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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(MARK ONE)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2026
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to ____
Commission file number 001-38481
 
UMB FINANCIAL CORP ORATION
(Exact name of registrant as specified in its charter)
 
 

Missouri

 

43-0903811

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification Number)

 

1010 Grand Boulevard , Kansas City , Missouri

 

64106

(Address of principal executive offices)

 

(Zip Code)

(Registrant's telephone number, including area code): ( 816 ) 860-7000
Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $1.00 Par Value

UMBF

The NASDAQ Global Select Market

Depositary Shares, each representing 1/400th interest in a share of 7.75% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock Series B

UMBFO

The NASDAQ Global Select Market

 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 

Large accelerated filer

☒

Accelerated filer

☐

Non- accelerated filer

☐

 

Smaller reporting company

☐

 

 

 

Emerging growth company

☐

 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of July 27, 2026, UMB Financial Corporation ha d 75,950,030 shares of common stock outstanding.
 

 
 

 

 
UMB FINAN CIAL CORPORATION
FORM 10-Q
INDEX

PART I – FINANCIAL INFORMATION

3

 

 

 

ITEM 1.

FINANCIAL STATEMENTS (UNAUDITED)

3

CONSOLIDATED BALANCE SHEETS

3

CONSOLIDATED STATEMENTS OF INCOME

4

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

5

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

6

CONSOLIDATED STATEMENTS OF CASH FLOWS

8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

67

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

88

ITEM 4.

CONTROLS AND PROCEDURES

93

 

 

 

PART II - OTHER INFORMATION

94

 

 

 

ITEM 1.

LEGAL PROCEEDINGS

94

ITEM 1A.

RISK FACTORS

94

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

94

ITEM 6.

EXHIBITS

95

SIGNATURES

96

 

 

 

 
2

 

PART I – FINANCI AL INFORMATION
ITEM 1. FINANCI AL STATEMENTS
UMB FINANCIAL CORPORATION
CONSOLIDATED B ALANCE SHEETS
(unaudited, dollars in thousands, except share and per share data)

 

 

June 30,

 

 

December 31,

 

 

 

2026

 

 

2025

 

ASSETS

 

 

 

 

 

 

Loans

 

$

41,149,726

 

 

$

38,779,408

 

Allowance for credit losses on loans

 

 

( 437,376

)

 

 

( 419,478

)

Net loans

 

 

40,712,350

 

 

 

38,359,930

 

Loans held for sale

 

 

6,800

 

 

 

2,030

 

Securities:

 

 

 

 

 

 

Available for sale (amortized cost of $ 13,903,318  and $ 13,999,900 , respectively)

 

 

13,488,159

 

 

 

13,709,141

 

Held to maturity, net of allowance for credit losses of $ 3,996  and $ 1,684 , respectively (fair value of $ 5,239,447  and $ 5,250,465 , respectively)

 

 

5,712,430

 

 

 

5,722,543

 

Trading securities

 

 

45,839

 

 

 

22,331

 

Other securities

 

 

693,502

 

 

 

676,300

 

Total securities

 

 

19,939,930

 

 

 

20,130,315

 

Federal funds sold and securities purchased under agreements to resell

 

 

928,438

 

 

 

1,548,093

 

Interest-bearing due from banks

 

 

4,951,010

 

 

 

6,940,535

 

Cash and due from banks

 

 

779,876

 

 

 

952,547

 

Premises and equipment, net

 

 

397,352

 

 

 

398,271

 

Accrued income

 

 

347,447

 

 

 

349,639

 

Goodwill

 

 

1,837,594

 

 

 

1,839,825

 

Other intangibles, net

 

 

439,949

 

 

 

486,869

 

Other assets

 

 

1,914,814

 

 

 

2,086,036

 

Total assets

 

$

72,255,560

 

 

$

73,094,090

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest-bearing demand

 

$

16,177,250

 

 

$

17,143,341

 

Interest-bearing demand and savings

 

 

40,381,530

 

 

 

39,752,587

 

Time deposits under $250,000

 

 

1,834,890

 

 

 

1,934,617

 

Time deposits of $250,000 or more

 

 

1,373,012

 

 

 

1,826,245

 

Total deposits

 

 

59,766,682

 

 

 

60,656,790

 

Federal funds purchased and repurchase agreements

 

 

3,083,600

 

 

 

3,324,938

 

Long-term debt

 

 

480,126

 

 

 

474,229

 

Accrued expenses and taxes

 

 

360,694

 

 

 

435,351

 

Other liabilities

 

 

533,665

 

 

 

509,214

 

Total liabilities

 

 

64,224,767

 

 

 

65,400,522

 

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Series B Fixed-Rate Reset Non-Cumulative Perpetual Preferred stock, $ 0.01  par value; 30,000  authorized, issued and outstanding

 

 

294,066

 

 

 

294,066

 

Common stock, $ 1.00  par value; 160,000,000  shares authorized; 78,665,809  shares issued, 75,947,552  and 75,960,675  shares outstanding, respectively

 

 

78,666

 

 

 

78,666

 

Capital surplus

 

 

4,016,045

 

 

 

4,011,047

 

Retained earnings

 

 

4,197,812

 

 

 

3,736,413

 

Accumulated other comprehensive loss, net

 

 

( 371,517

)

 

 

( 261,520

)

Treasury stock, 2,718,257  and 2,705,134  shares, at cost, respectively

 

 

( 184,279

)

 

 

( 165,104

)

Total shareholders' equity

 

 

8,030,793

 

 

 

7,693,568

 

Total liabilities and shareholders' equity

 

$

72,255,560

 

 

$

73,094,090

 

See Notes to Consolidated Financial Statements.

 
3

 

UMB FINANCIAL CORPORATION
CONSOLIDATED STAT EMENTS OF INCOME
(unaudited, dollars in thousands, except share and per share data)
 

 

 

Three Months Ended

 

 

Six Months Ended

 

June 30,

 

 

June 30,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

643,995

 

 

$

612,414

 

 

$

1,277,073

 

 

$

1,139,818

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

Taxable interest

 

 

146,593

 

 

 

122,237

 

 

 

291,892

 

 

 

220,533

 

Tax-exempt interest

 

 

35,181

 

 

 

33,024

 

 

 

69,635

 

 

 

62,987

 

Total securities income

 

 

181,774

 

 

 

155,261

 

 

 

361,527

 

 

 

283,520

 

Federal funds and resell agreements

 

 

11,259

 

 

 

8,733

 

 

 

27,322

 

 

 

15,685

 

Interest-bearing due from banks

 

 

33,950

 

 

 

73,874

 

 

 

71,852

 

 

 

148,859

 

Trading securities

 

 

388

 

 

 

255

 

 

 

659

 

 

 

625

 

Total interest income

 

 

871,366

 

 

 

850,537

 

 

 

1,738,433

 

 

 

1,588,507

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

298,927

 

 

 

343,153

 

 

 

591,300

 

 

 

646,559

 

Federal funds and repurchase agreements

 

 

28,953

 

 

 

27,423

 

 

 

58,651

 

 

 

53,213

 

Other

 

 

10,961

 

 

 

12,937

 

 

 

21,591

 

 

 

24,072

 

Total interest expense

 

 

338,841

 

 

 

383,513

 

 

 

671,542

 

 

 

723,844

 

Net interest income

 

 

532,525

 

 

 

467,024

 

 

 

1,066,891

 

 

 

864,663

 

Provision for credit losses

 

 

28,000

 

 

 

21,000

 

 

 

55,000

 

 

 

107,000

 

Net interest income after provision for credit losses

 

 

504,525

 

 

 

446,024

 

 

 

1,011,891

 

 

 

757,663

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

Trust and securities processing

 

 

98,295

 

 

 

83,263

 

 

 

192,962

 

 

 

163,044

 

Trading and investment banking

 

 

5,314

 

 

 

6,170

 

 

 

13,054

 

 

 

12,081

 

Service charges on deposit accounts

 

 

29,588

 

 

 

28,865

 

 

 

59,062

 

 

 

56,322

 

Insurance fees and commissions

 

 

207

 

 

 

189

 

 

 

462

 

 

 

367

 

Brokerage fees

 

 

25,400

 

 

 

20,525

 

 

 

46,489

 

 

 

38,627

 

Bankcard fees

 

 

29,954

 

 

 

29,018

 

 

 

58,832

 

 

 

55,311

 

Investment securities gains, net

 

 

27,087

 

 

 

37,685

 

 

 

30,133

 

 

 

32,903

 

Other

 

 

29,660

 

 

 

16,470

 

 

 

49,304

 

 

 

29,728

 

Total noninterest income

 

 

245,505

 

 

 

222,185

 

 

 

450,298

 

 

 

388,383

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

227,162

 

 

 

213,551

 

 

 

446,843

 

 

 

434,949

 

Occupancy, net

 

 

19,277

 

 

 

18,571

 

 

 

38,352

 

 

 

34,640

 

Equipment

 

 

13,942

 

 

 

16,426

 

 

 

27,262

 

 

 

33,374

 

Supplies and services

 

 

5,504

 

 

 

6,383

 

 

 

11,108

 

 

 

11,168

 

Marketing and business development

 

 

13,916

 

 

 

11,344

 

 

 

27,708

 

 

 

19,342

 

Processing fees

 

 

43,073

 

 

 

43,638

 

 

 

85,132

 

 

 

84,488

 

Legal and consulting

 

 

14,415

 

 

 

18,468

 

 

 

23,502

 

 

 

47,074

 

Bankcard

 

 

11,873

 

 

 

12,363

 

 

 

23,714

 

 

 

25,158

 

Amortization of other intangible assets

 

 

23,460

 

 

 

25,268

 

 

 

46,920

 

 

 

42,750

 

Regulatory fees

 

 

9,097

 

 

 

9,259

 

 

 

17,367

 

 

 

17,496

 

Other

 

 

17,914

 

 

 

17,897

 

 

 

32,608

 

 

 

27,516

 

Total noninterest expense

 

 

399,633

 

 

 

393,168

 

 

 

780,516

 

 

 

777,955

 

Income before income taxes

 

 

350,397

 

 

 

275,041

 

 

 

681,673

 

 

 

368,091

 

Income tax expense

 

 

72,827

 

 

 

57,647

 

 

 

142,665

 

 

 

69,364

 

NET INCOME

 

$

277,570

 

 

$

217,394

 

 

$

539,008

 

 

$

298,727

 

Less: Preferred dividends

 

 

5,812

 

 

 

2,012

 

 

 

11,625

 

 

 

4,025

 

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

 

$

271,758

 

 

$

215,382

 

 

$

527,383

 

 

$

294,702

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PER SHARE DATA

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share – basic

 

$

3.58

 

 

$

2.84

 

 

$

6.94

 

 

$

4.18

 

Net income per common share – diluted

 

 

3.56

 

 

 

2.82

 

 

 

6.90

 

 

 

4.16

 

Dividends per common share

 

 

0.43

 

 

 

0.40

 

 

 

0.86

 

 

 

0.80

 

Weighted average common shares outstanding – basic

 

 

75,972,781

 

 

 

75,923,082

 

 

 

76,002,535

 

 

 

70,523,171

 

Weighted average common shares outstanding – diluted

 

 

76,392,233

 

 

 

76,241,798

 

 

 

76,422,437

 

 

 

70,901,635

 

See Notes to Consolidated Financial Statements.

 
4

 

UMB FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited, dollars in thousands)

 

 

Three Months Ended

 

 

Six Months Ended

 

June 30,

 

 

June 30,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Net income

 

$

277,570

 

 

$

217,394

 

 

$

539,008

 

 

$

298,727

 

Other comprehensive (loss) income, before tax:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains and losses on debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized holding gains and losses, net

 

 

( 38,499

)

 

 

43,337

 

 

 

( 123,971

)

 

 

119,572

 

Less: Reclassification adjustment for net gains included in net income

 

 

( 26

)

 

 

( 33

)

 

 

( 429

)

 

 

( 423

)

Amortization of net unrealized loss on securities transferred from available-for-sale to held-to-maturity

 

 

7,290

 

 

 

7,989

 

 

 

14,378

 

 

 

16,279

 

Change in unrealized gains and losses on debt securities

 

 

( 31,235

)

 

 

51,293

 

 

 

( 110,022

)

 

 

135,428

 

Unrealized gains and losses on derivative hedges:

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized gains and losses on derivative hedges, net

 

 

( 22,693

)

 

 

14,386

 

 

 

( 38,746

)

 

 

37,032

 

Less: Reclassification adjustment for net (gains) losses included in net income

 

 

( 426

)

 

 

2,041

 

 

 

( 1,223

)

 

 

2,017

 

Change in unrealized gains and losses on derivative hedges

 

 

( 23,119

)

 

 

16,427

 

 

 

( 39,969

)

 

 

39,049

 

Other comprehensive (loss) income, before tax

 

 

( 54,354

)

 

 

67,720

 

 

 

( 149,991

)

 

 

174,477

 

Income tax benefit (expense)

 

 

14,187

 

 

 

( 17,069

)

 

 

39,994

 

 

 

( 43,474

)

Other comprehensive (loss) income

 

 

( 40,167

)

 

 

50,651

 

 

 

( 109,997

)

 

 

131,003

 

Comprehensive income

 

$

237,403

 

 

$

268,045

 

 

$

429,011

 

 

$

429,730

 

 
See Notes to Consolidated Financial Statements.

 
5

 

UMB FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CHA NGES IN SHAREHOLDERS' EQUITY
(unaudited, dollars in thousands, except per share data)

 

 

Preferred
Stock

 

 

Common
Stock

 

 

Capital
Surplus

 

 

Retained
Earnings

 

 

Accumulated Other Comprehensive (Loss) Income

 

 

Treasury
Stock

 

 

Total

 

Balance – April 1, 2025

 

$

110,705

 

 

$

78,666

 

 

$

3,993,662

 

 

$

3,224,866

 

 

$

( 492,698

)

 

$

( 166,767

)

 

$

6,748,434

 

Total comprehensive income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

217,394

 

 

 

50,651

 

 

 

—

 

 

 

268,045

 

Cash dividends declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred dividends ($ 175.00  per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 2,012

)

 

 

—

 

 

 

—

 

 

 

( 2,012

)

Common dividends ($ 0.40  per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 30,542

)

 

 

—

 

 

 

—

 

 

 

( 30,542

)

Purchase of treasury stock

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 290

)

 

 

( 290

)

Issuances of equity awards, net of forfeitures

 

 

—

 

 

 

—

 

 

 

( 607

)

 

 

—

 

 

 

—

 

 

 

607

 

 

 

—

 

Recognition of equity-based compensation

 

 

—

 

 

 

—

 

 

 

7,879

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

7,879

 

Sale of treasury stock

 

 

—

 

 

 

—

 

 

 

53

 

 

 

—

 

 

 

—

 

 

 

83

 

 

 

136

 

Exercise of stock options

 

 

—

 

 

 

—

 

 

 

( 14

)

 

 

—

 

 

 

—

 

 

 

67

 

 

 

53

 

Preferred stock issuance

 

 

294,062

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

294,062

 

Balance – June 30, 2025

 

$

404,767

 

 

$

78,666

 

 

$

4,000,973

 

 

$

3,409,706

 

 

$

( 442,047

)

 

$

( 166,300

)

 

$

7,285,765

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – April 1, 2026

 

$

294,066

 

 

$

78,666

 

 

$

4,006,726

 

 

$

3,958,611

 

 

$

( 331,350

)

 

$

( 179,722

)

 

$

7,826,997

 

Total comprehensive income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

277,570

 

 

 

( 40,167

)

 

 

—

 

 

 

237,403

 

Cash dividends declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred dividends ($ 193.75  per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 5,812

)

 

 

—

 

 

 

—

 

 

 

( 5,812

)

Common dividends ($ 0.43  per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 32,557

)

 

 

—

 

 

 

—

 

 

 

( 32,557

)

Purchase of treasury stock

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 5,087

)

 

 

( 5,087

)

Issuances of equity awards, net of forfeitures

 

 

—

 

 

 

—

 

 

 

52

 

 

 

—

 

 

 

—

 

 

 

172

 

 

 

224

 

Recognition of equity-based compensation

 

 

—

 

 

 

—

 

 

 

9,126

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

9,126

 

Sale of treasury stock

 

 

—

 

 

 

—

 

 

 

59

 

 

 

—

 

 

 

—

 

 

 

65

 

 

 

124

 

Exercise of stock options

 

 

—

 

 

 

—

 

 

 

82

 

 

 

—

 

 

 

—

 

 

 

293

 

 

 

375

 

Balance – June 30, 2026

 

$

294,066

 

 

$

78,666

 

 

$

4,016,045

 

 

$

4,197,812

 

 

$

( 371,517

)

 

$

( 184,279

)

 

$

8,030,793

 

 

 
6

 

 

 

Preferred
Stock

 

 

Common
Stock

 

 

Capital
Surplus

 

 

Retained
Earnings

 

 

Accumulated Other Comprehensive (Loss) Income

 

 

Treasury
Stock

 

 

Total

 

Balance – January 1, 2025

 

$

—

 

 

$

55,057

 

 

$

1,145,638

 

 

$

3,174,948

 

 

$

( 573,050

)

 

$

( 336,052

)

 

$

3,466,541

 

Total comprehensive income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

298,727

 

 

 

131,003

 

 

 

—

 

 

 

429,730

 

Cash dividends declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred dividends ($ 350.0 0 per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 4,025

)

 

 

—

 

 

 

—

 

 

 

( 4,025

)

Common dividends ($ 0.80  per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 59,944

)

 

 

—

 

 

 

—

 

 

 

( 59,944

)

Purchase of treasury stock

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 15,724

)

 

 

( 15,724

)

Issuances of equity awards, net of forfeitures

 

 

—

 

 

 

—

 

 

 

( 16,202

)

 

 

—

 

 

 

—

 

 

 

17,002

 

 

 

800

 

Recognition of equity-based compensation

 

 

—

 

 

 

—

 

 

 

40,298

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

40,298

 

Sale of treasury stock

 

 

—

 

 

 

—

 

 

 

169

 

 

 

—

 

 

 

—

 

 

 

143

 

 

 

312

 

Exercise of stock options

 

 

—

 

 

 

—

 

 

 

112

 

 

 

—

 

 

 

—

 

 

 

246

 

 

 

358

 

Common stock issuance

 

 

—

 

 

 

—

 

 

 

67,056

 

 

 

—

 

 

 

—

 

 

 

168,085

 

 

 

235,141

 

Preferred stock issuance

 

 

294,062

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

294,062

 

Stock issuance for acquisition, net of issuance costs

 

 

110,705

 

 

 

23,609

 

 

 

2,763,902

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,898,216

 

Balance – June 30, 2025

 

$

404,767

 

 

$

78,666

 

 

$

4,000,973

 

 

$

3,409,706

 

 

$

( 442,047

)

 

$

( 166,300

)

 

$

7,285,765

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – January 1, 2026

 

$

294,066

 

 

$

78,666

 

 

$

4,011,047

 

 

$

3,736,413

 

 

$

( 261,520

)

 

$

( 165,104

)

 

$

7,693,568

 

Total comprehensive income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

539,008

 

 

 

( 109,997

)

 

 

—

 

 

 

429,011

 

Cash dividends declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred dividends ($ 387.50  per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 11,625

)

 

 

—

 

 

 

—

 

 

 

( 11,625

)

Common dividends ($ 0.86  per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 65,984

)

 

 

—

 

 

 

—

 

 

 

( 65,984

)

Purchase of treasury stock

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 37,901

)

 

 

( 37,901

)

Issuances of equity awards, net of forfeitures

 

 

—

 

 

 

—

 

 

 

( 16,259

)

 

 

—

 

 

 

—

 

 

 

17,983

 

 

 

1,724

 

Recognition of equity-based compensation

 

 

—

 

 

 

—

 

 

 

21,050

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

21,050

 

Sale of treasury stock

 

 

—

 

 

 

—

 

 

 

142

 

 

 

—

 

 

 

—

 

 

 

150

 

 

 

292

 

Exercise of stock options

 

 

—

 

 

 

—

 

 

 

65

 

 

 

—

 

 

 

—

 

 

 

593

 

 

 

658

 

Balance – June 30, 2026

 

$

294,066

 

 

$

78,666

 

 

$

4,016,045

 

 

$

4,197,812

 

 

$

( 371,517

)

 

$

( 184,279

)

 

$

8,030,793

 

 
See Notes to Consolidated Financial Statements.

 
7

 

UMB FINANCIAL CORPORATION
CONSOLIDATED STATEM ENTS OF CASH FLOWS
(unaudited, dollars in thousands)
 

 

 

For the Six Months Ended

 

 

 

June 30,

 

 

 

2026

 

 

2025

 

OPERATING ACTIVITIES

 

 

 

 

 

 

Net income

 

$

539,008

 

 

$

298,727

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Provision for credit losses

 

 

55,000

 

 

 

107,000

 

Net accretion of premiums and discounts from acquisition

 

 

( 86,082

)

 

 

( 60,204

)

Depreciation and amortization

 

 

70,222

 

 

 

67,361

 

Amortization of debt issuance costs

 

 

213

 

 

 

438

 

Deferred income tax expense

 

 

17,858

 

 

 

23,772

 

Net (increase) decrease in trading securities and other earning assets

 

 

( 23,508

)

 

 

3,835

 

Gains on investment securities, net

 

 

( 30,133

)

 

 

( 32,903

)

Losses on sales of assets

 

 

1,124

 

 

 

62

 

Amortization of securities premiums, net of discount accretion

 

 

3,061

 

 

 

1,828

 

Originations of loans held for sale

 

 

( 63,896

)

 

 

( 43,485

)

Gains on sales of loans held for sale, net

 

 

( 1,541

)

 

 

( 1,165

)

Proceeds from sales of loans held for sale

 

 

60,667

 

 

 

41,668

 

Equity-based compensation

 

 

22,774

 

 

 

20,709

 

Changes in:

 

 

 

 

 

 

Accrued income

 

 

2,192

 

 

 

( 7,016

)

Accrued expenses and taxes

 

 

( 72,426

)

 

 

( 21,935

)

Other assets and liabilities, net

 

 

215,997

 

 

 

249,715

 

Net cash provided by operating activities

 

 

710,530

 

 

 

648,407

 

INVESTING ACTIVITIES

 

 

 

 

 

 

Securities held to maturity:

 

 

 

 

 

 

Maturities, calls and principal repayments

 

 

253,434

 

 

 

346,297

 

Purchases

 

 

( 234,023

)

 

 

( 15,319

)

Securities available for sale:

 

 

 

 

 

 

Sales

 

 

57,146

 

 

 

616,354

 

Maturities, calls and principal repayments

 

 

946,269

 

 

 

819,828

 

Purchases

 

 

( 884,636

)

 

 

( 2,571,763

)

Equity securities with readily determinable fair values:

 

 

 

 

 

 

Sales

 

 

20,590

 

 

 

—

 

Purchases

 

 

( 212

)

 

 

( 392

)

Equity securities without readily determinable fair values:

 

 

 

 

 

 

Sales

 

 

28,249

 

 

 

23,068

 

Maturities, calls and principal repayments

 

 

16,713

 

 

 

11,096

 

Purchases

 

 

( 47,801

)

 

 

( 114,823

)

Payment of tax equity investment commitments

 

 

( 32,734

)

 

 

( 34,762

)

Net increase in loans

 

 

( 2,346,075

)

 

 

( 1,332,396

)

Net decrease (increase) in fed funds sold and resell agreements

 

 

619,655

 

 

 

( 192,191

)

Net cash activity from acquisitions and divestitures

 

 

—

 

 

 

174,985

 

Net decrease in interest-bearing balances due from other financial institutions

 

 

258

 

 

 

958,769

 

Net purchases of premises and equipment

 

 

( 22,978

)

 

 

( 23,427

)

Net cash used in investing activities

 

 

( 1,626,145

)

 

 

( 1,334,676

)

 

 
8

 

FINANCING ACTIVITIES

 

 

 

 

 

 

Net (decrease) increase in demand and savings deposits

 

 

( 337,148

)

 

 

2,898,641

 

Net decrease in time deposits

 

 

( 552,960

)

 

 

( 405,498

)

Net (decrease) increase in fed funds purchased and repurchase agreements

 

 

( 241,338

)

 

 

300,258

 

Repayment of long-term debt

 

 

—

 

 

 

( 11,055

)

Cash dividends paid

 

 

( 78,113

)

 

 

( 62,504

)

Payment of common stock issuance costs

 

 

—

 

 

 

( 524

)

Proceeds from exercise of stock options and sales of treasury shares

 

 

950

 

 

 

670

 

Purchases of treasury stock

 

 

( 37,901

)

 

 

( 15,724

)

Common stock issuance

 

 

—

 

 

 

235,141

 

Preferred stock issuance

 

 

—

 

 

 

294,062

 

Net cash (used in) provided by financing activities

 

 

( 1,246,510

)

 

 

3,233,467

 

(Decrease) increase in cash and cash equivalents

 

 

( 2,162,125

)

 

 

2,547,198

 

Cash and cash equivalents at beginning of period

 

 

7,771,973

 

 

 

8,448,691

 

Cash and cash equivalents at end of period

 

$

5,609,848

 

 

$

10,995,889

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures:

 

 

 

 

 

 

Income tax payments

 

$

83,535

 

 

$

20,402

 

Total interest payments

 

 

680,523

 

 

 

699,709

 

Noncash disclosures:

 

 

 

 

 

 

Acquisition of tax equity investments

 

$

2,500

 

 

$

29,314

 

Commitment to fund tax equity investments

 

 

2,500

 

 

 

29,314

 

Transfer of loans to other real estate owned

 

 

1,489

 

 

 

900

 

Transfer of loans to other repossessed assets

 

 

—

 

 

 

39

 

Issuance of common stock as consideration for acquisition

 

 

—

 

 

 

2,783,510

 

Issuance of preferred stock as consideration for acquisition

 

 

—

 

 

 

115,230

 

Stock based compensation as consideration for acquisition

 

 

—

 

 

 

20,389

 

 
See Notes to Consolidated Financial Statements.

 
9

 

UMB FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2026 (UNAUDITED)
1. Financial Statement Presentation
The Consolidated Financial Statements include the accounts of UMB Financial Corporation and its subsidiaries (collectively, the Company) after the elimination of all intercompany transactions. In the opinion of management of the Company, all adjustments relating to items that are of a normal recurring nature and necessary for a fair presentation of the financial position and results of operations have been made. The results of operations and cash flows for the interim periods presented may not be indicative of the results of the full year ending December 31, 2026. The financial statements should be read in conjunction with “Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations” within this Quarterly Report on Form 10-Q (the Form 10-Q) and in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the Securities and Exchange Commission (SEC) on February 26, 2026 (the Form 10-K).
The Company is a financial holding company, which offers a wide range of banking and other financial services to its customers through its branches and offices. The Company’s national bank, UMB Bank, National Association (the Bank), has its principal office in Missouri as well as branches and offices primarily located in the Midwestern, Southwestern, and Western regions of the United States.

2. Summary of Significant Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. These estimates and assumptions also impact reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A summary of the significant accounting policies to assist the reader in understanding the financial presentation is provided in the Notes to Consolidated Financial Statements in the Form 10-K.

Business Combinations
The Company accounts for business combinations using the purchase method of accounting in accordance with FASB ASC Topic 805, Business Combinations , which requires assets acquired and liabilities assumed to be recognized at fair value as of the acquisition date.
On January 31, 2025 (Acquisition Date), the Company acquired Heartland Financial USA, Inc. (HTLF) pursuant to an Agreement and Plan of Merger, dated as of April 28, 2024 . See Note 13, “Acquisition” for additional information.

Cash and cash equivalents
Cash and cash equivalents includes Cash and due from banks and amounts due from the Federal Reserve Bank (FRB). Cash on hand, cash items in the process of collection, and amounts due from correspondent banks are included in Cash and due from banks. Amounts due from the FRB are interest-bearing for all periods presented and are included in the Interest-bearing due from banks line on the Company’s Consolidated Balance Sheets.
This table provides a summary of cash and cash equivalents as presented on the Consolidated Statements of Cash Flows as of June 30, 2026 and June 30, 2025 (in thousands) :

 

 

June 30,

 

 

 

2026

 

 

2025

 

Due from the FRB

 

$

4,829,972

 

 

$

9,908,193

 

Cash and due from banks

 

 

779,876

 

 

 

1,087,696

 

Cash and cash equivalents at end of period

 

$

5,609,848

 

 

$

10,995,889

 

 

 
10

 

Also included in the Interest-bearing due from banks, but not considered cash and cash equivalents, are interest-bearing accounts held at other financial institutions, which totaled $ 121.0 m illion and $ 118.0 million at June 30, 2026 and June 30, 2025 , respectively.

Acquired Loans
Acquired loans are initially recorded at fair value. The Company’s accounting methods for acquired loans depends on whether or not the loan reflects more than insignificant credit deterioration since origination at the date of acquisition.
Non-Purchased Credit Deteriorated Loans
Non-purchased credit deteriorated (Non-PCD) loans do not reflect more than insignificant credit deterioration since origination at the date of acquisition. These loans are recorded at fair value and an increase to the allowance for credit losses (ACL) is recorded with a corresponding increase to the provision for credit losses at the date of acquisition. The difference between fair value and the unpaid principal balance at the acquisition date is amortized or accreted to interest income over the contractual life of the loan using the effective interest method.
Purchased Credit Deteriorated Loans
Purchased loans that reflect a more than insignificant credit deterioration since origination at the date of acquisition are classified as purchased credit deteriorated (PCD) loans. PCD loans are recorded at fair value plus the ACL expected at the time of acquisition. Under this method, there is no provision for credit losses on acquisition of PCD loans. The non-credit-related difference between fair value and the unpaid principal balance at the acquisition date is amortized or accreted to interest income over the contractual life of the loan using the effective interest method.

Per Share Data
Basic net income per common share is computed using net income available to common shareholders and the weighted average number of shares of common stock outstanding during each period. Diluted net income per common share is determined using net income available to common shareholders and the weighted average common shares and assumed incremental common shares issued. The following table provides the amounts used in the determination of basic and diluted net income per common share for the three and six months ended June 30, 2026 and 2025 (in thousands, except share and per share data) :
 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Net income

 

$

277,570

 

 

$

217,394

 

 

$

539,008

 

 

$

298,727

 

Less: Preferred dividends

 

 

5,812

 

 

 

2,012

 

 

 

11,625

 

 

 

4,025

 

Net income available to common shareholders

 

$

271,758

 

 

$

215,382

 

 

$

527,383

 

 

$

294,702

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding for basic earnings per share

 

 

75,972,781

 

 

 

75,923,082

 

 

 

76,002,535

 

 

 

70,523,171

 

Assumed incremental common shares issued upon vesting of outstanding restricted stock units

 

 

419,452

 

 

 

318,716

 

 

 

419,902

 

 

 

378,464

 

Weighted average common shares for diluted earnings per share

 

 

76,392,233

 

 

 

76,241,798

 

 

 

76,422,437

 

 

 

70,901,635

 

Net income per common share – basic

 

$

3.58

 

 

$

2.84

 

 

$

6.94

 

 

$

4.18

 

Net income per common share – diluted

 

 

3.56

 

 

 

2.82

 

 

 

6.90

 

 

 

4.16

 

Number of antidilutive restricted stock units excluded from diluted earnings per share computation

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Number of antidilutive stock options excluded from diluted earnings per share computation

 

 

—

 

 

 

4,962

 

 

 

—

 

 

 

4,962

 

 

 
11

 

Derivatives
The Company records all derivatives on the Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Currently, 15 of the Company’s derivatives are designated in qualifying hedging relationships. However, the remainder of the Company’s derivatives are not designated in qualifying hedging relationships, as the derivatives are not used to manage risks within the Company’s assets or liabilities. All changes in fair value of the Company’s non-designated derivatives and fair value hedges are recognized directly in earnings. Changes in fair value of the Company’s cash flow hedges are recognized in accumulated other comprehensive income (AOCI) and are reclassified to earnings when the hedged transaction affects earnings.

3. New Accounting Pronouncements
Income Statement Reporting In November 2024, the FASB issued Accounting Standards Update (ASU) No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40).” The amendments in this update require additional disclosures providing disaggregated information about prescribed categories underlying relevant income statement expense captions. The amendments in this update are effective for fiscal years beginning January 1, 2027, and interim periods beginning January 1, 2028. Early adoption is permitted and should be applied on a prospective basis. The adoption of this accounting pronouncement will have no impact on the Consolidated Financial Statements aside from additional disclosures.

4. Loans and Allowance for Credit Losses
Loan Origination/Risk Management
The Company has certain lending policies and procedures in place that are designed to minimize the level of risk within the loan portfolio. Diversification of the loan portfolio manages the risk associated with fluctuations in economic conditions. Authority levels are established for the extension of credit to ensure consistency throughout the Company. It is necessary that policies, processes, and practices implemented to control the risks of individual credit transactions and portfolio segments are sound and adhered to. The Company maintains an independent loan review department that reviews and validates the risk assessment on a continual basis. Management regularly evaluates the results of the loan reviews. The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel, as well as the Company’s policies and procedures.
Commercial and industrial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. Commercial loans are made based on the identified cash flows of the borrower and on the underlying collateral provided by the borrower. The cash flows of the borrower, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts from its customers. Beginning with the third quarter 2025, commercial and industrial loans include all loans to Non-Depository Financial Institutions (NDFIs), which includes a wide range of financial entities that provide services similar to those of traditional banks but do not accept deposits from the general public and are not regulated by the same federal banking agencies. Previously reported balances have been reclassified for purposes of comparability.
Specialty lending loans include Asset-based loans, which are offered primarily in the form of revolving lines of credit to commercial borrowers that do not generally qualify for traditional bank financing. Asset-based loans are underwritten based primarily upon the value of the collateral pledged to secure the loan, rather than on the borrower’s general financial condition. The Company utilizes pre-loan due diligence techniques, monitoring disciplines, and loan management practices common within the asset-based lending industry to underwrite loans to these borrowers.

 
12

 

Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans, in addition to those of real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. The Company requires that an appraisal of the collateral be made at origination and on an as-needed basis, in conformity with current market conditions and regulatory requirements. The underwriting standards address both owner and non-owner-occupied real estate. Also included in Commercial real estate are Construction loans that are underwritten using feasibility studies, independent appraisal reviews, sensitivity analysis or absorption and lease rates, and financial analysis of the developers and property owners. Construction loans are based upon estimates of costs and value associated with the complete project. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their repayment being sensitive to interest rate changes, governmental regulation of real property, economic conditions, completion of the construction project, and the availability of long-term financing.
Consumer real estate loans, including residential real estate and home equity loans, are underwritten based on the borrower’s loan-to-value percentage, collection remedies, and overall credit history.
Consumer loans are underwritten based on the borrower’s repayment ability. The Company monitors delinquencies on all of its consumer loans and leases. The underwriting and review practices combined with the relatively small loan amounts that are spread across many individual borrowers, minimizes risk. Consumer loans and leases that are 90 days past due or more are considered non-performing.
Credit cards include both commercial and consumer credit cards. Commercial credit cards are generally unsecured and are underwritten with criteria similar to commercial loans, including an analysis of the borrower’s cash flow, available business capital, and overall creditworthiness of the borrower. Consumer credit cards are underwritten based on the borrower’s repayment ability. The Company monitors delinquencies on all of its consumer credit cards and periodically reviews the distribution of credit scores relative to historical periods to monitor credit risk on its consumer credit card loans.
Credit risk is a potential loss resulting from nonpayment of either the primary or secondary exposure. Credit risk is mitigated with formal risk management practices and a thorough initial credit-granting process including consistent underwriting standards and approval process. Control factors or techniques to minimize credit risk include knowing the client, understanding total exposure, analyzing the client and debtor’s financial capacity, and monitoring the client’s activities. Credit risk and portions of the portfolio risk are managed through concentration considerations, average risk ratings, and other aggregate characteristics.

 
13

 

Loan Aging Analysis
The following tables provide a summary of loan classes and an aging of past due loans at June 30, 2026 and December 31, 2025 (in thousands):

 

 

June 30, 2026

 

 

 

30-89
Days Past
Due and
Accruing

 

 

Greater than
90 Days Past
Due and
Accruing

 

 

Nonaccrual
Loans

 

 

Total
Past Due

 

 

Current

 

 

Total Loans

 

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

15,797

 

 

$

179

 

 

$

33,917

 

 

$

49,893

 

 

$

17,889,869

 

 

$

17,939,762

 

Specialty lending

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

657,710

 

 

 

657,710

 

Commercial real estate

 

 

21,290

 

 

 

—

 

 

 

61,827

 

 

 

83,117

 

 

 

16,484,246

 

 

 

16,567,363

 

Consumer real estate

 

 

5,209

 

 

 

399

 

 

 

30,561

 

 

 

36,169

 

 

 

4,478,048

 

 

 

4,514,217

 

Consumer

 

 

624

 

 

 

5,238

 

 

 

177

 

 

 

6,039

 

 

 

263,158

 

 

 

269,197

 

Credit cards

 

 

8,864

 

 

 

7,899

 

 

 

1,044

 

 

 

17,807

 

 

 

683,425

 

 

 

701,232

 

Leases and other

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

500,245

 

 

 

500,245

 

Total loans

 

$

51,784

 

 

$

13,715

 

 

$

127,526

 

 

$

193,025

 

 

$

40,956,701

 

 

$

41,149,726

 

 

 

 

December 31, 2025

 

 

 

30-89
Days Past
Due and
Accruing

 

 

Greater than
90 Days Past
Due and
Accruing

 

 

Nonaccrual
Loans

 

 

Total
Past Due

 

 

Current

 

 

Total Loans

 

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

36,391

 

 

$

6,417

 

 

$

26,633

 

 

$

69,441

 

 

$

16,201,079

 

 

$

16,270,520

 

Specialty lending

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

518,237

 

 

 

518,237

 

Commercial real estate

 

 

24,786

 

 

 

—

 

 

 

86,838

 

 

 

111,624

 

 

 

16,264,615

 

 

 

16,376,239

 

Consumer real estate

 

 

10,451

 

 

 

244

 

 

 

29,910

 

 

 

40,605

 

 

 

4,395,863

 

 

 

4,436,468

 

Consumer

 

 

689

 

 

 

5,237

 

 

 

777

 

 

 

6,703

 

 

 

232,108

 

 

 

238,811

 

Credit cards

 

 

9,194

 

 

 

6,505

 

 

 

508

 

 

 

16,207

 

 

 

684,526

 

 

 

700,733

 

Leases and other

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

238,400

 

 

 

238,400

 

Total loans

 

$

81,511

 

 

$

18,403

 

 

$

144,666

 

 

$

244,580

 

 

$

38,534,828

 

 

$

38,779,408

 

 
The Company sold consumer real estate loans with proceed s of $ 60.7 million and $ 41.7 million in the secondary market without recourse during the six months ended June 30, 2026 and 2025, respectively.
The Company has ceased the recognition of interest on l oans with a carrying value of $ 127.5 million an d $ 144.7 million at June 30, 2026 and December 31, 2025, respectiv ely. Restructured loans totaled $ 157 thousand a nd $ 169 thousand at June 30, 2026 and December 31, 2025, respectively. Loans 90 days past due and still accruing interest amounted to $ 13.7 million and $ 18.4 million at June 30, 2026 and December 31, 2025, respectively. All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. There was an insignificant amount of interest reversed related to loans on nonaccrual during 2026 and 2025 . Nonaccrual loans with no related allowance for credit losses totaled $ 84.2 million and $ 76.8 million at June 30, 2026 and December 31, 2025, respectively.

 
14

 

The following tables provide the amortized cost of nonaccrual loans with no related allowance for credit losses by loan class at June 30, 2026 and December 31, 2025 (in thousands):
 

 

 

June 30, 2026

 

 

 

Nonaccrual
Loans

 

 

Amortized Cost of Nonaccrual Loans with no related Allowance

 

Loans

 

 

 

 

 

 

Commercial and industrial

 

$

33,917

 

 

$

14,228

 

Specialty lending

 

 

—

 

 

 

—

 

Commercial real estate

 

 

61,827

 

 

 

39,178

 

Consumer real estate

 

 

30,561

 

 

 

29,551

 

Consumer

 

 

177

 

 

 

177

 

Credit cards

 

 

1,044

 

 

 

1,044

 

Leases and other

 

 

—

 

 

 

—

 

Total loans

 

$

127,526

 

 

$

84,178

 

 

 

 

December 31, 2025

 

 

 

Nonaccrual
Loans

 

 

Amortized Cost of Nonaccrual Loans with no related Allowance

 

Loans

 

 

 

 

 

 

Commercial and industrial

 

$

26,633

 

 

$

10,870

 

Specialty lending

 

 

—

 

 

 

—

 

Commercial real estate

 

 

86,838

 

 

 

35,973

 

Consumer real estate

 

 

29,910

 

 

 

28,661

 

Consumer

 

 

777

 

 

 

777

 

Credit cards

 

 

508

 

 

 

508

 

Leases and other

 

 

—

 

 

 

—

 

Total loans

 

$

144,666

 

 

$

76,789

 

Amortized Cost
The following tables provide a summary of the amortized cost balance of each of the Company’s loan classes disaggregated by collateral type and origination year as of June 30, 2026 and December 31, 2025, as well as the gross charge-offs by loan class and origination year for the six months ended June 30, 2026 (in thousands):
 

 
15

 

 

 

June 30, 2026

 

 

 

Amortized Cost Basis by Origination Year - Term Loans

 

 

 

 

 

 

 

 

 

 

Loan Segment
and Type

 

2026

 

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

Prior

 

 

Amortized Cost - Revolving Loans

 

 

Amortized Cost - Revolving Loans Converted to Term Loans

 

 

Total

 

Commercial and industrial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment/Accounts Receivable/Inventory

 

$

2,117,193

 

 

$

2,538,752

 

 

$

1,664,541

 

 

$

819,602

 

 

$

747,661

 

 

$

581,891

 

 

$

6,144,832

 

 

$

20,447

 

 

$

14,634,919

 

Agriculture

 

 

15,722

 

 

 

24,780

 

 

 

17,997

 

 

 

20,683

 

 

 

5,307

 

 

 

3,841

 

 

 

353,108

 

 

 

—

 

 

 

441,438

 

NDFIs

 

 

106,719

 

 

 

181,631

 

 

 

293,521

 

 

 

356,570

 

 

 

53,622

 

 

 

18,935

 

 

 

1,832,814

 

 

 

421

 

 

 

2,844,233

 

Overdrafts

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

19,172

 

 

 

—

 

 

 

19,172

 

Total Commercial and industrial

 

 

2,239,634

 

 

 

2,745,163

 

 

 

1,976,059

 

 

 

1,196,855

 

 

 

806,590

 

 

 

604,667

 

 

 

8,349,926

 

 

 

20,868

 

 

 

17,939,762

 

Current period charge-offs

 

 

15

 

 

 

—

 

 

 

41

 

 

 

102

 

 

 

71

 

 

 

603

 

 

 

11,440

 

 

 

—

 

 

 

12,272

 

Specialty lending:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based lending

 

 

51,570

 

 

 

38,437

 

 

 

2,989

 

 

 

—

 

 

 

6,433

 

 

 

46,332

 

 

 

511,949

 

 

 

—

 

 

 

657,710

 

Total Specialty lending

 

 

51,570

 

 

 

38,437

 

 

 

2,989

 

 

 

—

 

 

 

6,433

 

 

 

46,332

 

 

 

511,949

 

 

 

—

 

 

 

657,710

 

Current period charge-offs

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owner-occupied

 

 

535,382

 

 

 

1,157,525

 

 

 

557,615

 

 

 

505,468

 

 

 

885,425

 

 

 

1,288,592

 

 

 

46,994

 

 

 

538

 

 

 

4,977,539

 

Non-owner-occupied

 

 

960,336

 

 

 

1,502,277

 

 

 

739,683

 

 

 

548,768

 

 

 

997,794

 

 

 

1,268,408

 

 

 

39,333

 

 

 

—

 

 

 

6,056,599

 

Farmland

 

 

111,106

 

 

 

264,017

 

 

 

68,862

 

 

 

63,823

 

 

 

96,724

 

 

 

214,606

 

 

 

62,025

 

 

 

—

 

 

 

881,163

 

5+ Multi-family

 

 

255,240

 

 

 

95,985

 

 

 

194,816

 

 

 

132,012

 

 

 

567,165

 

 

 

473,161

 

 

 

6,289

 

 

 

—

 

 

 

1,724,668

 

1-4 Family construction

 

 

51,421

 

 

 

40,213

 

 

 

25,236

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

116,870

 

General construction

 

 

505,979

 

 

 

825,964

 

 

 

562,440

 

 

 

564,466

 

 

 

288,487

 

 

 

18,716

 

 

 

44,472

 

 

 

—

 

 

 

2,810,524

 

Total Commercial real estate

 

 

2,419,464

 

 

 

3,885,981

 

 

 

2,148,652

 

 

 

1,814,537

 

 

 

2,835,595

 

 

 

3,263,483

 

 

 

199,113

 

 

 

538

 

 

 

16,567,363

 

Current period charge-offs

 

 

—

 

 

 

—

 

 

 

403

 

 

 

6,145

 

 

 

4,394

 

 

 

995

 

 

 

—

 

 

 

—

 

 

 

11,937

 

Consumer real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HELOC

 

 

591

 

 

 

1,367

 

 

 

478

 

 

 

2,128

 

 

 

2,561

 

 

 

8,528

 

 

 

749,509

 

 

 

2,996

 

 

 

768,158

 

First lien: 1-4 family

 

 

381,589

 

 

 

574,413

 

 

 

323,306

 

 

 

317,289

 

 

 

593,506

 

 

 

1,439,016

 

 

 

855

 

 

 

1,333

 

 

 

3,631,307

 

Junior lien: 1-4 family

 

 

9,881

 

 

 

15,698

 

 

 

24,973

 

 

 

17,417

 

 

 

25,230

 

 

 

21,062

 

 

 

491

 

 

 

—

 

 

 

114,752

 

Total Consumer real estate

 

 

392,061

 

 

 

591,478

 

 

 

348,757

 

 

 

336,834

 

 

 

621,297

 

 

 

1,468,606

 

 

 

750,855

 

 

 

4,329

 

 

 

4,514,217

 

Current period charge-offs

 

 

—

 

 

 

—

 

 

 

29

 

 

 

371

 

 

 

167

 

 

 

327

 

 

 

5

 

 

 

—

 

 

 

899

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revolving line

 

 

—

 

 

 

484

 

 

 

34

 

 

 

96

 

 

 

442

 

 

 

707

 

 

 

160,755

 

 

 

6,984

 

 

 

169,502

 

Auto

 

 

6,530

 

 

 

6,380

 

 

 

5,421

 

 

 

6,891

 

 

 

3,407

 

 

 

608

 

 

 

—

 

 

 

—

 

 

 

29,237

 

Other

 

 

5,293

 

 

 

10,126

 

 

 

7,422

 

 

 

2,483

 

 

 

5,301

 

 

 

1,538

 

 

 

38,295

 

 

 

—

 

 

 

70,458

 

Total Consumer

 

 

11,823

 

 

 

16,990

 

 

 

12,877

 

 

 

9,470

 

 

 

9,150

 

 

 

2,853

 

 

 

199,050

 

 

 

6,984

 

 

 

269,197

 

Current period charge-offs

 

 

—

 

 

 

19

 

 

 

47

 

 

 

56

 

 

 

103

 

 

 

12

 

 

 

1,820

 

 

 

—

 

 

 

2,057

 

Credit cards:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

348,172

 

 

 

—

 

 

 

348,172

 

Commercial

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

353,060

 

 

 

—

 

 

 

353,060

 

Total Credit cards

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

701,232

 

 

 

—

 

 

 

701,232

 

Current period charge-offs

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

12,202

 

 

 

—

 

 

 

12,202

 

Leases and other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leases

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

933

 

 

 

—

 

 

 

—

 

 

 

933

 

Other

 

 

69,283

 

 

 

166,648

 

 

 

15,240

 

 

 

7,871

 

 

 

7,149

 

 

 

10,744

 

 

 

222,377

 

 

 

—

 

 

 

499,312

 

Total Leases and other

 

 

69,283

 

 

 

166,648

 

 

 

15,240

 

 

 

7,871

 

 

 

7,149

 

 

 

11,677

 

 

 

222,377

 

 

 

—

 

 

 

500,245

 

Current period charge-offs

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total loans

 

$

5,183,835

 

 

$

7,444,697

 

 

$

4,504,574

 

 

$

3,365,567

 

 

$

4,286,214

 

 

$

5,397,618

 

 

$

10,934,502

 

 

$

32,719

 

 

$

41,149,726

 

 

 
16

 

 

 

 

December 31, 2025

 

 

 

Amortized Cost Basis by Origination Year - Term Loans

 

 

 

 

 

 

 

 

 

 

Loan Segment
and Type

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

Prior

 

 

Amortized Cost - Revolving Loans

 

 

Amortized Cost - Revolving Loans Converted to Term Loans

 

 

Total

 

Commercial and industrial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment/Accounts Receivable/Inventory

 

$

2,989,029

 

 

$

1,901,767

 

 

$

1,039,595

 

 

$

929,230

 

 

$

471,193

 

 

$

321,761

 

 

$

5,636,442

 

 

$

12,186

 

 

$

13,301,203

 

Agriculture

 

 

30,385

 

 

 

22,585

 

 

 

24,980

 

 

 

7,827

 

 

 

3,859

 

 

 

3,180

 

 

 

426,729

 

 

 

2,258

 

 

 

521,803

 

NDFIs

 

 

130,392

 

 

 

286,076

 

 

 

368,137

 

 

 

86,436

 

 

 

12,136

 

 

 

29,406

 

 

 

1,517,283

 

 

 

271

 

 

 

2,430,137

 

Overdrafts

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

17,377

 

 

 

—

 

 

 

17,377

 

Total Commercial and industrial

 

 

3,149,806

 

 

 

2,210,428

 

 

 

1,432,712

 

 

 

1,023,493

 

 

 

487,188

 

 

 

354,347

 

 

 

7,597,831

 

 

 

14,715

 

 

 

16,270,520

 

Specialty lending:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based lending

 

 

46,480

 

 

 

5,639

 

 

 

—

 

 

 

5,801

 

 

 

25,763

 

 

 

22,632

 

 

 

411,922

 

 

 

—

 

 

 

518,237

 

Total Specialty lending

 

 

46,480

 

 

 

5,639

 

 

 

—

 

 

 

5,801

 

 

 

25,763

 

 

 

22,632

 

 

 

411,922

 

 

 

—

 

 

 

518,237

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owner-occupied

 

 

1,151,075

 

 

 

529,761

 

 

 

599,178

 

 

 

955,385

 

 

 

775,378

 

 

 

724,775

 

 

 

39,505

 

 

 

—

 

 

 

4,775,057

 

Non-owner-occupied

 

 

1,664,285

 

 

 

656,031

 

 

 

847,458

 

 

 

1,018,831

 

 

 

769,616

 

 

 

736,502

 

 

 

41,093

 

 

 

1,054

 

 

 

5,734,870

 

Farmland

 

 

258,796

 

 

 

74,542

 

 

 

85,814

 

 

 

131,009

 

 

 

83,613

 

 

 

163,318

 

 

 

66,403

 

 

 

75

 

 

 

863,570

 

5+ Multi-family

 

 

329,902

 

 

 

179,107

 

 

 

171,945

 

 

 

554,125

 

 

 

434,660

 

 

 

96,475

 

 

 

10,441

 

 

 

—

 

 

 

1,776,655

 

1-4 Family construction

 

 

75,849

 

 

 

11,564

 

 

 

240

 

 

 

520

 

 

 

—

 

 

 

—

 

 

 

1,301

 

 

 

—

 

 

 

89,474

 

General construction

 

 

1,099,253

 

 

 

868,115

 

 

 

719,128

 

 

 

373,196

 

 

 

28,313

 

 

 

16,273

 

 

 

32,335

 

 

 

—

 

 

 

3,136,613

 

Total Commercial real estate

 

 

4,579,160

 

 

 

2,319,120

 

 

 

2,423,763

 

 

 

3,033,066

 

 

 

2,091,580

 

 

 

1,737,343

 

 

 

191,078

 

 

 

1,129

 

 

 

16,376,239

 

Consumer real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HELOC

 

 

2,748

 

 

 

399

 

 

 

756

 

 

 

2,075

 

 

 

577

 

 

 

7,784

 

 

 

698,503

 

 

 

5,331

 

 

 

718,173

 

First lien: 1-4 family

 

 

653,333

 

 

 

368,156

 

 

 

364,405

 

 

 

631,555

 

 

 

735,751

 

 

 

830,570

 

 

 

6,864

 

 

 

13

 

 

 

3,590,647

 

Junior lien: 1-4 family

 

 

20,458

 

 

 

31,221

 

 

 

19,212

 

 

 

28,538

 

 

 

17,405

 

 

 

6,048

 

 

 

4,766

 

 

 

—

 

 

 

127,648

 

Total Consumer real estate

 

 

676,539

 

 

 

399,776

 

 

 

384,373

 

 

 

662,168

 

 

 

753,733

 

 

 

844,402

 

 

 

710,133

 

 

 

5,344

 

 

 

4,436,468

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revolving line

 

 

1,485

 

 

 

34

 

 

 

23

 

 

 

49

 

 

 

24

 

 

 

526

 

 

 

160,454

 

 

 

102

 

 

 

162,697

 

Auto

 

 

8,179

 

 

 

7,292

 

 

 

9,743

 

 

 

5,307

 

 

 

1,118

 

 

 

248

 

 

 

—

 

 

 

—

 

 

 

31,887

 

Other

 

 

12,907

 

 

 

11,197

 

 

 

3,514

 

 

 

5,917

 

 

 

853

 

 

 

1,272

 

 

 

8,567

 

 

 

—

 

 

 

44,227

 

Total Consumer

 

 

22,571

 

 

 

18,523

 

 

 

13,280

 

 

 

11,273

 

 

 

1,995

 

 

 

2,046

 

 

 

169,021

 

 

 

102

 

 

 

238,811

 

Credit cards:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

347,749

 

 

 

—

 

 

 

347,749

 

Commercial

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

352,984

 

 

 

—

 

 

 

352,984

 

Total Credit cards

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

700,733

 

 

 

—

 

 

 

700,733

 

Leases and other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leases

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,214

 

 

 

—

 

 

 

—

 

 

 

1,214

 

Other

 

 

181,160

 

 

 

16,408

 

 

 

8,588

 

 

 

8,713

 

 

 

7,344

 

 

 

1,671

 

 

 

13,302

 

 

 

—

 

 

 

237,186

 

Total Leases and other

 

 

181,160

 

 

 

16,408

 

 

 

8,588

 

 

 

8,713

 

 

 

7,344

 

 

 

2,885

 

 

 

13,302

 

 

 

—

 

 

 

238,400

 

Total loans

 

$

8,655,716

 

 

$

4,969,894

 

 

$

4,262,716

 

 

$

4,744,514

 

 

$

3,367,603

 

 

$

2,963,655

 

 

$

9,794,020

 

 

$

21,290

 

 

$

38,779,408

 

 
Accrued interest on loans totaled $ 174.1 million and $ 176.1 million as of June 30, 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 basis of loans presented above. Further, the Company has elected not to measure an allowance for credit losses for accrued interest receivable.

 
17

 

Credit Quality Indicators
As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to the risk grading of specified classes of loans, net charge-offs, non-performing loans, and general economic conditions.
The Company utilizes a risk grading matrix to assign a rating to each of its commercial, commercial real estate, and construction real estate loans. Changes in credit risk are monitored on a continuous basis and changes in risk ratings are made when identified. The loan ratings are summarized into the following categories: Pass, Special Mention, Substandard, and Doubtful. Any loan not classified in one of the categories described below is considered to be a Pass loan. A description of the general characteristics of the loan rating categories is as follows:
• Special Mention – This rating reflects a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or the borrower’s credit position at some future date. The rating is not adversely classified and does not expose an institution to sufficient risk to warrant adverse classification.

• Substandard – This rating represents an asset inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Loans in this category are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified as substandard.

• Doubtful – This rating represents an asset that has all the weaknesses inherent in an asset classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work to the advantage of strengthening the asset, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, liquidation procedures, capital injection, or perfecting liens.

 
Commercial and industrial
A discussion of the credit quality indicators that impact each type of collateral securing Commercial and industrial loans is included below:
Equipment, accounts receivable, and inventory General commercial and industrial loans are secured by working capital assets and non-real estate assets. The general purpose of these loans is for financing capital expenditures and current operations for commercial and industrial entities. These assets are short-term in nature. In the case of accounts receivable and inventories, the repayment of debt is reliant upon converting assets into cash or through goods and services being sold and collected. Collateral-based risk is due to aged short-term assets, which can be indicative of underlying issues with the borrower and lead to the value of the collateral being overstated.
Agriculture Agricultural loans are secured by non-real estate agricultural assets. These include shorter-term assets such as equipment, crops, and livestock. The risks associated with loans to finance crops or livestock include the borrower’s ability to successfully raise and market the commodity. Adverse weather conditions and other natural perils can dramatically affect farmers’ or ranchers’ production and ability to service debt. Volatile commodity prices present another significant risk for agriculture borrowers. Market price volatility and production cost volatility can affect both revenues and expenses.
Non-Depository Financial Institutions NDFI loans are secured by working capital assets and non-real estate assets. The general purpose of these loans is for financing capital expenditures and current operations. The repayment of debt is reliant upon converting assets into cash or through services being sold and collected. Collateral-based risk is due to aged short-term assets, which can be indicative of underlying issues with the borrower and lead to the value of the collateral being overstated. Other risks consist of collateral that is secured by the stock

 
18

 

of a NDFI, which can be unlisted stock with a limited market for the stock, or volatility of asset values driven by market performance.
Overdrafts Commercial overdrafts are typically short-term and unsecured. Some commercial borrowers tie their overdraft obligation to their line of credit, so any draw on the line of credit will satisfy the overdraft.
Based on the factors noted above for each type of collateral, the Company assigns risk ratings to borrowers based on their most recently assessed financial position.
The following tables provide a summary of the amortized cost balance by collateral type and risk rating as of June 30, 2026 and December 31, 2025 (in thousands):
 

 

 

June 30, 2026

 

 

 

Amortized Cost Basis by Origination Year - Term Loans

 

 

 

 

 

 

 

 

 

 

Risk by Collateral

 

2026

 

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

Prior

 

 

Amortized Cost - Revolving Loans

 

 

Amortized Cost - Revolving Loans Converted to Term Loans

 

 

Total

 

Equipment/Accounts Receivable/Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

2,064,385

 

 

$

2,507,694

 

 

$

1,616,205

 

 

$

780,852

 

 

$

696,623

 

 

$

574,866

 

 

$

5,920,736

 

 

$

10,201

 

 

$

14,171,562

 

Special Mention

 

 

102

 

 

 

3,705

 

 

 

30,810

 

 

 

9,142

 

 

 

2,228

 

 

 

1,055

 

 

 

90,700

 

 

 

—

 

 

 

137,742

 

Substandard

 

 

52,206

 

 

 

23,283

 

 

 

13,460

 

 

 

29,594

 

 

 

48,810

 

 

 

5,970

 

 

 

132,934

 

 

 

10,246

 

 

 

316,503

 

Doubtful

 

 

500

 

 

 

4,070

 

 

 

4,066

 

 

 

14

 

 

 

—

 

 

 

—

 

 

 

462

 

 

 

—

 

 

 

9,112

 

Total Equipment/Accounts Receivable/Inventory

 

$

2,117,193

 

 

$

2,538,752

 

 

$

1,664,541

 

 

$

819,602

 

 

$

747,661

 

 

$

581,891

 

 

$

6,144,832

 

 

$

20,447

 

 

$

14,634,919

 

Agriculture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

12,983

 

 

$

23,035

 

 

$

17,700

 

 

$

20,333

 

 

$

5,206

 

 

$

3,466

 

 

$

337,635

 

 

$

—

 

 

$

420,358

 

Special Mention

 

 

2,447

 

 

 

1,571

 

 

 

—

 

 

 

252

 

 

 

51

 

 

 

36

 

 

 

3,922

 

 

 

—

 

 

 

8,279

 

Substandard

 

 

292

 

 

 

174

 

 

 

297

 

 

 

98

 

 

 

50

 

 

 

339

 

 

 

11,551

 

 

 

—

 

 

 

12,801

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total Agriculture

 

$

15,722

 

 

$

24,780

 

 

$

17,997

 

 

$

20,683

 

 

$

5,307

 

 

$

3,841

 

 

$

353,108

 

 

$

—

 

 

$

441,438

 

NDFIs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

106,719

 

 

$

181,351

 

 

$

286,906

 

 

$

354,035

 

 

$

50,955

 

 

$

18,927

 

 

$

1,821,067

 

 

$

421

 

 

$

2,820,381

 

Special Mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

11,747

 

 

 

—

 

 

 

11,747

 

Substandard

 

 

—

 

 

 

280

 

 

 

6,615

 

 

 

2,535

 

 

 

2,667

 

 

 

8

 

 

 

—

 

 

 

—

 

 

 

12,105

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total NDFIs

 

$

106,719

 

 

$

181,631

 

 

$

293,521

 

 

$

356,570

 

 

$

53,622

 

 

$

18,935

 

 

$

1,832,814

 

 

$

421

 

 

$

2,844,233

 

 

 
19

 

 

 

December 31, 2025

 

 

 

Amortized Cost Basis by Origination Year - Term Loans

 

 

 

 

 

 

 

 

 

 

Risk by Collateral

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

Prior

 

 

Amortized Cost - Revolving Loans

 

 

Amortized Cost - Revolving Loans Converted to Term Loans

 

 

Total

 

Equipment/Accounts Receivable/Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

2,958,147

 

 

$

1,842,768

 

 

$

982,320

 

 

$

874,006

 

 

$

462,210

 

 

$

302,753

 

 

$

5,404,325

 

 

$

4,492

 

 

$

12,831,021

 

Special Mention

 

 

4,962

 

 

 

37,671

 

 

 

7,883

 

 

 

6,085

 

 

 

893

 

 

 

9,535

 

 

 

63,256

 

 

 

6,635

 

 

 

136,920

 

Substandard

 

 

21,647

 

 

 

17,207

 

 

 

49,292

 

 

 

49,139

 

 

 

8,090

 

 

 

9,473

 

 

 

168,348

 

 

 

1,059

 

 

 

324,255

 

Doubtful

 

 

4,273

 

 

 

4,121

 

 

 

100

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

513

 

 

 

—

 

 

 

9,007

 

Total Equipment/Accounts Receivable/Inventory

 

$

2,989,029

 

 

$

1,901,767

 

 

$

1,039,595

 

 

$

929,230

 

 

$

471,193

 

 

$

321,761

 

 

$

5,636,442

 

 

$

12,186

 

 

$

13,301,203

 

Agriculture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

26,921

 

 

$

22,252

 

 

$

24,757

 

 

$

7,254

 

 

$

3,824

 

 

$

2,622

 

 

$

406,985

 

 

$

815

 

 

$

495,430

 

Special Mention

 

 

2,464

 

 

 

—

 

 

 

—

 

 

 

71

 

 

 

35

 

 

 

—

 

 

 

5,374

 

 

 

—

 

 

 

7,944

 

Substandard

 

 

1,000

 

 

 

333

 

 

 

223

 

 

 

502

 

 

 

—

 

 

 

558

 

 

 

14,370

 

 

 

—

 

 

 

16,986

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,443

 

 

 

1,443

 

Total Agriculture

 

$

30,385

 

 

$

22,585

 

 

$

24,980

 

 

$

7,827

 

 

$

3,859

 

 

$

3,180

 

 

$

426,729

 

 

$

2,258

 

 

$

521,803

 

NDFIs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

129,859

 

 

$

277,053

 

 

$

364,738

 

 

$

82,934

 

 

$

11,470

 

 

$

29,289

 

 

$

1,489,473

 

 

$

221

 

 

$

2,385,037

 

Special Mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2

 

 

 

—

 

 

 

27,810

 

 

 

50

 

 

 

27,862

 

Substandard

 

 

533

 

 

 

9,023

 

 

 

3,399

 

 

 

3,502

 

 

 

664

 

 

 

117

 

 

 

—

 

 

 

—

 

 

 

17,238

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total NDFIs

 

$

130,392

 

 

$

286,076

 

 

$

368,137

 

 

$

86,436

 

 

$

12,136

 

 

$

29,406

 

 

$

1,517,283

 

 

$

271

 

 

$

2,430,137

 

 
Specialty lending
A discussion of the credit quality indicators that impact each type of collateral securing Specialty loans is included below:
Asset-based lending General asset-based loans are secured by accounts receivable, inventory, equipment, and real estate. The purpose of these loans is for financing current operations for commercial customers. The repayment of debt is reliant upon collection of the accounts receivable within 30 to 90 days or converting assets into cash or through goods and services being sold and collected. The Company tracks each individual borrower credit risk based on their loan to collateral position. Any borrower position where the underlying value of collateral is below the fair value of the loan is considered out-of-margin and inherently higher risk.
The following table provides a summary of the amortized cost balance by risk rating for asset-based loans as of June 30, 2026 and December 31, 2025 (in thousands):
 

 

 

Asset-based lending

 

Risk

 

June 30, 2026

 

 

December 31, 2025

 

In-margin

 

$

657,710

 

 

$

518,237

 

Out-of-margin

 

 

—

 

 

 

—

 

Total

 

$

657,710

 

 

$

518,237

 

 

 
20

 

 
Commercial real estate
A discussion of the credit quality indicators that impact each type of collateral securing Commercial real estate loans is included below:
Owner-occupied Owner-occupied loans are secured by commercial real estate. These loans are often longer tenured and susceptible to multiple economic cycles. The loans rely on the owner-occupied operations to service debt which cover a broad spectrum of industries. Real estate debt can carry a significant amount of leverage for a borrower to maintain.
Non-owner-occupied Non-owner-occupied loans are secured by commercial real estate. These loans are often longer tenured and susceptible to multiple economic cycles. The key element of risk in this type of lending is the cyclical nature of real estate markets. Although national conditions affect the overall real estate industry, the effect of national conditions on local markets is equally important. Factors such as unemployment rates, consumer demand, household formation, and the level of economic activity can vary widely from state to state and among metropolitan areas. In addition to geographic considerations, markets can be defined by property type. While all sectors are influenced by economic conditions, some sectors are more sensitive to certain economic factors than others.
Farmland Farmland loans are secured by real estate used for agricultural purposes such as crop and livestock production. Assets used as collateral are long-term assets that carry the ability to have longer amortizations and maturities. Longer terms carry the risk of added susceptibility to market conditions. The limited purpose of some Agriculture-related collateral affects credit risk because such collateral may have limited or no other uses to support values when loan repayment problems emerge.
5+ Multi-family 5+ multi-family loans are secured by a multi-family residential property. The primary risks associated with this type of collateral are largely driven by economic conditions. The national and local market conditions can change with unemployment rates or competing supply of multi-family housing. Tenants may not be able to afford their housing or have better options and this can result in increased vacancy. Rents may need to be lowered to fill apartment units. Increased vacancy and lower rental rates not only drive the borrower’s ability to repay debt but also contribute to how the collateral is valued.
1-4 Family construction 1-4 family construction loans are secured by 1-4 family residential real estate and are in the process of construction or improvements being made. The predominant risk inherent to this portfolio is the risk associated with a borrower’s ability to successfully complete a project on time and within budget. Market conditions also play an important role in understanding the risk profile. Risk from adverse changes in market conditions from the start of development to completion can result in deflated collateral values.
General construction General construction loans are secured by commercial real estate in process of construction or improvements being made and their repayment is dependent on the collateral’s completion. Construction lending presents unique risks not encountered in term financing of existing real estate. The predominant risk inherent to this portfolio is the risk associated with a borrower’s ability to successfully complete a project on time and within budget. Commercial properties under construction are susceptible to market and economic conditions. Demand from prospective customers may erode after construction begins because of a general economic slowdown or an increase in the supply of competing properties.
Based on the factors noted above for each type of collateral, the Company assigns risk ratings to borrowers based on their most recently assessed financial position.
The following tables provide a summary of the amortized cost balance by collateral type and risk rating as of June 30, 2026 and December 31, 2025 (in thousands):

 
21

 

 

 

June 30, 2026

 

 

 

Amortized Cost Basis by Origination Year - Term Loans

 

 

 

 

 

 

 

 

 

 

Risk by Collateral

 

2026

 

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

Prior

 

 

Amortized Cost - Revolving Loans

 

 

Amortized Cost - Revolving Loans Converted to Term Loans

 

 

Total

 

Owner-occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

477,420

 

 

$

1,143,977

 

 

$

554,446

 

 

$

463,876

 

 

$

843,516

 

 

$

1,244,377

 

 

$

46,004

 

 

$

538

 

 

$

4,774,154

 

Special Mention

 

 

51,659

 

 

 

3,689

 

 

 

116

 

 

 

—

 

 

 

16,406

 

 

 

15,850

 

 

 

340

 

 

 

—

 

 

 

88,060

 

Substandard

 

 

6,303

 

 

 

9,859

 

 

 

3,053

 

 

 

41,592

 

 

 

25,503

 

 

 

28,365

 

 

 

650

 

 

 

—

 

 

 

115,325

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total Owner-occupied

 

$

535,382

 

 

$

1,157,525

 

 

$

557,615

 

 

$

505,468

 

 

$

885,425

 

 

$

1,288,592

 

 

$

46,994

 

 

$

538

 

 

$

4,977,539

 

Non-owner-occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

931,798

 

 

$

1,502,277

 

 

$

735,807

 

 

$

527,055

 

 

$

974,214

 

 

$

1,225,011

 

 

$

34,371

 

 

$

—

 

 

$

5,930,533

 

Special Mention

 

 

—

 

 

 

—

 

 

 

1,877

 

 

 

16,581

 

 

 

8,373

 

 

 

15,955

 

 

 

—

 

 

 

—

 

 

 

42,786

 

Substandard

 

 

28,538

 

 

 

—

 

 

 

1,999

 

 

 

5,128

 

 

 

15,207

 

 

 

27,442

 

 

 

4,962

 

 

 

—

 

 

 

83,276

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

Total Non-owner-occupied

 

$

960,336

 

 

$

1,502,277

 

 

$

739,683

 

 

$

548,768

 

 

$

997,794

 

 

$

1,268,408

 

 

$

39,333

 

 

$

—

 

 

$

6,056,599

 

Farmland

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

101,410

 

 

$

232,209

 

 

$

62,847

 

 

$

46,198

 

 

$

84,721

 

 

$

176,726

 

 

$

61,026

 

 

$

—

 

 

$

765,137

 

Special Mention

 

 

5,325

 

 

 

23,286

 

 

 

185

 

 

 

236

 

 

 

629

 

 

 

3,200

 

 

 

—

 

 

 

—

 

 

 

32,861

 

Substandard

 

 

4,371

 

 

 

8,522

 

 

 

5,830

 

 

 

17,389

 

 

 

11,374

 

 

 

34,680

 

 

 

999

 

 

 

—

 

 

 

83,165

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total Farmland

 

$

111,106

 

 

$

264,017

 

 

$

68,862

 

 

$

63,823

 

 

$

96,724

 

 

$

214,606

 

 

$

62,025

 

 

$

—

 

 

$

881,163

 

5+ Multi-family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

216,409

 

 

$

95,985

 

 

$

194,816

 

 

$

113,863

 

 

$

558,021

 

 

$

472,075

 

 

$

6,284

 

 

$

—

 

 

$

1,657,453

 

Special Mention

 

 

38,831

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

97

 

 

 

1,086

 

 

 

5

 

 

 

—

 

 

 

40,019

 

Substandard

 

 

—

 

 

 

—

 

 

 

—

 

 

 

18,149

 

 

 

9,047

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

27,196

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total 5+ Multi-family

 

$

255,240

 

 

$

95,985

 

 

$

194,816

 

 

$

132,012

 

 

$

567,165

 

 

$

473,161

 

 

$

6,289

 

 

$

—

 

 

$

1,724,668

 

1-4 Family construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

50,751

 

 

$

40,213

 

 

$

24,781

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

115,745

 

Special Mention

 

 

670

 

 

 

—

 

 

 

455

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,125

 

Substandard

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total 1-4 Family construction

 

$

51,421

 

 

$

40,213

 

 

$

25,236

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

116,870

 

General construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

494,647

 

 

$

811,295

 

 

$

558,292

 

 

$

527,131

 

 

$

249,472

 

 

$

15,398

 

 

$

37,222

 

 

$

—

 

 

$

2,693,457

 

Special Mention

 

 

3,693

 

 

 

14,570

 

 

 

4,148

 

 

 

404

 

 

 

19,334

 

 

 

1,865

 

 

 

—

 

 

 

—

 

 

 

44,014

 

Substandard

 

 

7,639

 

 

 

—

 

 

 

—

 

 

 

36,931

 

 

 

19,681

 

 

 

1,453

 

 

 

7,250

 

 

 

—

 

 

 

72,954

 

Doubtful

 

 

—

 

 

 

99

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

99

 

Total General construction

 

$

505,979

 

 

$

825,964

 

 

$

562,440

 

 

$

564,466

 

 

$

288,487

 

 

$

18,716

 

 

$

44,472

 

 

$

—

 

 

$

2,810,524

 

 

 
22

 

 

 

December 31, 2025

 

 

 

Amortized Cost Basis by Origination Year - Term Loans

 

 

 

 

 

 

 

 

 

 

Risk by Collateral

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

Prior

 

 

Amortized Cost - Revolving Loans

 

 

Amortized Cost - Revolving Loans Converted to Term Loans

 

 

Total

 

Owner-occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

1,135,389

 

 

$

489,616

 

 

$

529,515

 

 

$

904,187

 

 

$

751,944

 

 

$

681,592

 

 

$

39,385

 

 

$

—

 

 

$

4,531,628

 

Special Mention

 

 

4,148

 

 

 

37,092

 

 

 

19,605

 

 

 

30,991

 

 

 

11,892

 

 

 

27,290

 

 

 

120

 

 

 

—

 

 

 

131,138

 

Substandard

 

 

11,538

 

 

 

3,053

 

 

 

50,058

 

 

 

20,207

 

 

 

11,542

 

 

 

15,893

 

 

 

—

 

 

 

—

 

 

 

112,291

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total Owner-occupied

 

$

1,151,075

 

 

$

529,761

 

 

$

599,178

 

 

$

955,385

 

 

$

775,378

 

 

$

724,775

 

 

$

39,505

 

 

$

—

 

 

$

4,775,057

 

Non-owner-occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

1,619,478

 

 

$

652,107

 

 

$

827,493

 

 

$

974,293

 

 

$

749,272

 

 

$

716,905

 

 

$

36,134

 

 

$

1,054

 

 

$

5,576,736

 

Special Mention

 

 

23,339

 

 

 

1,950

 

 

 

—

 

 

 

19,994

 

 

 

745

 

 

 

12,307

 

 

 

—

 

 

 

—

 

 

 

58,335

 

Substandard

 

 

21,468

 

 

 

1,974

 

 

 

7,013

 

 

 

17,856

 

 

 

19,599

 

 

 

7,290

 

 

 

4,959

 

 

 

—

 

 

 

80,159

 

Doubtful

 

 

—

 

 

 

—

 

 

 

12,952

 

 

 

6,688

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

19,640

 

Total Non-owner-occupied

 

$

1,664,285

 

 

$

656,031

 

 

$

847,458

 

 

$

1,018,831

 

 

$

769,616

 

 

$

736,502

 

 

$

41,093

 

 

$

1,054

 

 

$

5,734,870

 

Farmland

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

230,559

 

 

$

67,852

 

 

$

65,697

 

 

$

116,281

 

 

$

80,909

 

 

$

124,702

 

 

$

65,013

 

 

$

75

 

 

$

751,088

 

Special Mention

 

 

18,101

 

 

 

342

 

 

 

—

 

 

 

115

 

 

 

120

 

 

 

1,869

 

 

 

—

 

 

 

—

 

 

 

20,547

 

Substandard

 

 

10,136

 

 

 

6,348

 

 

 

20,117

 

 

 

14,613

 

 

 

2,584

 

 

 

36,747

 

 

 

1,390

 

 

 

—

 

 

 

91,935

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total Farmland

 

$

258,796

 

 

$

74,542

 

 

$

85,814

 

 

$

131,009

 

 

$

83,613

 

 

$

163,318

 

 

$

66,403

 

 

$

75

 

 

$

863,570

 

5+ Multi-family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

329,902

 

 

$

179,107

 

 

$

157,535

 

 

$

543,003

 

 

$

426,213

 

 

$

96,282

 

 

$

10,441

 

 

$

—

 

 

$

1,742,483

 

Special Mention

 

 

—

 

 

 

—

 

 

 

238

 

 

 

2,891

 

 

 

8,447

 

 

 

193

 

 

 

—

 

 

 

—

 

 

 

11,769

 

Substandard

 

 

—

 

 

 

—

 

 

 

14,172

 

 

 

8,231

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

22,403

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total 5+ Multi-family

 

$

329,902

 

 

$

179,107

 

 

$

171,945

 

 

$

554,125

 

 

$

434,660

 

 

$

96,475

 

 

$

10,441

 

 

$

—

 

 

$

1,776,655

 

1-4 Family construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

74,900

 

 

$

11,104

 

 

$

—

 

 

$

520

 

 

$

—

 

 

$

—

 

 

$

1,301

 

 

$

—

 

 

$

87,825

 

Special Mention

 

 

949

 

 

 

460

 

 

 

240

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,649

 

Substandard

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total 1-4 Family construction

 

$

75,849

 

 

$

11,564

 

 

$

240

 

 

$

520

 

 

$

—

 

 

$

—

 

 

$

1,301

 

 

$

—

 

 

$

89,474

 

General construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

1,078,840

 

 

$

865,015

 

 

$

684,507

 

 

$

333,717

 

 

$

23,062

 

 

$

14,951

 

 

$

25,085

 

 

$

—

 

 

$

3,025,177

 

Special Mention

 

 

14,579

 

 

 

3,100

 

 

 

128

 

 

 

18,919

 

 

 

1,903

 

 

 

29

 

 

 

—

 

 

 

—

 

 

 

38,658

 

Substandard

 

 

5,732

 

 

 

—

 

 

 

34,493

 

 

 

20,560

 

 

 

3,348

 

 

 

1,293

 

 

 

7,250

 

 

 

—

 

 

 

72,676

 

Doubtful

 

 

102

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

102

 

Total General construction

 

$

1,099,253

 

 

$

868,115

 

 

$

719,128

 

 

$

373,196

 

 

$

28,313

 

 

$

16,273

 

 

$

32,335

 

 

$

—

 

 

$

3,136,613

 

Consumer real estate
A discussion of the credit quality indicators that impact each type of collateral securing Consumer real estate loans is included below:
HELOC HELOC loans are revolving lines of credit secured by 1-4 family residential property. The primary risk is the borrower’s inability to repay debt. Revolving notes are often associated with HELOCs that can be secured by real estate without a 1st lien priority. Collateral is susceptible to market volatility impacting home values or economic downturns.

 
23

 

First lien: 1-4 family First lien 1-4 family loans are secured by a first lien on 1-4 family residential property. These term loans carry longer maturities and amortizations. The longer tenure exposes the borrower to multiple economic cycles, coupled with longer amortizations that result in smaller principal reduction early in the life of the loan. Collateral is susceptible to market volatility impacting home values.
Junior lien: 1-4 family Junior lien 1-4 family loans are secured by a junior lien on 1-4 family residential property. The Company’s primary risk is the borrower’s inability to repay debt and not being in a first lien position. Collateral is susceptible to market volatility impacting home values or economic downturns.
A borrower is considered non-performing if the Company has ceased the recognition of interest and the loan is placed on non-accrual. Charge-offs and borrower performance are tracked on a loan origination vintage basis. Certain vintages, based on their maturation cycle, could be at higher risk due to collateral-based risk factors.
The following tables provide a summary of the amortized cost balance by collateral type and risk rating as of June 30, 2026 and December 31, 2025 (in thousands):
 

 

 

June 30, 2026

 

 

 

Amortized Cost Basis by Origination Year - Term Loans

 

 

 

 

 

 

 

 

 

 

Risk by Collateral

 

2026

 

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

Prior

 

 

Amortized Cost - Revolving Loans

 

 

Amortized Cost - Revolving Loans Converted to Term Loans

 

 

Total

 

HELOC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

532

 

 

$

1,356

 

 

$

117

 

 

$

1,001

 

 

$

1,787

 

 

$

6,139

 

 

$

749,352

 

 

$

2,546

 

 

$

762,830

 

Non-performing

 

 

59

 

 

 

11

 

 

 

361

 

 

 

1,127

 

 

 

774

 

 

 

2,389

 

 

 

157

 

 

 

450

 

 

 

5,328

 

Total HELOC

 

$

591

 

 

$

1,367

 

 

$

478

 

 

$

2,128

 

 

$

2,561

 

 

$

8,528

 

 

$

749,509

 

 

$

2,996

 

 

$

768,158

 

First lien: 1-4 family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

380,978

 

 

$

572,745

 

 

$

322,776

 

 

$

312,864

 

 

$

586,081

 

 

$

1,430,073

 

 

$

855

 

 

$

1,333

 

 

$

3,607,705

 

Non-performing

 

 

611

 

 

 

1,668

 

 

 

530

 

 

 

4,425

 

 

 

7,425

 

 

 

8,943

 

 

 

—

 

 

 

—

 

 

 

23,602

 

Total First lien: 1-4 family

 

$

381,589

 

 

$

574,413

 

 

$

323,306

 

 

$

317,289

 

 

$

593,506

 

 

$

1,439,016

 

 

$

855

 

 

$

1,333

 

 

$

3,631,307

 

Junior lien: 1-4 family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

9,881

 

 

$

15,698

 

 

$

24,934

 

 

$

17,297

 

 

$

25,178

 

 

$

20,748

 

 

$

491

 

 

$

—

 

 

$

114,227

 

Non-performing

 

 

—

 

 

 

—

 

 

 

39

 

 

 

120

 

 

 

52

 

 

 

314

 

 

 

—

 

 

 

—

 

 

 

525

 

Total Junior lien: 1-4 family

 

$

9,881

 

 

$

15,698

 

 

$

24,973

 

 

$

17,417

 

 

$

25,230

 

 

$

21,062

 

 

$

491

 

 

$

—

 

 

$

114,752

 

 

 
24

 

 

 

December 31, 2025

 

 

 

Amortized Cost Basis by Origination Year - Term Loans

 

 

 

 

 

 

 

 

 

 

Risk by Collateral

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

Prior

 

 

Amortized Cost - Revolving Loans

 

 

Amortized Cost - Revolving Loans Converted to Term Loans

 

 

Total

 

HELOC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

2,736

 

 

$

87

 

 

$

407

 

 

$

1,343

 

 

$

324

 

 

$

5,979

 

 

$

697,853

 

 

$

4,358

 

 

$

713,087

 

Non-performing

 

 

12

 

 

 

312

 

 

 

349

 

 

 

732

 

 

 

253

 

 

 

1,805

 

 

 

650

 

 

 

973

 

 

 

5,086

 

Total HELOC

 

$

2,748

 

 

$

399

 

 

$

756

 

 

$

2,075

 

 

$

577

 

 

$

7,784

 

 

$

698,503

 

 

$

5,331

 

 

$

718,173

 

First lien: 1-4 family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

608,545

 

 

$

367,915

 

 

$

359,419

 

 

$

624,670

 

 

$

732,306

 

 

$

824,314

 

 

$

6,864

 

 

$

13

 

 

$

3,524,046

 

Non-performing

 

 

44,788

 

 

 

241

 

 

 

4,986

 

 

 

6,885

 

 

 

3,445

 

 

 

6,256

 

 

 

—

 

 

 

—

 

 

 

66,601

 

Total First lien: 1-4 family

 

$

653,333

 

 

$

368,156

 

 

$

364,405

 

 

$

631,555

 

 

$

735,751

 

 

$

830,570

 

 

$

6,864

 

 

$

13

 

 

$

3,590,647

 

Junior lien: 1-4 family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

20,419

 

 

$

30,975

 

 

$

19,202

 

 

$

28,417

 

 

$

17,324

 

 

$

5,974

 

 

$

4,766

 

 

$

—

 

 

$

127,077

 

Non-performing

 

 

39

 

 

 

246

 

 

 

10

 

 

 

121

 

 

 

81

 

 

 

74

 

 

 

—

 

 

 

—

 

 

 

571

 

Total Junior lien: 1-4 family

 

$

20,458

 

 

$

31,221

 

 

$

19,212

 

 

$

28,538

 

 

$

17,405

 

 

$

6,048

 

 

$

4,766

 

 

$

—

 

 

$

127,648

 

 
Consumer
A discussion of the credit quality indicators that impact each type of collateral securing Consumer loans is included below:
Revolving line Consumer Revolving lines of credit are secured by consumer assets other than real estate. The primary risk associated with this collateral is related to market volatility and the value of the underlying financial assets.
Auto Direct consumer auto loans are secured by new and used consumer vehicles. The primary risk with this collateral class is the rate at which the collateral depreciates.
Other This category includes Other consumer loans made to an individual. The primary risk for this category is for those loans where the loan is unsecured. This collateral type also includes other unsecured lending such as consumer overdrafts.

 
25

 

A borrower is considered non-performing if the Company has ceased the recognition of interest and the loan is placed on non-accrual. Charge-offs and borrower performance are tracked on a loan origination vintage basis. Certain vintages, based on their maturation cycle, could be at higher risk due to collateral-based risk factors.
The following tables provide a summary of the amortized cost balance by collateral type and risk rating as of June 30, 2026 and December 31, 2025 (in thousands):
 

 

 

June 30, 2026

 

 

 

Amortized Cost Basis by Origination Year - Term Loans

 

 

 

 

 

 

 

 

 

 

Risk by Collateral

 

2026

 

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

Prior

 

 

Amortized Cost - Revolving Loans

 

 

Amortized Cost - Revolving Loans Converted to Term Loans

 

 

Total

 

Revolving line

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

—

 

 

$

484

 

 

$

34

 

 

$

96

 

 

$

442

 

 

$

705

 

 

$

160,751

 

 

$

6,937

 

 

$

169,449

 

Non-performing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2

 

 

 

4

 

 

 

47

 

 

 

53

 

Total Revolving line

 

$

—

 

 

$

484

 

 

$

34

 

 

$

96

 

 

$

442

 

 

$

707

 

 

$

160,755

 

 

$

6,984

 

 

$

169,502

 

Auto

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

6,530

 

 

$

6,380

 

 

$

5,421

 

 

$

6,891

 

 

$

3,375

 

 

$

603

 

 

$

—

 

 

$

—

 

 

$

29,200

 

Non-performing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

32

 

 

 

5

 

 

 

—

 

 

 

—

 

 

 

37

 

Total Auto

 

$

6,530

 

 

$

6,380

 

 

$

5,421

 

 

$

6,891

 

 

$

3,407

 

 

$

608

 

 

$

—

 

 

$

—

 

 

$

29,237

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

5,293

 

 

$

10,126

 

 

$

7,386

 

 

$

2,483

 

 

$

5,283

 

 

$

1,515

 

 

$

38,295

 

 

$

—

 

 

$

70,381

 

Non-performing

 

 

—

 

 

 

—

 

 

 

36

 

 

 

—

 

 

 

18

 

 

 

23

 

 

 

—

 

 

 

—

 

 

 

77

 

Total Other

 

$

5,293

 

 

$

10,126

 

 

$

7,422

 

 

$

2,483

 

 

$

5,301

 

 

$

1,538

 

 

$

38,295

 

 

$

—

 

 

$

70,458

 

 

 

 

December 31, 2025

 

 

 

Amortized Cost Basis by Origination Year - Term Loans

 

 

 

 

 

 

 

 

 

 

Risk by Collateral

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

Prior

 

 

Amortized Cost - Revolving Loans

 

 

Amortized Cost - Revolving Loans Converted to Term Loans

 

 

Total

 

Revolving line

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

1,485

 

 

$

34

 

 

$

23

 

 

$

47

 

 

$

24

 

 

$

525

 

 

$

159,834

 

 

$

99

 

 

$

162,071

 

Non-performing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2

 

 

 

—

 

 

 

1

 

 

 

620

 

 

 

3

 

 

 

626

 

Total Revolving line

 

$

1,485

 

 

$

34

 

 

$

23

 

 

$

49

 

 

$

24

 

 

$

526

 

 

$

160,454

 

 

$

102

 

 

$

162,697

 

Auto

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

8,179

 

 

$

7,292

 

 

$

9,725

 

 

$

5,290

 

 

$

1,109

 

 

$

248

 

 

$

—

 

 

$

—

 

 

$

31,843

 

Non-performing

 

 

—

 

 

 

—

 

 

 

18

 

 

 

17

 

 

 

9

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

44

 

Total Auto

 

$

8,179

 

 

$

7,292

 

 

$

9,743

 

 

$

5,307

 

 

$

1,118

 

 

$

248

 

 

$

—

 

 

$

—

 

 

$

31,887

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

12,905

 

 

$

11,161

 

 

$

3,514

 

 

$

5,893

 

 

$

849

 

 

$

1,245

 

 

$

8,567

 

 

$

—

 

 

$

44,134

 

Non-performing

 

 

2

 

 

 

36

 

 

 

—

 

 

 

24

 

 

 

4

 

 

 

27

 

 

 

—

 

 

 

—

 

 

 

93

 

Total Other

 

$

12,907

 

 

$

11,197

 

 

$

3,514

 

 

$

5,917

 

 

$

853

 

 

$

1,272

 

 

$

8,567

 

 

$

—

 

 

$

44,227

 

 

 
26

 

Credit cards
A discussion of the credit quality indicators that impact Credit card loans is included below:
Consumer Consumer credit card loans are revolving loans made to individuals. The primary risk associated with this collateral class is credit card debt which is generally unsecured; therefore, repayment depends primarily on a borrower’s willingness and capacity to repay. The highly competitive environment for credit card lending provides consumers with ample opportunity to hold several credit cards from different issuers and to pay only minimum monthly payments on outstanding balances. In such an environment, borrowers may become over-extended and unable to repay, particularly in times of an economic downturn or a personal catastrophic event.
The consumer credit card portfolio is segmented by borrower payment activity. Transactors are defined as accounts that pay off their balance by the end of each statement cycle. Revolvers are defined as an account that carries a balance from one statement cycle to the next. These accounts incur monthly finance charges, and, sometimes, late fees. Revolvers are inherently higher risk and are tracked by credit score.
A co-branded credit card portfolio is also segmented between current and significantly delinquent loans, with accounts being considered significantly delinquent after 60 days . Current loans are segmented by borrower payment activity as described above. Significantly delinquent loans are tracked by the number of cycles past due.
Commercial Commercial credit card loans are revolving loans made to small and commercial businesses. The primary risk associated with this collateral class is credit card debt which is generally unsecured; therefore, repayment depends primarily on a borrower’s willingness and capacity to repay. Borrowers may become over-extended and unable to repay, particularly in times of an economic downturn or a catastrophic event.
The commercial credit card portfolio is segmented by current and past due payment status. A borrower is past due after 30 days. In general, commercial credit card customers do not have incentive to hold a balance resulting in paying interest on credit card debt as commercial customers will typically have other debt obligations with lower interest rates in which they can utilize for capital.
The following tables provide a summary of the amortized cost balance of consumer credit cards by risk rating as of June 30, 2026 and December 31, 2025 (in thousands):
 

 

 

Consumer

 

Risk

 

June 30, 2026

 

 

December 31, 2025

 

Transactor accounts

 

$

129,826

 

 

$

123,445

 

Revolver accounts (by credit score):

 

 

 

 

 

 

Less than 600

 

 

12,576

 

 

 

13,123

 

600-619

 

 

6,330

 

 

 

7,127

 

620-639

 

 

11,848

 

 

 

12,243

 

640-659

 

 

19,127

 

 

 

19,679

 

660-679

 

 

20,074

 

 

 

20,261

 

680-699

 

 

22,510

 

 

 

22,814

 

700-719

 

 

24,802

 

 

 

25,385

 

720-739

 

 

22,074

 

 

 

22,547

 

740-759

 

 

19,735

 

 

 

19,838

 

760-779

 

 

19,949

 

 

 

19,864

 

780-799

 

 

17,987

 

 

 

18,774

 

800-819

 

 

11,677

 

 

 

11,782

 

820-839

 

 

5,973

 

 

 

6,151

 

840+

 

 

1,229

 

 

 

1,213

 

Total

 

$

345,717

 

 

$

344,246

 

 

 
27

 

The following table provides a summary of the amortized cost balance of consumer credit cards considered significantly delinquent for a co-branded portfolio by delinquent cycles as of June 30, 2026 and December 31, 2025 (in thousands) :
 

 

 

Consumer

 

Risk

 

June 30, 2026

 

 

December 31, 2025

 

61-90 Days

 

$

665

 

 

$

1,084

 

91-120 Days

 

 

631

 

 

 

848

 

121-150 Days

 

 

597

 

 

 

805

 

151-180 Days

 

 

562

 

 

 

766

 

Total

 

$

2,455

 

 

$

3,503

 

 
The following table provides a summary of the amortized cost balance of commercial credit cards by risk rating as of June 30, 2026 and December 31, 2025 (in thousands):
 

 

 

Commercial

 

Risk

 

June 30, 2026

 

 

December 31, 2025

 

Current

 

$

326,000

 

 

$

330,585

 

Past Due

 

 

27,060

 

 

 

22,399

 

Total

 

$

353,060

 

 

$

352,984

 

 
Leases and other
A discussion of the credit quality indicators that impact each type of collateral securing Leases and other loans is included below:
Leases Leases are either loans to individuals for household, family, and other personal expenditures or are loans related to all other direct financing and leveraged leases on property for leasing to lessees other than for household, family and other personal expenditure purposes. All leases are secured by the lease between the lessor and the lessee. These assignments grant the creditor a security interest in the rent stream from any lease, an important source of cash to pay the note in case of the borrower’s default.
Other Other loans are loans that are obligations of states and political subdivisions in the U.S., loans for purchasing or carrying securities, or all other non-consumer loans. Risk associated with other loans is tied to the underlying collateral by each type of loan. Collateral is generally equipment, accounts receivable, inventory, 1-4 family residential construction and is susceptible to the same risks mentioned with those collateral types previously.
Based on the factors noted above for each type of collateral, the Company assigns risk ratings to borrowers based on their most recently assessed financial position.
The following table provides a summary of the amortized cost balance by collateral type and risk rating as of June 30, 2026 and December 31, 2025 (in thousands):
 

 

 

Leases

 

 

Other

 

Risk

 

June 30, 2026

 

 

December 31, 2025

 

 

June 30, 2026

 

 

December 31, 2025

 

Pass

 

$

933

 

 

$

1,214

 

 

$

499,312

 

 

$

237,186

 

Special Mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Substandard

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total

 

$

933

 

 

$

1,214

 

 

$

499,312

 

 

$

237,186

 

 

 
28

 

Allowance for Credit Losses
The ACL is a valuation account that is deducted from loans’ and held-to-maturity (HTM) securities’ amortized cost bases to present the net amount expected to be collected on the instrument. Loans and HTM securities are charged off against the ACL when management believes the balance has become uncollectible. Expected recoveries are included in the allowance and do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.
Management estimates the allowance balance using relevant available information, from internal and external sources, related to past events, current conditions, and reasonable and supportable economic forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses and is tracked over an economic cycle to capture a ‘through the cycle’ loss history. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in portfolio industry-based segmentation, risk rating and credit score changes, average prepayment rates, changes in environmental conditions, or other relevant factors. For economic forecasts, the Company uses the Moody’s baseline scenario. The Company has developed a dynamic reasonable and supportable forecast period that ranges from one to three years and changes based on economic conditions. The Company’s reasonable and supportable forecast period is one year . After the reasonable and supportable forecast period, the Company reverts to historical losses. The reversion method applied to each portfolio can either be cliff in which the Company reverts immediately to historical losses or straight-line over four quarters.
The ACL is measured on a collective (pool) basis when similar risk characteristics exist. The ACL also incorporates qualitative factors which represent adjustments to historical credit loss experience for items such as concentrations of credit and results of internal loan review. The Company has identified the following portfolio segments and measures the allowance for credit losses using the following methods. The Company’s portfolio segmentation consists of Commercial and industrial, Specialty lending, Commercial real estate, Consumer real estate, Consumer, Credit cards, Leases and other, and Held-to-maturity securities. Multiple modeling techniques are used to measure credit losses based on the portfolio.
The ACL for Commercial and industrial and Leases and other segments are measured using a probability of default and loss given default method. Primary risk drivers within the segment are risk ratings of the individual loans along with changes of macro-economic variables. The economic variables utilized are typically comprised of leading and lagging indicators. The ACL for Commercial and industrial loans is calculated by modeling probability of default (PD) over future periods multiplied by historical loss given default rates (LGD) multiplied by contractual exposure at default minus any estimated prepayments and charge offs.
Collateral positions for Specialty lending loans are continuously monitored by the Company and the borrower is required to continually adjust the amount of collateral securing the loan. Credit losses are measured for any position where the amortized cost basis is greater than the fair value of the collateral. The ACL for specialty lending loans is calculated by using a bottom-up approach comparing collateral values to outstanding balances.
The ACL for the Commercial real estate segment is measured using a PD and LGD method. Primary risk characteristics within the segment are risk ratings of the individual loans, along with changes of macro-economic variables, such as interest rates, CRE price index, median household income, construction activity, farm income, and vacancy rates. The ACL for Commercial real estate loans is calculated by modeling PD over future periods based on peer bank data. The PD loss rate is then multiplied by historical LGD multiplied by contractual exposure at default minus any estimated prepayments and charge offs.
The ACL for the Consumer real estate and Consumer segments are measured using an origination vintage loss rate method applied to the loans’ amortized cost balance. The primary risk driver within the segments is year of origination along with changes of macro-economic variables such as unemployment and the home price index.
The Credit card segment contains both consumer and commercial credit cards. The ACL for Consumer credit cards is measured using a PD and LGD method for Revolvers and average historical loss rates across a defined lookback period for Transactors. The PD and LGD method used for Revolvers is similar in nature to the method used in the Commercial and industrial and Commercial real estate segments. Primary risk drivers within the segment are credit ratings of the individual card holders along with changes of macro-economic variables such as

 
29

 

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 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.

 
30

 

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 and six months ended June 30, 2026 and June 30, 2025 (in thousands):
 

 

 

Three Months Ended June 30, 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

 

$

252,669

 

 

$

—

 

 

$

146,435

 

 

$

5,134

 

 

$

1,319

 

 

$

18,531

 

 

$

1,788

 

 

$

425,876

 

 

$

3,357

 

 

$

429,233

 

Charge-offs

 

 

( 8,923

)

 

 

—

 

 

 

( 1,173

)

 

 

( 386

)

 

 

( 972

)

 

 

( 6,326

)

 

 

—

 

 

 

( 17,780

)

 

 

—

 

 

 

( 17,780

)

Recoveries

 

 

422

 

 

 

—

 

 

 

26

 

 

 

22

 

 

 

154

 

 

 

1,295

 

 

 

—

 

 

 

1,919

 

 

 

—

 

 

 

1,919

 

Provision

 

 

51,144

 

 

 

—

 

 

 

( 33,292

)

 

 

940

 

 

 

1,470

 

 

 

4,590

 

 

 

2,509

 

 

 

27,361

 

 

 

639

 

 

 

28,000

 

Ending balance - ACL

 

$

295,312

 

 

$

—

 

 

$

111,996

 

 

$

5,710

 

 

$

1,971

 

 

$

18,090

 

 

$

4,297

 

 

$

437,376

 

 

$

3,996

 

 

$

441,372

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

3,865

 

 

$

—

 

 

$

1,608

 

 

$

116

 

 

$

77

 

 

$

—

 

 

$

31

 

 

$

5,697

 

 

$

24

 

 

$

5,721

 

Provision

 

 

96

 

 

 

—

 

 

 

( 197

)

 

 

( 17

)

 

 

6

 

 

 

—

 

 

 

114

 

 

 

2

 

 

 

( 2

)

 

 

—

 

Ending balance - ACL on off-balance sheet

 

$

3,961

 

 

$

—

 

 

$

1,411

 

 

$

99

 

 

$

83

 

 

$

—

 

 

$

145

 

 

$

5,699

 

 

$

22

 

 

$

5,721

 

 

 

Three Months Ended June 30, 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

 

$

192,755

 

 

$

—

 

 

$

149,345

 

 

$

4,798

 

 

$

1,488

 

 

$

19,995

 

 

$

541

 

 

$

368,922

 

 

$

4,566

 

 

$

373,488

 

PCD allowance for credit loss at acquisition

 

 

9,883

 

 

 

—

 

 

 

5,284

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

15,167

 

 

 

—

 

 

 

15,167

 

Charge-offs

 

 

( 6,112

)

 

 

—

 

 

 

( 4,178

)

 

 

( 400

)

 

 

( 681

)

 

 

( 5,524

)

 

 

—

 

 

 

( 16,895

)

 

 

—

 

 

 

( 16,895

)

Recoveries

 

 

120

 

 

 

—

 

 

 

184

 

 

 

147

 

 

 

126

 

 

 

856

 

 

 

—

 

 

 

1,433

 

 

 

—

 

 

 

1,433

 

Provision

 

 

14,082

 

 

 

—

 

 

 

2,854

 

 

 

976

 

 

 

634

 

 

 

2,586

 

 

 

159

 

 

 

21,291

 

 

 

( 291

)

 

 

21,000

 

Ending balance - ACL

 

$

210,728

 

 

$

—

 

 

$

153,489

 

 

$

5,521

 

 

$

1,567

 

 

$

17,913

 

 

$

700

 

 

$

389,918

 

 

$

4,275

 

 

$

394,193

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

5,535

 

 

$

—

 

 

$

2,412

 

 

$

138

 

 

$

91

 

 

$

—

 

 

$

35

 

 

$

8,211

 

 

$

10

 

 

$

8,221

 

Initial allowance for credit loss at acquisition

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Provision

 

 

( 1,204

)

 

 

—

 

 

 

1,128

 

 

 

42

 

 

 

7

 

 

 

—

 

 

 

19

 

 

 

( 8

)

 

 

8

 

 

 

—

 

Ending balance - ACL on off-balance sheet

 

$

4,331

 

 

$

—

 

 

$

3,540

 

 

$

180

 

 

$

98

 

 

$

—

 

 

$

54

 

 

$

8,203

 

 

$

18

 

 

$

8,221

 

 

 
31

 

 

 

 

Six Months Ended June 30, 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

 

 

( 12,272

)

 

 

—

 

 

 

( 11,937

)

 

 

( 899

)

 

 

( 2,057

)

 

 

( 12,202

)

 

 

—

 

 

 

( 39,367

)

 

 

—

 

 

 

( 39,367

)

Recoveries

 

 

1,512

 

 

 

—

 

 

 

29

 

 

 

41

 

 

 

453

 

 

 

2,522

 

 

 

20

 

 

 

4,577

 

 

 

—

 

 

 

4,577

 

Provision

 

 

65,748

 

 

 

—

 

 

 

( 27,156

)

 

 

( 370

)

 

 

2,188

 

 

 

9,728

 

 

 

2,550

 

 

 

52,688

 

 

 

2,312

 

 

 

55,000

 

Ending balance - ACL

 

$

295,312

 

 

$

—

 

 

$

111,996

 

 

$

5,710

 

 

$

1,971

 

 

$

18,090

 

 

$

4,297

 

 

$

437,376

 

 

$

3,996

 

 

$

441,372

 

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

 

 

1,075

 

 

 

—

 

 

 

( 1,137

)

 

 

( 55

)

 

 

( 8

)

 

 

—

 

 

 

118

 

 

 

( 7

)

 

 

7

 

 

 

—

 

Ending balance - ACL on off-balance sheet

 

$

3,961

 

 

$

—

 

 

$

1,411

 

 

$

99

 

 

$

83

 

 

$

—

 

 

$

145

 

 

$

5,699

 

 

$

22

 

 

$

5,721

 

 

 

 

Six Months Ended June 30, 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

 

 

45,026

 

 

 

—

 

 

 

32,048

 

 

 

206

 

 

 

13

 

 

 

—

 

 

 

—

 

 

 

77,293

 

 

 

—

 

 

 

77,293

 

Charge-offs

 

 

( 32,108

)

 

 

—

 

 

 

( 6,502

)

 

 

( 1,629

)

 

 

( 1,423

)

 

 

( 12,200

)

 

 

—

 

 

 

( 53,862

)

 

 

—

 

 

 

( 53,862

)

Recoveries

 

 

189

 

 

 

—

 

 

 

184

 

 

 

163

 

 

 

245

 

 

 

1,747

 

 

 

—

 

 

 

2,528

 

 

 

—

 

 

 

2,528

 

Provision

 

 

36,068

 

 

 

—

 

 

 

50,419

 

 

 

2,454

 

 

 

1,766

 

 

 

14,094

 

 

 

69

 

 

 

104,870

 

 

 

1,630

 

 

 

106,500

 

Ending balance - ACL

 

$

210,728

 

 

$

—

 

 

$

153,489

 

 

$

5,521

 

 

$

1,567

 

 

$

17,913

 

 

$

700

 

 

$

389,918

 

 

$

4,275

 

 

$

394,193

 

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

 

 

( 69

)

 

 

—

 

 

 

607

 

 

 

47

 

 

 

41

 

 

 

—

 

 

 

( 123

)

 

 

503

 

 

 

( 3

)

 

 

500

 

Ending balance - ACL on off-balance sheet

 

$

4,331

 

 

$

—

 

 

$

3,540

 

 

$

180

 

 

$

98

 

 

$

—

 

 

$

54

 

 

$

8,203

 

 

$

18

 

 

$

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.”

 
32

 

Collateral Dependent Financial Assets
The following tables provide the amortized cost balance of financial assets considered collateral dependent as of June 30, 2026 and December 31, 2025 (in thousands) :
 

 

 

June 30, 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

 

$

28,942

 

 

$

9,214

 

 

$

13,077

 

Agriculture

 

 

759

 

 

 

—

 

 

 

759

 

NDFIs

 

 

4,216

 

 

 

3,825

 

 

 

392

 

Total Commercial and industrial

 

 

33,917

 

 

 

13,039

 

 

 

14,228

 

Specialty lending:

 

 

 

 

 

 

 

 

 

Asset-based lending

 

 

—

 

 

 

—

 

 

 

—

 

Total Specialty lending

 

 

—

 

 

 

—

 

 

 

—

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

Owner-occupied

 

 

19,930

 

 

 

895

 

 

 

17,601

 

Non-owner-occupied

 

 

24,009

 

 

 

3,256

 

 

 

3,689

 

Farmland

 

 

3,274

 

 

 

—

 

 

 

3,274

 

5+ Multi-family

 

 

14,568

 

 

 

—

 

 

 

14,568

 

1-4 Family construction

 

 

—

 

 

 

—

 

 

 

—

 

General construction

 

 

183

 

 

 

—

 

 

 

183

 

Total Commercial real estate

 

 

61,964

 

 

 

4,151

 

 

 

39,315

 

Consumer real estate:

 

 

 

 

 

 

 

 

 

HELOC

 

 

5,523

 

 

 

—

 

 

 

5,523

 

First lien: 1-4 family

 

 

24,482

 

 

 

52

 

 

 

23,472

 

Junior lien: 1-4 family

 

 

556

 

 

 

—

 

 

 

556

 

Total Consumer real estate

 

 

30,561

 

 

 

52

 

 

 

29,551

 

Consumer:

 

 

 

 

 

 

 

 

 

Revolving line

 

 

61

 

 

 

—

 

 

 

61

 

Auto

 

 

39

 

 

 

—

 

 

 

39

 

Other

 

 

77

 

 

 

—

 

 

 

77

 

Total Consumer

 

 

177

 

 

 

—

 

 

 

177

 

Leases and other:

 

 

 

 

 

 

 

 

 

Leases

 

 

—

 

 

 

—

 

 

 

—

 

Other

 

 

—

 

 

 

—

 

 

 

—

 

Total Leases and other

 

 

—

 

 

 

—

 

 

 

—

 

Total loans

 

$

126,619

 

 

$

17,242

 

 

$

83,271

 

 

 
33

 

 

 

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.

 
34

 

For the three months ended June 30, 2026, the Company had no new modifications on loans made to a borrower experiencing financial difficulty. For the six months ended June 30, 2026 , the Company had three 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 June 30, 2025 , the Company had one new modification on a residential real estate loan made to a borrower experiencing financial difficulty with a total pre-modification loan balance of $ 131 thousand and a total post-modification loan balance of $ 133 thousand . For the six months ended June 30, 2025, the Company had two modifications on residential real estate loans made to borrowers experiencing financial difficulty with a total pre-modification loan balance of $ 356 thousand and a total post-modification loan balance of $ 358 thousand.
The Company had no commitments to lend to borrowers experiencing financial difficulty for which the Company has modified an existing loan as of June 30, 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 and six months ended June 30, 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 June 30, 2026 and December 31, 2025 (in thousands):

June 30, 2026

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

U.S. Treasury

 

$

2,212,279

 

 

$

1,966

 

 

$

( 9,328

)

 

$

2,204,917

 

U.S. Agencies

 

 

48,776

 

 

 

66

 

 

 

( 57

)

 

 

48,785

 

Mortgage-backed

 

 

8,582,743

 

 

 

22,107

 

 

 

( 381,235

)

 

 

8,223,615

 

State and political subdivisions

 

 

2,419,723

 

 

 

18,092

 

 

 

( 65,318

)

 

 

2,372,497

 

Corporates

 

 

88,922

 

 

 

250

 

 

 

( 1,863

)

 

 

87,309

 

Collateralized loan obligations

 

 

550,875

 

 

 

309

 

 

 

( 148

)

 

 

551,036

 

Total

 

$

13,903,318

 

 

$

42,790

 

 

$

( 457,949

)

 

$

13,488,159

 

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

 

 

 
35

 

 
The following table presents contractual maturity information for securities available for sale at June 30, 2026 (in thousands):

 

 

Amortized

 

 

Fair

 

 

 

Cost

 

 

Value

 

Due in 1 year or less

 

$

899,563

 

 

$

899,840

 

Due after 1 year through 5 years

 

 

2,072,561

 

 

 

2,056,146

 

Due after 5 years through 10 years

 

 

562,639

 

 

 

554,837

 

Due after 10 years

 

 

1,785,812

 

 

 

1,753,721

 

Total

 

 

5,320,575

 

 

 

5,264,544

 

Mortgage-backed securities

 

 

8,582,743

 

 

 

8,223,615

 

Total securities available for sale

 

$

13,903,318

 

 

$

13,488,159

 

 
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 and six months ended June 30, 2026 and 2025 (in thousands):
 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Proceeds from sales

 

$

5,375

 

 

$

4,931

 

 

$

57,146

 

 

$

616,354

 

Gross realized gains

 

 

26

 

 

 

33

 

 

 

429

 

 

 

423

 

Gross realized losses

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

There were $ 13.2 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 June 30, 2026 and December 31, 2025, respectively.
Accrued interest on securities available for sale totaled $ 80.1 million and $ 82.9 million as of June 30, 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 June 30, 2026 and December 31, 2025 (in thousands):

 

 

Less than 12 months

 

 

12 months or more

 

 

Total

 

June 30, 2026

 

Count

 

 

Fair Value

 

 

Unrealized
Losses

 

 

Count

 

 

Fair Value

 

 

Unrealized
Losses

 

 

Count

 

 

Fair Value

 

 

Unrealized
Losses

 

Description of Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

 

201

 

 

$

1,508,078

 

 

$

( 9,256

)

 

 

1

 

 

$

14,925

 

 

$

( 72

)

 

 

202

 

 

$

1,523,003

 

 

$

( 9,328

)

U.S. Agencies

 

 

1

 

 

 

6,663

 

 

 

( 57

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1

 

 

 

6,663

 

 

 

( 57

)

Mortgage-backed

 

 

384

 

 

 

3,684,127

 

 

 

( 45,541

)

 

 

795

 

 

 

2,591,410

 

 

 

( 335,694

)

 

 

1,179

 

 

 

6,275,537

 

 

 

( 381,235

)

State and political subdivisions

 

 

349

 

 

 

398,225

 

 

 

( 3,488

)

 

 

805

 

 

 

800,287

 

 

 

( 61,830

)

 

 

1,154

 

 

 

1,198,512

 

 

 

( 65,318

)

Corporates

 

 

—

 

 

 

—

 

 

 

—

 

 

 

46

 

 

 

70,302

 

 

 

( 1,863

)

 

 

46

 

 

 

70,302

 

 

 

( 1,863

)

Collateralized loan obligations

 

 

20

 

 

 

189,707

 

 

 

( 148

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

20

 

 

 

189,707

 

 

 

( 148

)

Total

 

 

955

 

 

$

5,786,800

 

 

$

( 58,490

)

 

 

1,647

 

 

$

3,476,924

 

 

$

( 399,459

)

 

 

2,602

 

 

$

9,263,724

 

 

$

( 457,949

)

 

 
36

 

 

 

 

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

)

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 June 30, 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 June 30, 2026 and December 31, 2025, respectively (in thousands):

June 30, 2026

 

Amortized Cost

 

 

Gross Unrealized Gains

 

 

Gross Unrealized Losses

 

 

Fair Value

 

 

Allowance for Credit Losses

 

 

Net Carrying Amount

 

U.S. Treasury

 

$

38,260

 

 

$

—

 

 

$

( 555

)

 

$

37,705

 

 

$

—

 

 

$

38,260

 

Mortgage-backed

 

 

2,405,985

 

 

 

3

 

 

 

( 319,454

)

 

 

2,086,534

 

 

 

—

 

 

 

2,405,985

 

State and political subdivisions

 

 

3,272,181

 

 

 

23,781

 

 

 

( 180,754

)

 

 

3,115,208

 

 

 

( 3,996

)

 

 

3,268,185

 

Total

 

$

5,716,426

 

 

$

23,784

 

 

$

( 500,763

)

 

$

5,239,447

 

 

$

( 3,996

)

 

$

5,712,430

 

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

 

 
37

 

The following table presents contractual maturity information for securities held to maturity at June 30, 2026 (in thousands):
 

 

 

Amortized

 

 

Fair

 

 

 

Cost

 

 

Value

 

Due in 1 year or less

 

$

89,562

 

 

$

89,149

 

Due after 1 year through 5 years

 

 

556,314

 

 

 

548,106

 

Due after 5 years through 10 years

 

 

797,227

 

 

 

767,036

 

Due after 10 years

 

 

1,867,338

 

 

 

1,748,622

 

Total

 

 

3,310,441

 

 

 

3,152,913

 

Mortgage-backed securities

 

 

2,405,985

 

 

 

2,086,534

 

Total securities held to maturity

 

$

5,716,426

 

 

$

5,239,447

 

 
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.
There were no sales of securities held to maturity during the three or six months ended June 30, 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 $ 124.9 million and $ 139.2 million at June 30, 2026 and December 31, 2025, respectively.
Accrued interest on securities held to maturity totaled $ 30.2 millio n and $ 28.0 million as of June 30, 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 June 30, 2026 and December 31, 2025, respectively (in thousands):
 

 

 

Less than 12 months

 

 

12 months or more

 

 

Total

 

June 30, 2026

 

Count

 

 

Fair Value

 

 

Unrealized Losses

 

 

Count

 

 

Fair Value

 

 

Unrealized Losses

 

 

Count

 

 

Fair Value

 

 

Unrealized Losses

 

U.S. Treasury

 

 

7

 

 

$

37,705

 

 

$

( 555

)

 

 

—

 

 

$

—

 

 

$

—

 

 

 

7

 

 

$

37,705

 

 

$

( 555

)

Mortgage-backed

 

 

17

 

 

 

195,205

 

 

 

( 3,487

)

 

 

262

 

 

 

1,890,512

 

 

 

( 315,967

)

 

 

279

 

 

 

2,085,717

 

 

 

( 319,454

)

State and political subdivisions

 

 

180

 

 

 

828,018

 

 

 

( 42,832

)

 

 

1,341

 

 

 

1,387,515

 

 

 

( 137,922

)

 

 

1,521

 

 

 

2,215,533

 

 

 

( 180,754

)

Total

 

 

204

 

 

$

1,060,928

 

 

$

( 46,874

)

 

 

1,603

 

 

$

3,278,027

 

 

$

( 453,889

)

 

 

1,807

 

 

$

4,338,955

 

 

$

( 500,763

)

 

 

 

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

)

 

 
38

 

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.
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 June 30, 2026 and December 31, 2025 (in thousands):
 

 

 

Amortized Cost Basis by Credit Rating - HTM Debt Securities

 

June 30, 2026

 

AAA

 

 

AA

 

 

A

 

 

BBB

 

 

BB

 

 

B

 

 

CCC-C

 

 

Total

 

State and political subdivisions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Competitive

 

$

47,599

 

 

$

50,866

 

 

$

346,707

 

 

$

820,929

 

 

$

30,143

 

 

$

28,447

 

 

$

13,458

 

 

$

1,338,149

 

Utilities

 

 

836,298

 

 

 

959,900

 

 

 

122,087

 

 

 

13,983

 

 

 

1,764

 

 

 

—

 

 

 

—

 

 

 

1,934,032

 

Total state and political subdivisions

 

$

883,897

 

 

$

1,010,766

 

 

$

468,794

 

 

$

834,912

 

 

$

31,907

 

 

$

28,447

 

 

$

13,458

 

 

$

3,272,181

 

 

 

 

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).

 
39

 

 
The following table presents the aging of past due held-to-maturity securities at June 30, 2026 (in thousands) :
 

June 30, 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

 

$

8,276

 

 

$

—

 

 

$

—

 

 

$

8,276

 

 

$

1,329,873

 

 

$

1,338,149

 

Utilities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,934,032

 

 

 

1,934,032

 

Total state and political subdivisions

 

$

8,276

 

 

$

—

 

 

$

—

 

 

$

8,276

 

 

$

3,263,905

 

 

$

3,272,181

 

 
All held-to-maturity securities were current and not past due at December 31, 2025.
 
Trading Securities
There were net unrealized gains of $ 13 thousand and $ 48 thousand on trading securities at June 30, 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 $ 14.0 million and $ 4.1 million at June 30, 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 June 30, 2026 and December 31, 2025 (in thousands):
 

 

 

June 30, 2026

 

 

December 31, 2025

 

FRB and FHLB stock

 

$

137,667

 

 

$

137,498

 

Equity securities with readily determinable fair values

 

 

12,610

 

 

 

14,690

 

Equity securities without readily determinable fair values

 

 

543,225

 

 

 

524,112

 

Total

 

$

693,502

 

 

$

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.
 

 
40

 

The table below presents the changes in equity securities without readily determinable fair values for the three and six months ended June 30, 2026 and 2025 (in thousands) :
 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Beginning balance

 

$

535,326

 

 

$

539,930

 

 

$

524,112

 

 

$

416,750

 

Acquisition of HTLF

 

 

—

 

 

 

1,117

 

 

 

—

 

 

 

122,886

 

Purchases of securities

 

 

16,322

 

 

 

24,827

 

 

 

49,986

 

 

 

48,830

 

Observable upward price adjustments

 

 

30,902

 

 

 

9,411

 

 

 

34,470

 

 

 

10,433

 

Observable downward price adjustments

 

 

( 4,088

)

 

 

( 2,302

)

 

 

( 4,724

)

 

 

( 8,575

)

Sales of securities and other activity

 

 

( 35,237

)

 

 

( 39,234

)

 

 

( 60,619

)

 

 

( 56,575

)

Ending balance

 

$

543,225

 

 

$

533,749

 

 

$

543,225

 

 

$

533,749

 

 
Investment Securities Gains, Net
The following table presents the components of Investment securities gains, net for the three and six months ended June 30, 2026 and June 30, 2025 (in thousands):
 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Investment securities gains, net

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

Gains realized on sales

 

$

26

 

 

$

33

 

 

$

429

 

 

$

423

 

Equity securities with readily determinable fair values:

 

 

 

 

 

 

 

 

 

 

 

 

Fair value adjustments, net

 

 

62

 

 

 

29,472

 

 

 

( 225

)

 

 

29,616

 

Equity securities without readily determinable fair values:

 

 

 

 

 

 

 

 

 

 

 

 

Fair value adjustments, net

 

 

8,534

 

 

 

( 60

)

 

 

8,849

 

 

 

( 5,303

)

Sales

 

 

18,465

 

 

 

8,240

 

 

 

21,080

 

 

 

8,167

 

Total investment securities gains, net

 

$

27,087

 

 

$

37,685

 

 

$

30,133

 

 

$

32,903

 

 
6. Goodwill and Other Intangibles
Changes in the carrying amount of goodwill for the periods ended June 30, 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 June 30, 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

 

 

 
41

 

The following table lists the finite-lived intangible assets that continue to be subject to amortization as of June 30, 2026 and December 31, 2025 (in thousands) :
 

 

 

As of June 30, 2026

 

 

 

Core Deposit Intangible Assets

 

 

Customer Relationships

 

 

Total

 

Gross carrying amount

 

$

481,294

 

 

$

124,085

 

 

$

605,379

 

Accumulated amortization

 

 

120,819

 

 

 

44,611

 

 

 

165,430

 

Net carrying amount

 

$

360,475

 

 

$

79,474

 

 

$

439,949

 

 

 

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 June 30, 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 June 30,

 

 

Six Months Ended June 30,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Aggregate amortization expense

 

$

23,460

 

 

$

25,268

 

 

$

46,920

 

 

$

42,750

 

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

For the six months ending December 31, 2026

 

$

46,199

 

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

 

 

 
42

 

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

 

 

June 30, 2026

 

 

December 31, 2025

 

Long-term debt:

 

 

 

 

 

 

Trust preferred securities

 

$

222,345

 

 

$

220,034

 

Subordinated notes 6.25 %, net of issuance costs

 

 

109,468

 

 

 

109,255

 

Subordinated notes 2.75 %

 

 

148,313

 

 

 

144,940

 

Total long-term debt

 

 

480,126

 

 

 

474,229

 

Total borrowed funds

 

$

480,126

 

 

$

474,229

 

 

 
43

 

The following table presents details of outstanding trust preferred securities as of June 30, 2026 (in thousands):
 

 

 

Amount Outstanding

 

 

Issuance Date

 

Interest Rate

 

Interest Rate as of June 30, 2026

 

 

Maturity Date

Marquette Capital Trust I

 

$

19,517

 

 

12/28/2005

 

1.33 % over 3-month term SOFR

 

 

5.26

%

 

1/7/2036

Marquette Capital Trust II

 

 

19,974

 

 

12/28/2005

 

1.33 % over 3-month term SOFR

 

 

5.26

%

 

1/7/2036

Marquette Capital Trust III

 

 

7,841

 

 

5/30/2006

 

1.50 % over 3-month term SOFR

 

 

5.46

%

 

6/23/2036

Marquette Capital Trust IV

 

 

31,616

 

 

6/30/2006

 

1.60 % over 3-month term SOFR

 

 

5.53

%

 

9/15/2036

Heartland Financial Statutory Trust IV

 

 

9,755

 

 

3/17/2004

 

2.75 % over 3-month term SOFR

 

 

6.68

%

 

3/17/2034

Heartland Financial Statutory Trust V

 

 

17,717

 

 

1/27/2006

 

1.33 % over 3-month term SOFR

 

 

5.26

%

 

4/7/2036

Heartland Financial Statutory Trust VI

 

 

17,153

 

 

6/21/2007

 

1.48 % over 3-month term SOFR

 

 

5.41

%

 

9/15/2037

Heartland Financial Statutory Trust VII

 

 

15,008

 

 

6/26/2007

 

1.48 % over 3-month term SOFR

 

 

5.40

%

 

9/1/2037

Morrill Statutory Trust I

 

 

10,054

 

 

12/19/2002

 

3.25 % over 3-month term SOFR

 

 

7.26

%

 

12/26/2032

Morrill Statutory Trust II

 

 

9,819

 

 

12/17/2003

 

2.85 % over 3-month term SOFR

 

 

6.78

%

 

12/17/2033

Sheboygan Statutory Trust I

 

 

7,411

 

 

9/17/2003

 

2.95 % over 3-month term SOFR

 

 

6.88

%

 

9/17/2033

CBNM Capital Trust I

 

 

4,883

 

 

9/10/2004

 

3.25 % over 3-month term SOFR

 

 

7.18

%

 

12/15/2034

Citywide Capital Trust III

 

 

6,861

 

 

12/19/2003

 

2.80 % over 3-month term SOFR

 

 

6.73

%

 

12/19/2033

Citywide Capital Trust IV

 

 

4,749

 

 

9/30/2004

 

2.20 % over 3-month term SOFR

 

 

6.10

%

 

9/30/2034

Citywide Capital Trust V

 

 

13,282

 

 

5/31/2006

 

1.54 % over 3-month term SOFR

 

 

5.47

%

 

7/25/2036

OCGI Statutory Trust III

 

 

3,040

 

 

6/27/2002

 

3.65 % over 3-month term SOFR

 

 

7.58

%

 

9/30/2032

OCGI Statutory Trust IV

 

 

5,722

 

 

9/23/2004

 

2.50 % over 3-month term SOFR

 

 

6.43

%

 

12/15/2034

BVBC Capital Trust II

 

 

7,506

 

 

4/10/2003

 

3.25 % over 3-month term SOFR

 

 

7.17

%

 

4/24/2033

BVBC Capital Trust III

 

 

10,437

 

 

7/29/2005

 

1.60 % over 3-month term SOFR

 

 

5.59

%

 

9/30/2035

Total trust preferred securities

 

$

222,345

 

 

 

 

 

 

 

 

 

 

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 $ 532 thousand and $ 745 thousand as of June 30, 2026 and December 31, 2025. Proceeds from the issuance of the notes were used for general corporate purposes, including contributing Tier 1 capital into the Bank.

 
44

 

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 had a carrying value of $ 222.3 million and $ 220.0 million as of June 30, 2026 and December 31, 2026, respectively.
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 June 30, 2026 and December 31, 2025 , the Company owned $ 10.3 million of FHLB stock. The Company had no outstanding advances with the FHLB Des Moines as of June 30, 2026 or December 31, 2025. As of June 30, 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 $ 218.0 million and have various maturity dates through September 15, 2026 . The Company’s remaining borrowing capacity with the FHLB was $ 2.5 billion as of June 30, 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 June 30, 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 June 30, 2026

 

 

 

Remaining Contractual Maturities of the Agreements

 

 

 

Overnight

 

 

2-29 Days

 

 

30-90 Days

 

 

Over 90 Days

 

 

Total

 

Repurchase agreements, secured by:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

$

369,417

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

369,417

 

U.S. Agencies

 

 

1,838,295

 

 

 

152,245

 

 

 

685,573

 

 

 

13,550

 

 

 

2,689,663

 

Total repurchase agreements

 

$

2,207,712

 

 

$

152,245

 

 

$

685,573

 

 

$

13,550

 

 

$

3,059,080

 

 

 

 

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.

 
45

 

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 June 30, 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.

 
46

 

Business Segment Information
Business Segment financial results for the three and six months ended June 30, 2026 and June 30, 2025 were as follows (in thousands):
 

 

 

Three Months Ended June 30, 2026

 

 

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Total

 

Net interest income

 

$

362,575

 

 

$

79,048

 

 

$

90,902

 

 

$

532,525

 

Provision for credit losses

 

 

24,733

 

 

 

627

 

 

 

2,640

 

 

 

28,000

 

Noninterest income

 

 

51,939

 

 

 

129,191

 

 

 

64,375

 

 

 

245,505

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

53,977

 

 

 

53,327

 

 

 

38,383

 

 

 

145,687

 

Processing fees

 

 

4,328

 

 

 

10,579

 

 

 

4,799

 

 

 

19,706

 

Bankcard

 

 

2,833

 

 

 

6,318

 

 

 

2,675

 

 

 

11,826

 

Amortization of other intangible assets

 

 

—

 

 

 

1,972

 

 

 

75

 

 

 

2,047

 

Allocated technology, service, overhead

 

 

93,137

 

 

 

38,829

 

 

 

46,016

 

 

 

177,982

 

Other segment items*

 

 

14,978

 

 

 

11,502

 

 

 

15,905

 

 

 

42,385

 

Noninterest expense

 

 

169,253

 

 

 

122,527

 

 

 

107,853

 

 

 

399,633

 

Income before taxes

 

 

220,528

 

 

 

85,085

 

 

 

44,784

 

 

 

350,397

 

Income tax expense

 

 

45,835

 

 

 

17,684

 

 

 

9,308

 

 

 

72,827

 

Net income

 

$

174,693

 

 

$

67,401

 

 

$

35,476

 

 

$

277,570

 

Average assets

 

$

35,374,000

 

 

$

21,070,000

 

 

$

13,963,000

 

 

$

70,407,000

 

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

 

 

Three Months Ended June 30, 2025

 

 

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Total

 

Net interest income

 

$

322,619

 

 

$

66,331

 

 

$

78,074

 

 

$

467,024

 

Provision for credit losses

 

 

18,334

 

 

 

430

 

 

 

2,236

 

 

 

21,000

 

Noninterest income

 

 

43,219

 

 

 

107,998

 

 

 

70,968

 

 

 

222,185

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

53,685

 

 

 

47,278

 

 

 

39,450

 

 

 

140,413

 

Processing fees

 

 

3,770

 

 

 

9,778

 

 

 

4,948

 

 

 

18,496

 

Bankcard

 

 

3,620

 

 

 

5,424

 

 

 

3,331

 

 

 

12,375

 

Amortization of other intangible assets

 

 

—

 

 

 

1,776

 

 

 

103

 

 

 

1,879

 

Allocated technology, service, overhead

 

 

95,114

 

 

 

31,921

 

 

 

50,037

 

 

 

177,072

 

Other segment items*

 

 

14,459

 

 

 

8,960

 

 

 

19,514

 

 

 

42,933

 

Noninterest expense

 

 

170,648

 

 

 

105,137

 

 

 

117,383

 

 

 

393,168

 

Income before taxes

 

 

176,856

 

 

 

68,762

 

 

 

29,423

 

 

 

275,041

 

Income tax expense

 

 

37,068

 

 

 

14,412

 

 

 

6,167

 

 

 

57,647

 

Net income

 

$

139,788

 

 

$

54,350

 

 

$

23,256

 

 

$

217,394

 

Average assets

 

$

33,917,000

 

 

$

18,978,000

 

 

$

13,977,000

 

 

$

66,872,000

 

 

 
47

 

 

 

 

Six Months Ended June 30, 2026

 

 

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Total

 

Net interest income

 

$

727,917

 

 

$

156,336

 

 

$

182,638

 

 

$

1,066,891

 

Provision for credit losses

 

 

48,510

 

 

 

1,125

 

 

 

5,365

 

 

 

55,000

 

Noninterest income

 

 

98,228

 

 

 

251,020

 

 

 

101,050

 

 

 

450,298

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

110,403

 

 

 

103,965

 

 

 

78,307

 

 

 

292,675

 

Processing fees

 

 

8,355

 

 

 

21,249

 

 

 

9,181

 

 

 

38,785

 

Bankcard

 

 

5,682

 

 

 

12,830

 

 

 

5,185

 

 

 

23,697

 

Amortization of other intangible assets

 

 

—

 

 

 

3,945

 

 

 

150

 

 

 

4,095

 

Allocated technology, service, overhead

 

 

178,773

 

 

 

72,705

 

 

 

90,420

 

 

 

341,898

 

Other segment items*

 

 

31,492

 

 

 

20,764

 

 

 

27,110

 

 

 

79,366

 

Noninterest expense

 

 

334,705

 

 

 

235,458

 

 

 

210,353

 

 

 

780,516

 

Income before taxes

 

 

442,930

 

 

 

170,773

 

 

 

67,970

 

 

 

681,673

 

Income tax expense

 

 

92,699

 

 

 

35,741

 

 

 

14,225

 

 

 

142,665

 

Net income

 

$

350,231

 

 

$

135,032

 

 

$

53,745

 

 

$

539,008

 

Average assets

 

$

35,133,000

 

 

$

21,266,000

 

 

$

14,017,000

 

 

$

70,416,000

 

 

 

 

Six Months Ended June 30, 2025

 

 

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Total

 

Net interest income

 

$

596,536

 

 

$

127,489

 

 

$

140,638

 

 

$

864,663

 

Provision for credit losses

 

 

85,085

 

 

 

865

 

 

 

21,050

 

 

 

107,000

 

Noninterest income

 

 

80,438

 

 

 

211,792

 

 

 

96,153

 

 

 

388,383

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

107,271

 

 

 

94,464

 

 

 

75,448

 

 

 

277,183

 

Processing fees

 

 

7,434

 

 

 

20,425

 

 

 

9,392

 

 

 

37,251

 

Bankcard

 

 

6,793

 

 

 

11,461

 

 

 

6,917

 

 

 

25,171

 

Amortization of other intangible assets

 

 

—

 

 

 

3,562

 

 

 

206

 

 

 

3,768

 

Allocated technology, service, overhead

 

 

196,240

 

 

 

64,165

 

 

 

102,501

 

 

 

362,906

 

Other segment items*

 

 

25,922

 

 

 

18,325

 

 

 

27,429

 

 

 

71,676

 

Noninterest expense

 

 

343,660

 

 

 

212,402

 

 

 

221,893

 

 

 

777,955

 

Income (loss) before taxes

 

 

248,229

 

 

 

126,014

 

 

 

( 6,152

)

 

 

368,091

 

Income tax expense (benefit)

 

 

46,777

 

 

 

23,746

 

 

 

( 1,159

)

 

 

69,364

 

Net income (loss)

 

$

201,452

 

 

$

102,268

 

 

$

( 4,993

)

 

$

298,727

 

Average assets

 

$

31,979,000

 

 

$

18,658,000

 

 

$

12,803,000

 

 

$

63,440,000

 

 
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 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.

 
48

 

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 June 30, 2026 and June 30, 2025 , the Company had $ 13.5 millio n and $ 13.7 million of expense, respectively, recorded within the Bankcard fees line on the Company’s Consolidated Statements of Income related to rebates and rewards programs that are outside of the scope of ASC 606. For the six months ended June 30, 2026 and June 30, 2025, the Company had $ 25.7 mi llion and $ 25.5 million of expense, respectively, related to these rebates and rewards programs. 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

 
49

 

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 June 30, 2026 . Total receivables from revenue recognized under the scope of ASC 606 were $ 124.7 mill ion and $ 116.1 million as of June 30, 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 and six months ended June 30, 2026 and June 30, 2025. As stated in Note 8, “Business Segment Reporting,” for comparability purposes, amounts in all periods are based on methodologies in effect at June 30, 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 June 30, 2026

 

NONINTEREST INCOME

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Revenue (Expense) out of Scope of ASC 606

 

 

Total

 

Trust and securities processing

 

$

858

 

 

$

76,843

 

 

$

20,594

 

 

$

—

 

 

$

98,295

 

Trading and investment banking

 

 

—

 

 

 

144

 

 

 

—

 

 

 

5,170

 

 

 

5,314

 

Service charges on deposit accounts

 

 

16,579

 

 

 

10,583

 

 

 

2,397

 

 

 

29

 

 

 

29,588

 

Insurance fees and commissions

 

 

—

 

 

 

—

 

 

 

207

 

 

 

—

 

 

 

207

 

Brokerage fees

 

 

97

 

 

 

22,802

 

 

 

2,501

 

 

 

—

 

 

 

25,400

 

Bankcard fees

 

 

27,779

 

 

 

7,981

 

 

 

7,711

 

 

 

( 13,517

)

 

 

29,954

 

Investment securities gains, net

 

 

—

 

 

 

—

 

 

 

—

 

 

 

27,087

 

 

 

27,087

 

Other

 

 

3,005

 

 

 

968

 

 

 

1,007

 

 

 

24,680

 

 

 

29,660

 

Total Noninterest income

 

$

48,318

 

 

$

119,321

 

 

$

34,417

 

 

$

43,449

 

 

$

245,505

 

 

 
50

 

 

 

 

Three Months Ended June 30, 2025

 

NONINTEREST INCOME

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Revenue (Expense) out of Scope of ASC 606

 

 

Total

 

Trust and securities processing

 

$

752

 

 

$

63,577

 

 

$

18,934

 

 

$

—

 

 

$

83,263

 

Trading and investment banking

 

 

—

 

 

 

85

 

 

 

—

 

 

 

6,085

 

 

 

6,170

 

Service charges on deposit accounts

 

 

16,199

 

 

 

10,162

 

 

 

2,466

 

 

 

38

 

 

 

28,865

 

Insurance fees and commissions

 

 

—

 

 

 

—

 

 

 

189

 

 

 

—

 

 

 

189

 

Brokerage fees

 

 

62

 

 

 

17,573

 

 

 

2,890

 

 

 

—

 

 

 

20,525

 

Bankcard fees

 

 

27,285

 

 

 

7,304

 

 

 

8,135

 

 

 

( 13,706

)

 

 

29,018

 

Investment securities gains, net

 

 

—

 

 

 

—

 

 

 

—

 

 

 

37,685

 

 

 

37,685

 

Other

 

 

2,262

 

 

 

695

 

 

 

921

 

 

 

12,592

 

 

 

16,470

 

Total Noninterest income

 

$

46,560

 

 

$

99,396

 

 

$

33,535

 

 

$

42,694

 

 

$

222,185

 

 

 

 

Six Months Ended June 30, 2026

 

NONINTEREST INCOME

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Revenue (Expense) out of Scope of ASC 606

 

 

Total

 

Trust and securities processing

 

$

1,619

 

 

$

150,168

 

 

$

41,175

 

 

$

—

 

 

$

192,962

 

Trading and investment banking

 

 

—

 

 

 

266

 

 

 

—

 

 

 

12,788

 

 

 

13,054

 

Service charges on deposit accounts

 

 

32,723

 

 

 

21,440

 

 

 

4,838

 

 

 

61

 

 

 

59,062

 

Insurance fees and commissions

 

 

—

 

 

 

—

 

 

 

462

 

 

 

—

 

 

 

462

 

Brokerage fees

 

 

184

 

 

 

41,167

 

 

 

5,138

 

 

 

—

 

 

 

46,489

 

Bankcard fees

 

 

53,865

 

 

 

15,875

 

 

 

14,782

 

 

 

( 25,690

)

 

 

58,832

 

Investment securities gains, net

 

 

—

 

 

 

—

 

 

 

—

 

 

 

30,133

 

 

 

30,133

 

Other

 

 

4,169

 

 

 

1,706

 

 

 

1,849

 

 

 

41,580

 

 

 

49,304

 

Total Noninterest income

 

$

92,560

 

 

$

230,622

 

 

$

68,244

 

 

$

58,872

 

 

$

450,298

 

 

 

 

Six Months Ended June 30, 2025

 

NONINTEREST INCOME

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Revenue (Expense) out of Scope of ASC 606

 

 

Total

 

Trust and securities processing

 

$

1,231

 

 

$

124,825

 

 

$

36,988

 

 

$

—

 

 

$

163,044

 

Trading and investment banking

 

 

—

 

 

 

414

 

 

 

—

 

 

 

11,667

 

 

 

12,081

 

Service charges on deposit accounts

 

 

30,780

 

 

 

21,021

 

 

 

4,444

 

 

 

77

 

 

 

56,322

 

Insurance fees and commissions

 

 

—

 

 

 

—

 

 

 

367

 

 

 

—

 

 

 

367

 

Brokerage fees

 

 

129

 

 

 

32,945

 

 

 

5,553

 

 

 

—

 

 

 

38,627

 

Bankcard fees

 

 

51,449

 

 

 

14,546

 

 

 

14,818

 

 

 

( 25,502

)

 

 

55,311

 

Investment securities gains, net

 

 

—

 

 

 

—

 

 

 

—

 

 

 

32,903

 

 

 

32,903

 

Other

 

 

3,541

 

 

 

1,377

 

 

 

1,703

 

 

 

23,107

 

 

 

29,728

 

Total Noninterest income

 

$

87,130

 

 

$

195,128

 

 

$

63,873

 

 

$

42,252

 

 

$

388,383

 

 
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

 
51

 

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

 

 

 

June 30,

 

 

December 31,

 

 

 

2026

 

 

2025

 

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

 

$

19,134,503

 

 

$

17,819,711

 

Commitments to extend credit under credit card loans

 

 

5,207,847

 

 

 

5,994,640

 

Commercial letters of credit

 

 

741

 

 

 

217

 

Standby letters of credit

 

 

486,493

 

 

 

468,384

 

Forward contracts

 

 

152,152

 

 

 

119,978

 

Spot foreign exchange contracts

 

 

14,808

 

 

 

34,233

 

Commitments to extend credit for securities purchased under agreements to resell

 

 

886,000

 

 

 

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 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 June 30, 2026 and December 31, 2025 , and was recorded in the Accrued expenses and taxes line of the Company’s Consolidated Balance Sheets. There was no provision for off-balance sheet credit exposures recorded for the three months ended June 30, 2026

 
52

 

and 2025. For the six months ended June 30, 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 six months ended June 30, 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 June 30, 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, 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 June 30, 2026 and December 31, 2025 ( in thousands ):

 

 

Derivative Assets

 

 

Derivative Liabilities

 

 

 

June 30,

 

 

December 31,

 

 

June 30,

 

 

December 31,

 

Fair Value

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Interest Rate Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments

 

$

115,788

 

 

$

126,423

 

 

$

119,583

 

 

$

130,122

 

Derivatives designated as hedging instruments

 

 

91,619

 

 

 

148,550

 

 

 

—

 

 

 

36

 

Total interest rate derivatives

 

 

207,407

 

 

 

274,973

 

 

 

119,583

 

 

 

130,158

 

Commodity Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments

 

 

29,013

 

 

 

6,356

 

 

 

28,754

 

 

 

6,294

 

Total commodity derivatives

 

 

29,013

 

 

 

6,356

 

 

 

28,754

 

 

 

6,294

 

Total

 

$

236,420

 

 

$

281,329

 

 

$

148,337

 

 

$

136,452

 

 

 
53

 

 
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 June 30, 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 both the three months ended June 30, 2026 and 2025 the Company reclassified $ 1.2 million from AOCI to Interest income in connection with these terminated hedges. For the six months ended June 30, 2026 and 2025 the Company reclassified $ 2.9 million and $ 2.4 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 $ 44.2 million net of tax, and $ 46.7 million net of tax, as of June 30, 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 June 30, 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 June 30, 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 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 June 30, 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 $ 0.8 million from AOCI as a reduction to Interest expense and $ 12.2 million from AOCI as a reduction to Interest income during the next 12 months. As of June 30, 2026 , the Company is hedging its exposure to the variability in future cash flows for forecasted transactions over a maximum period of 10.2 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.

 
54

 

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 June 30, 2026 , the Company had 854 interest rate swaps with an aggregate notional amount of $ 12.7 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 related to this program.
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 June 30, 2026, the Company had 382 commodity swaps and option contracts with an aggregate remaining volume of 5.7 million oil barrels and 72.1 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.
 
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 and six months ended June 30, 2026 and June 30, 2025 (in thousands) :

 

 

Amount of Gain (Loss) Recognized

 

 

 

For the Three Months Ended

 

 

For the Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Interest Rate Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments

 

$

65

 

 

$

( 92

)

 

$

36

 

 

$

( 182

)

Total

 

$

65

 

 

$

( 92

)

 

$

36

 

 

$

( 182

)

Commodity Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments

 

$

171

 

 

$

—

 

 

$

247

 

 

$

—

 

Total

 

$

171

 

 

$

—

 

 

$

247

 

 

$

—

 

 

 
55

 

 
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 and six months ended June 30, 2026 and June 30, 2025 (in thousands) :
 

 

 

For the Three Months Ended June 30, 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

 

$

( 23,267

)

 

$

( 30,764

)

 

$

7,497

 

 

$

( 881

)

 

$

( 297

)

 

$

( 584

)

Interest rate swaps

 

 

574

 

 

 

574

 

 

 

—

 

 

 

152

 

 

 

152

 

 

 

—

 

Total

 

$

( 22,693

)

 

$

( 30,190

)

 

$

7,497

 

 

$

( 729

)

 

$

( 145

)

 

$

( 584

)

 

 

 

For the Three Months Ended June 30, 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

 

$

14,457

 

 

$

23,515

 

 

$

( 9,058

)

 

$

( 3,462

)

 

$

( 2,878

)

 

$

( 584

)

Interest rate swaps

 

 

( 71

)

 

 

( 71

)

 

 

—

 

 

 

244

 

 

 

244

 

 

 

—

 

Total

 

$

14,386

 

 

$

23,444

 

 

$

( 9,058

)

 

$

( 3,218

)

 

$

( 2,634

)

 

$

( 584

)

 

 

 

For the Six Months Ended June 30, 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

 

$

( 39,517

)

 

$

( 51,450

)

 

$

11,933

 

 

$

( 1,990

)

 

$

( 828

)

 

$

( 1,162

)

Interest rate swaps

 

 

771

 

 

 

771

 

 

 

—

 

 

 

307

 

 

 

307

 

 

 

—

 

Total

 

$

( 38,746

)

 

$

( 50,679

)

 

$

11,933

 

 

$

( 1,683

)

 

$

( 521

)

 

$

( 1,162

)

 

 

 

For the Six Months Ended June 30, 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

 

$

38,192

 

 

$

68,667

 

 

$

( 30,475

)

 

$

( 4,857

)

 

$

( 3,695

)

 

$

( 1,162

)

Interest rate swaps

 

 

( 1,160

)

 

 

( 1,160

)

 

 

—

 

 

 

487

 

 

 

487

 

 

 

—

 

Total

 

$

37,032

 

 

$

67,507

 

 

$

( 30,475

)

 

$

( 4,370

)

 

$

( 3,208

)

 

$

( 1,162

)

 

 
56

 

 
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.
The Company has minimum collateral posting thresholds with certain of its derivative counterparties. At June 30, 2026, the Company had not posted any collateral as there were no derivatives in a net liability position. If the Company had breached any of these provisions at June 30, 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 June 30, 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.

 
57

 

Assets and liabilities measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025 (in thousands):

 

 

Fair Value Measurement at June 30, 2026

 

Description

 

June 30, 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

 

 

18,407

 

 

 

—

 

 

 

18,407

 

 

 

—

 

Mortgage-backed

 

 

2,493

 

 

 

—

 

 

 

2,493

 

 

 

—

 

State and political subdivisions

 

 

13,584

 

 

 

—

 

 

 

13,584

 

 

 

—

 

Corporates

 

 

11,022

 

 

 

11,022

 

 

 

—

 

 

 

—

 

Trading – other

 

 

333

 

 

 

333

 

 

 

—

 

 

 

—

 

Trading securities

 

 

45,839

 

 

 

11,355

 

 

 

34,484

 

 

 

—

 

U.S. Treasury

 

 

2,204,917

 

 

 

2,204,917

 

 

 

—

 

 

 

—

 

U.S. Agencies

 

 

48,785

 

 

 

—

 

 

 

48,785

 

 

 

—

 

Mortgage-backed

 

 

8,223,615

 

 

 

—

 

 

 

8,223,615

 

 

 

—

 

State and political subdivisions

 

 

2,372,497

 

 

 

—

 

 

 

2,372,497

 

 

 

—

 

Corporates

 

 

87,309

 

 

 

87,309

 

 

 

—

 

 

 

—

 

Collateralized loan obligations

 

 

551,036

 

 

 

—

 

 

 

551,036

 

 

 

—

 

Available-for-sale securities

 

 

13,488,159

 

 

 

2,292,226

 

 

 

11,195,933

 

 

 

—

 

Equity securities with readily determinable fair values

 

 

12,610

 

 

 

12,610

 

 

 

—

 

 

 

—

 

Derivatives

 

 

236,420

 

 

 

—

 

 

 

236,420

 

 

 

—

 

Total

 

$

13,783,028

 

 

$

2,316,191

 

 

$

11,466,837

 

 

$

—

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives

 

$

148,337

 

 

$

—

 

 

$

148,337

 

 

$

—

 

Securities sold not yet purchased

 

 

14,027

 

 

 

—

 

 

 

14,027

 

 

 

—

 

Total

 

$

162,364

 

 

$

—

 

 

$

162,364

 

 

$

—

 

 

 
58

 

 

 

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

 
59

 

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 June 30, 2026 and December 31, 2025 (in thousands):
 

 

 

Fair Value Measurement at June 30, 2026 Using

 

Description

 

June 30, 2026

 

 

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

 

 

Significant Other Observable Inputs (Level 2)

 

 

Significant Unobservable Inputs (Level 3)

 

 

Total Losses Recognized During the Six Months Ended June 30

 

Collateral dependent assets

 

$

32,037

 

 

$

—

 

 

$

—

 

 

$

32,037

 

 

$

( 4,161

)

Other real estate owned

 

 

1,489

 

 

 

—

 

 

 

—

 

 

 

1,489

 

 

 

—

 

Total

 

$

33,526

 

 

$

—

 

 

$

—

 

 

$

33,526

 

 

$

( 4,161

)

 

 

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 property, including auto, recreational and marine vehicles. Other real estate owned is recorded as held for sale

 
60

 

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 June 30, 2026 and December 31, 2025 are as follows (in thousands):
 

 

 

Fair Value Measurement at June 30, 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

 

$

6,659,324

 

 

$

5,730,886

 

 

$

928,438

 

 

$

—

 

 

$

6,659,324

 

Securities available for sale

 

 

13,488,159

 

 

 

2,292,226

 

 

 

11,195,933

 

 

 

—

 

 

 

13,488,159

 

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

 

 

5,716,426

 

 

 

—

 

 

 

5,239,447

 

 

 

—

 

 

 

5,239,447

 

Trading securities

 

 

45,839

 

 

 

11,355

 

 

 

34,484

 

 

 

—

 

 

 

45,839

 

Other securities

 

 

693,502

 

 

 

12,610

 

 

 

680,892

 

 

 

—

 

 

 

693,502

 

Loans (exclusive of allowance for credit losses)

 

 

41,156,526

 

 

 

—

 

 

 

40,602,007

 

 

 

—

 

 

 

40,602,007

 

Derivatives

 

 

236,420

 

 

 

—

 

 

 

236,420

 

 

 

—

 

 

 

236,420

 

FINANCIAL LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time deposits

 

 

3,207,902

 

 

 

—

 

 

 

3,223,265

 

 

 

—

 

 

 

3,223,265

 

Other borrowings

 

 

3,083,600

 

 

 

24,520

 

 

 

3,059,080

 

 

 

—

 

 

 

3,083,600

 

Long-term debt

 

 

480,126

 

 

 

—

 

 

 

489,896

 

 

 

—

 

 

 

489,896

 

Derivatives

 

 

148,337

 

 

 

—

 

 

 

148,337

 

 

 

—

 

 

 

148,337

 

OFF-BALANCE SHEET ARRANGEMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments to extend credit for loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,411

 

Commitments to extend resell agreements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

435

 

Commercial letters of credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32

 

Standby letters of credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,851

 

 

 
61

 

 

 

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.

 
62

 

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.

 
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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.
 

 
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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 methodology 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.
 

 
65

 

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.

 

 
66

 

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 and six months ended June 30, 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;

 
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• 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 respect 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

 
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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, UMBF 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. 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 second quarter of 2026, total revenue increased $88.8 million, or 12.9%, as compared to the second quarter of 2025, while noninterest expense increased $6.5 million, or 1.6%, for the same period. Included in noninterest expense for the second quarter of 2025 is $13.5 million in acquisition-related expense compared to $1.7 million in the second quarter of 2026. Revenue is also impacted by 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 second quarter of 2026, the Company had an increase in net interest income of $65.5 million, or 14.0%, from the same period in 2025. The change in net interest income was primarily driven by favorable repricing of deposits in conjunction with lower short-term interest rates, and increases of $4.2 billion, or 11.6%, in average loans and $2.2 billion, or 12.6%, in average securities. These increases were partially offset by a decrease of $2.9 billion, or 44.3%, in average interest-bearing due from banks and $6.3 million in lower purchase accounting accretion income. The funding for these assets was driven by an increase in average interest-bearing deposits of 3.9%, and an increase in noninterest-bearing demand deposit balances of 2.1% compared to the second quarter of 2025. Net interest margin, on a tax-equivalent basis, increased 22 basis points compared to the same period in 2025, primarily driven by favorable repricing of deposits in conjunction with lower short-term interest rates. Net interest spread increased 34 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 $23.3 million, or 10.5%, to $245.5 million for the three months ended June 30, 2026, compared to the same period in 2025. See greater detail below under Noninterest Income. The Company continues to emphasize its asset management, brokerage, bankcard services, healthcare services, and treasury management businesses. For the three months ended June 30, 2026, noninterest income represented 31.6% of total revenue, compared to 32.2% for the same period in 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

 
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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 June 30, 2026, the Company had $8.0 billion in total shareholders’ equity. This is an increase of $745.0 million, or 10.2%, compared to total shareholders’ equity at June 30, 2025. At June 30, 2026, the Company had a total risk-based capital ratio of 13.80%. The Company repurchased 38,158 shares of common stock during the second quarter of 2026 at an average price of $132.10. The Company also acquired shares pursuant to the Company's share-based incentive programs.
Earnings Summary
The following is a summary regarding the Company’s earnings for the second 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 $271.8 million for the three-month period ended June 30, 2026, compared to net income available to common shareholders of $215.4 million for the same period a year earlier. Basic earnings per common share for the second quarter of 2026 were $3.58 per share ($3.56 per share fully-diluted) compared to $2.84 per common share ($2.82 per share fully-diluted) for the second quarter of 2025. Return on average assets and return on average common shareholders’ equity for the three-month period ended June 30, 2026 were 1.55% and 14.16%, respectively, compared to 1.29% and 12.72%, respectively, for the three-month period ended June 30, 2025.
The Company recorded net income available to common shareholders of $527.4 million for the six-month period ended June 30, 2026, compared to net income available to common shareholders of $294.7 million for the same period a year earlier. Basic earnings per common share for the six-month period ended June 30, 2026 were $6.94 per share ($6.90 per share fully-diluted) compared to $4.18 per share ($4.16 per share fully-diluted) for the same period in 2025. Return on average assets and return on average common shareholders’ equity for the six-month period ended June 30, 2026 were 1.51% and 13.93%, respectively, compared to 0.94% and 9.67%, respectively, for the six-month period ended June 30, 2025.
Net interest income for the three and six-month periods ended June 30, 2026 increased $65.5 million, or 14.0%, and increased $202.2 million, or 23.4%, respectively, compared to the same periods in 2025. For the three-month period ended June 30, 2026, average earning assets increased by $3.9 billion, or 6.3%, and for the six-month period ended June 30, 2026, they increased by $6.7 billion, or 11.5%, compared to the same periods in 2025. Net interest margin, on a tax-equivalent basis, increased to 3.32% and 3.35%, respectively, for the three and six-month periods ended June 30, 2026, compared to 3.10% and 3.04%, respectively, for the same periods in 2025.
The provision for credit losses increased by $7.0 million for the three-month period ended June 30, 2026 and decreased by $52.0 million for the six-month period ended June 30, 2026, as compared to the same periods in 2025. Provision expense for the six-month period 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 ongoing recalibrations of economic loss models in the current period as compared to the prior periods. The Company’s nonperforming loans increased $30.5 million to $127.5 million at June 30, 2026, compared to June 30, 2025. The ACL on loans as a percentage of total loans remained flat at 1.06% as of June 30, 2026, compared to June 30, 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 $23.3 million, or 10.5%, for the three-month period ended June 30, 2026, and increased by $61.9 million, or 15.9%, for the six-month period ended June 30, 2026, compared to the same periods in 2025. These changes are discussed in greater detail below under Noninterest Income.
Noninterest expense increased by $6.5 million, or 1.6%, for the three-month period ended June 30, 2026, and increased by $2.6 million, or 0.3%, for the six-month period ended June 30, 2026, compared to the same periods in 2025. These changes are discussed in greater detail below under Noninterest Expense.

 
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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 net interest income. Net interest income for the three and six-month periods ended June 30, 2026 increased $65.5 million, or 14.0%, and increased $202.2 million, or 23.4%, compared to the same periods in 2025. The change in net interest income was primarily driven by favorable repricing of deposits in conjunction with lower short-term interest rates, and increases in average loans and average securities. These increases were partially offset by decreases in average interest-bearing due from banks and purchase accounting accretion income.
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 June 30, 2026 increased 34 basis points as compared to the same period in 2025. Net interest margin for the three months ended June 30, 2026 increased 22 basis points compared to the same period in 2025. Net interest spread for the six-month period ended June 30, 2026 increased by 44 basis points as compared to the same period in 2025. Net interest margin for the six-month period ended June 30, 2026 increased by 31 basis points compared to the same period in 2025. The change is driven by favorable repricing of deposits in conjunction with lower short-term interest rates. The cost of interest-bearing liabilities decreased 54 basis points from the second quarter of 2025 while the yield on earning assets decreased 20 basis points compared to the same period. The cost of interest-bearing liabilities decreased 54 basis points for the six-month period ended June 30, 2026 as compared to the same period in 2025 while the yield on earning assets decreased 10 basis points 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 led to an increase in the Company’s net interest income during 2026, as compared to results for the same periods 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 5.35% for the three-month period ended June 30, 2026, and 5.55% for the same period in 2025. The average yield on earning assets without the tax-equivalent basis adjustment would have been 5.37% for the six-month period ended June 30, 2026, and 5.48% for the same period in 2025.

 
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Three Months Ended June 30,

 

 

 

2026

 

 

 

2025

 

 

 

Average

 

 

Average

 

 

 

Average

 

 

Average

 

 

 

Balance

 

 

Yield/Rate

 

 

 

Balance

 

 

Yield/Rate

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned interest

 

$

40,623,950

 

 

 

6.36

%

 

 

$

36,406,753

 

 

 

6.75

%

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

15,580,537

 

 

 

3.77

 

 

 

 

13,409,940

 

 

 

3.66

 

Tax-exempt

 

 

4,337,660

 

 

 

4.06

 

 

 

 

4,273,494

 

 

 

3.87

 

Total securities

 

 

19,918,197

 

 

 

3.84

 

 

 

 

17,683,434

 

 

 

3.71

 

Federal funds and resell agreements

 

 

1,033,826

 

 

 

4.37

 

 

 

 

684,747

 

 

 

5.12

 

Interest-bearing due from banks

 

 

3,712,165

 

 

 

3.67

 

 

 

 

6,660,111

 

 

 

4.45

 

Other earning assets

 

 

26,734

 

 

 

6.12

 

 

 

 

16,693

 

 

 

6.54

 

Total earning assets

 

 

65,314,872

 

 

 

5.41

 

 

 

 

61,451,738

 

 

 

5.61

 

Allowance for credit losses

 

 

(418,985

)

 

 

 

 

 

 

(367,919

)

 

 

 

Other assets

 

 

5,511,562

 

 

 

 

 

 

 

5,787,982

 

 

 

 

Total assets

 

$

70,407,449

 

 

 

 

 

 

$

66,871,801

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

42,872,466

 

 

 

2.80

%

 

 

$

41,246,157

 

 

 

3.34

%

Federal funds and repurchase agreements

 

 

3,512,241

 

 

 

3.31

 

 

 

 

2,767,216

 

 

 

3.97

 

Borrowed funds

 

 

478,555

 

 

 

9.19

 

 

 

 

655,575

 

 

 

7.92

 

Total interest-bearing liabilities

 

 

46,863,262

 

 

 

2.90

 

 

 

 

44,668,948

 

 

 

3.44

 

Noninterest-bearing demand deposits

 

 

14,712,647

 

 

 

 

 

 

 

14,403,211

 

 

 

 

Other liabilities

 

 

843,604

 

 

 

 

 

 

 

839,134

 

 

 

 

Shareholders' equity

 

 

7,987,936

 

 

 

 

 

 

 

6,960,508

 

 

 

 

Total liabilities and shareholders' equity

 

$

70,407,449

 

 

 

 

 

 

$

66,871,801

 

 

 

 

Net interest spread

 

 

 

 

 

2.51

%

 

 

 

 

 

 

2.17

%

Net interest margin

 

 

 

 

 

3.32

 

 

 

 

 

 

 

3.10

 

 

 
72

 

 

 

 

Six Months Ended June 30,

 

 

 

2026

 

 

 

2025

 

 

 

Average

 

 

Average

 

 

 

Average

 

 

Average

 

 

 

Balance

 

 

Yield/Rate

 

 

 

Balance

 

 

Yield/Rate

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned interest

 

$

40,007,008

 

 

 

6.44

%

 

 

$

34,369,543

 

 

 

6.69

%

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

15,617,174

 

 

 

3.77

 

 

 

 

12,557,618

 

 

 

3.54

 

Tax-exempt

 

 

4,345,604

 

 

 

4.04

 

 

 

 

4,197,951

 

 

 

3.78

 

Total securities

 

 

19,962,778

 

 

 

3.83

 

 

 

 

16,755,569

 

 

 

3.60

 

Federal funds and resell agreements

 

 

1,285,452

 

 

 

4.29

 

 

 

 

620,632

 

 

 

5.10

 

Interest-bearing due from banks

 

 

3,951,163

 

 

 

3.67

 

 

 

 

6,733,977

 

 

 

4.46

 

Other earning assets

 

 

22,070

 

 

 

6.30

 

 

 

 

18,767

 

 

 

7.10

 

Total earning assets

 

 

65,228,471

 

 

 

5.43

 

 

 

 

58,498,488

 

 

 

5.53

 

Allowance for credit losses

 

 

(418,380

)

 

 

 

 

 

 

(344,276

)

 

 

 

Other assets

 

 

5,605,959

 

 

 

 

 

 

 

5,285,676

 

 

 

 

Total assets

 

$

70,416,050

 

 

 

 

 

 

$

63,439,888

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

42,672,728

 

 

 

2.79

%

 

 

$

39,063,362

 

 

 

3.34

%

Federal funds and repurchase agreements

 

 

3,567,518

 

 

 

3.32

 

 

 

 

2,730,267

 

 

 

3.93

 

Borrowed funds

 

 

477,045

 

 

 

9.13

 

 

 

 

613,236

 

 

 

7.92

 

Total interest-bearing liabilities

 

 

46,717,291

 

 

 

2.90

 

 

 

 

42,406,865

 

 

 

3.44

 

Noninterest-bearing demand deposits

 

 

14,906,914

 

 

 

 

 

 

 

13,918,401

 

 

 

 

Other liabilities

 

 

867,597

 

 

 

 

 

 

 

846,697

 

 

 

 

Shareholders' equity

 

 

7,924,248

 

 

 

 

 

 

 

6,267,925

 

 

 

 

Total liabilities and shareholders' equity

 

$

70,416,050

 

 

 

 

 

 

$

63,439,888

 

 

 

 

Net interest spread

 

 

 

 

 

2.53

%

 

 

 

 

 

 

2.09

%

Net interest margin

 

 

 

 

 

3.35

 

 

 

 

 

 

 

3.04

 

 
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 $1.7 billion and increased $2.4 billion for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025. The benefit from interest-free funds decreased 12 basis points and 13 points, respectively, in the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025.

 
73

 

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

 

 

Six Months Ended

 

 

 

June 30, 2026 vs. 2025

 

 

June 30, 2026 vs. 2025

 

 

 

Volume

 

 

Rate

 

 

Total

 

 

Volume

 

 

Rate

 

 

Total

 

Change in interest earned on:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

68,227

 

 

$

(36,646

)

 

$

31,581

 

 

$

181,288

 

 

$

(44,033

)

 

$

137,255

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

20,317

 

 

 

4,039

 

 

 

24,356

 

 

 

56,463

 

 

 

14,896

 

 

 

71,359

 

Tax-exempt

 

 

498

 

 

 

1,659

 

 

 

2,157

 

 

 

2,234

 

 

 

4,414

 

 

 

6,648

 

Federal funds sold and resell agreements

 

 

3,947

 

 

 

(1,421

)

 

 

2,526

 

 

 

14,476

 

 

 

(2,839

)

 

 

11,637

 

Interest-bearing due from banks

 

 

(28,590

)

 

 

(11,334

)

 

 

(39,924

)

 

 

(53,882

)

 

 

(23,125

)

 

 

(77,007

)

Trading

 

 

151

 

 

 

(18

)

 

 

133

 

 

 

112

 

 

 

(78

)

 

 

34

 

Interest income

 

 

64,550

 

 

 

(43,721

)

 

 

20,829

 

 

 

200,691

 

 

 

(50,765

)

 

 

149,926

 

Change in interest incurred on:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

13,101

 

 

 

(57,327

)

 

 

(44,226

)

 

 

56,219

 

 

 

(111,478

)

 

 

(55,259

)

Federal funds purchased and repurchase agreements

 

 

6,619

 

 

 

(5,089

)

 

 

1,530

 

 

 

14,628

 

 

 

(9,190

)

 

 

5,438

 

Other borrowed funds

 

 

(3,845

)

 

 

1,869

 

 

 

(1,976

)

 

 

(5,830

)

 

 

3,349

 

 

 

(2,481

)

Interest expense

 

 

15,875

 

 

 

(60,547

)

 

 

(44,672

)

 

 

65,017

 

 

 

(117,319

)

 

 

(52,302

)

Net interest income

 

$

48,675

 

 

$

16,826

 

 

$

65,501

 

 

$

135,674

 

 

$

66,554

 

 

$

202,228

 

 
ANALYSIS OF NET INTEREST MARGIN

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2026

 

 

2025

 

 

Change

 

 

2026

 

 

2025

 

 

Change

 

Average earning assets

 

$

65,314,872

 

 

$

61,451,738

 

 

$

3,863,134

 

 

$

65,228,471

 

 

$

58,498,488

 

 

$

6,729,983

 

Interest-bearing liabilities

 

 

46,863,262

 

 

 

44,668,948

 

 

 

2,194,314

 

 

 

46,717,291

 

 

 

42,406,865

 

 

 

4,310,426

 

Interest-free funds

 

$

18,451,610

 

 

$

16,782,790

 

 

$

1,668,820

 

 

$

18,511,180

 

 

$

16,091,623

 

 

$

2,419,557

 

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

 

 

28.25

%

 

 

27.31

%

 

 

0.94

%

 

 

28.38

%

 

 

27.51

%

 

 

0.87

%

Tax-equivalent yield on earning assets

 

 

5.41

 

 

 

5.61

 

 

 

(0.20

)

 

 

5.43

 

 

 

5.53

 

 

 

(0.10

)

Cost of interest-bearing liabilities

 

 

2.90

 

 

 

3.44

 

 

 

(0.54

)

 

 

2.90

 

 

 

3.44

 

 

 

(0.54

)

Net interest spread

 

 

2.51

 

 

 

2.17

 

 

 

0.34

 

 

 

2.53

 

 

 

2.09

 

 

 

0.44

 

Benefit of interest-free funds

 

 

0.81

 

 

 

0.93

 

 

 

(0.12

)

 

 

0.82

 

 

 

0.95

 

 

 

(0.13

)

Net interest margin

 

 

3.32

%

 

 

3.10

%

 

 

0.22

%

 

 

3.35

%

 

 

3.04

%

 

 

0.31

%

 
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.

 
74

 

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.
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 $28.0 million as provision for credit losses for the three-month period ended June 30, 2026, as compared to $21.0 million for the same period in 2025. For the six-month period ended June 30, 2026, management of the Company recorded $55.0 million as provision for credit losses, as compared to $107.0 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 and the remaining $10.0 million increase in provision in the six-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 remained flat at 1.06% of total loans as of June 30, 2026, compared to June 30, 2025.
Table 3 presents a summary of the Company’s ACL for the six-month periods ended June 30, 2026 and 2025, and for the year ended December 31, 2025. Net charge-offs were $34.8 million for the six-month period ended June 30, 2026, compared to $51.3 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.

 
75

 

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

 

 

Six Months Ended

 

 

Year Ended

 

 

 

June 30,

 

 

December 31,

 

 

 

2026

 

 

2025

 

 

2025

 

Allowance – January 1

 

$

421,162

 

$

261,734

 

$

261,734

 

PCD allowance for credit loss at acquisition

 

 

—

 

 

 

77,293

 

 

 

85,299

 

Provision for credit losses

 

 

55,000

 

 

 

106,500

 

 

 

156,500

 

Charge-offs:

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

(12,272

)

 

 

(32,108

)

 

 

(44,645

)

Specialty lending

 

 

—

 

 

 

—

 

 

 

—

 

Commercial real estate

 

 

(11,937

)

 

 

(6,502

)

 

 

(11,792

)

Consumer real estate

 

 

(899

)

 

 

(1,629

)

 

 

(2,041

)

Consumer

 

 

(2,057

)

 

 

(1,423

)

 

 

(3,538

)

Credit cards

 

 

(12,202

)

 

 

(12,200

)

 

 

(25,676

)

Leases and other

 

 

—

 

 

 

—

 

 

 

(27

)

Total charge-offs

 

 

(39,367

)

 

 

(53,862

)

 

 

(87,719

)

Recoveries:

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

1,512

 

 

 

189

 

 

 

507

 

Specialty lending

 

 

—

 

 

 

—

 

 

 

—

 

Commercial real estate

 

 

29

 

 

 

184

 

 

 

196

 

Consumer real estate

 

 

41

 

 

 

163

 

 

 

275

 

Consumer

 

 

453

 

 

 

245

 

 

 

845

 

Credit cards

 

 

2,522

 

 

 

1,747

 

 

 

3,519

 

Leases and other

 

 

20

 

 

 

—

 

 

 

6

 

Total recoveries

 

 

4,577

 

 

 

2,528

 

 

 

5,348

 

Net charge-offs

 

 

(34,790

)

 

 

(51,334

)

 

 

(82,371

)

Allowance for credit losses – end of period

 

$

441,372

 

$

394,193

 

$

421,162

 

Allowance for credit losses on loans

 

$

437,376

 

 

$

389,918

 

 

$

419,478

 

Allowance for credit losses on held-to-maturity securities

 

 

3,996

 

 

 

4,275

 

 

 

1,684

 

Loans at end of period, net of unearned interest

 

 

41,149,726

 

 

 

36,807,933

 

 

 

38,779,408

 

Held-to-maturity securities at end of period

 

 

5,716,426

 

 

 

5,499,457

 

 

 

5,724,227

 

Total assets at amortized cost

 

 

46,866,152

 

 

 

42,307,390

 

 

 

44,503,635

 

Average loans, net of unearned interest

 

 

40,003,513

 

 

34,366,980

 

 

36,065,953

 

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

 

 

1.06

%

 

 

1.06

%

 

 

1.08

%

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

 

 

0.94

%

 

 

0.93

%

 

 

0.95

%

Allowance as a multiple of net charge-offs

 

6.29x

 

 

3.81x

 

 

5.11x

 

Net charge-offs to average loans

 

 

0.18

%

 

 

0.30

%

 

 

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.

 
76

 

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

 

 

Three Months Ended

 

 

Dollar

 

 

Percent

 

 

 

June 30,

 

 

Change

 

 

Change

 

 

 

2026

 

 

2025

 

 

26-25

 

 

26-25

 

Trust and securities processing

 

$

98,295

 

 

$

83,263

 

 

$

15,032

 

 

 

18.1

%

Trading and investment banking

 

 

5,314

 

 

 

6,170

 

 

 

(856

)

 

 

(13.9

)

Service charges on deposits

 

 

29,588

 

 

 

28,865

 

 

 

723

 

 

 

2.5

 

Insurance fees and commissions

 

 

207

 

 

 

189

 

 

 

18

 

 

 

9.5

 

Brokerage fees

 

 

25,400

 

 

 

20,525

 

 

 

4,875

 

 

 

23.8

 

Bankcard fees

 

 

29,954

 

 

 

29,018

 

 

 

936

 

 

 

3.2

 

Investment securities gains, net

 

 

27,087

 

 

 

37,685

 

 

 

(10,598

)

 

 

(28.1

)

Other

 

 

29,660

 

 

 

16,470

 

 

 

13,190

 

 

 

80.1

 

Total noninterest income

 

$

245,505

 

 

$

222,185

 

 

$

23,320

 

 

 

10.5

%

 

 

 

Six Months Ended

 

 

Dollar

 

 

Percent

 

 

 

June 30,

 

 

Change

 

 

Change

 

 

 

2026

 

 

2025

 

 

26-25

 

 

26-25

 

Trust and securities processing

 

$

192,962

 

 

$

163,044

 

 

$

29,918

 

 

 

18.3

%

Trading and investment banking

 

 

13,054

 

 

 

12,081

 

 

 

973

 

 

 

8.1

 

Service charges on deposits

 

 

59,062

 

 

 

56,322

 

 

 

2,740

 

 

 

4.9

 

Insurance fees and commissions

 

 

462

 

 

 

367

 

 

 

95

 

 

 

25.9

 

Brokerage fees

 

 

46,489

 

 

 

38,627

 

 

 

7,862

 

 

 

20.4

 

Bankcard fees

 

 

58,832

 

 

 

55,311

 

 

 

3,521

 

 

 

6.4

 

Investment securities gains, net

 

 

30,133

 

 

 

32,903

 

 

 

(2,770

)

 

 

(8.4

)

Other

 

 

49,304

 

 

 

29,728

 

 

 

19,576

 

 

 

65.9

 

Total noninterest income

 

$

450,298

 

 

$

388,383

 

 

$

61,915

 

 

 

15.9

%

 
Noninterest income increased by $23.3 million, or 10.5%, during the three-month period ended June 30, 2026, and increased $61.9 million, or 15.9%, during the six-month period ended June 30, 2026, compared to the same periods 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 and six-month periods ended June 30, 2026, compared to the same periods in 2025, was primarily due to an increase in trust services income, fund services revenue, and corporate trust revenue. For the three-month period ended June 30, 2026, fund services revenue increased $9.1 million, or 20.2%, corporate trust revenue increased $3.9 million, or 21.7%, and trust income increased $2.0 million, or 10.0%, compared to the same period in 2025. For the six-month period ended June 30, 2026, fund services revenue increased $18.0 million, or 20.3%, corporate trust revenue increased $7.3 million, or 20.6%, and trust services revenue increased $4.7 million, or 11.9%, 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.
Brokerage fees for the three-month period ended June 30, 2026 increased $4.9 million, or 23.8%, and increased $7.9 million, or 20.4%, for the six-month period ended June 30, 2026, compared to the same periods in 2025. The changes in the three-month and six-month periods were driven by 12b-1 fees and money market share revenue.
Bankcard fees for the three and six-month periods ended June 30, 2026 increased $0.9 million, or 3.2%, and increased $3.5 million, or 6.4%, respectively, as compared to the same periods in 2025. The increase for the

 
77

 

three-month period ended June 30, 2026, was driven by higher interchange income, increased merchant revenue share, and lower rebate costs. The increase for the six-month period was driven by higher interchange income, partially offset by higher reward costs.
Investment securities gains, net for the three and six-month periods ended June 30, 2026 decreased $10.6 million, or 28.1%, and decreased $2.8 million, or 8.4%, respectively, compared to the same periods in 2025. The decrease for the three-month period ended June 30, 2026, was primarily driven by the pre-tax gain of $29.4 million on the company's investment in Voyager Technologies, Inc., which completed its initial public offering in June 2025, and pre-tax gains of $8.2 million on the sale of two non-marketable investments, all recognized in the second quarter of 2025. This is compared to a $17.9 million gain on the sale of a non-marketable security and increases of $9.1 million in valuation of the company's non-marketable securities in the second quarter of 2026. The decrease for the six-month period ended June 30, 2026 was further impacted by a gain of $3.0 million on the sale of a non-marketable security in the first quarter of 2026, coupled with declines of $5.4 million in valuation of the Company’s non-marketable securities in the six-month period ended June 30, 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 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 June 30, 2026, increased $13.2 million, or 80.1%, compared to the same period in 2025, primarily driven by a $8.8 million increase in company-owned life insurance income, $2.5 million increase in bank-owned life insurance income, and a $1.0 million increase in derivative income. For the six-month period, other noninterest income increased $19.6 million, or 65.9%, compared to the same period in 2025. This increase is driven by increases of $7.6 million in company-owned life insurance income, $4.2 million in bank-owned life insurance income, $2.3 million in derivative income, and $1.8 million in syndication income.
Table 5
SUMMARY OF NONINTEREST EXPENSE (unaudited, dollars in thousands)

 

 

Three Months Ended

 

 

Dollar

 

 

Percent

 

 

 

June 30,

 

 

Change

 

 

Change

 

 

 

2026

 

 

2025

 

 

26-25

 

 

26-25

 

Salaries and employee benefits

 

$

227,162

 

$

213,551

 

$

13,611

 

 

 

6.4

%

Occupancy, net

 

 

19,277

 

 

 

18,571

 

 

 

706

 

 

 

3.8

 

Equipment

 

 

13,942

 

 

 

16,426

 

 

 

(2,484

)

 

 

(15.1

)

Supplies and services

 

 

5,504

 

 

 

6,383

 

 

 

(879

)

 

 

(13.8

)

Marketing and business development

 

 

13,916

 

 

 

11,344

 

 

 

2,572

 

 

 

22.7

 

Processing fees

 

 

43,073

 

 

 

43,638

 

 

 

(565

)

 

 

(1.3

)

Legal and consulting

 

 

14,415

 

 

 

18,468

 

 

 

(4,053

)

 

 

(21.9

)

Bankcard

 

 

11,873

 

 

 

12,363

 

 

 

(490

)

 

 

(4.0

)

Amortization of other intangible assets

 

 

23,460

 

 

 

25,268

 

 

 

(1,808

)

 

 

(7.2

)

Regulatory fees

 

 

9,097

 

 

 

9,259

 

 

 

(162

)

 

 

(1.7

)

Other

 

 

17,914

 

 

 

17,897

 

 

 

17

 

 

 

0.1

 

Total noninterest expense

 

$

399,633

 

$

393,168

 

$

6,465

 

 

 

1.6

%

 

 
78

 

 

 

 

Six Months Ended

 

 

Dollar

 

 

Percent

 

 

 

June 30,

 

 

Change

 

 

Change

 

 

 

2026

 

 

2025

 

 

26-25

 

 

26-25

 

Salaries and employee benefits

 

$

446,843

 

 

$

434,949

 

$

11,894

 

 

 

2.7

%

Occupancy, net

 

 

38,352

 

 

 

34,640

 

 

 

3,712

 

 

 

10.7

 

Equipment

 

 

27,262

 

 

 

33,374

 

 

 

(6,112

)

 

 

(18.3

)

Supplies and services

 

 

11,108

 

 

 

11,168

 

 

 

(60

)

 

 

(0.5

)

Marketing and business development

 

 

27,708

 

 

 

19,342

 

 

 

8,366

 

 

 

43.3

 

Processing fees

 

 

85,132

 

 

 

84,488

 

 

 

644

 

 

 

0.8

 

Legal and consulting

 

 

23,502

 

 

 

47,074

 

 

 

(23,572

)

 

 

(50.1

)

Bankcard

 

 

23,714

 

 

 

25,158

 

 

 

(1,444

)

 

 

(5.7

)

Amortization of other intangible assets

 

 

46,920

 

 

 

42,750

 

 

 

4,170

 

 

 

9.8

 

Regulatory fees

 

 

17,367

 

 

 

17,496

 

 

 

(129

)

 

 

(0.7

)

Other

 

 

32,608

 

 

 

27,516

 

 

 

5,092

 

 

 

18.5

 

Total noninterest expense

 

$

780,516

 

$

777,955

 

$

2,561

 

 

 

0.3

%

 
Noninterest expense increased $6.5 million, or 1.6%, and increased $2.6 million, or 0.3%, for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025. Table 5 above summarizes the components of noninterest expense and the respective year-over-year comparison for each category. For the first six months of 2026, noninterest expense included $6.0 million in total acquisition-related and other nonrecurring costs, compared to $66.7 million in the same period in 2025.
Salaries and employee benefits increased by $13.6 million, or 6.4%, and increased $11.9 million, or 2.7%, for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025. Salaries and wages expense increased $0.9 million, or 0.7%, and increased $14.5 million, or 6.1%, for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025. Bonus and commission expense increased $0.1 million, or 0.3%, and decreased $21.2 million, or 16.8%, for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025. Employee benefits expense increased $12.5 million, or 38.4%, and increased $18.6 million, or 26.3%, for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025. The variances in salaries and employee benefits are primarily driven by higher deferred compensation expense, coupled with increased bonus and commission expense due to higher company performance, partially offset by severance, retention bonuses, and change in control payments made to HTLF associates in 2025.
Occupancy expense increased $0.7 million, or 3.8%, and $3.7 million, or 10.7%, for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025, primarily due to increased depreciation expense related to assets acquired from the HTLF acquisition and higher building repair expense.
Equipment expense decreased $2.5 million, or 15.1%, and $6.1 million, or 18.3%, for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025, primarily due to lower software maintenance and amortization expense.
Marketing and business development expense increased $2.6 million, or 22.7%, and $8.4 million, or 43.3%, for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025, primarily due to the timing of advertising campaigns and higher travel and entertainment expense.
Legal and consulting expense decreased $4.1 million, or 21.9%, and $23.6 million, or 50.1%, for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025. The decrease in both periods is primarily due to decreases in non-recurring transaction costs associated with the acquisition in 2025.
Amortization of other intangible assets decreased $1.8 million, or 7.2%, and increased $4.2 million, or 9.8%, for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025. The decrease in the three-month period ended June 30, 2026 is primarily due to a decrease of amortization related to the

 
79

 

core deposit intangible recognized from the HTLF acquisition. The increase in the six-month period ended June 30, 2026 is related to the timing of the HTLF acquisition in the first quarter of 2025.
Income Tax Expense
 
The Company’s effective tax rate was 20.9% for the six months ended June 30, 2026, compared to 18.8% 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 June 30, 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

 

 

 

June 30,

 

 

Change

 

 

Change

 

 

 

2026

 

 

2025

 

 

26-25

 

 

26-25

 

Net interest income

 

$

362,575

 

 

$

322,619

 

$

39,956

 

 

 

12.4

%

Provision for credit losses

 

 

24,733

 

 

 

18,334

 

 

 

6,399

 

 

 

34.9

 

Noninterest income

 

 

51,939

 

 

 

43,219

 

 

 

8,720

 

 

 

20.2

 

Noninterest expense

 

 

169,253

 

 

 

170,648

 

 

 

(1,395

)

 

 

(0.8

)

Income before taxes

 

 

220,528

 

 

 

176,856

 

 

 

43,672

 

 

 

24.7

 

Income tax expense

 

 

45,835

 

 

 

37,068

 

 

 

8,767

 

 

 

23.7

 

Net income

 

$

174,693

 

 

$

139,788

 

$

34,905

 

 

 

25.0

%

 

 

 

Six Months Ended

 

 

Dollar

 

 

Percent

 

 

 

June 30,

 

 

Change

 

 

Change

 

 

 

2026

 

 

2025

 

 

26-25

 

 

26-25

 

Net interest income

 

$

727,917

 

 

$

596,536

 

$

131,381

 

 

 

22.0

%

Provision for credit losses

 

 

48,510

 

 

 

85,085

 

 

 

(36,575

)

 

 

(43.0

)

Noninterest income

 

 

98,228

 

 

 

80,438

 

 

 

17,790

 

 

 

22.1

 

Noninterest expense

 

 

334,705

 

 

 

343,660

 

 

 

(8,955

)

 

 

(2.6

)

Income before taxes

 

 

442,930

 

 

 

248,229

 

 

 

194,701

 

 

 

78.4

 

Income tax expense

 

 

92,699

 

 

 

46,777

 

 

 

45,922

 

 

 

98.2

 

Net income

 

$

350,231

 

$

201,452

 

$

148,779

 

 

 

73.9

%

 
For the six-month period ended June 30, 2026, Commercial Banking net income increased $148.8 million, or 73.9%, to $350.2 million, compared to the same period in 2025. Net interest income increased $131.4 million, or 22.0%, for the six-month period ended June 30, 2026, compared to the same period in 2025, primarily driven by organic loan growth, an additional month of activity from the acquisition of HTLF, and earning asset mix changes. Provision for credit losses decreased $36.6 million for the period, driven by the acquisition of HTLF as well as portfolio metric changes and ongoing recalibrations of economic loss models in 2026 as compared to 2025. Noninterest income increased $17.8 million, or 22.1%, compared to the same period in 2025, primarily due to

 
80

 

increases of $12.8 million in other income driven by increases in gains recorded for recoveries of loans previously charged off by HTLF and increased derivative income, syndication income, and life insurance income, coupled with increases of $2.6 million in bankcard fees and $1.9 million in deposit service charges. Noninterest expense decreased $9.0 million, or 2.6%, to $334.7 million for the six-month period ended June 30, 2026, compared to the same period in 2025. This decrease was driven by a decrease of $17.5 million in technology, service, and overhead expenses, partially offset by increases of $3.9 million in marketing and business development, $3.1 million in salaries and employee benefits, and $2.1 million in other noninterest expense.
Table 7
Institutional Banking Operating Results (unaudited, dollars in thousands)

 

 

Three Months Ended

 

 

Dollar

 

 

Percent

 

 

 

June 30,

 

 

Change

 

 

Change

 

 

 

2026

 

 

2025

 

 

26-25

 

 

26-25

 

Net interest income

 

$

79,048

 

 

$

66,331

 

$

12,717

 

 

 

19.2

%

Provision for credit losses

 

 

627

 

 

 

430

 

 

 

197

 

 

 

45.8

 

Noninterest income

 

 

129,191

 

 

 

107,998

 

 

 

21,193

 

 

 

19.6

 

Noninterest expense

 

 

122,527

 

 

 

105,137

 

 

 

17,390

 

 

 

16.5

 

Income before taxes

 

 

85,085

 

 

 

68,762

 

 

 

16,323

 

 

 

23.7

 

Income tax expense

 

 

17,684

 

 

 

14,412

 

 

 

3,272

 

 

 

22.7

 

Net income

 

$

67,401

 

$

54,350

 

$

13,051

 

 

 

24.0

%

 

 

 

Six Months Ended

 

 

Dollar

 

 

Percent

 

 

 

June 30,

 

 

Change

 

 

Change

 

 

 

2026

 

 

2025

 

 

26-25

 

 

26-25

 

Net interest income

 

$

156,336

 

 

$

127,489

 

$

28,847

 

 

 

22.6

%

Provision for credit losses

 

 

1,125

 

 

 

865

 

 

 

260

 

 

 

30.1

 

Noninterest income

 

 

251,020

 

 

 

211,792

 

 

 

39,228

 

 

 

18.5

 

Noninterest expense

 

 

235,458

 

 

 

212,402

 

 

 

23,056

 

 

 

10.9

 

Income before taxes

 

 

170,773

 

 

 

126,014

 

 

 

44,759

 

 

 

35.5

 

Income tax expense

 

 

35,741

 

 

 

23,746

 

 

 

11,995

 

 

 

50.5

 

Net income

 

$

135,032

 

$

102,268

 

$

32,764

 

 

 

32.0

%

 
For the six-month period ended June 30, 2026, Institutional Banking net income increased $32.8 million, or 32.0%, to $135.0 million, compared to the same period last year. Net interest income increased $28.8 million, or 22.6%, compared to the same period last year, due to an increase in funds transfer pricing resulting from higher deposit balances. Provision for credit losses increased $0.3 million for the period, driven by portfolio metric changes and ongoing recalibrations of economic loss models in 2026 compared to 2025. Noninterest income increased $39.2 million, or 18.5%, to $251.0 million for the six-month period June 30, 2026, compared to the same period in 2025. This increase was due to increases of $25.3 million in trust and securities processing income driven by higher fund services and corporate trust revenue, $8.2 million in brokerage income due to increased 12b-1 and money market revenue, $2.9 million in other income due to increased foreign currency valuation changes, $1.3 million in bankcard fees, and $1.0 million in bond trading income. Noninterest expense increased $23.1 million, or 10.9%, primarily driven by increases of $9.5 million in salaries and employee benefits expense, $8.5 million increase in technology, service, and overhead expense, $1.4 million in bankcard expense, $1.2 million in other noninterest expense, $0.9 million in legal and consulting expense, and $0.9 million in marketing and business development.

 
81

 

Table 8
Personal Banking Operating Results (unaudited, dollars in thousands)
 

 

 

Three Months Ended

 

 

Dollar

 

 

Percent

 

 

 

June 30,

 

 

Change

 

 

Change

 

 

 

2026

 

 

2025

 

 

26-25

 

 

26-25

 

Net interest income

 

$

90,902

 

 

$

78,074

 

$

12,828

 

 

 

16.4

%

Provision for credit losses

 

 

2,640

 

 

 

2,236

 

 

 

404

 

 

 

18.1

 

Noninterest income

 

 

64,375

 

 

 

70,968

 

 

 

(6,593

)

 

 

(9.3

)

Noninterest expense

 

 

107,853

 

 

 

117,383

 

 

 

(9,530

)

 

 

(8.1

)

Income before taxes

 

 

44,784

 

 

 

29,423

 

 

 

15,361

 

 

 

52.2

 

Income tax expense

 

 

9,308

 

 

 

6,167

 

 

 

3,141

 

 

 

50.9

 

Net income

 

$

35,476

 

$

23,256

 

$

12,220

 

 

 

52.5

%

 

 

 

Six Months Ended

 

 

Dollar

 

 

Percent

 

 

 

June 30,

 

 

Change

 

 

Change

 

 

 

2026

 

 

2025

 

 

26-25

 

 

26-25

 

Net interest income

 

$

182,638

 

 

$

140,638

 

$

42,000

 

 

 

29.9

%

Provision for credit losses

 

 

5,365

 

 

 

21,050

 

 

 

(15,685

)

 

 

(74.5

)

Noninterest income

 

 

101,050

 

 

 

96,153

 

 

 

4,897

 

 

 

5.1

 

Noninterest expense

 

 

210,353

 

 

 

221,893

 

 

 

(11,540

)

 

 

(5.2

)

Income (loss) before taxes

 

 

67,970

 

 

 

(6,152

)

 

 

74,122

 

 

 

1,204.8

 

Income tax expense (benefit)

 

 

14,225

 

 

 

(1,159

)

 

 

15,384

 

 

 

1,327.4

 

Net income (loss)

 

$

53,745

 

$

(4,993

)

$

58,738

 

 

 

1,176.4

%

 
For the six-month period ended June 30, 2026, Personal Banking net income improved $58.7 million, or 1,176.4%, to net income of $53.7 million, as compared to a net loss of $5.0 million in the same period in 2025. Net interest income increased $42.0 million, or 29.9%, compared to the same period last year driven by organic loan growth, an additional month of activity from the acquisition of HTLF, and earning asset mix changes. Provision for credit losses decreased $15.7 million for the period, driven by the acquisition of HTLF as well as by portfolio metric changes and ongoing recalibrations of economic loss models in 2026 as compared to 2025. Noninterest income increased $4.9 million, or 5.1%, for the same period primarily driven by increases of $4.1 million in trust and securities processing income and $2.6 million in other income driven by increases in gains recorded for recoveries of loans previously charged off by HTLF and increased life insurance income, partially offset by a $2.2 million decline in investment securities gains. Noninterest expense decreased $11.5 million, or 5.2%, primarily due to decreases of $12.1 million in technology, service, and overhead expenses, $3.6 million in other noninterest expense driven by reduced charitable contributions, and $1.7 million in bankcard expenses, partially offset by increases of $2.9 million in salaries and employee benefits expense and $2.8 million in marketing and business development.
Balance Sheet Analysis
Total assets of the Company decreased $838.5 million, or 1.1%, as of June 30, 2026, compared to December 31, 2025, primarily due to decreases of $2.0 billion, or 28.7%, and $172.7 million, or 18.1%, in interest-bearing due from banks and cash and due from banks, respectively, coupled with decreases of $619.7 million, or 40.0%, in securities purchased under agreements to resell and $221.0 million, or 1.6%, in securities available for sale. These decreases were partially offset by an increase of $2.4 billion, or 6.1%, in loans balances.
Total assets of the Company increased $495.4 million, or 0.7%, as of June 30, 2026, compared to June 30, 2025, primarily due to increases of $4.3 billion, or 11.8%, in loan balances and $1.3 billion, or 10.9%, in securities available for sale, partially offset by a decrease of $5.1 billion, or 50.6%, in interest-bearing due from banks.

 
82

 

Table 9
SELECTED FINANCIAL INFORMATION (unaudited, dollars in thousands)
 

 

 

June 30,

 

 

December 31,

 

 

 

2026

 

 

2025

 

 

2025

 

Total assets

 

$

72,255,560

 

 

$

71,760,153

 

 

$

73,094,090

 

Loans, net of unearned interest

 

 

41,156,526

 

 

 

36,813,671

 

 

 

38,781,438

 

Total securities

 

 

19,943,926

 

 

 

18,405,658

 

 

 

20,131,999

 

Interest-bearing due from banks

 

 

4,951,010

 

 

 

10,026,186

 

 

 

6,940,535

 

Total earning assets

 

 

66,979,900

 

 

 

65,982,706

 

 

 

67,402,065

 

Total deposits

 

 

59,766,682

 

 

 

59,987,009

 

 

 

60,656,790

 

Total borrowed funds

 

 

3,563,726

 

 

 

3,589,930

 

 

 

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 $41.1 billion as of June 30, 2026, and increased $2.4 billion, or 6.1%, compared to December 31, 2025, and increased $4.3 billion, or 11.8%, compared to June 30, 2025. Compared to December 31, 2025, commercial and industrial loans increased $1.7 billion, or 10.3%, leases and other loans increased $261.8 million, or 109.8%, and commercial real estate loans increased $191.1 million, or 1.2%. Compared to June 30, 2025, commercial and industrial loans increased $3.3 billion, or 22.5%, leases and other loans increased $398.4 million, or 391.2%, commercial real estate loans increased $382.4 million, or 2.4%, and consumer real estate loans increased $221.0 million, or 5.1%.
As of June 30, 2026 and December 31, 2025, commercial real estate loans comprised approximately 40.3% 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 the 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 25.7% and 27.5% of total Company loans as of June 30, 2026 and December 31, 2025, respectively. The average investment CRE loan was approximately $4.0 million and $3.6 million, as of June 30, 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.”

 
83

 

Table 10
 

 

 

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

 

 

 

June 30, 2026

 

 

December 31, 2025

 

Industrial

 

 

7.9

%

 

 

8.1

%

Multifamily

 

 

6.5

 

 

 

6.7

 

Office building

 

 

2.9

 

 

 

3.6

 

Retail

 

 

2.1

 

 

 

2.3

 

Hotel

 

 

1.8

 

 

 

2.0

 

Other

 

 

4.5

 

 

 

4.8

 

Total Investment CRE

 

 

25.7

%

 

 

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

 

 

 

June 30, 2026

 

 

December 31, 2025

 

Texas

 

 

12.0

%

 

 

12.0

%

Missouri

 

 

12.0

 

 

 

12.5

 

Arizona

 

 

11.9

 

 

 

12.2

 

Colorado

 

 

11.5

 

 

 

11.7

 

California

 

 

5.3

 

 

 

5.1

 

Utah

 

 

5.0

 

 

 

4.9

 

All others

 

 

42.3

 

 

 

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 $19.9 billion as of June 30, 2026, and $20.1 billion as of 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 67.6% of the Company’s total securities portfolio at June 30, 2026 and 68.1% at 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 69.6 months at June 30, 2026, compared to 74.8 months at December 31, 2025, and 72.4 months at June 30, 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 $13.2 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 June 30, 2026 and December 31, 2025, respectively.

 
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The Company’s HTM securities portfolio consists of U.S. agency-backed securities, mortgage-backed securities, general obligation bonds, and private placement bonds. The HTM portfolio, net of the ACL, totaled $5.7 billion at both June 30, 2026 and December 31, 2025, respectively. The average life of the HTM portfolio was 8.6 years at June 30, 2026, compared to 8.5 years at December 31, 2025, and 8.8 years at June 30, 2025.
The securities portfolio generates the Company’s second largest component of interest income. The securities portfolio achieved an average yield on a tax-equivalent basis of 3.83% for the six-month period ended June 30, 2026, compared to 3.60% for the same period in 2025.
At June 30, 2026, the unrealized pre-tax net loss on the AFS securities portfolio was $415.2 million, or 3.0% of the $13.9 billion amortized cost value, compared to $290.8 million at December 31, 2025. At June 30, 2026, the unrealized pre-tax net loss on the securities designated as HTM was $477.0 million, or 8.3% of the $5.7 billion amortized cost value, compared to $473.8 million at December 31, 2025. During 2022, the Company transferred securities with an amortized cost balance of $4.1 billion and a fair value of $3.8 billion from the AFS category to the HTM category. The transfer of securities was made at fair value at the time of transfer. The remaining balance of unrealized pre-tax losses related to transferred securities was $124.9 million as of June 30, 2026, and $139.2 million as of December 31, 2025, and was included in the amortized cost balance of HTM securities. See further information in Note 5, “Securities” in the Notes to Consolidated Financial Statements.
Deposits and Borrowed Funds
Deposits decreased $890.1 million, or 1.5%, from December 31, 2025 to June 30, 2026 and decreased $220.3 million, or 0.4%, from June 30, 2025 to June 30, 2026. Total interest-bearing balances increased $76.0 million and noninterest-bearing deposits decreased $966.1 million from December 31, 2025 to June 30, 2026. Total interest-bearing deposits increased $2.1 billion and noninterest-bearing deposits decreased $2.3 billion from June 30, 2025 to June 30, 2026. Noninterest-bearing deposits were 27.1%, 28.3%, and 30.8% of total deposits at June 30, 2026, December 31, 2025, and June 30, 2025, respectively.
Deposits represent the Company’s primary funding source for its asset base. In addition to the core deposits garnered by the Company’s retail branch structure, the Company continues to focus on its cash management services, as well as its trust and investment company servicing businesses, in order to attract and retain additional deposits. Management believes a strong core deposit composition is one of the Company’s key strengths given its competitive product mix.
As of June 30, 2026, there were an estimated $38.2 billion of uninsured deposits, a decrease of $1.5 billion as compared to December 31, 2025, and a decrease of $2.6 billion as compared to June 30, 2025. Estimated uninsured deposits comprised approximately 64.0%, 65.4%, and 68.1% of total deposits as of June 30, 2026, December 31, 2025, and June 30, 2025, respectively. A portion of these uninsured deposits represent affiliate deposits and collateralized deposits. Affiliate deposits represent deposit accounts owned by the wholly owned subsidiaries of UMB Financial Corporation that are on deposit at UMB Bank, n.a. Collateralized deposits are public fund deposits or corporate trust deposits that are collateralized by high quality securities within the investment portfolio. Excluding affiliate deposits of $2.7 billion and collateralized deposits of $6.6 billion, the adjusted estimated uninsured deposits were $28.9 billion as of June 30, 2026. The adjusted ratio of estimated uninsured deposits, excluding affiliate and collateralized deposits, as a percentage of total deposits was approximately 48.4% as of June 30, 2026. The adjusted ratio of estimated uninsured deposits, excluding affiliate and collateralized deposits, as a percentage of total deposits was approximately 48.1% as of December 31, 2025, and 51.5% as of June 30, 2025.
The Company participates in the IntraFi Cash Service program, which allows its customers to place deposits into the program to receive reciprocal FDIC insurance coverage. The Company had $4.2 billion, $3.5 billion, and $3.2 billion of deposits in the program as of June 30, 2026, December 31, 2025, and June 30, 2025, respectively.
Long-term debt totaled $480.1 million as of June 30, 2026, compared to $474.2 million as of December 31, 2025, and $657.3 million as of June 30, 2025.
In September 2022, the Company issued $110.0 million in aggregate subordinated notes due in September 2032. The Company received $107.9 million, after deducting underwriting discounts and commissions and offering expenses, and used the proceeds from the offering for general corporate purposes, including, among other uses,

 
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contributing Tier 1 capital into the Bank. The subordinated notes were issued with a fixed-to-fixed rate of 6.25% and an effective rate of 6.64%, due to issuance costs, with an interest rate reset date of September 2027.
As part of the acquisition of HTLF, the Company acquired $150.0 million in aggregate subordinated notes due in 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 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. These long-term debt obligations have an aggregate contractual balance of $262.9 million and a carrying value of $222.3 million as of June 30, 2026 and $220.0 million at December 31, 2025. Interest rates on trust preferred securities are tied to the three-month term SOFR rate with spreads ranging from 133 basis points to 365 basis points and reset quarterly. The trust preferred securities have maturity dates ranging from September 2032 to September 2037.
Federal funds purchased and securities sold under agreements to repurchase totaled $3.1 billion as of June 30, 2026, $3.3 billion at December 31, 2025, and $2.9 billion at June 30, 2025. Repurchase agreements are transactions involving the exchange of investment funds by the customer for securities by the Company under an agreement to repurchase the same or similar issues at an agreed-upon price and date.
Capital and Liquidity
The Company places a significant emphasis on the maintenance of a strong capital position, which 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. Higher levels of liquidity, however, bear corresponding costs, measured in terms of lower yields on short-term, more liquid earning assets and higher expenses for extended liability maturities. The Company manages capital for each subsidiary based upon the subsidiary’s respective risks and growth opportunities as well as regulatory requirements.
 
Total shareholders’ equity was $8.0 billion at June 30, 2026, a $337.2 million increase as compared to December 31, 2025, and a $745.0 million increase compared to June 30, 2025. Total common shareholders’ equity was $7.7 billion as of June 30, 2026, compared to $7.4 billion at December 31, 2025 and $6.9 billion at June 30, 2025. Total accumulated other comprehensive loss was $371.5 million at June 30, 2026. This is a decline of $110.0 million as compared to December 31, 2025, and an improvement of $70.5 million as compared to June 30, 2025.
The Company’s Board of Directors authorized, at its April 28, 2026 meeting, the repurchase of up to two million shares of the Company's common stock during the twelve months following each meeting (each a Repurchase Authorization). On April 29, 2025 and April 30, 2024, the Board authorized the repurchase of up to one million shares during the twelve months following each meeting. During the six-month period ended June 30, 2026, the Company repurchased 178,429 shares pursuant to the 2025 Repurchase Authorization and 38,158 shares pursuant to the 2026 Repurchase Authorization, and also acquired shares pursuant to the Company's share-based incentive programs. During the six-month period ended June 30, 2025, the Company did not repurchase shares of common stock pursuant to any of its announced Repurchase Authorizations, but did acquire shares pursuant to the Company's share-based incentive programs.
At the Company’s quarterly board meeting, the Board of Directors declared a $0.50 per common share quarterly cash dividend payable on October 1, 2026, to common shareholders of record at the close of business on September 10, 2026. Additionally, the Board of Directors declared a dividend of $193.75 per share of the Company’s Series B Preferred Stock, which results in a dividend of $0.484375 per depositary share. The Series B Preferred Stock dividend is payable on October 15, 2026 to stockholders of record of the Series B Preferred Stock as of the close of business on September 30, 2026.
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 June 30, 2026 and

 
86

 

December 31, 2025, the Company owned $10.3 million of FHLB stock. As of June 30, 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 $218.0 million and have various maturity dates through September 15, 2026. The Company’s remaining borrowing capacity with the FHLB was $2.5 billion as of June 30, 2026. The Company had no outstanding FHLB advances with the FHLB of Des Moines as of June 30, 2026.
In addition to the borrowing capacity with the FHLB as described above, the Company had additional liquidity of $35.9 billion available via cash, unpledged bond collateral, the federal funds market, the Federal Reserve Discount Window, and the IntraFi Cash Service program as of June 30, 2026.
Risk-based capital guidelines established by regulatory agencies set minimum capital standards based on the level of risk associated with a financial institution’s assets. The Company has implemented the Basel III regulatory capital rules adopted by the FRB. Basel III capital rules include a minimum ratio of common equity tier 1 capital to risk-weighted assets of 4.5% and a minimum tier 1 risk-based capital ratio of 6%. A financial institution’s total capital is also required to equal at least 8% of risk-weighted assets.
The risk-based capital guidelines indicate the specific risk weightings by type of asset. Certain off-balance sheet items (such as standby letters of credit and binding loan commitments) are multiplied by credit conversion factors to translate them into balance sheet equivalents before assigning them specific risk weightings. The Company is also required to maintain a leverage ratio equal to or greater than 4%. The leverage ratio is calculated as the ratio of tier 1 core capital to total average assets, less goodwill and intangibles.
The Company's capital position as of June 30, 2026 is summarized in the table below and exceeded regulatory requirements.
Table 12
 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

RATIOS

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Common equity tier 1 capital ratio

 

 

11.45

%

 

 

10.39

%

 

 

11.45

%

 

 

10.39

%

Tier 1 risk-based capital ratio

 

 

12.02

 

 

 

11.24

 

 

 

12.02

 

 

 

11.24

 

Total risk-based capital ratio

 

 

13.80

 

 

 

13.46

 

 

 

13.80

 

 

 

13.46

 

Leverage ratio

 

 

9.11

 

 

 

8.34

 

 

 

9.11

 

 

 

8.34

 

Return on average assets

 

 

1.55

 

 

 

1.29

 

 

 

1.51

 

 

 

0.94

 

Return on average common equity

 

 

14.16

 

 

 

12.72

 

 

 

13.93

 

 

 

9.67

 

Average common equity to assets

 

 

10.94

 

 

 

10.15

 

 

 

10.84

 

 

 

9.69

 

 
The Company's per common share data is summarized in the table below.

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

Per Share Data

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Earnings per common share – basic

 

$

3.58

 

 

$

2.84

 

 

$

6.94

 

 

$

4.18

 

Earnings per common share – diluted

 

 

3.56

 

 

 

2.82

 

 

 

6.90

 

 

 

4.16

 

Cash dividends per common share

 

 

0.43

 

 

 

0.40

 

 

 

0.86

 

 

 

0.80

 

Dividend payout ratio

 

 

12.0

%

 

 

14.1

%

 

 

12.4

%

 

 

19.1

%

Book value per common share

 

$

102.02

 

 

$

90.68

 

 

$

102.02

 

 

$

90.68

 

 
Off-balance Sheet Arrangements
The Company’s main off-balance sheet arrangements are loan commitments, commercial and standby letters of credit, futures contracts and forward exchange contracts, which have maturity dates rather than payment due dates. See Note 10, “Commitments, Contingencies and Guarantees” in the Notes to Consolidated Financial Statements for detailed information on these arrangements. The level of the outstanding commitments could be

 
87

 

impacted by volatility in the economic markets and governmental responses to inflation, geopolitical tensions, and supply chain constraints. These changing conditions could have impacts on the consolidated balance sheets of the Company for the remainder of the year.
Critical Accounting Policies and Estimates
The preparation of these Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates and judgments, including those related to customers and suppliers, allowance for credit losses, bad debts, investments, financing operations, long-lived assets, taxes, other contingencies, and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which have formed the basis for making such judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Under different assumptions or conditions, actual results may differ from the recorded estimates.
A summary of critical accounting policies is listed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the Form 10-K.
 
ITEM 3. QUANTITATIVE AND QUALITATI VE DISCLOSURES ABOUT MARKET RISK
Risk Management
Market risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes may be the result of various factors, including interest rates, foreign exchange prices, commodity prices, or equity prices. Financial instruments that are subject to market risk can be classified either as held for trading or held for purposes other than trading.
The Company is subject to market risk primarily through the effect of changes in interest rates of its assets held for purposes other than trading. The following discussion of interest rate risk, however, combines instruments held for trading and instruments held for purposes other than trading because the instruments held for trading represent such a small portion of the Company’s portfolio that the interest rate risk associated with them is immaterial.
Interest Rate Risk
In the banking industry, a major risk exposure is changing interest rates. To minimize the effect of interest rate changes to net interest income and exposure levels to economic losses, the Company manages its exposure to changes in interest rates through asset and liability management within guidelines established by its Asset Liability Committee (ALCO) and approved by the Board. The ALCO is responsible for approving and ensuring compliance with asset/liability management policies, including interest rate exposure. The Company’s primary method for measuring and analyzing consolidated interest rate risk is the Net Interest Income Simulation Analysis. The Company also uses a Net Portfolio Value model to measure market value risk under various rate change scenarios and a gap analysis to measure maturity and repricing relationships between interest-earning assets and interest-bearing liabilities at specific points in time. On a limited basis, the Company uses hedges such as swaps, rate floors, floor spreads, and futures contracts to manage interest rate risk on certain loans, securities, and trust preferred securities. See further information in Note 11 “Derivatives and Hedging Activities” in the Notes to the Consolidated Financial Statements.
Overall, the Company manages interest rate risk by positioning the balance sheet to maximize net interest income while maintaining an acceptable level of interest rate and credit risk, remaining mindful of the relationship among profitability, liquidity, interest rate risk, and credit risk.

 
88

 

Net Interest Income Modeling
The Company’s primary interest rate risk tool, the Net Interest Income Simulation Analysis, measures interest rate risk and the effect of interest rate changes on net interest income and net interest margin. This analysis incorporates all of the Company’s assets and liabilities together with assumptions that reflect the current interest rate environment. Through these simulations, management estimates the impact on net interest income of a 200-basis-point upward or a 300-basis-point downward gradual change (e.g. ramp) and immediate change (e.g. shock) of market interest rates over a two year period. In ramp scenarios, rates change gradually for a one-year period and remain constant in year two. In shock scenarios, rates change immediately and the change is sustained for the remainder of the two-year scenario horizon. Assumptions are made to project rates for new loans and deposits based on historical analysis, management outlook and repricing strategies. Asset prepayments and other market risks are developed from industry estimates of prepayment speeds and other market changes. The results of these simulations can be significantly influenced by assumptions utilized and management evaluates the sensitivity of the simulation results on a regular basis.
Table 13 shows the net interest income increase or decrease over the next two years as of June 30, 2026 and 2025 based on hypothetical changes in interest rates and a constant sized balance sheet with runoff being replaced.
Table 13
MARKET RISK (unaudited)

 

 

Hypothetical change in interest rate – Rate Ramp

 

 

 

Year One

 

 

Year Two

 

 

 

June 30, 2026

 

 

June 30, 2025

 

 

June 30, 2026

 

 

June 30, 2025

 

Change in basis points

 

Percentage
change

 

 

Percentage
change

 

 

Percentage
change

 

 

Percentage
change

 

200

 

 

(1.2

)%

 

 

0.4

%

 

 

3.8

%

 

 

7.2

%

100

 

 

(0.7

)

 

 

(0.1

)

 

 

1.4

 

 

 

3.1

 

Static

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

(100)

 

 

1.6

 

 

 

0.5

 

 

 

(0.7

)

 

 

(2.7

)

(200)

 

 

3.2

 

 

 

1.0

 

 

 

(1.9

)

 

 

(5.4

)

(300)

 

 

5.1

 

 

 

1.8

 

 

 

(2.2

)

 

 

(7.8

)

 

 

Hypothetical change in interest rate – Rate Shock

 

 

 

Year One

 

 

Year Two

 

 

 

June 30, 2026

 

 

June 30, 2025

 

 

June 30, 2026

 

 

June 30, 2025

 

Change in basis points

 

Percentage
change

 

 

Percentage
change

 

 

Percentage
change

 

 

Percentage
change

 

200

 

 

0.8

%

 

 

4.1

%

 

 

5.0

%

 

 

8.4

%

100

 

 

(0.2

)

 

 

1.3

 

 

 

2.0

 

 

 

3.6

 

Static

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

(100)

 

 

1.4

 

 

 

(0.8

)

 

 

(1.7

)

 

 

(3.5

)

(200)

 

 

2.3

 

 

 

(1.5

)

 

 

(4.2

)

 

 

(7.3

)

(300)

 

 

4.1

 

 

 

(2.1

)

 

 

(5.9

)

 

 

(11.1

)

The Company is positioned relatively neutral to changes in interest rates in the next year. In year one, net interest income is predicted to decrease in all upward rate scenarios, except for 200bps rate shock scenario. In down rate scenarios, net interest income is predicted to increase in all scenarios. In year two, net interest income is predicted to increase in rising rate scenarios and decrease in falling rate scenarios. The Company’s ability to price deposits consistent with its historical approach is a key assumption in these scenarios.

 
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Trading Account
The Company carries securities in a trading account that is maintained according to Board-approved policy and procedures. The policy limits the amount and type of securities that can be carried in the trading account, requires compliance with any limits under applicable law and regulations, and mandates the use of a value-at-risk methodology to manage price volatility risks within financial parameters. The risk associated with the carrying of trading securities is offset by utilizing financial instruments including exchange-traded financial futures as well as short sales of U.S. Treasury and Corporate securities. The trading securities and related hedging instruments are marked-to-market daily. The trading account had a balance of $45.8 million as of June 30, 2026, $22.3 million as of December 31, 2025, and $24.7 million as of June 30, 2025. Securities sold not yet purchased (i.e., short positions) totaled $14.0 million at June 30, 2026, $4.1 million as of December 31, 2025, and $15.2 million at June 30, 2025 and are classified within the Other liabilities line of the Company’s Consolidated Balance Sheets.
The Company is subject to market risk primarily through the effect of changes in interest rates of its assets held for purposes other than trading. The discussion in Table 13 above of interest rate risk, however, combines instruments held for trading and instruments held for purposes other than trading, because the instruments held for trading represent such a small portion of the Company’s portfolio that the interest rate risk associated with them is immaterial.
Other Market Risk
The Company has minimal foreign currency risk as a result of foreign exchange contracts. See Note 10 “Commitments, Contingencies and Guarantees” in the notes to the Consolidated Financial Statements.
Credit Risk Management
Credit risk represents the risk that a customer or counterparty may not perform in accordance with contractual terms. The Company utilizes a centralized credit administration function, which provides information on the Bank’s risk levels, delinquencies, an internal ranking system and overall credit exposure. Loan requests are centrally reviewed to ensure the consistent application of the loan policy and standards. In addition, the Company has an internal loan review staff that operates independently of the Bank. This review team performs periodic examinations of the Bank’s loans for credit quality, documentation and loan administration. The respective regulatory authorities governing the Bank also review loan portfolios.
A primary indicator of credit quality and risk management is the level of nonperforming loans. Nonperforming loans include both nonaccrual loans and restructured loans on nonaccrual. The Company’s nonperforming loans increased $30.5 million to $127.5 million at June 30, 2026, compared to June 30, 2025, and decreased $17.1 million, compared to December 31, 2025. The increase compared to June 30, 2025 is attributable to additional non-performing loans related to the acquisition of HTLF.
The Company had $5.7 million, $4.1 million, and $4.8 million of other real estate owned as of June 30, 2026, June 30, 2025, and December 31, 2025, respectively. Other repossessed assets totaled $26.8 million as of June 30, 2025. Loans past due more than 90 days and still accruing interest totaled $13.7 million as of June 30, 2026, compared to $6.8 million as of June 30, 2025 and $18.4 million as of December 31, 2025.
A loan is generally placed on nonaccrual status when payments are past due 90 days or more and/or when management has considerable doubt about the borrower’s ability to repay on the terms originally contracted. The accrual of interest is discontinued and recorded thereafter only when received in cash.
Certain loans are restructured to provide a reduction or deferral of interest or principal due to deterioration in the financial condition of the respective borrowers. The Company had $157 thousand of restructured loans at June 30, 2026, $183 thousand at June 30, 2025, and $169 thousand at December 31, 2025.

 
90

 

Table 14
LOAN QUALITY (unaudited, dollars in thousands)

 

 

June 30,

 

 

December 31,

 

 

 

2026

 

 

2025

 

 

2025

 

Nonaccrual loans

 

$

127,506

 

 

$

96,995

 

 

$

144,640

 

Restructured loans on nonaccrual

 

 

20

 

 

 

34

 

 

 

26

 

Total nonperforming loans

 

 

127,526

 

 

 

97,029

 

 

 

144,666

 

Other real estate owned

 

 

5,728

 

 

 

4,077

 

 

 

4,800

 

Other repossessed assets

 

 

—

 

 

 

26,813

 

 

 

—

 

Total nonperforming assets

 

$

133,254

 

 

$

127,919

 

 

$

149,466

 

Loans past due 90 days or more

 

$

13,715

 

 

$

6,813

 

 

$

18,403

 

Restructured loans accruing

 

 

137

 

 

 

149

 

 

 

143

 

Allowance for credit losses on loans

 

 

437,376

 

 

 

389,918

 

 

 

419,478

 

Ratios:

 

 

 

 

 

 

 

 

 

Nonperforming loans as a percent of loans

 

 

0.31

%

 

 

0.26

%

 

 

0.37

%

Nonperforming assets as a percent of loans plus other real estate owned

 

 

0.32

 

 

 

0.35

 

 

 

0.39

 

Nonperforming assets as a percent of total assets

 

 

0.18

 

 

 

0.18

 

 

 

0.20

 

Loans past due 90 days or more as a percent of loans

 

 

0.03

 

 

 

0.02

 

 

 

0.05

 

Allowance for credit losses on loans as a percent of loans

 

 

1.06

 

 

 

1.06

 

 

 

1.08

 

Allowance for credit losses on loans as a multiple of nonperforming loans

 

3.43x

 

 

4.02x

 

 

2.90x

 

Liquidity Risk
Liquidity represents the Company’s ability to meet financial commitments through the maturity and sale of existing assets or availability of additional funds. The Company believes that the most important factor in the preservation of liquidity is maintaining public confidence that facilitates the retention and growth of a large, stable supply of core deposits and wholesale funds. Ultimately, the Company believes public confidence is generated through profitable operations, sound credit quality and a strong capital position. The primary source of liquidity for the Company is regularly scheduled payments on and maturity of assets, which include $13.5 billion of high-quality securities available for sale as of June 30, 2026. The liquidity of the Company and the Bank is also enhanced by its activity in the federal funds market and by its core deposits. Additionally, management believes it can raise debt or equity capital in the future, should the need arise.
Another factor affecting liquidity is the amount of deposits and customer repurchase agreements that have pledging requirements. All customer repurchase agreements require collateral in the form of a security. The U.S. Government, other public entities, and certain trust depositors require the Company to pledge securities if their deposit balances are greater than the FDIC-insured deposit limitations. These pledging requirements affect liquidity risk in that the related security cannot otherwise be disposed of due to the pledging restriction. There were $13.2 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 June 30, 2026 and December 31, 2025, respectively.
The Company also has other commercial commitments that may impact liquidity. These commitments include unused commitments to extend credit, standby letters of credit and financial guarantees, and commercial letters of credit. The total amount of these commercial commitments at June 30, 2026 was $25.7 billion. Since many of these commitments expire without being drawn upon, the total amount of these commercial commitments does not necessarily represent the future cash requirements of the Company.
The Company’s cash requirements consist primarily of dividends to shareholders, debt service, operating expenses, and treasury stock purchases. Management fees and dividends received from bank and non-bank subsidiaries traditionally have been sufficient to satisfy these requirements and are expected to be sufficient in the future. The Bank is subject to various rules regarding payment of dividends to the Company. For the most part, the Bank can pay dividends at least equal to its current year’s earnings without seeking prior regulatory approval. The

 
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Company also uses cash to inject capital into its bank and non-bank subsidiaries to maintain adequate capital as well as fund strategic initiatives.
In September 2022, the Company issued $110.0 million in aggregate subordinated notes due in September 2032. The Company received $107.9 million, after deducting underwriting discounts and commissions and offering expenses, and used the proceeds from the offering for general corporate purposes, including, among other uses, contributing Tier 1 capital into the Bank. The subordinated notes were issued with a fixed-to-fixed rate of 6.25% and an effective rate of 6.64%, due to issuance costs, with an interest rate reset date of September 2027.
As part of the acquisition of HTLF, the Company acquired $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 Company is a member bank of the FHLB. The Company owns $10.3 million of 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 June 30, 2026 the Company has four letters of credit outstanding with the FHLB of Des Moines to secure deposits. These letters of credit have an aggregate amount of $218.0 million and have various maturity dates through September 15, 2026. The Company’s remaining borrowing capacity with the FHLB was $2.5 billion as of June 30, 2026. The Company had no outstanding FHLB advances with the FHLB of Des Moines as of June 30, 2026.
In addition to borrowing capacity with the FHLB as described above, the Company had additional liquidity of $35.9 billion available via cash, unpledged bond collateral, the federal funds market, the Federal Reserve Discount Window, and the IntraFi Cash Service program as of June 30, 2026.
Operational Risk
Operational risk generally refers to the risk of loss resulting from the Company’s operations, including those operations performed for the Company by third parties. This would include but is not limited to the risk of fraud by employees or persons outside the Company, the execution of unauthorized transactions by employees or others, errors relating to transaction processing, breaches of the internal control system and compliance requirements, and unplanned interruptions in service. This risk of loss also includes the potential legal or regulatory actions that could arise as a result of an operational deficiency, or as a result of noncompliance with applicable regulatory standards. The Company must comply with a number of legal and regulatory requirements.
The Company operates in many markets and relies on the ability of its employees and systems to properly process a high number of transactions. In the event of a breakdown in internal control systems, improper operation of systems or improper employee actions, the Company could suffer financial loss, face regulatory action and suffer damage to its reputation. In order to address this risk, management maintains a system of internal controls with the objective of providing proper transaction authorization and execution, safeguarding of assets from misuse or theft, and ensuring the reliability of financial and other data.
The Company maintains systems of internal controls that provide management with timely and accurate information about the Company’s operations. These systems have been designed to manage operational risk at appropriate levels given the Company’s financial strength, the environment in which it operates, and considering factors such as competition and regulation. The Company has also established procedures that are designed to ensure that policies relating to conduct, ethics, and business practices are followed on a uniform basis. In certain cases, the Company has experienced losses from operational risk. Such losses have included the effects of operational errors that the Company has discovered and included as expense in the statement of income. While there can be no assurance that the Company will not suffer such losses in the future, management continually monitors and works to improve its internal controls, systems, and corporate-wide processes and procedures.

 
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ITEM 4. CONTROLS AND PROCEDURES
The Sarbanes-Oxley Act of 2002, as amended, requires the Chief Executive Officer and the Chief Financial Officer to make certain certifications under this Form 10-Q with respect to the Company’s disclosure controls and procedures and internal control over financial reporting. The Company has a Code of Ethics that expresses the values that drive employee behavior and maintains the Company’s commitment to the highest standards of ethics.
Disclosure Controls and Procedures
The Company’s management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company's “disclosure controls and procedures” (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this Form 10-Q. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Form 10-Q, the Company’s disclosure controls and procedures were effective for ensuring that the Company’s SEC filings are recorded, processed, summarized, and reported within the time period required and that information required to be disclosed by the Company is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
Internal Control Over Financial Reporting
There has been no change in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the three months ended June 30, 2026 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting .

 
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PART II – OTHE R INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the normal course of business, the Company and its subsidiaries are named defendants in various legal proceedings. In the opinion of management, after consultation with legal counsel, none of these lawsuits are expected to have a materially adverse effect on the financial position, results of operations, or cash flows of the Company.
ITEM 1A. RI SK FACTORS
There were no material changes to the risk factors as previously disclosed in response to Item 1A to Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, or in response to Item 1A to Part II of the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2026.
ITEM 2. UNREGISTERED SALES OF EQU ITY SECURITIES AND USE OF PROCEEDS
The table below sets forth the information with respect to purchases made by or on behalf of the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) of our common stock during the three-month period ended June 30, 2026.
ISSUER PURCHASE OF EQUITY SECURITIES

Period

 

Total Number of Shares (or Units) Purchased (1)

 

 

Average Price Paid per Share (or Unit)

 

 

Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2)

 

 

Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs

 

April 1 - April 28, 2026

 

 

81

 

 

$

112.06

 

 

 

—

 

 

 

821,751

 

April 29 - April 30, 2026

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,000,000

 

May 1 - May 31, 2026

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,000,000

 

June 1 - June 30, 2026

 

 

38,441

 

 

 

132.10

 

 

 

38,158

 

 

 

1,961,842

 

Total

 

 

38,522

 

 

$

132.06

 

 

 

38,158

 

 

 

 

(1) Includes shares acquired pursuant to the Company's share-based incentive programs. Under the terms of the Company's share-based incentive programs, the Company accepts previously owned shares of common stock surrendered to satisfy tax withholding obligations associated with equity compensation. These purchases do not count against the maximum value of shares remaining available for purchase under Repurchase Authorizations.
(2) Includes shares acquired under the Board of Directors approved Repurchase Authorization(s).
On April 29, 2025, the Company announced a plan to repurchase up to one million shares of common stock, which terminated on April 28, 2026. On April 28, 2026, the Company announced a plan to repurchase up to two million shares of common stock, which will terminate on April 27, 2027. The Company has not made any repurchases other than through the Repurchase Authorizations, but did acquire shares pursuant to the Company's share-based incentive programs. All share purchases pursuant to the Repurchase Authorizations are intended to be within the scope of Rule 10b-18 promulgated under the Exchange Act. Rule 10b-18 provides a safe harbor for purchases in a given day if the Company satisfies the manner, timing and volume conditions of the rule when purchasing its own shares of common stock.

 
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ITEM 6. EXHIBITS
 

 

 

 

3.1

 

Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 and filed with the Commission on May 9, 2006).

 

 

 

3.2

 

Bylaws, amended as of April 13, 2023 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K dated April 13, 2023 and filed with the Commission on April 13, 2023).

 

 

 

31.1

 

CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act filed herewith.

 

 

 

31.2

 

CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act filed herewith.

 

 

 

32.1

 

CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act filed herewith.

 

 

 

32.2

 

CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act filed herewith.

 

 

 

101.INS

 

XBRL Instance Document – The instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

 

 

 

101.SCH

 

Inline XBRL Taxonomy Extension Schema Document filed herewith.

 

 

 

104

 

The cover page of our Form 10-Q for the quarter ended June 30, 2026, formatted in iXBRL.

 

 
95

 

SIGNAT URES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

UMB FINANCIAL CORPORATION

 

/s/ David C. Odgers

David C. Odgers

Chief Accounting Officer

 

Date: July 30, 2026

 

 
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