%, for the three-month period ended March 31, 2026, compared to the same period in 2025. These changes are discussed in greater detail below under Noninterest Expense.
Net Interest Income
Net interest income is a significant source of the Company’s earnings and represents the amount by which interest income on earning assets exceeds the interest expense paid on liabilities. The volume of interest-earning assets and the related funding sources, the overall mix of these assets and liabilities, and the rates paid on each affect

 
64

 

net interest income. Net interest income for the three-month period ended March 31, 2026 increased $136.7 million, or 34.4%, compared to the same period in 2025. The change in net interest income was primarily driven by an additional month of HTLF operations, higher purchase accounting accretion benefits, favorable repricing of deposits and loans in conjunction with lower short-term interest rates, and increases of $7.1 billion, or 21.9%, in average loans and $4.2 billion, or 26.2% in average securities. These increases were partially offset by a decrease of $2.6 billion, or 38.4% in average interest-bearing due from banks.
Table 1 shows the impact of earning asset rate changes compared to changes in the cost of interest-bearing liabilities. As illustrated in this table, net interest spread for the three months ended March 31, 2026 increased 55 basis points as compared to the same period in 2025. Net interest margin for the three months ended March 31, 2026 increased 42 basis points compared to the same period in 2025. The change is driven by favorable repricing of deposits and loans in conjunction with lower short-term interest rates. The cost of interest-bearing liabilities decreased 54 basis points from the first quarter of 2025 while the yield on earning assets increased one basis point compared to the same period. Earning asset balance increases have been primarily driven by higher average loans and increased securities balances, partially offset by decreased interest-bearing due from banks balances. These variances have contributed to an increase in the Company’s net interest income during 2026, as compared to results for the same period in 2025. The Company expects to see continued volatility in the economic markets and governmental responses to changes in the economy. These changing conditions could have impacts on the balance sheet and income statement of the Company for the remainder of the year. For the impact of the contribution from free funds, see the Analysis of Net Interest Margin within Table 2 below. Table 2 also illustrates how the changes in volume and interest rates have resulted in an increase in net interest income.
Table 1
AVERAGE BALANCE SHEETS/YIELDS AND RATES (tax-equivalent basis) (unaudited, dollars in thousands)
The following table presents, for the periods indicated, the average earning assets and resulting yields, as well as the average interest-bearing liabilities and resulting yields, expressed in both dollars and rates. All average balances are daily average balances. The average yield on earning assets without the tax-equivalent basis adjustment would have been 5.40% for the three-month period ended March 31, 2026, and 5.39% for the same period in 2025.

 
65

 

 

 

Three Months Ended March 31,

 

 

 

2026

 

 

 

2025

 

 

 

Average

 

 

Average

 

 

 

Average

 

 

Average

 

 

 

Balance

 

 

Yield/Rate

 

 

 

Balance

 

 

Yield/Rate

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned interest

 

$

39,383,210

 

 

 

6.52

%

 

 

$

32,309,697

 

 

 

6.62

%

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

15,654,218

 

 

 

3.76

 

 

 

 

11,728,148

 

 

 

3.40

 

Tax-exempt

 

 

4,353,635

 

 

 

4.01

 

 

 

 

4,121,569

 

 

 

3.68

 

Total securities

 

 

20,007,853

 

 

 

3.82

 

 

 

 

15,849,717

 

 

 

3.47

 

Federal funds and resell agreements

 

 

1,539,874

 

 

 

4.23

 

 

 

 

555,805

 

 

 

5.07

 

Interest-bearing due from banks

 

 

4,192,804

 

 

 

3.67

 

 

 

 

6,808,680

 

 

 

4.47

 

Other earning assets

 

 

17,354

 

 

 

6.59

 

 

 

 

20,863

 

 

 

7.56

 

Total earning assets

 

 

65,141,095

 

 

 

5.45

 

 

 

 

55,544,762

 

 

 

5.44

 

Allowance for credit losses

 

 

(417,768

)

 

 

 

 

 

 

(320,371

)

 

 

 

Other assets

 

 

5,704,489

 

 

 

 

 

 

 

4,752,484

 

 

 

 

Total assets

 

$

70,427,816

 

 

 

 

 

 

$

59,976,875

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

42,470,772

 

 

 

2.79

%

 

 

$

36,856,314

 

 

 

3.34

%

Federal funds and repurchase agreements

 

 

3,623,410

 

 

 

3.32

 

 

 

 

2,692,907

 

 

 

3.88

 

Borrowed funds

 

 

475,518

 

 

 

9.07

 

 

 

 

570,427

 

 

 

7.92

 

Total interest-bearing liabilities

 

 

46,569,700

 

 

 

2.90

 

 

 

 

40,119,648

 

 

 

3.44

 

Noninterest-bearing demand deposits

 

 

15,103,339

 

 

 

 

 

 

 

13,428,205

 

 

 

 

Other liabilities

 

 

894,926

 

 

 

 

 

 

 

861,375

 

 

 

 

Shareholders' equity

 

 

7,859,851

 

 

 

 

 

 

 

5,567,647

 

 

 

 

Total liabilities and shareholders' equity

 

$

70,427,816

 

 

 

 

 

 

$

59,976,875

 

 

 

 

Net interest spread

 

 

 

 

 

2.55

%

 

 

 

 

 

 

2.00

%

Net interest margin

 

 

 

 

 

3.38

 

 

 

 

 

 

 

2.96

 

 
 
Table 2 presents the dollar amount of change in net interest income and margin due to volume and rate. Table 2 also reflects the effect that interest-free funds have on net interest margin. The average balance of interest-free funds (total earning assets less interest-bearing liabilities) increased $3.1 billion for the three-month period ended March 31, 2026, compared to the same period in 2025. The benefit from interest-free funds decreased 13 basis points in the three-month period ended March 31, 2026, compared to the same period in 2025.

 
66

 

Table 2
ANALYSIS OF CHANGES IN NET INTEREST INCOME AND MARGIN (unaudited, dollars in thousands)
ANALYSIS OF CHANGES IN NET INTEREST INCOME

 

 

Three Months Ended

 

 

 

March 31, 2026 vs. 2025

 

 

 

Volume

 

 

Rate

 

 

Total

 

Change in interest earned on:

 

 

 

 

 

 

 

 

 

Loans

 

$

113,832

 

 

$

(8,158

)

 

$

105,674

 

Securities:

 

 

 

 

 

 

 

 

 

Taxable

 

 

35,582

 

 

 

11,421

 

 

 

47,003

 

Tax-exempt

 

 

1,714

 

 

 

2,777

 

 

 

4,491

 

Federal funds sold and resell agreements

 

 

10,440

 

 

 

(1,329

)

 

 

9,111

 

Interest-bearing due from banks

 

 

(25,289

)

 

 

(11,794

)

 

 

(37,083

)

Trading

 

 

(56

)

 

 

(43

)

 

 

(99

)

Interest income

 

 

136,223

 

 

 

(7,126

)

 

 

129,097

 

Change in interest incurred on:

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

42,571

 

 

 

(53,604

)

 

 

(11,033

)

Federal funds purchased and repurchase agreements

 

 

8,005

 

 

 

(4,097

)

 

 

3,908

 

Other borrowed funds

 

 

(1,997

)

 

 

1,492

 

 

 

(505

)

Interest expense

 

 

48,579

 

 

 

(56,209

)

 

 

(7,630

)

Net interest income

 

$

87,644

 

 

$

49,083

 

 

$

136,727

 

 
ANALYSIS OF NET INTEREST MARGIN

 

 

Three Months Ended March 31,

 

 

 

2026

 

 

2025

 

 

Change

 

Average earning assets

 

$

65,141,095

 

 

$

55,544,762

 

 

$

9,596,333

 

Interest-bearing liabilities

 

 

46,569,700

 

 

 

40,119,648

 

 

 

6,450,052

 

Interest-free funds

 

$

18,571,395

 

 

$

15,425,114

 

 

$

3,146,281

 

Free funds ratio (interest-free funds to average earning assets)

 

 

28.51

%

 

 

27.77

%

 

 

0.74

%

Tax-equivalent yield on earning assets

 

 

5.45

 

 

 

5.44

 

 

 

0.01

 

Cost of interest-bearing liabilities

 

 

2.90

 

 

 

3.44

 

 

 

(0.54

)

Net interest spread

 

 

2.55

 

 

 

2.00

 

 

 

0.55

 

Benefit of interest-free funds

 

 

0.83

 

 

 

0.96

 

 

 

(0.13

)

Net interest margin

 

 

3.38

%

 

 

2.96

%

 

 

0.42

%

 
Provision and Allowance for Credit Losses
The ACL represents management’s judgment of the total expected losses included in the Company’s loan portfolio as of the balance sheet date. The Company’s process for recording the ACL is based on the evaluation of the Company’s lifetime historical loss experience, management’s understanding of the credit quality inherent in the loan portfolio, and the impact of the current economic environment, coupled with reasonable and supportable economic forecasts.
A mathematical calculation of an estimate is made to assist in determining the adequacy and reasonableness of management’s recorded ACL. To develop the estimate, the Company follows the guidelines in ASC 326, Financial Instruments – Credit Losses . The estimate reserves for assets held at amortized cost and any related credit deterioration in the Company’s available-for-sale debt security portfolio. Assets held at amortized cost include the Company’s loan book and held-to-maturity security portfolio.

 
67

 

The process involves the consideration of quantitative and qualitative factors relevant to the specific segmentation of loans. These factors have been established over decades of financial institution experience and include economic observation and loan loss characteristics. This process is designed to produce a lifetime estimate of the losses, at a reporting date, that includes evaluation of historical loss experience, current economic conditions, reasonable and supportable forecasts, and the qualitative framework outlined by the Office of the Comptroller of the Currency in the published 2020 Interagency Policy Statement. This process allows management to take a holistic view of the recorded ACL reserve and ensure that all significant and pertinent information is considered.
The Company considers a variety of factors to ensure the safety and soundness of its estimate including a strong internal control framework, extensive methodology documentation, credit underwriting standards which encompass the Company’s desired risk profile, model validation, and ratio analysis. If the Company’s total ACL estimate, as determined in accordance with the approved ACL methodology, is either outside a reasonable range based on review of economic indicators or by comparison of historical ratio analysis, the ACL estimate is an outlier and management will investigate the underlying reason(s). Based on that investigation, issues or factors that previously had not been considered may be identified in the estimation process, which may warrant adjustments to estimated credit losses.
The ending result of this process is a recorded consolidated ACL that represents management’s best estimate of the total expected losses included in the loan portfolio, held-to-maturity securities, and credit deterioration in available-for-sale securities.
Based on the factors above, management of the Company recorded $27.0 million as provision for credit losses for the three-month period ended March 31, 2026, as compared to $86.0 million for the same period in 2025. As noted above, $62.0 million was recorded to establish an allowance for credit losses on the acquired loans designated as non-PCD loans at the close of the HTLF acquisition in the first quarter of 2025. See Note 13, “Acquisition” above. The increase in the three-month period is the result of applying the methodology for computing the ACL, coupled with the impacts of the current and forecasted economic environment. As illustrated in Table 3 below, the ACL on loans increased three basis points to 1.06% of total loans as of March 31, 2026, compared to March 31, 2025.
Table 3 presents a summary of the Company’s ACL for the three-month period ended March 31, 2026 and 2025, and for the year ended December 31, 2025. Net charge-offs were $18.9 million for the three-month period ended March 31, 2026, compared to $35.9 million for the same period in 2025. See “Credit Risk Management” under “Item 3. Quantitative and Qualitative Disclosures About Market Risk” in this report for information relating to nonaccrual loans, past due loans, restructured loans and other credit risk matters.

 
68

 

Table 3
ANALYSIS OF ALLOWANCE FOR CREDIT LOSSES (unaudited, dollars in thousands)

 

 

Three Months Ended

 

 

Year Ended

 

 

 

March 31,

 

 

December 31,

 

 

 

2026

 

 

2025

 

 

2025

 

Allowance – January 1

 

$

421,162

 

$

261,734

 

$

261,734

 

PCD allowance for credit loss at acquisition

 

 

—

 

 

 

62,126

 

 

 

85,299

 

Provision for credit losses

 

 

27,000

 

 

 

85,500

 

 

 

156,500

 

Charge-offs:

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

(3,349

)

 

 

(25,996

)

 

 

(44,645

)

Specialty lending

 

 

—

 

 

 

—

 

 

 

—

 

Commercial real estate

 

 

(10,764

)

 

 

(2,324

)

 

 

(11,792

)

Consumer real estate

 

 

(513

)

 

 

(1,229

)

 

 

(2,041

)

Consumer

 

 

(1,085

)

 

 

(742

)

 

 

(3,538

)

Credit cards

 

 

(5,876

)

 

 

(6,676

)

 

 

(25,676

)

Leases and other

 

 

—

 

 

 

—

 

 

 

(27

)

Total charge-offs

 

 

(21,587

)

 

 

(36,967

)

 

 

(87,719

)

Recoveries:

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

1,090

 

 

 

69

 

 

 

507

 

Specialty lending

 

 

—

 

 

 

—

 

 

 

—

 

Commercial real estate

 

 

3

 

 

 

—

 

 

 

196

 

Consumer real estate

 

 

19

 

 

 

16

 

 

 

275

 

Consumer

 

 

299

 

 

 

119

 

 

 

845

 

Credit cards

 

 

1,227

 

 

 

891

 

 

 

3,519

 

Leases and other

 

 

20

 

 

 

—

 

 

 

6

 

Total recoveries

 

 

2,658

 

 

 

1,095

 

 

 

5,348

 

Net charge-offs

 

 

(18,929

)

 

 

(35,872

)

 

 

(82,371

)

Allowance for credit losses – end of period

 

$

429,233

 

$

373,488

 

$

421,162

 

Allowance for credit losses on loans

 

$

425,876

 

 

$

368,922

 

 

$

419,478

 

Allowance for credit losses on held-to-maturity securities

 

 

3,357

 

 

 

4,566

 

 

 

1,684

 

Loans at end of period, net of unearned interest

 

 

40,134,325

 

 

 

35,936,281

 

 

 

38,779,408

 

Held-to-maturity securities at end of period

 

 

5,703,238

 

 

 

5,669,139

 

 

 

5,724,227

 

Total assets at amortized cost

 

 

45,837,563

 

 

 

41,605,420

 

 

 

44,503,635

 

Average loans, net of unearned interest

 

 

39,380,114

 

 

32,307,533

 

 

36,065,953

 

Allowance for credit losses on loans to loans at end of period

 

 

1.06

%

 

 

1.03

%

 

 

1.08

%

Allowance for credit losses – end of period to total assets at amortized cost

 

 

0.94

%

 

 

0.90

%

 

 

0.95

%

Allowance as a multiple of net charge-offs

 

5.59x

 

 

2.57x

 

 

5.11x

 

Net charge-offs to average loans

 

 

0.19

%

 

 

0.45

%

 

 

0.23

%

 
Noninterest Income
A key objective of the Company is the growth of noninterest income to provide a diverse source of revenue not directly tied to interest rates. Fee-based services are typically non-credit related and are not generally affected by fluctuations in interest rates.
The Company offers multiple fee-based products and services, which management believes will more closely align with customer demands. The Company is currently emphasizing fee-based products and services including trust and securities processing, bankcard, securities trading and brokerage, and cash and treasury management. Management believes that it can offer these products and services both efficiently and profitably, as most have common platforms and support structures.

 
69

 

Table 4
SUMMARY OF NONINTEREST INCOME (unaudited, dollars in thousands)

 

 

Three Months Ended

 

 

Dollar

 

 

Percent

 

 

 

March 31,

 

 

Change

 

 

Change

 

 

 

2026

 

 

2025

 

 

26-25

 

 

26-25

 

Trust and securities processing

 

$

94,667

 

 

$

79,781

 

 

$

14,886

 

 

 

18.7

%

Trading and investment banking

 

 

7,740

 

 

 

5,911

 

 

 

1,829

 

 

 

30.9

 

Service charges on deposits

 

 

29,474

 

 

 

27,457

 

 

 

2,017

 

 

 

7.3

 

Insurance fees and commissions

 

 

255

 

 

 

178

 

 

 

77

 

 

 

43.3

 

Brokerage fees

 

 

21,089

 

 

 

18,102

 

 

 

2,987

 

 

 

16.5

 

Bankcard fees

 

 

28,878

 

 

 

26,293

 

 

 

2,585

 

 

 

9.8

 

Investment securities gains (losses), net

 

 

3,046

 

 

 

(4,782

)

 

 

7,828

 

 

 

163.7

 

Other

 

 

19,644

 

 

 

13,258

 

 

 

6,386

 

 

 

48.2

 

Total noninterest income

 

$

204,793

 

 

$

166,198

 

 

$

38,595

 

 

 

23.2

%

 
Noninterest income increased by $38.6 million, or 23.2%, during the three-month period ended March 31, 2026, compared to the same period in 2025. Table 4 above summarizes the components of noninterest income and the respective year-over-year comparison for each category.
Trust and securities processing income consists of fees earned on personal and corporate trust accounts, custody of securities services, trust investments and wealth management services, mutual fund assets, and alternative asset servicing. The increase in these fees for the three-month period ended March 31, 2026, compared to the same period in 2025, was primarily due to an increase in fund services revenue, corporate trust revenue, and trust services income. For the three-month period ended March 31, 2026, fund services revenue increased $8.8 million, or 20.5%, corporate trust revenue increased $3.4 million, or 19.4%, and trust income increased $2.6 million, or 13.8%, compared to the same period in 2025. The recent volatile markets have impacted the income in this category. Since trust and securities processing fees are primarily asset-based, which are highly correlated to the change in market value of the assets, the related income for the remainder of the year will be affected by changes in the securities markets. Management continues to emphasize sales of services to both new and existing clients as well as increasing and improving the distribution channels.
Trading and investment banking income for the three-month period ended March 31, 2026 increased $1.8 million, or 30.9%, compared to the same period in 2025. This increase was largely driven by increased municipal bond trading volume.
Service charges on deposit accounts for the three-month period ended March 31, 2026 increased $2.0 million, or 7.3%, compared to the same period in 2025. This increase was largely driven by increased commercial service charge income related to one additional month in 2026 of HTLF revenue.
Brokerage fees for the three-month period ended March 31, 2026 increased $3.0 million, or 16.5%. The changes were driven by 12b-1 fees and money market share revenue.
Bankcard fees for the three-month period ended March 31, 2026 increased $2.6 million, or 9.8%, compared to the same period in 2025. This increase was driven by higher interchange income, partially offset by higher reward costs.
Investment securities gains (losses), net for the three-month period ended March 31, 2026 increased $7.8 million, or 163.7%, compared to the same period in 2025. The increase in investment securities gains was primarily driven by a $3.0 million gain on the sale of a non-marketable security in the first quarter of 2026, coupled with decreased valuations in the Company's non-marketable securities in the first quarter of 2025. The income in this category is highly correlated to the change in market value of the assets, and the related income for the remainder of the year will be affected by changes in the securities markets. The Company’s investment portfolio is continually evaluated for opportunities to improve its performance and risk profile relative to market conditions and the

 
70

 

Company’s interest rate expectations. This can result in differences from quarter to quarter in the amount of realized gains or losses on this portfolio.
Other noninterest income for the three-month period ended March 31, 2026, increased $6.4 million, or 48.2%, compared to the same period in 2025, primarily driven by a $4.3 million increase in gains recorded for recoveries of loans previously charged off by HTLF, coupled with a $1.7 million increase in bank-owned life insurance income.
Table 5
SUMMARY OF NONINTEREST EXPENSE (unaudited, dollars in thousands)

 

 

Three Months Ended

 

 

Dollar

 

 

Percent

 

 

 

March 31,

 

 

Change

 

 

Change

 

 

 

2026

 

 

2025

 

 

26-25

 

 

26-25

 

Salaries and employee benefits

 

$

219,681

 

$

221,398

 

$

(1,717

)

 

 

(0.8

)%

Occupancy, net

 

 

19,075

 

 

 

16,069

 

 

 

3,006

 

 

 

18.7

 

Equipment

 

 

13,320

 

 

 

16,948

 

 

 

(3,628

)

 

 

(21.4

)

Supplies and services

 

 

5,604

 

 

 

4,785

 

 

 

819

 

 

 

17.1

 

Marketing and business development

 

 

13,792

 

 

 

7,998

 

 

 

5,794

 

 

 

72.4

 

Processing fees

 

 

42,059

 

 

 

40,850

 

 

 

1,209

 

 

 

3.0

 

Legal and consulting

 

 

9,087

 

 

 

28,606

 

 

 

(19,519

)

 

 

(68.2

)

Bankcard

 

 

11,841

 

 

 

12,795

 

 

 

(954

)

 

 

(7.5

)

Amortization of other intangible assets

 

 

23,460

 

 

 

17,482

 

 

 

5,978

 

 

 

34.2

 

Regulatory fees

 

 

8,270

 

 

 

8,237

 

 

 

33

 

 

 

0.4

 

Other

 

 

14,694

 

 

 

9,619

 

 

 

5,075

 

 

 

52.8

 

Total noninterest expense

 

$

380,883

 

$

384,787

 

$

(3,904

)

 

 

(1.0

)%

 
Noninterest expense decreased $3.9 million, or 1.0%, for the three-month period ended March 31, 2026, respectively, compared to the same period in 2025. Table 5 above summarizes the components of noninterest expense and the respective year-over-year comparison for each category. For the first three months of 2026, noninterest expense included $4.4 million in total acquisition-related and other nonrecurring costs, compared to $53.2 million in the same period in 2025.
Salaries and employee benefits decreased by $1.7 million, or 0.8%, for the three-month period ended March 31, 2026, respectively, compared to the same period in 2025. Bonus and commission expense decreased $21.3 million, or 29.3%, for the three-month period ended March 31, 2026 compared to the same period in 2025. This decrease is offset by an increase in salary and wage expense of $13.5 million, or 12.3% and an increase in employee benefits expense of $6.1 million, or 15.9%, for the three-month period ended March 31, 2026 compared to the same period in 2025. The variances in salaries and employee benefits are primarily driven by decreased severance, retention bonuses, and change in control payments made to HTLF associates in 2025.
Occupancy expense increased $3.0 million, or 18.7%, for the three-month period ended March 31, 2026 compared to the same period in 2025, primarily due to increased depreciation expense related to assets acquired from the HTLF acquisition.
Equipment expense decreased $3.6 million, or 21.4%, for the three-month period ended March 31, 2026 compared to the same period in 2025, primarily due to decreased software maintenance and amortization expense.
Marketing and business development expense increased $5.8 million, or 72.4%, for the three-month period ended March 31, 2026 compared to the same period in 2025, driven by the timing of multiple advertising campaigns and increased travel and entertainment expense.
Legal and consulting expense decreased $19.5 million, or 68.2%, for the three-month period ended March 31, 2026 compared to the same period in 2025. The decrease is primarily due to non-recurring transaction costs associated with the acquisition in 2025.

 
71

 

Amortization of other intangible assets increased $6.0 million, or 34.2%, for the three-month period ended March 31, 2026 compared to the same period in 2025, related to the timing of the HTLF acquisition in the first quarter of 2025.
Other expense increased $5.1 million, or 52.8%, for the three-month period ended March 31, 2026 compared to the same period in 2025. The increase is driven by a $2.5 million increase in charitable contributions, $1.2 million increase in losses on the sale of other assets and expense related to other real estate owned, and $0.9 million increase in tax expense other than income tax.
Income Tax Expense
 
The Company’s effective tax rate was 21.1% for the three months ended March 31, 2026, compared to 12.6% for the same period in 2025. The increase in the effective tax rate in 2026 is mainly due to more favorable discrete tax items in 2025, including a benefit from remeasuring deferred tax assets after the HTLF acquisition increased the state marginal tax rate. Additionally, a smaller proportion of pre-tax income in 2026 was earned from tax-exempt municipal securities.
 
Strategic Lines of Business
The Company has strategically aligned its operations into the following three reportable Business Segments: Commercial Banking, Institutional Banking, and Personal Banking. The Company’s senior executive officers regularly evaluate Business Segment financial results produced by the Company’s internal reporting system in deciding how to allocate resources and assess performance for individual Business Segments. For comparability purposes, amounts in all periods are based on methodologies in effect at March 31, 2026. Previously reported results have been reclassified in this Form 10-Q to conform to the Company’s current organizational structure.
Table 6
Commercial Banking Operating Results (unaudited, dollars in thousands)

 

 

Three Months Ended

 

 

Dollar

 

 

Percent

 

 

 

March 31,

 

 

Change

 

 

Change

 

 

 

2026

 

 

2025

 

 

26-25

 

 

26-25

 

Net interest income

 

$

365,342

 

 

$

273,916

 

$

91,426

 

 

 

33.4

%

Provision for credit losses

 

 

23,777

 

 

 

66,751

 

 

 

(42,974

)

 

 

(64.4

)

Noninterest income

 

 

46,289

 

 

 

37,218

 

 

 

9,071

 

 

 

24.4

 

Noninterest expense

 

 

165,452

 

 

 

173,011

 

 

 

(7,559

)

 

 

(4.4

)

Income before taxes

 

 

222,402

 

 

 

71,372

 

 

 

151,030

 

 

 

211.6

 

Income tax expense

 

 

46,886

 

 

 

8,987

 

 

 

37,899

 

 

 

421.7

 

Net income

 

$

175,516

 

 

$

62,385

 

$

113,131

 

 

 

181.3

%

 
For the three-month period ended March 31, 2026, Commercial Banking net income increased $113.1 million, or 181.3%, to $175.5 million, compared to the same period in 2025. Net interest income increased $91.4 million, or 33.4%, for the three-month period ended March 31, 2026, compared to the same period in 2025, primarily driven by an additional month of activity from the acquisition of HTLF, as well as organic legacy-UMB loan growth, and earning asset mix changes. Provision for credit losses decreased $43.0 million for the period, driven by the acquisition of HTLF as well as portfolio metric changes and changes in macro-economic metrics in 2026 as compared to 2025. Noninterest income increased $9.1 million, or 24.4%, compared to the same period in 2025, primarily due to increases of $5.8 million in other income driven by increases in gains recorded for recoveries of loans previously charged off by HTLF and increased derivative income, $1.8 million in bankcard fees, and $1.6 million in deposit service charges. Noninterest expense decreased $7.6 million, or 4.4%, to $165.5 million for the three-month period ended March 31, 2026, compared to the same period in 2025. This decrease was driven by a decrease of $15.5 million in technology, service, and overhead expenses, partially offset by increases of $2.8 million in salaries and employee benefit expense, $2.8 million in marketing and business development, and $1.9 million in other noninterest expense.

 
72

 

Table 7
Institutional Banking Operating Results (unaudited, dollars in thousands)

 

 

Three Months Ended

 

 

Dollar

 

 

Percent

 

 

 

March 31,

 

 

Change

 

 

Change

 

 

 

2026

 

 

2025

 

 

26-25

 

 

26-25

 

Net interest income

 

$

77,287

 

 

$

61,159

 

$

16,128

 

 

 

26.4

%

Provision for credit losses

 

 

497

 

 

 

435

 

 

 

62

 

 

 

14.3

 

Noninterest income

 

 

121,829

 

 

 

103,797

 

 

 

18,032

 

 

 

17.4

 

Noninterest expense

 

 

112,931

 

 

 

107,268

 

 

 

5,663

 

 

 

5.3

 

Income before taxes

 

 

85,688

 

 

 

57,253

 

 

 

28,435

 

 

 

49.7

 

Income tax expense

 

 

18,064

 

 

 

7,210

 

 

 

10,854

 

 

 

150.5

 

Net income

 

$

67,624

 

$

50,043

 

$

17,581

 

 

 

35.1

%

 
For the three-month period ended March 31, 2026, Institutional Banking net income increased $17.6 million, or 35.1%, to $67.6 million, compared to the same period last year. Net interest income increased $16.1 million, or 26.4%, compared to the same period last year, due to an increase in funds transfer pricing resulting from higher deposit balances. Noninterest income increased $18.0 million, or 17.4%, to $121.8 million for the three-month period March 31, 2026, compared to the same period in 2025. This increase was due to increases of $12.1 million in trust and securities processing income driven by higher fund services and corporate trust revenue, $3.0 million in brokerage income due to increased 12b-1 and money market revenue, and $1.8 million in bond trading income. Noninterest expense increased $5.7 million, or 5.3%, primarily driven by increases of $3.5 million in salaries and employee benefits expense and a $1.6 million increase in technology, service, and overhead expense.
 
Personal Banking Operating Results (unaudited, dollars in thousands)
 

 

 

Three Months Ended

 

 

Dollar

 

 

Percent

 

 

 

March 31,

 

 

Change

 

 

Change

 

 

 

2026

 

 

2025

 

 

26-25

 

 

26-25

 

Net interest income

 

$

91,737

 

 

$

62,564

 

$

29,173

 

 

 

46.6

%

Provision for credit losses

 

 

2,726

 

 

 

18,814

 

 

 

(16,088

)

 

 

(85.5

)

Noninterest income

 

 

36,675

 

 

 

25,183

 

 

 

11,492

 

 

 

45.6

 

Noninterest expense

 

 

102,500

 

 

 

104,508

 

 

 

(2,008

)

 

 

(1.9

)

Income (loss) before taxes

 

 

23,186

 

 

 

(35,575

)

 

 

58,761

 

 

 

165.2

 

Income tax expense (benefit)

 

 

4,888

 

 

 

(4,480

)

 

 

9,368

 

 

 

209.1

 

Net income (loss)

 

$

18,298

 

$

(31,095

)

$

49,393

 

 

 

158.8

%

 
For the three-month period ended March 31, 2026, Personal Banking net income improved $49.4 million, or 158.8%, to net income of $18.3 million, as compared to a net loss of $31.1 million in the same period in 2025. Net interest income increased $29.2 million, or 46.6%, compared to the same period last year driven by an additional month of activity from the acquisition of HTLF, as well as organic legacy-UMB loan growth, and earning asset mix change. Provision for credit losses decreased $16.1 million for the period, driven by the acquisition of HTLF as well as by portfolio metric changes and changes in macro-economic metrics in 2026 as compared to 2025. Noninterest income increased $11.5 million, or 45.6%, for the same period primarily driven by increases of $8.2 million in investment securities gains and $2.5 million in trust and securities processing income. Noninterest expense decreased $2.0 million, or 1.9%, primarily due to a decrease of $8.1 million in technology, service, and overhead expenses. This decrease is partially offset by increases of $3.9 million in salaries and employee benefits expense and $1.4 million in marketing and business development.
Balance Sheet Analysis
Total assets of the Company decreased $419.9 million, or 0.6%, as of March 31, 2026, compared to December 31, 2025, primarily due to decreases of $1.3 billion, or 18.5%, and $216.7 million, or 22.8%, in interest-bearing due from bank and cash and due from banks, respectively, partially offset by an increase of $1.4 billion, or 3.5%, in loan balances.

 
73

 

Total assets of the Company increased $3.3 billion, or 4.8%, as of March 31, 2026, compared to March 31, 2025, primarily due to increases of $4.2 billion, or 11.7%, in loan balances and $2.8 billion, or 25.4%, in securities available for sale, partially offset by a decrease of $4.2 billion, or 42.4% in interest-bearing due from bank.
Table 9
SELECTED FINANCIAL INFORMATION (unaudited, dollars in thousands)
 

 

 

March 31,

 

 

December 31,

 

 

 

2026

 

 

2025

 

 

2025

 

Total assets

 

$

72,674,161

 

 

$

69,347,313

 

 

$

73,094,090

 

Loans, net of unearned interest

 

 

40,138,796

 

 

 

35,941,380

 

 

 

38,781,438

 

Total securities

 

 

20,073,919

 

 

 

17,295,602

 

 

 

20,131,999

 

Interest-bearing due from banks

 

 

5,655,290

 

 

 

9,811,867

 

 

 

6,940,535

 

Total earning assets

 

 

67,392,674

 

 

 

63,684,918

 

 

 

67,402,065

 

Total deposits

 

 

59,980,756

 

 

 

58,521,178

 

 

 

60,656,790

 

Total borrowed funds

 

 

4,027,902

 

 

 

3,214,363

 

 

 

3,799,167

 

Loans represent the Company’s largest source of interest income. In addition to growing the commercial loan portfolio, management believes its middle market commercial business and its consumer business, including home equity and credit card loan products, are the market niches that represent its best opportunity to cross-sell fee-related services and generate additional noninterest income for the Company.
Actual loan balances totaled $40.1 billion as of March 31, 2026, and increased $1.4 billion, or 3.5%, compared to December 31, 2025, and increased $4.2 billion, or 11.7%, compared to March 31, 2025. Compared to December 31, 2025, commercial and industrial loans increased $798.2 million, or 4.9% and commercial real estate loans increased $250.8 million, or 1.5%. Compared to March 31, 2025, commercial and industrial loans increased $2.9 billion, or 20.9% and commercial real estate loans increased $628.3 million, or 3.9%.
As of March 31, 2026 and December 31, 2025, commercial real estate loans comprised approximately 41.4% and 42.2%, respectively, of the Company's loan portfolio. Commercial real estate loans generally involve a greater degree of credit risk than consumer real estate loans because they typically have larger balances and are more affected by adverse conditions in the economy. Because payments on loans secured by commercial real estate often depend upon the successful operation and management of the properties and the businesses which operate from within them, repayment of such loans may be affected by factors outside the borrower’s control, such as adverse conditions in the real estate market or the economy or changes in government regulations. In recent years, commercial real estate markets have been particularly impacted by economic disruption and the evolution of various remote work options, which could impact the long-term performance of some types of office properties within our commercial real estate portfolio. Due to these risks, the Company is actively monitoring its exposure to commercial real estate.
Generally, these loans are made for investment and real estate development or working capital and business expansion purposes and are primarily secured by real estate with a maximum loan-to-value of 80%. Most of these properties are non-owner occupied and have guarantees as additional security. The Company’s investment CRE portfolio (which includes non-owner occupied and construction loans) totaled 26.8% and 27.5% of total Company loans as of March 31, 2026 and December 31, 2025, respectively. The average investment CRE loan was approximately $3.7 million and $3.6 million, as of March 31, 2026 and December 31, 2025, respectively.
The properties securing the commercial real estate portfolio are diverse in terms of type and geographic location. This diversity helps reduce exposure to adverse economic events that affect any single market or industry. Notwithstanding, commercial real estate loans, in general, may be more adversely impacted by conditions in the real estate market or the economy.
The following table presents the Company’s investment CRE (which includes non-owner occupied and construction loans) by industry. The table separately discloses the top five industries as a percentage of the Company’s loan portfolio as of either period presented, while the remainder are included in “Other.”

 
74

 

Table 10
 

 

 

Investment CRE loans by industry as a percentage of total Company Loans

 

 

 

March 31, 2026

 

 

December 31, 2025

 

Industrial

 

 

8.1

%

 

 

8.1

%

Multifamily

 

 

6.8

 

 

 

6.7

 

Office building

 

 

3.3

 

 

 

3.6

 

Retail

 

 

2.2

 

 

 

2.3

 

Hotel

 

 

1.9

 

 

 

2.0

 

Other

 

 

4.5

 

 

 

4.8

 

Total Investment CRE

 

 

26.8

%

 

 

27.5

%

The following table presents the Company’s investment CRE (which includes non-owner occupied and construction loans) by state. The table separately discloses all states that represent at least 5.0% of the Company’s investment CRE portfolio as of either period presented, while the remainder are included in “All Others.”
Table 11
 

 

 

Investment CRE loans by State

 

 

 

March 31, 2026

 

 

December 31, 2025

 

Missouri

 

 

12.7

%

 

 

12.5

%

Arizona

 

 

12.4

 

 

 

12.2

 

Texas

 

 

11.3

 

 

 

12.0

 

Colorado

 

 

11.3

 

 

 

11.7

 

California

 

 

5.6

 

 

 

5.1

 

Utah

 

 

5.2

 

 

 

4.9

 

All others

 

 

41.5

 

 

 

41.6

 

Total Investment CRE

 

 

100.0

%

 

 

100.0

%

Nonaccrual, past due and restructured loans are discussed under “Credit Risk Management” within “Item 3. Quantitative and Qualitative Disclosures About Market Risk” in this report.
Investment Securities
The Company’s investment portfolio contains trading, AFS, and HTM securities, as well as FRB stock, FHLB stock, and other miscellaneous investments. Investment securities totaled $20.1 billion as of both March 31, 2026 and December 31, 2025, and comprised 29.8% and 29.9% of the Company’s earning assets, respectively, as of those dates.
The Company’s AFS securities portfolio comprised 68.1% of the Company’s total securities portfolio at both March 31, 2026 and December 31, 2025. The Company’s AFS securities portfolio provides liquidity as a result of the composition and average life of the underlying securities. This liquidity can be used to fund loan growth or to offset the outflow of traditional funding sources. The average life of the AFS securities portfolio was 70.2 months at March 31, 2026, compared to 74.8 months at December 31, 2025, and 77.5 months at March 31, 2025. In addition to providing a potential source of liquidity, the AFS securities portfolio can be used as a tool to manage interest rate sensitivity. The Company’s goal in the management of its AFS securities portfolio is to maximize return within the Company’s parameters of liquidity goals, interest rate risk, and credit risk.
Management expects collateral pledging requirements for public funds, loan demand, and deposit funding to be the primary factors impacting changes in the level of AFS securities. There were $12.7 billion and $13.4 billion of securities pledged to secure U.S. Government deposits, other public deposits, certain trust deposits, derivative transactions, and repurchase agreements at March 31, 2026 and December 31, 2025, respectively.

 
75