[10-Q] First Citizens BancShares Inc Quarterly Earnings Report
Filing Impact
Filing Sentiment
Form Type
10-Q
First Citizens BancShares reported consolidated net income of $575 million for the quarter ended June 30, 2025, down from $707 million a year earlier, producing diluted earnings per share of $42.36 versus $47.54 in the prior-year period. Net interest income fell to $1,695 million from $1,821 million, driven by lower interest and fees on loans ($2,270 million versus $2,422 million) partially offset by higher interest on investment securities ($419 million versus $330 million).
On the balance sheet, total assets rose to $229.7 billion from $223.7 billion, and total deposits increased to $159.9 billion from $155.2 billion. Total loans and leases were $141.3 billion. The allowance for loan and lease losses was $1.672 billion. Accumulated other comprehensive loss improved meaningfully to $(114) million from $(445) million, reflecting unrealized gains on available-for-sale securities.
Noninterest expense rose to $1,500 million for the quarter and provision for credit losses increased to $115 million. The company repurchased 641,642 Class A shares year-to-date for $1.239 billion (including 338,959 shares for $619 million this quarter). These results show asset and deposit growth and improved OCI, while earnings, net interest margin and credit-related costs moderated performance versus the prior year.
First Citizens BancShares ha registrato un utile netto consolidato di $575 million per il trimestre chiuso il 30 giugno 2025, in diminuzione rispetto a $707 million dell'anno precedente, con utili diluiti per azione pari a $42.36 contro $47.54 nel periodo dell'anno precedente. Il margine di interesse netto 猫 sceso a $1,695 million da $1,821 million, principalmente a causa di minori interessi e commissioni sui prestiti ($2,270 million rispetto a $2,422 million), parzialmente compensati da maggiori interessi sui titoli di investimento ($419 million rispetto a $330 million).
Sul lato patrimoniale, le attivit脿 totali sono aumentate a $229.7 billion da $223.7 billion e i depositi totali sono saliti a $159.9 billion da $155.2 billion. I prestiti e i leasing totali ammontavano a $141.3 billion. L'accantonamento per perdite su prestiti e leasing era di $1.672 billion. La voce 'altri utili complessivi accumulati' (OCI) si 猫 sensibilmente ridotta a $(114) million da $(445) million, riflettendo utili non realizzati su titoli disponibili per la vendita.
Le spese non derivanti da interessi sono aumentate a $1,500 million nel trimestre e la rettifica per perdite su crediti 猫 salita a $115 million. La societ脿 ha riacquistato 641,642 azioni di Classe A da inizio anno per $1.239 billion (incluse 338,959 azioni per $619 million in questo trimestre). Questi risultati evidenziano crescita di attivit脿 e depositi e un miglioramento dell'OCI, mentre utili, margine di interesse netto e costi legati al credito hanno moderato la performance rispetto all'anno precedente.
First Citizens BancShares inform贸 un ingreso neto consolidado de $575 million para el trimestre terminado el 30 de junio de 2025, por debajo de $707 million del a帽o anterior, con una utilidad diluida por acci贸n de $42.36 frente a $47.54 en el mismo per铆odo del a帽o previo. El ingreso neto por intereses cay贸 a $1,695 million desde $1,821 million, impulsado por menores intereses y comisiones sobre pr茅stamos ($2,270 million frente a $2,422 million), parcialmente compensado por mayores intereses sobre t铆tulos de inversi贸n ($419 million frente a $330 million).
En el balance, los activos totales aumentaron a $229.7 billion desde $223.7 billion, y los dep贸sitos totales crecieron a $159.9 billion desde $155.2 billion. Los pr茅stamos y arrendamientos totales fueron de $141.3 billion. La provisi贸n para p茅rdidas por pr茅stamos y arrendamientos fue de $1.672 billion. La p茅rdida acumulada por otros resultados comprensivos mejor贸 notablemente a $(114) million desde $(445) million, reflejando ganancias no realizadas en valores disponibles para la venta.
Los gastos no relacionados con intereses aumentaron a $1,500 million en el trimestre y la provisi贸n para p茅rdidas de cr茅dito se increment贸 a $115 million. La compa帽铆a recompr贸 641,642 acciones Clase A en lo que va del a帽o por $1.239 billion (incluyendo 338,959 acciones por $619 million en este trimestre). Estos resultados muestran crecimiento de activos y dep贸sitos y una mejora del OCI, mientras que las ganancias, el margen neto de inter茅s y los costos relacionados con cr茅dito moderaron el desempe帽o respecto al a帽o anterior.
First Citizens BancShares電� 2025雲� 6鞗� 30鞚茧 雭濍倻 攵勱赴鞐� 鞐瓣舶 靾滌澊鞚� $575 million鞚� 氤搓碃頄堨溂氅�, 鞚措姅 鞝勲厔 霃欔赴 $707 million鞐愳劀 臧愳唽頃� 靾橃箻搿� 頋劃 欤茧嫻靾滌澊鞚奠潃 $42.36搿� 鞝勲厔鞚� $47.54氤措嫟 雮晿鞀惦媹雼�. 靾滌澊鞛愳垬鞚奠潃 雽赌於� 鞚挫瀽路靾橃垬耄� 臧愳唽($2,270 million 雽赌 $2,422 million)搿� 鞚疙暣 $1,695 million鞙茧 欷勳棃瓿�, 鞚措姅 韴瀽 鞙犼皜歃濌秾 鞚挫瀽 歃濌皜($419 million 雽赌 $330 million)鞐� 鞚橅暣 鞚茧秬 靸侅噭霅橃棃鞀惦媹雼�.
雽赌彀尪撵“響滌儊 齑濎瀽靷办潃 $229.7 billion鞙茧 $223.7 billion鞐愳劀 歃濌皜頄堦碃, 齑濎槇旮堨潃 $159.9 billion鞙茧 $155.2 billion鞐愳劀 電橃棃鞀惦媹雼�. 齑濍尪撵稖路毽姢電� $141.3 billion鞚挫棃瓿� 雽赌於� 氚� 毽姢 靻愳嫟於╇嫻旮堨潃 $1.672 billion鞚挫棃鞀惦媹雼�. 氙胳嫟順勳澊鞚奠潉 氚橃榿頃橃棳 旮绊儉韽磩靻愳嫟 雸勱硠電� $(445) million鞐愳劀 韥矊 臧滌劆霅橃柎 $(114) million鞚� 霅橃棃鞀惦媹雼�.
牍勳澊鞛愲箘鞖╈潃 攵勱赴 旮办 $1,500 million鞙茧 歃濌皜頄堦碃 雽赌靻愳订雼龟笀鞚� $115 million鞙茧 電橃棃鞀惦媹雼�. 須岇偓電� 鞐办磮 鞚错泟 齑� 641,642欤检潣 韥措灅鞀� A 欤检嫕鞚� $1.239 billion鞐� 鞛Г鞛呿枅鞙茧┌, 鞚� 欷� 鞚措矆 攵勱赴鞐� 338,959欤茧ゼ $619 million鞐� 毵れ瀰頄堨姷雼堧嫟. 鞝勲皹鞝侅溂搿� 鞛愳偘瓿� 鞓堦笀鞚� 靹膘灔頃橁碃 OCI臧� 臧滌劆霅愳毵� 靾橃澋, 靾滌澊鞛愲歆� 氚� 鞁犾毄 甏�霠� 牍勳毄鞚� 鞝勲厔 雽赌牍� 鞁れ爜鞚� 霊旐檾鞁滌及鞀惦媹雼�.
First Citizens BancShares a d茅clar茅 un b茅n茅fice net consolid茅 de $575 million pour le trimestre clos le 30 juin 2025, en baisse par rapport 脿 $707 million un an auparavant, avec un b茅n茅fice dilu茅 par action de $42.36 contre $47.54 sur la p茅riode pr茅c茅dente. Le produit net d'int茅r锚ts est tomb茅 脿 $1,695 million contre $1,821 million, en raison de la baisse des int茅r锚ts et commissions sur pr锚ts ($2,270 million vs $2,422 million), partiellement compens茅e par une hausse des int茅r锚ts sur titres d'investissement ($419 million vs $330 million).
Au bilan, l'actif total est pass茅 脿 $229.7 billion contre $223.7 billion, et les d茅p么ts totaux ont augment茅 脿 $159.9 billion contre $155.2 billion. Les pr锚ts et leasing totaux s'茅levaient 脿 $141.3 billion. La provision pour pertes sur pr锚ts et leasing 茅tait de $1.672 billion. Le r茅sultat global accumul茅 s'est nettement am茅lior茅 脿 $(114) million contre $(445) million, refl茅tant des gains non r茅alis茅s sur titres disponibles 脿 la vente.
Les charges hors int茅r锚ts ont augment茅 脿 $1,500 million pour le trimestre et la provision pour pertes de cr茅dit a augment茅 脿 $115 million. La soci茅t茅 a rachet茅 641,642 actions de classe A depuis le d茅but de l'ann茅e pour $1.239 billion (dont 338,959 actions pour $619 million ce trimestre). Ces r茅sultats montrent une croissance des actifs et des d茅p么ts et une am茅lioration de l'OCI, tandis que les b茅n茅fices, la marge nette d'int茅r锚t et les co没ts li茅s au cr茅dit ont mod茅r茅 la performance par rapport 脿 l'ann茅e pr茅c茅dente.
First Citizens BancShares meldete f眉r das Quartal zum 30. Juni 2025 einen konsolidierten Nettogewinn von $575 million, 驳别驳别苍眉产别谤 $707 million im Vorjahreszeitraum. Das verw盲sserte Ergebnis je Aktie betrug $42.36 驳别驳别苍眉产别谤 $47.54 im Vorjahr. Das Nettozinsergebnis sank auf $1,695 million von $1,821 million, bedingt durch geringere Zinsen und Geb眉hren aus Krediten ($2,270 million vs. $2,422 million), teilweise ausgeglichen durch h枚here Ertr盲ge aus Anlagewerten ($419 million vs. $330 million).
Auf der Bilanzseite stiegen die Gesamtaktiva auf $229.7 billion von $223.7 billion, und die Gesamteinlagen erh枚hten sich auf $159.9 billion von $155.2 billion. Die Gesamtforderungen und Leasingvertr盲ge beliefen sich auf $141.3 billion. Die R眉ckstellung f眉r Kreditausf盲lle betrug $1.672 billion. Der kumulierte sonstige umfassende Verlust verbesserte sich deutlich auf $(114) million von $(445) million, was unrealisierte Gewinne aus zum Verkauf verf眉gbaren Wertpapieren widerspiegelt.
Die nicht zinstragenden Aufwendungen stiegen im Quartal auf $1,500 million und die Vorsorge f眉r Kreditverluste erh枚hte sich auf $115 million. Das Unternehmen hat bisher 641,642 Class-A-Aktien f眉r $1.239 billion zur眉ckgekauft (davon 338,959 Aktien f眉r $619 million in diesem Quartal). Die Ergebnisse zeigen ein Wachstum von Verm枚genswerten und Einlagen sowie eine Verbesserung des OCI, w盲hrend Ergebnis, Nettozinsmarge und kreditbezogene Kosten die Performance 驳别驳别苍眉产别谤 dem Vorjahr abschw盲chten.
Positive
- Total assets increased to $229.7 billion from $223.7 billion, showing balance sheet growth
- Total deposits rose to $159.9 billion from $155.2 billion
- Accumulated other comprehensive loss improved to $(114 million) from $(445 million), driven by unrealized gains on available-for-sale securities
- Material share repurchases: 641,642 Class A shares repurchased year-to-date for $1.239 billion
- Noninterest income increased to $678 million for the quarter versus $639 million prior year quarter
Negative
- Net income declined to $575 million from $707 million a year earlier; EPS fell to $42.36 from $47.54
- Net interest income decreased to $1,695 million from $1,821 million; interest and fees on loans declined to $2,270 million from $2,422 million
- Provision for credit losses rose to $115 million from $95 million and six-month charge-offs increased to $311 million
- Operating expenses increased to $1,500 million this quarter from $1,386 million prior year quarter, pressuring pre-tax income
- Income before income taxes declined to $758 million from $979 million
Insights
TL;DR: Mixed quarter鈥攂alance sheet growth and buybacks offset by lower earnings and rising expenses.
First Citizens delivered stronger nominal balance sheet metrics with total assets of $229.7B and deposits of $159.9B, and it executed significant share repurchases totaling $1.239B YTD. However, operating profitability contracted: net interest income declined to $1.695B and quarterly net income fell to $575M, lowering EPS to $42.36. Noninterest expense increased to $1.500B and the provision for credit losses rose to $115M, pressuring pre-tax income. The improvement in accumulated other comprehensive loss to $(114M) provides a favorable capital/comprehensive income dynamic. Overall, the quarter is mixed from an investor-return standpoint: capital deployment and deposit growth are positives, while margin and expense trends are headwinds.
TL;DR: Credit metrics show modest stress but allowance coverage remains stable.
Allowance for loan and lease losses stood at $1.672B with a provision for loan and lease losses of $111M this quarter and total provision for credit losses of $115M. Charge-offs for the six months were $311M (vs $287M prior-year), and nonaccrual loans totaled $1.319B. Management noted specific reserve increases for individually evaluated loans offset by scenario-weighting improvements and portfolio mix shifts. Pledged loan collateral remains significant for borrowing arrangements. These data point to manageable credit deterioration with elevated yet contained loss activity; the ALLL did not materially increase, suggesting current reserves broadly align with observed losses.
First Citizens BancShares ha registrato un utile netto consolidato di $575 million per il trimestre chiuso il 30 giugno 2025, in diminuzione rispetto a $707 million dell'anno precedente, con utili diluiti per azione pari a $42.36 contro $47.54 nel periodo dell'anno precedente. Il margine di interesse netto 猫 sceso a $1,695 million da $1,821 million, principalmente a causa di minori interessi e commissioni sui prestiti ($2,270 million rispetto a $2,422 million), parzialmente compensati da maggiori interessi sui titoli di investimento ($419 million rispetto a $330 million).
Sul lato patrimoniale, le attivit脿 totali sono aumentate a $229.7 billion da $223.7 billion e i depositi totali sono saliti a $159.9 billion da $155.2 billion. I prestiti e i leasing totali ammontavano a $141.3 billion. L'accantonamento per perdite su prestiti e leasing era di $1.672 billion. La voce 'altri utili complessivi accumulati' (OCI) si 猫 sensibilmente ridotta a $(114) million da $(445) million, riflettendo utili non realizzati su titoli disponibili per la vendita.
Le spese non derivanti da interessi sono aumentate a $1,500 million nel trimestre e la rettifica per perdite su crediti 猫 salita a $115 million. La societ脿 ha riacquistato 641,642 azioni di Classe A da inizio anno per $1.239 billion (incluse 338,959 azioni per $619 million in questo trimestre). Questi risultati evidenziano crescita di attivit脿 e depositi e un miglioramento dell'OCI, mentre utili, margine di interesse netto e costi legati al credito hanno moderato la performance rispetto all'anno precedente.
First Citizens BancShares inform贸 un ingreso neto consolidado de $575 million para el trimestre terminado el 30 de junio de 2025, por debajo de $707 million del a帽o anterior, con una utilidad diluida por acci贸n de $42.36 frente a $47.54 en el mismo per铆odo del a帽o previo. El ingreso neto por intereses cay贸 a $1,695 million desde $1,821 million, impulsado por menores intereses y comisiones sobre pr茅stamos ($2,270 million frente a $2,422 million), parcialmente compensado por mayores intereses sobre t铆tulos de inversi贸n ($419 million frente a $330 million).
En el balance, los activos totales aumentaron a $229.7 billion desde $223.7 billion, y los dep贸sitos totales crecieron a $159.9 billion desde $155.2 billion. Los pr茅stamos y arrendamientos totales fueron de $141.3 billion. La provisi贸n para p茅rdidas por pr茅stamos y arrendamientos fue de $1.672 billion. La p茅rdida acumulada por otros resultados comprensivos mejor贸 notablemente a $(114) million desde $(445) million, reflejando ganancias no realizadas en valores disponibles para la venta.
Los gastos no relacionados con intereses aumentaron a $1,500 million en el trimestre y la provisi贸n para p茅rdidas de cr茅dito se increment贸 a $115 million. La compa帽铆a recompr贸 641,642 acciones Clase A en lo que va del a帽o por $1.239 billion (incluyendo 338,959 acciones por $619 million en este trimestre). Estos resultados muestran crecimiento de activos y dep贸sitos y una mejora del OCI, mientras que las ganancias, el margen neto de inter茅s y los costos relacionados con cr茅dito moderaron el desempe帽o respecto al a帽o anterior.
First Citizens BancShares電� 2025雲� 6鞗� 30鞚茧 雭濍倻 攵勱赴鞐� 鞐瓣舶 靾滌澊鞚� $575 million鞚� 氤搓碃頄堨溂氅�, 鞚措姅 鞝勲厔 霃欔赴 $707 million鞐愳劀 臧愳唽頃� 靾橃箻搿� 頋劃 欤茧嫻靾滌澊鞚奠潃 $42.36搿� 鞝勲厔鞚� $47.54氤措嫟 雮晿鞀惦媹雼�. 靾滌澊鞛愳垬鞚奠潃 雽赌於� 鞚挫瀽路靾橃垬耄� 臧愳唽($2,270 million 雽赌 $2,422 million)搿� 鞚疙暣 $1,695 million鞙茧 欷勳棃瓿�, 鞚措姅 韴瀽 鞙犼皜歃濌秾 鞚挫瀽 歃濌皜($419 million 雽赌 $330 million)鞐� 鞚橅暣 鞚茧秬 靸侅噭霅橃棃鞀惦媹雼�.
雽赌彀尪撵“響滌儊 齑濎瀽靷办潃 $229.7 billion鞙茧 $223.7 billion鞐愳劀 歃濌皜頄堦碃, 齑濎槇旮堨潃 $159.9 billion鞙茧 $155.2 billion鞐愳劀 電橃棃鞀惦媹雼�. 齑濍尪撵稖路毽姢電� $141.3 billion鞚挫棃瓿� 雽赌於� 氚� 毽姢 靻愳嫟於╇嫻旮堨潃 $1.672 billion鞚挫棃鞀惦媹雼�. 氙胳嫟順勳澊鞚奠潉 氚橃榿頃橃棳 旮绊儉韽磩靻愳嫟 雸勱硠電� $(445) million鞐愳劀 韥矊 臧滌劆霅橃柎 $(114) million鞚� 霅橃棃鞀惦媹雼�.
牍勳澊鞛愲箘鞖╈潃 攵勱赴 旮办 $1,500 million鞙茧 歃濌皜頄堦碃 雽赌靻愳订雼龟笀鞚� $115 million鞙茧 電橃棃鞀惦媹雼�. 須岇偓電� 鞐办磮 鞚错泟 齑� 641,642欤检潣 韥措灅鞀� A 欤检嫕鞚� $1.239 billion鞐� 鞛Г鞛呿枅鞙茧┌, 鞚� 欷� 鞚措矆 攵勱赴鞐� 338,959欤茧ゼ $619 million鞐� 毵れ瀰頄堨姷雼堧嫟. 鞝勲皹鞝侅溂搿� 鞛愳偘瓿� 鞓堦笀鞚� 靹膘灔頃橁碃 OCI臧� 臧滌劆霅愳毵� 靾橃澋, 靾滌澊鞛愲歆� 氚� 鞁犾毄 甏�霠� 牍勳毄鞚� 鞝勲厔 雽赌牍� 鞁れ爜鞚� 霊旐檾鞁滌及鞀惦媹雼�.
First Citizens BancShares a d茅clar茅 un b茅n茅fice net consolid茅 de $575 million pour le trimestre clos le 30 juin 2025, en baisse par rapport 脿 $707 million un an auparavant, avec un b茅n茅fice dilu茅 par action de $42.36 contre $47.54 sur la p茅riode pr茅c茅dente. Le produit net d'int茅r锚ts est tomb茅 脿 $1,695 million contre $1,821 million, en raison de la baisse des int茅r锚ts et commissions sur pr锚ts ($2,270 million vs $2,422 million), partiellement compens茅e par une hausse des int茅r锚ts sur titres d'investissement ($419 million vs $330 million).
Au bilan, l'actif total est pass茅 脿 $229.7 billion contre $223.7 billion, et les d茅p么ts totaux ont augment茅 脿 $159.9 billion contre $155.2 billion. Les pr锚ts et leasing totaux s'茅levaient 脿 $141.3 billion. La provision pour pertes sur pr锚ts et leasing 茅tait de $1.672 billion. Le r茅sultat global accumul茅 s'est nettement am茅lior茅 脿 $(114) million contre $(445) million, refl茅tant des gains non r茅alis茅s sur titres disponibles 脿 la vente.
Les charges hors int茅r锚ts ont augment茅 脿 $1,500 million pour le trimestre et la provision pour pertes de cr茅dit a augment茅 脿 $115 million. La soci茅t茅 a rachet茅 641,642 actions de classe A depuis le d茅but de l'ann茅e pour $1.239 billion (dont 338,959 actions pour $619 million ce trimestre). Ces r茅sultats montrent une croissance des actifs et des d茅p么ts et une am茅lioration de l'OCI, tandis que les b茅n茅fices, la marge nette d'int茅r锚t et les co没ts li茅s au cr茅dit ont mod茅r茅 la performance par rapport 脿 l'ann茅e pr茅c茅dente.
First Citizens BancShares meldete f眉r das Quartal zum 30. Juni 2025 einen konsolidierten Nettogewinn von $575 million, 驳别驳别苍眉产别谤 $707 million im Vorjahreszeitraum. Das verw盲sserte Ergebnis je Aktie betrug $42.36 驳别驳别苍眉产别谤 $47.54 im Vorjahr. Das Nettozinsergebnis sank auf $1,695 million von $1,821 million, bedingt durch geringere Zinsen und Geb眉hren aus Krediten ($2,270 million vs. $2,422 million), teilweise ausgeglichen durch h枚here Ertr盲ge aus Anlagewerten ($419 million vs. $330 million).
Auf der Bilanzseite stiegen die Gesamtaktiva auf $229.7 billion von $223.7 billion, und die Gesamteinlagen erh枚hten sich auf $159.9 billion von $155.2 billion. Die Gesamtforderungen und Leasingvertr盲ge beliefen sich auf $141.3 billion. Die R眉ckstellung f眉r Kreditausf盲lle betrug $1.672 billion. Der kumulierte sonstige umfassende Verlust verbesserte sich deutlich auf $(114) million von $(445) million, was unrealisierte Gewinne aus zum Verkauf verf眉gbaren Wertpapieren widerspiegelt.
Die nicht zinstragenden Aufwendungen stiegen im Quartal auf $1,500 million und die Vorsorge f眉r Kreditverluste erh枚hte sich auf $115 million. Das Unternehmen hat bisher 641,642 Class-A-Aktien f眉r $1.239 billion zur眉ckgekauft (davon 338,959 Aktien f眉r $619 million in diesem Quartal). Die Ergebnisse zeigen ein Wachstum von Verm枚genswerten und Einlagen sowie eine Verbesserung des OCI, w盲hrend Ergebnis, Nettozinsmarge und kreditbezogene Kosten die Performance 驳别驳别苍眉产别谤 dem Vorjahr abschw盲chten.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________
FORM 10-Q
____________________________________________________
| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||||
For the quarterly period ended | |||||
| or | |||||
| Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||||
Commission File Number: 001-16715
First Citizens BancShares, Inc.
(Exact name of Registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | ||||||||||
| (Address of principal executive offices) | (Zip code) | ||||||||||
| (Registrant’s telephone number, including area code) | |||||||||||
____________________________________________________
| Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934: | ||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934: | ||||||||
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).
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.
| ☒ | 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 ☒
Class A Common Stock—11,916,011 shares
Class B Common Stock—1,005,185 shares
(Number of shares outstanding, by class, as of August 4, 2025)
| CONTENTS | ||||||||
| Page | ||||||||
| PART I—FINANCIAL INFORMATION | ||||||||
| Item 1. | Financial Statements | 4 | ||||||
Consolidated Balance Sheets (Unaudited) | 4 | |||||||
Consolidated Statements of Income (Unaudited) | 5 | |||||||
Consolidated Statements of Comprehensive Income (Unaudited) | 6 | |||||||
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) | 7 | |||||||
Consolidated Statements of Cash Flows (Unaudited) | 8 | |||||||
Notes to Unaudited Consolidated Financial Statements | 10 | |||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 56 | ||||||
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 109 | ||||||
| Item 4. | Controls and Procedures | 109 | ||||||
| PART II—OTHER INFORMATION | ||||||||
| Item 1. | Legal Proceedings | 110 | ||||||
| Item 1A. | Risk Factors | 110 | ||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 111 | ||||||
| Item 5. | Other Information | 111 | ||||||
| Item 6. | Exhibits | 111 | ||||||
Signatures | 112 | |||||||
2
GLOSSARY OF ABBREVIATIONS AND ACRONYMS
The following is a list of select abbreviations and acronyms used throughout this document. You may find it helpful to refer back to this table.
| Acronym | Definition | Acronym | Definition | ||||||||
| ALLL | Allowance for Loan and Lease Losses | MD&A | Management’s Discussion and Analysis | ||||||||
| AOCI | Accumulated Other Comprehensive Income | MSRs | Mortgage Servicing Rights | ||||||||
| ASC | Accounting Standards Codification | NII | Net Interest Income | ||||||||
| ASU | Accounting Standards Update | NII Sensitivity | Net Interest Income Sensitivity | ||||||||
| BHC | Bank Holding Company | NIM | Net Interest Margin | ||||||||
| bps | Basis point(s); 1 bp = 0.01% | NPR | Notice of Proposed Rulemaking | ||||||||
| CRA | Community Reinvestment Act | OBBBA | One Big Beautiful Bill Act | ||||||||
| CRE | Commercial AG真人官方 Estate | OREO | Other AG真人官方 Estate Owned | ||||||||
| DPA | Deferred Purchase Agreement | PAA | Purchase Accounting Accretion or Amortization | ||||||||
| DTAs | Deferred Tax Assets | PAM | Proportional Amortization Method | ||||||||
| ETR | Effective Income Tax Rate | PCA | Prompt Corrective Action | ||||||||
| EVE Sensitivity | Economic Value of Equity Sensitivity | PCD | Purchased Credit Deteriorated | ||||||||
| FCB | First-Citizens Bank & Trust Company | PD | Probability of Obligor Default | ||||||||
| FDIC | Federal Deposit Insurance Corporation | PPNR | Pre-provision net revenue | ||||||||
| Federal Reserve | Board of Governors of the Federal Reserve System | ROU | Right of Use | ||||||||
| FHLB | Federal Home Loan Bank | RWA | Risk-weighted assets | ||||||||
| FOMC | Federal Open Market Committee | SBA | Small Business Administration | ||||||||
| FRB | Federal Reserve Bank | SOFR | Secured Overnight Financing Rate | ||||||||
| GAAP | United States Generally Accepted Accounting Principles | SRP | Share Repurchase Program | ||||||||
| HPI | Home Price Index | SVB | Silicon Valley Bank | ||||||||
| HQLS | High-Quality Liquid Securities | SVBB | Silicon Valley Bridge Bank, N.A. | ||||||||
| ISDA | International Swaps and Derivatives Association | TMT | Technology Media and Telecommunications | ||||||||
| LGD | Loss Given Default | UPB | Unpaid Principal Balance | ||||||||
| LOCOM | Lower of Cost or Fair Value | VIE | Variable Interest Entities | ||||||||
3
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
First Citizens BancShares, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
| dollars in millions, except share data | June 30, 2025 | December 31, 2024 | |||||||||
| Assets | |||||||||||
| Cash and due from banks | $ | $ | |||||||||
| Interest-earning deposits at banks | |||||||||||
| Securities purchased under agreements to resell | |||||||||||
Investment in marketable equity securities (cost of $ | |||||||||||
Investment securities available for sale (cost of $ | |||||||||||
Investment securities held to maturity (fair value of $ | |||||||||||
| Assets held for sale | |||||||||||
| Loans and leases | |||||||||||
| Allowance for loan and lease losses | ( | ( | |||||||||
| Loans and leases, net of allowance for loan and lease losses | |||||||||||
| Operating lease equipment, net | |||||||||||
| Premises and equipment, net | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets, net | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities | |||||||||||
| Deposits: | |||||||||||
| Noninterest-bearing | $ | $ | |||||||||
| Interest-bearing | |||||||||||
| Total deposits | |||||||||||
| Credit balances of factoring clients | |||||||||||
| Borrowings: | |||||||||||
| Short-term borrowings | |||||||||||
| Long-term borrowings | |||||||||||
| Total borrowings | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Stockholders’ equity | |||||||||||
Preferred stock - $ | |||||||||||
| Common stock: | |||||||||||
Class A - $ | |||||||||||
Class B - $ | |||||||||||
| Additional paid in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
See accompanying Notes to the Unaudited Consolidated Financial Statements.
4
First Citizens BancShares, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| dollars in millions, except share and per share data | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||||||||
| Interest and fees on loans | $ | $ | $ | $ | |||||||||||||||||||||||||
| Interest on investment securities | |||||||||||||||||||||||||||||
| Interest on deposits at banks | |||||||||||||||||||||||||||||
| Total interest income | |||||||||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||
| Deposits | |||||||||||||||||||||||||||||
| Borrowings | |||||||||||||||||||||||||||||
| Total interest expense | |||||||||||||||||||||||||||||
| Net interest income | |||||||||||||||||||||||||||||
| Provision for credit losses | |||||||||||||||||||||||||||||
| Net interest income after provision for credit losses | |||||||||||||||||||||||||||||
| Noninterest income | |||||||||||||||||||||||||||||
| Rental income on operating lease equipment | |||||||||||||||||||||||||||||
| Lending-related fees | |||||||||||||||||||||||||||||
| Deposit fees and service charges | |||||||||||||||||||||||||||||
| Client investment fees | |||||||||||||||||||||||||||||
| Wealth management services | |||||||||||||||||||||||||||||
| International fees | |||||||||||||||||||||||||||||
| Factoring commissions | |||||||||||||||||||||||||||||
| Cardholder services, net | |||||||||||||||||||||||||||||
| Merchant services, net | |||||||||||||||||||||||||||||
| Insurance commissions | |||||||||||||||||||||||||||||
| Fair value adjustment on marketable equity securities, net | ( | ( | ( | ||||||||||||||||||||||||||
| Gain on sale of leasing equipment, net | |||||||||||||||||||||||||||||
| Loss on extinguishment of debt | ( | ||||||||||||||||||||||||||||
| Other noninterest income | |||||||||||||||||||||||||||||
| Total noninterest income | |||||||||||||||||||||||||||||
| Noninterest expense | |||||||||||||||||||||||||||||
| Depreciation on operating lease equipment | |||||||||||||||||||||||||||||
| Maintenance and other operating lease expenses | |||||||||||||||||||||||||||||
| Personnel cost | |||||||||||||||||||||||||||||
| Net occupancy expense | |||||||||||||||||||||||||||||
| Equipment expense | |||||||||||||||||||||||||||||
| Professional fees | |||||||||||||||||||||||||||||
| Third-party processing fees | |||||||||||||||||||||||||||||
| FDIC insurance expense | |||||||||||||||||||||||||||||
| Marketing expense | |||||||||||||||||||||||||||||
| Acquisition-related expenses | |||||||||||||||||||||||||||||
| Intangible asset amortization | |||||||||||||||||||||||||||||
| Other noninterest expense | |||||||||||||||||||||||||||||
| Total noninterest expense | |||||||||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||||||||
| Preferred stock dividends | |||||||||||||||||||||||||||||
| Net income available to common stockholders | $ | $ | $ | $ | |||||||||||||||||||||||||
| Earnings per common share | |||||||||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||||||||
| Basic | |||||||||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||||||||
See accompanying Notes to the Unaudited Consolidated Financial Statements.
5
First Citizens BancShares, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| dollars in millions | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | |||||||||||||||||||||||||||||
| Net unrealized gain (loss) on securities available for sale | ( | ( | |||||||||||||||||||||||||||
| Net change in defined benefit pension items | ( | ( | ( | ( | |||||||||||||||||||||||||
| Net unrealized (loss) gain on cash flow hedge derivatives | ( | ||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||
| Total comprehensive income | $ | $ | $ | $ | |||||||||||||||||||||||||
See accompanying Notes to the Unaudited Consolidated Financial Statements.
6
First Citizens BancShares, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
| dollars in millions, except per share data | Preferred Stock | Class A Common Stock | Class B Common Stock | Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Repurchased | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | ||||||||||||||||||||||||||||||||||||||||||||
| Class A common stock | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Class B common stock | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Preferred stock dividends declared: | ||||||||||||||||||||||||||||||||||||||||||||
| Series A | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Series B | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Series C | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | ||||||||||||||||||||||||||||||||||||||||||||
| Class A common stock | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Class B common stock | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Preferred stock dividends declared: | ||||||||||||||||||||||||||||||||||||||||||||
| Series A | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Series B | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Series C | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
| dollars in millions, except share data | Preferred Stock | Class A Common Stock | Class B Common Stock | Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Repurchased | — | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | ||||||||||||||||||||||||||||||||||||||||||||
| Class A common stock | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Class B common stock | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Preferred stock dividends declared: | ||||||||||||||||||||||||||||||||||||||||||||
| Series A | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Series B | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Series C | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
| Stock based compensation | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | ||||||||||||||||||||||||||||||||||||||||||||
| Class A common stock | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Class B common stock | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Preferred stock dividends declared: | ||||||||||||||||||||||||||||||||||||||||||||
| Series A | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Series B | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Series C | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
See accompanying Notes to the Unaudited Consolidated Financial Statements.
7
First Citizens BancShares, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
| Six Months Ended June 30, | |||||||||||||||||
| dollars in millions | 2025 | 2024 | |||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||||
| Net income | $ | $ | |||||||||||||||
| Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||||||||
| Provision for credit losses | |||||||||||||||||
| Deferred tax benefit | ( | ( | |||||||||||||||
| Depreciation, amortization, and accretion, net | ( | ||||||||||||||||
| Fair value adjustment on marketable equity securities, net | |||||||||||||||||
| Gain on sale of loans, net | ( | ( | |||||||||||||||
| Gain on sale of operating lease equipment, net | ( | ( | |||||||||||||||
| Loss (gain) on other real estate owned, net | ( | ||||||||||||||||
| Loss on extinguishment of debt | |||||||||||||||||
| Origination of loans held for sale | ( | ( | |||||||||||||||
| Proceeds from sale of loans held for sale | |||||||||||||||||
| Impairment of premises and equipment | |||||||||||||||||
| Net change in other assets | ( | ( | |||||||||||||||
| Net change in other liabilities | ( | ( | |||||||||||||||
| Other operating activities | ( | ( | |||||||||||||||
| Net cash provided by operating activities | |||||||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||||
| Net (increase) decrease in interest-earning deposits at banks | ( | ||||||||||||||||
| Purchases of investment securities available for sale | ( | ( | |||||||||||||||
| Proceeds from maturities of investment securities available for sale | |||||||||||||||||
| Proceeds from sales of investment securities available for sale | |||||||||||||||||
| Purchases of investment securities held to maturity | ( | ( | |||||||||||||||
| Proceeds from maturities of investment securities held to maturity | |||||||||||||||||
| Net (increase) decrease in securities purchased under agreements to resell | ( | ||||||||||||||||
| Net increase in loans | ( | ( | |||||||||||||||
| Proceeds from sales of loans | |||||||||||||||||
| Net increase in credit balances of factoring clients | |||||||||||||||||
| Purchases of operating lease equipment | ( | ( | |||||||||||||||
| Proceeds from sales of operating lease equipment | |||||||||||||||||
| Purchases of premises and equipment | ( | ( | |||||||||||||||
| Proceeds from sales of other real estate owned | |||||||||||||||||
| Other investing activities | ( | ( | |||||||||||||||
| Net cash used in investing activities | ( | ( | |||||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||||
| Net decrease in time deposits | ( | ( | |||||||||||||||
| Net increase in demand and other interest-bearing deposits | |||||||||||||||||
| Net increase (decrease) in securities sold under agreements to repurchase | ( | ||||||||||||||||
| Repayment of long-term borrowings | ( | ( | |||||||||||||||
| Proceeds from issuance of long-term borrowings | |||||||||||||||||
| Repurchase of Class A common stock | ( | ||||||||||||||||
| Cash dividends paid | ( | ( | |||||||||||||||
| Other financing activities | ( | ||||||||||||||||
| Net cash provided by financing activities | |||||||||||||||||
| Change in cash and due from banks | ( | ||||||||||||||||
| Cash and due from banks at beginning of period | |||||||||||||||||
| Cash and due from banks at end of period | $ | $ | |||||||||||||||
8
| Six Months Ended June 30, | |||||||||||||||||
| dollars in millions | 2025 | 2024 | |||||||||||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||||||||||||||||
| Cash paid during the period for: | |||||||||||||||||
| Interest | $ | $ | |||||||||||||||
| Income taxes | |||||||||||||||||
| Significant non-cash investing and financing activities: | |||||||||||||||||
| Transfers of loans to other real estate | |||||||||||||||||
| Net settlement with FDIC for Purchase Money Note | |||||||||||||||||
| Transfer of assets from held for investment to held for sale | |||||||||||||||||
| Commitments extended during the period on affordable housing investment credits | |||||||||||||||||
See accompanying Notes to the Unaudited Consolidated Financial Statements.
9
First Citizens BancShares, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
Nature of Operations
First Citizens BancShares, Inc. (the “Parent Company” and, when including all of its subsidiaries on a consolidated basis, “we,” “us,” “our,” “BancShares”) is a financial holding company organized under the laws of Delaware that conducts operations through its banking subsidiary, First-Citizens Bank & Trust Company (“FCB”), which is headquartered in Raleigh, North Carolina. BancShares operates a network of branches and offices, predominantly located in the Southeast, Mid-Atlantic, Midwest and Western United States. BancShares provides various types of commercial and consumer banking services, including lending, leasing, and wealth management services. Deposit services include checking, savings, money market, and time deposit accounts.
BASIS OF PRESENTATION
Principles of Consolidation and Basis of Presentation
These consolidated financial statements and notes thereto are presented in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations and cash flow activity required in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, all normal recurring adjustments necessary for a fair presentation of the consolidated financial position and consolidated results of operations have been made. The unaudited interim consolidated financial statements included in this Quarterly Report on Form 10-Q (this “Form 10-Q”) should be read in conjunction with the Consolidated Financial Statements and Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”). Interim results are not necessarily indicative of results for a full year.
Reclassifications
Financial Statements
In certain instances, amounts reported in the 2024 consolidated financial statements have been reclassified to conform to the current financial statement presentation. Such reclassifications had no effect on previously reported stockholders’ equity or net income.
Changes to the Composition of Reportable Segments
2025 Loan Class Changes
At December 31, 2024, our disclosures for loans and leases and the allowance for loan and lease losses (“ALLL”) were aggregated into Commercial, Consumer, and SVB portfolios, each of which consisted of several loan classes as summarized below:
•The Commercial portfolio consisted of the following loan classes: commercial construction, owner occupied commercial mortgage, non-owner occupied commercial mortgage, commercial and industrial, and leases.
•The Consumer portfolio consisted of the following loan classes: residential mortgage, revolving mortgage, consumer auto, and consumer other.
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•The SVB portfolio consisted of the following loan classes: global fund banking, investor dependent - early stage, investor dependent - growth stage, and cash flow dependent and innovation C&I.
For further descriptions of these loan classes, refer to Note 1—Significant Accounting Policies and Basis of Presentation in the Notes to the Consolidated Financial Statements included in our 2024 Form 10-K.
During the second quarter of 2025, the loan classes which were reported in the SVB portfolio in the 2024 Form 10-K were recast to the Commercial portfolio (the “2025 Loan Class Changes”) as summarized below:
•Global fund banking remained a separate loan class, but is reported under the Commercial portfolio.
•Investor dependent–early stage and investor dependent–growth stage were combined into a single investor dependent loan class, which is reported under the Commercial portfolio.
•Cash flow dependent and innovation C&I was combined with the commercial and industrial loan class, which is reported under the Commercial portfolio.
Loan and lease and ALLL disclosures for all periods presented in this Form 10-Q were recast to reflect the 2025 Loan Class Changes. Refer to Note 4—Loans and Leases and Note 5—Allowance for Loan and Lease Losses.
The disclosures in Note 17—Segment Information were not recast as a result of the 2025 Loan Class Changes because the composition of reportable segments is separate and distinct from the identification of loan classes.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions based on available information. These estimates and assumptions impact the amounts reported in the consolidated financial statements and accompanying notes and the disclosures provided, and actual results could differ from those estimates. The significant estimate related to the determination of the ALLL is considered a critical accounting estimate.
SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies are described in the 2024 Form 10-K. There were no material changes to these policies during the six months ended June 30, 2025.
NOTE 2 — BUSINESS COMBINATIONS
On March 27, 2023 (the “SVBB Acquisition Date”), FCB acquired substantially all loans and certain other assets and assumed all customer deposits and certain other liabilities of Silicon Valley Bridge Bank, N.A. (“SVBB”) from the Federal Deposit Insurance Corporation (the “FDIC”) pursuant to the terms of a purchase and assumption agreement (the “SVBB Purchase Agreement”) by and among FCB, the FDIC, and the FDIC, as receiver of SVBB (the “SVBB Acquisition”).
In connection with the SVBB Purchase Agreement, FCB entered into a commercial shared loss agreement with the FDIC (the “Shared-Loss Agreement”). On April 7, 2025, FCB and the FDIC entered into an agreement (the “Shared-Loss Termination Agreement”) to terminate the Shared-Loss Agreement. As a result of entering into the Shared-Loss Termination Agreement, all rights and obligations of the parties under the Shared-Loss Agreement terminated as of the date of the Shared-Loss Termination Agreement, including FCB’s reporting covenants and obligations related to FDIC Loss Sharing and FCB reimbursement (each as defined in Note 2—Business Combinations in our 2024 Form 10-K). There was no impact to our consolidated balance sheets or statements of income resulting from the Shared-Loss Termination Agreement because there was no loss indemnification asset or true-up liability associated with the Shared-Loss Agreement, primarily based on evaluation of historical loss experience and the credit quality of the Covered Assets (as defined in Note 2—Business Combinations in our 2024 Form 10-K).
In connection with the SVBB Acquisition, FCB issued a five-year $36.07 billion note payable to the FDIC, maturing March 27, 2028, which was amended and restated on November 20, 2023 (the “Purchase Money Note”). FCB and the FDIC, as lender and as collateral agent, also entered into an Advance Facility Agreement, dated as of the SVBB Acquisition Date, and effective as of November 20, 2023 (the “Advance Facility Agreement”), which provided total advances available through March 27, 2025 of up to $70 billion solely to provide liquidity to offset deposit withdrawal or runoff of former SVBB deposit accounts and to fund the unfunded commercial lending commitments acquired in the SVBB Acquisition. There were no amounts outstanding on the facility at the end of the draw period on March 27, 2025.
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NOTE 3 — INVESTMENT SECURITIES
The following tables include the amortized cost and fair value of investment securities:
Amortized Cost and Fair Value - Investment Securities
| dollars in millions | June 30, 2025 | ||||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
| Investment securities available for sale | |||||||||||||||||||||||
| U.S. Treasury | $ | $ | $ | ( | $ | ||||||||||||||||||
| Government agency | ( | ||||||||||||||||||||||
| Residential mortgage-backed securities | ( | ||||||||||||||||||||||
| Commercial mortgage-backed securities | ( | ||||||||||||||||||||||
| Corporate bonds | ( | ||||||||||||||||||||||
| Municipal bonds | |||||||||||||||||||||||
| Total investment securities available for sale | $ | $ | $ | ( | $ | ||||||||||||||||||
| Investment in marketable equity securities | $ | $ | $ | ( | $ | ||||||||||||||||||
| Investment securities held to maturity | |||||||||||||||||||||||
| U.S. Treasury | $ | $ | $ | ( | $ | ||||||||||||||||||
| Government agency | ( | ||||||||||||||||||||||
| Residential mortgage-backed securities | ( | ||||||||||||||||||||||
| Commercial mortgage-backed securities | ( | ||||||||||||||||||||||
| Supranational securities | ( | ||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total investment securities held to maturity | $ | $ | $ | ( | $ | ||||||||||||||||||
| Total investment securities | $ | $ | $ | ( | $ | ||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
| Investment securities available for sale | |||||||||||||||||||||||
| U.S. Treasury | $ | $ | $ | ( | $ | ||||||||||||||||||
| Government agency | ( | ||||||||||||||||||||||
| Residential mortgage-backed securities | ( | ||||||||||||||||||||||
| Commercial mortgage-backed securities | ( | ||||||||||||||||||||||
| Corporate bonds | ( | ||||||||||||||||||||||
| Municipal bonds | |||||||||||||||||||||||
| Total investment securities available for sale | $ | $ | $ | ( | $ | ||||||||||||||||||
| Investment in marketable equity securities | $ | $ | $ | ( | $ | ||||||||||||||||||
| Investment securities held to maturity | |||||||||||||||||||||||
| U.S. Treasury | $ | $ | $ | ( | $ | ||||||||||||||||||
| Government agency | ( | ||||||||||||||||||||||
| Residential mortgage-backed securities | ( | ||||||||||||||||||||||
| Commercial mortgage-backed securities | ( | ||||||||||||||||||||||
| Supranational securities | ( | ||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total investment securities held to maturity | $ | $ | $ | ( | $ | ||||||||||||||||||
| Total investment securities | $ | $ | $ | ( | $ | ||||||||||||||||||
U.S. Treasury investments include Treasury bills and Notes issued by the U.S. Treasury. Investments in government agency securities represent securities issued by the Small Business Administration (“SBA”), Federal Home Loan Bank (“FHLB”) and other U.S. agencies. Investments in residential and commercial mortgage-backed securities represent securities issued by the Government National Mortgage Association, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation. Investments in corporate bonds represent positions in debt securities of other financial institutions. Municipal bonds are revenue bonds. Investments in marketable equity securities represent positions in common stock of publicly traded financial institutions. Investments in supranational securities represent securities issued by the Supranational Entities & Multilateral Development Banks. Other held to maturity investments include certificates of deposit with other financial institutions.
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BancShares initially held approximately 354,000 shares of Visa, Inc. (“Visa”) Class B common stock (“Visa Class B common stock”). Effective January 24, 2024, all outstanding shares of Visa Class B common stock were redenominated as Visa Class B-1 common stock (“Visa Class B-1 common stock”) pursuant to Visa’s eighth amended and restated certificate of incorporation. BancShares currently holds approximately 354,000 shares of Visa Class B-1 common stock. Until the resolution of certain litigation, at which time the Visa Class B-1 common stock will convert to publicly traded Visa Class A common stock, or the potential exchange of Visa Class B-1 common stock for other marketable classes of Visa common stock, these shares are only transferable to other stockholders of Visa Class B-1 common stock or certain new denominations of Visa’s former Class B common stock. As a result, there is limited transfer activity in private transactions between buyers and sellers. Given this limited trading activity and the continuing uncertainty regarding the likelihood, ultimate timing and eventual exchange of Visa Class B-1 common stock for shares of Visa Class A common stock or other marketable classes of Visa common stock, these shares are not considered to have a readily determinable fair value and have no
Accrued interest receivable for available for sale and held to maturity debt securities was excluded from the estimate for credit losses. At June 30, 2025, accrued interest receivable for available for sale and held to maturity debt securities was $175 million and $20 million, respectively. At December 31, 2024, accrued interest receivable for available for sale and held to maturity debt securities was $177 million and $20 million, respectively. During the three and six months ended June 30, 2025 and 2024, there was no
A security is considered past due once it is 30 days contractually past due under the terms of the agreement. There were no
The following table provides the amortized cost and fair value by contractual maturity. Expected maturities will differ from contractual maturities on certain securities because borrowers and issuers may have the right to call or prepay obligations with or without prepayment penalties. Residential and commercial mortgage-backed and government agency securities are stated separately as they are not due at a single maturity date.
Maturities - Debt Securities
| dollars in millions | June 30, 2025 | December 31, 2024 | |||||||||||||||||||||
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||||
| Investment securities available for sale | |||||||||||||||||||||||
| Non-amortizing securities maturing in: | |||||||||||||||||||||||
| One year or less | $ | $ | $ | $ | |||||||||||||||||||
| After one through five years | |||||||||||||||||||||||
| After five through 10 years | |||||||||||||||||||||||
| After 10 years | |||||||||||||||||||||||
| Government agency | |||||||||||||||||||||||
| Residential mortgage-backed securities | |||||||||||||||||||||||
| Commercial mortgage-backed securities | |||||||||||||||||||||||
| Total investment securities available for sale | $ | $ | $ | $ | |||||||||||||||||||
| Investment securities held to maturity | |||||||||||||||||||||||
| Non-amortizing securities maturing in: | |||||||||||||||||||||||
| One year or less | $ | $ | $ | $ | |||||||||||||||||||
| After one through five years | |||||||||||||||||||||||
| After five through 10 years | |||||||||||||||||||||||
| Residential mortgage-backed securities | |||||||||||||||||||||||
| Commercial mortgage-backed securities | |||||||||||||||||||||||
| Total investment securities held to maturity | $ | $ | $ | $ | |||||||||||||||||||
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The following table presents interest and dividend income on investment securities:
Interest and Dividends on Investment Securities
| dollars in millions | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||
Interest income - taxable investment securities(1) | $ | $ | $ | $ | |||||||||||||||||||||||||
| Dividend income - marketable equity securities | |||||||||||||||||||||||||||||
| Interest on investment securities | $ | $ | $ | $ | |||||||||||||||||||||||||
(1) Amount includes interest income on securities purchased under agreements to resell.
The following table presents the gross realized gain and loss on sales of investment securities available for sale, and the net realized gain on sale of marketable equity securities:
AG真人官方ized Gain (Loss) on Sale of Investment Securities, Net
| dollars in millions | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||
| Gross realized gain on sale of investment securities available for sale | $ | $ | $ | $ | |||||||||||||||||||||||||
| Gross realized loss on sale of investment securities available for sale | ( | ||||||||||||||||||||||||||||
| Net realized loss on sale of investment securities available for sale | ( | ||||||||||||||||||||||||||||
Net realized gain on sale of marketable equity securities | |||||||||||||||||||||||||||||
| AG真人官方ized gain (loss) on sale of investment securities, net | $ | $ | $ | $ | |||||||||||||||||||||||||
The following table provides information regarding investment securities available for sale with unrealized losses:
Gross Unrealized Losses on Debt Securities Available For Sale
| dollars in millions | June 30, 2025 | ||||||||||||||||||||||||||||||||||
| Less than 12 months | 12 months or more | Total | |||||||||||||||||||||||||||||||||
| Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||
| Investment securities available for sale | |||||||||||||||||||||||||||||||||||
| U.S. Treasury | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
| Government agency | ( | ( | |||||||||||||||||||||||||||||||||
| Residential mortgage-backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Commercial mortgage-backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Corporate bonds | ( | ( | |||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||||||||
| Less than 12 months | 12 months or more | Total | |||||||||||||||||||||||||||||||||
| Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||
| Investment securities available for sale | |||||||||||||||||||||||||||||||||||
| U.S. Treasury | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
| Government agency | ( | ( | |||||||||||||||||||||||||||||||||
| Residential mortgage-backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Commercial mortgage-backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Corporate bonds | ( | ( | |||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
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As of June 30, 2025, there were 458 investment securities available for sale with continuous unrealized losses for more than 12 months, of which 414 were government sponsored enterprise-issued mortgage-backed securities, government agency securities, or U.S. Treasury securities and the remaining 44 were corporate bonds. BancShares has the ability and intent to retain these securities for a period of time sufficient to recover all unrealized losses. Given the consistently strong credit rating of the U.S. Treasury, and the long history of no credit losses on debt securities issued by government agencies and government sponsored entities, as of June 30, 2025, no allowance for credit loss was required. For corporate bonds, we analyzed the changes in interest rates relative to when the investment securities were purchased or acquired, and considered other factors including changes in credit ratings, delinquencies, and other macroeconomic factors. As a result of this analysis, we determined that no allowance for credit loss was required for investment securities available for sale as of June 30, 2025.
BancShares’ portfolio of held to maturity debt securities consists of mortgage-backed securities issued by government agencies and government sponsored entities, U.S. Treasury notes, unsecured bonds issued by government agencies and government sponsored entities, and securities issued by the Supranational Entities & Multilateral Development Banks. Given the consistently strong credit rating of the U.S. Treasury, the Supranational Entities & Multilateral Development Banks and the long history of no credit losses on debt securities issued by government agencies and government sponsored entities, no allowance for credit loss was required for debt securities held to maturity as of June 30, 2025.
There were no
Investment securities having an aggregate carrying value of $4.00 billion at June 30, 2025, and $3.94 billion at December 31, 2024, were pledged as collateral to secure public funds on deposit and certain short-term borrowings, and for other purposes as required by law.
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NOTE 4 — LOANS AND LEASES
Unless otherwise noted, loans held for sale are not included in the following tables. Leases in the following tables include finance leases, but exclude operating lease equipment.
Loans by Class
| dollars in millions | June 30, 2025 | December 31, 2024 | |||||||||
| Commercial | |||||||||||
| Commercial construction | $ | $ | |||||||||
| Owner occupied commercial mortgage | |||||||||||
| Non-owner occupied commercial mortgage | |||||||||||
| Commercial and industrial | |||||||||||
| Leases | |||||||||||
| Global fund banking | |||||||||||
| Investor dependent | |||||||||||
| Total commercial | |||||||||||
| Consumer | |||||||||||
| Residential mortgage | |||||||||||
| Revolving mortgage | |||||||||||
| Consumer auto | |||||||||||
| Consumer other | |||||||||||
| Total consumer | |||||||||||
| Total loans and leases | $ | $ | |||||||||
Refer to Note 1—Significant Accounting Policies and Basis of Presentation for discussion related to changes in loan classes.
At June 30, 2025 and December 31, 2024, accrued interest receivable on loans included in other assets was $605 million and $603 million, respectively, and was excluded from the estimate of credit losses.
The discount on acquired loans is accreted to interest income over the contractual life of the loan using the effective interest method. Discount accretion income was $75 million and $159 million for the three and six months ended June 30, 2025, including $4 million and $12 million for unfunded commitments, respectively. Discount accretion income was $145 million and $308 million for the three and six months ended June 30, 2024, including $20 million and $56 million for unfunded commitments, respectively.
The following table presents selected components of the amortized cost of loans, including the unamortized discount on acquired loans.
Components of Amortized Cost
| dollars in millions | June 30, 2025 | December 31, 2024 | |||||||||
| Deferred fees, including unamortized costs and unearned fees on non-PCD loans | $ | ( | $ | ( | |||||||
| Net unamortized discount on acquired loans | |||||||||||
| Non-PCD | $ | $ | |||||||||
| PCD | |||||||||||
| Total net unamortized discount | $ | $ | |||||||||
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The aging and nonaccrual status of the outstanding loans and leases by class at June 30, 2025 and December 31, 2024 are provided in the tables below. Loans and leases less than 30 days past due are considered current, as various grace periods allow borrowers to make payments within a stated period after the due date and remain in compliance with the respective agreement.
Loans and Leases - Delinquency and Nonaccrual Status (1) (2)
| dollars in millions | June 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| Accruing Loans | |||||||||||||||||||||||||||||||||||||||||||||||
| 30-59 Days Past Due | 60-89 Days Past Due | 90 Days or Greater | Total Past Due | Current | Total Accruing | Nonaccrual Loans | Total | ||||||||||||||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial construction | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Owner occupied commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||
| Leases | |||||||||||||||||||||||||||||||||||||||||||||||
| Global fund banking | |||||||||||||||||||||||||||||||||||||||||||||||
| Investor dependent | |||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Revolving mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Consumer auto | |||||||||||||||||||||||||||||||||||||||||||||||
| Consumer other | |||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer | |||||||||||||||||||||||||||||||||||||||||||||||
| Total loans and leases | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||
| Accruing Loans | |||||||||||||||||||||||||||||||||||||||||||||||
| 30-59 Days Past Due | 60-89 Days Past Due | 90 Days or Greater | Total Past Due | Current | Total Accruing | Nonaccrual Loans | Total | ||||||||||||||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial construction | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Owner occupied commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||
| Leases | |||||||||||||||||||||||||||||||||||||||||||||||
| Global fund banking | |||||||||||||||||||||||||||||||||||||||||||||||
| Investor dependent | |||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Revolving mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Consumer auto | |||||||||||||||||||||||||||||||||||||||||||||||
| Consumer other | |||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer | |||||||||||||||||||||||||||||||||||||||||||||||
| Total loans and leases | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
(1) Accrued interest that was reversed when the loan went to nonaccrual status was $10 million for the six months ended June 30, 2025 and $14 million for the year ended December 31, 2024.
(2) Nonaccrual loans for which there was no related ALLL totaled $362 million at June 30, 2025 and $303 million at December 31, 2024.
Other real estate owned (“OREO”) and repossessed assets were $103 million as of June 30, 2025 and $64 million as of December 31, 2024.
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Credit Quality Indicators
Loans and leases are monitored for credit quality on a recurring basis. Commercial loans and leases and consumer loans have different credit quality indicators as a result of the unique characteristics of the loan classes being evaluated. The credit quality indicators for commercial loans and leases are developed through a review of individual borrowers on an ongoing basis. Commercial loans are evaluated periodically with more frequent evaluations done on criticized loans. The indicators as of the date presented are based on the most recent assessment performed and are defined below:
Pass – A pass rated asset is not adversely classified because it does not display any of the characteristics for adverse classification.
Special mention – A special mention asset has potential weaknesses which deserve management’s close attention. If left uncorrected, such potential weaknesses may result in deterioration of the repayment prospects or collateral position at some future date. Special mention assets are not adversely classified and do not warrant adverse classification.
Substandard – A substandard asset is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Assets classified as substandard generally have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. These assets are characterized by the distinct possibility of loss if the deficiencies are not corrected.
Doubtful – An asset classified as doubtful has all the weaknesses inherent in an asset classified substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently existing facts, conditions and values.
Loss – Assets classified as loss are considered uncollectible and of such little value it is inappropriate to be carried as an asset. This classification is not necessarily equivalent to any potential for recovery or salvage value, but rather it is not appropriate to defer a full charge-off even though partial recovery may be affected in the future.
Ungraded – Ungraded loans represent loans not included in the individual credit grading process due to their relatively small balances or borrower type. The majority of ungraded loans at June 30, 2025 and December 31, 2024, relate to business credit cards. Business credit card loans are subject to automatic charge-off when they become 120 days past due in the same manner as unsecured consumer lines of credit.
The credit quality indicator for consumer loans is based on delinquency status of the borrower as of the date presented. As the borrower becomes more delinquent, the likelihood of loss increases. An exemption is applied to government guaranteed loans as the principal repayments are insured by the Federal Housing Administration and U.S. Department of Veterans Affairs and thus remain on accrual status regardless of delinquency status.
The following tables summarize the commercial loans disaggregated by year of origination and by risk rating. The consumer loan delinquency status by year of origination is also presented below. The tables reflect the amortized cost of the loans and include purchased credit deteriorated (“PCD”) loans.
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Commercial Loans - Risk Classifications by Class
| June 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk Classification: | Term Loans by Origination Year | Revolving Converted to Term Loans | |||||||||||||||||||||||||||||||||||||||||||||||||||
| dollars in millions | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 & Prior | Revolving | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Commercial construction | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ungraded | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial construction | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Owner occupied commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ungraded | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total owner occupied commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ungraded | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-owner occupied commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ungraded | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ungraded | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total leases | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Global fund banking | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ungraded | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total global fund banking | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investor dependent | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ungraded | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total investor dependent | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
19
Consumer Loans - Delinquency Status by Class
| June 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Days Past Due: | Term Loans by Origination Year | Revolving Converted to Term Loans | |||||||||||||||||||||||||||||||||||||||||||||||||||
| dollars in millions | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 & Prior | Revolving | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| 30-59 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 60-89 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 90 days or greater | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total residential mortgage | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revolving mortgage | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 30-59 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 60-89 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 90 days or greater | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revolving mortgage | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer auto | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 30-59 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 60-89 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 90 days or greater | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer auto | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer other | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 30-59 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 60-89 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 90 days or greater | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer other | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
20
The following tables represent current credit quality indicators by origination year as of December 31, 2024:
Commercial Loans - Risk Classifications by Class
| December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk Classification: | Term Loans by Origination Year | Revolving Converted to Term Loans | |||||||||||||||||||||||||||||||||||||||||||||||||||
| dollars in millions | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 & Prior | Revolving | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Commercial construction | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ungraded | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial construction | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Owner occupied commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ungraded | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total owner occupied commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ungraded | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-owner occupied commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ungraded | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ungraded | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total leases | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Global fund banking | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ungraded | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total global fund banking | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investor dependent | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ungraded | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total investor dependent | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
21
Consumer Loans - Delinquency Status by Class
| December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Days Past Due: | Term Loans by Origination Year | Revolving Converted to Term Loans | |||||||||||||||||||||||||||||||||||||||||||||||||||
| dollars in millions | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 & Prior | Revolving | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| 30-59 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 60-89 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 90 days or greater | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total residential mortgage | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revolving mortgage | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 30-59 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 60-89 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 90 days or greater | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revolving mortgage | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer auto | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 30-59 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 60-89 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 90 days or greater | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer auto | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer other | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 30-59 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 60-89 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 90 days or greater | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer other | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
22
Gross Charge-offs
Gross charge-off vintage disclosures by origination year and loan class are summarized in the following tables:
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Term Loans by Origination Year | Revolving Converted to Term Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| dollars in millions | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 & Prior | Revolving | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Owner occupied commercial mortgage | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investor dependent | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer auto | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer other | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loans and leases | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Term Loans by Origination Year | Revolving Converted to Term Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| dollars in millions | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 & Prior | Revolving | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial mortgage | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investor dependent | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer auto | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer other | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loans and leases | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
23
Loan Modifications for Borrowers Experiencing Financial Difficulties
As part of BancShares’ ongoing credit risk management practices, BancShares attempts to work with borrowers when necessary to extend or modify loan terms to better align with the borrowers’ current ability to repay. BancShares’ modifications granted to debtors experiencing financial difficulties typically take the form of term extensions, interest rate reductions, payment delays, principal forgiveness, or a combination thereof. Modifications are made in accordance with internal policies and guidelines to conform to regulatory guidance.
The following tables present the amortized cost of loan modifications made to debtors experiencing financial difficulty, disaggregated by class and type of loan modification. The tables also provide financial effects by type of such loan modifications for the respective loan class. Loan modifications for principal forgiveness round to less than $1 million for all loan classes in all periods presented and are not presented in the following tables.
Amortized Cost of Loans Modified during the three months ended June 30, 2025
| dollars in millions | Term Extension (1) | Payment Delay | Interest Rate Reduction | Term Extension(1) and Interest Rate Reduction | Term Extension(1) and Payment Delay | Other Combinations(2) | Total | Percent of Total Loan Class | |||||||||||||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial construction | $ | $ | $ | $ | $ | $ | $ | % | |||||||||||||||||||||||||||||||||||||||
| Owner occupied commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||
| Investor dependent | |||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Revolving mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer | |||||||||||||||||||||||||||||||||||||||||||||||
| Total loans and leases | $ | $ | $ | $ | $ | $ | $ | % | |||||||||||||||||||||||||||||||||||||||
(1) Term extensions include modifications in which the balloon principal payment was deferred to a later date or the loan amortization period was extended.
(2) Consists of $5 million of commercial and industrial loans modified with a term extension, payment delay, and interest rate reduction.
Amortized Cost of Loans Modified during the three months ended June 30, 2024
| dollars in millions | Term Extension (1) | Payment Delay | Interest Rate Reduction | Term Extension(1) and Payment Delay | Other Combinations(2) | Total | Percent of Total Loan Class | ||||||||||||||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Owner occupied commercial mortgage | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||
| Investor dependent | |||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Revolving mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer | |||||||||||||||||||||||||||||||||||||||||||||||
| Total loans and leases | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||
(1) Term extensions include modifications in which the balloon principal payment was deferred to a later date or the loan amortization period was extended.
(2) Consists of $4 million commercial and industrial loans modified with a term extension and interest rate reduction as well as $1 million of investor dependent loans modified with a term extension, interest rate reduction, and payment delay.
24
Financial Effects of Loan Modifications made during the three months ended June 30, 2025
| dollars in millions | Weighted Average Term Extension (in Months) | Weighted Average Interest Rate Reduction | Weighted Average Payment Delay (in Months) | ||||||||||||||||||||
| Commercial | |||||||||||||||||||||||
| Commercial construction | 7 | % | 6 | ||||||||||||||||||||
| Owner occupied commercial mortgage | 12 | 5 | |||||||||||||||||||||
| Non-owner occupied commercial mortgage | 27 | — | |||||||||||||||||||||
| Commercial and industrial | 13 | 15 | |||||||||||||||||||||
| Investor dependent | 6 | 5 | |||||||||||||||||||||
| Total commercial | 19 | 11 | |||||||||||||||||||||
| Consumer | |||||||||||||||||||||||
| Residential mortgage | 8 | 6 | |||||||||||||||||||||
| Revolving mortgage | 43 | — | |||||||||||||||||||||
| Consumer auto | 19 | — | |||||||||||||||||||||
| Consumer other | 60 | — | |||||||||||||||||||||
| Total consumer | 9 | 6 | |||||||||||||||||||||
| Total loans and leases | 18 | % | 11 | ||||||||||||||||||||
Financial Effects of Loan Modifications made during the three months ended June 30, 2024
| dollars in millions | Weighted Average Term Extension (in Months) | Weighted Average Interest Rate Reduction | Weighted Average Payment Delay (in Months) | ||||||||||||||||||||
| Commercial | |||||||||||||||||||||||
| Commercial construction | 60 | % | — | ||||||||||||||||||||
| Owner occupied commercial mortgage | 86 | — | |||||||||||||||||||||
| Non-owner occupied commercial mortgage | 20 | 6 | |||||||||||||||||||||
| Commercial and industrial | 16 | 11 | |||||||||||||||||||||
| Leases | — | 6 | |||||||||||||||||||||
| Investor dependent | 9 | 8 | |||||||||||||||||||||
| Total commercial | 22 | 10 | |||||||||||||||||||||
| Consumer | |||||||||||||||||||||||
| Residential mortgage | 120 | — | |||||||||||||||||||||
| Revolving mortgage | 60 | — | |||||||||||||||||||||
| Consumer auto | 32 | — | |||||||||||||||||||||
| Consumer other | — | — | |||||||||||||||||||||
| Total consumer | 90 | — | |||||||||||||||||||||
| Total loans and leases | 24 | % | 10 | ||||||||||||||||||||
Note: The financial effects of loan modifications for certain loan classes reported in the tables above were not reported in the preceding tables as the total amortized cost of loans modified during the period for such loan classes rounded to less than $1 million.
25
Amortized Cost of Loans Modified during the six months ended June 30, 2025
| dollars in millions | Term Extension (1) | Payment Delay | Interest Rate Reduction | Term Extension(1) and Interest Rate Reduction | Term Extension(1) and Payment Delay | Other Combinations(2) | Total | Percent of Total Loan Class | |||||||||||||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial construction | $ | $ | $ | $ | $ | $ | $ | % | |||||||||||||||||||||||||||||||||||||||
| Owner occupied commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||
| Investor dependent | |||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Revolving mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer | |||||||||||||||||||||||||||||||||||||||||||||||
| Total loans and leases | $ | $ | $ | $ | $ | $ | $ | % | |||||||||||||||||||||||||||||||||||||||
(1) Term extensions include modifications in which the balloon principal payment was deferred to a later date or the loan amortization period was extended.
(2) Consists of $5 million of commercial and industrial loans modified with a term extension, payment delay, and interest rate reduction.
Amortized Cost of Loans Modified during the six months ended June 30, 2024
| dollars in millions | Term Extension (1) | Payment Delay | Interest Rate Reduction | Term Extension(1) and Interest Rate Reduction | Term Extension(1) and Payment Delay | Other Combinations(2) | Total | Percent of Total Loan Class | |||||||||||||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial construction | $ | $ | $ | $ | $ | $ | $ | % | |||||||||||||||||||||||||||||||||||||||
| Owner occupied commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||
| Investor dependent | |||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Revolving mortgage | |||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer | |||||||||||||||||||||||||||||||||||||||||||||||
| Total loans and leases | $ | $ | $ | $ | $ | $ | $ | % | |||||||||||||||||||||||||||||||||||||||
(1) Term extensions include modifications in which the balloon principal payment was deferred to a later date or the loan amortization period was extended.
(2) Consists of $1 million of investor dependent loans modified with a term extension, interest rate reduction, and payment delay.
26
Financial Effects of Loan Modifications made during the six months ended June 30, 2025
| Weighted Average Term Extension (in Months) | Weighted Average Interest Rate Reduction | Weighted Average Payment Delay (in Months) | |||||||||||||||||||||
| Commercial | |||||||||||||||||||||||
| Commercial construction | 7 | % | 6 | ||||||||||||||||||||
| Owner occupied commercial mortgage | 11 | 5 | |||||||||||||||||||||
| Non-owner occupied commercial mortgage | 24 | 7 | |||||||||||||||||||||
| Commercial and industrial | 16 | 13 | |||||||||||||||||||||
| Investor dependent | 7 | 5 | |||||||||||||||||||||
| Total commercial | 17 | 9 | |||||||||||||||||||||
| Consumer | |||||||||||||||||||||||
| Residential mortgage | 11 | 6 | |||||||||||||||||||||
| Revolving mortgage | 47 | 5 | |||||||||||||||||||||
| Consumer auto | 20 | — | |||||||||||||||||||||
| Consumer other | 60 | — | |||||||||||||||||||||
| Total consumer | 12 | 6 | |||||||||||||||||||||
| Total loans and leases | 17 | % | 9 | ||||||||||||||||||||
Financial Effects of Loan Modifications made during the six months ended June 30, 2024
| Weighted Average Term Extension (in Months) | Weighted Average Interest Rate Reduction | Weighted Average Payment Delay (in Months) | |||||||||||||||||||||
| Commercial | |||||||||||||||||||||||
| Commercial construction | 19 | % | — | ||||||||||||||||||||
| Owner occupied commercial mortgage | 39 | 20 | |||||||||||||||||||||
| Non-owner occupied commercial mortgage | 24 | 48 | |||||||||||||||||||||
| Commercial and industrial | 14 | 11 | |||||||||||||||||||||
| Leases | — | 6 | |||||||||||||||||||||
| Investor dependent | 12 | 8 | |||||||||||||||||||||
| Total commercial | 21 | 14 | |||||||||||||||||||||
| Consumer | |||||||||||||||||||||||
| Residential mortgage | 73 | — | |||||||||||||||||||||
| Revolving mortgage | 60 | — | |||||||||||||||||||||
| Consumer auto | 30 | — | |||||||||||||||||||||
| Consumer other | 46 | — | |||||||||||||||||||||
| Total consumer | 68 | — | |||||||||||||||||||||
| Total loans and leases | 23 | % | 14 | ||||||||||||||||||||
Note: The financial effects of loan modifications for certain loan classes reported in the tables above were not reported in the preceding tables as the total amortized cost of loans modified during the period for such loan classes rounded to less than $1 million.
Borrowers experiencing financial difficulties are typically identified in our credit risk management process before loan modifications occur. An assessment of whether a borrower is experiencing financial difficulty is reassessed or performed on the date of a modification. Since the effect of most modifications made to borrowers experiencing financial difficulty is already included in the ALLL because of the measurement methodologies used to estimate the ALLL, a change to the ALLL is generally not recorded upon modification. Upon BancShares’ determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged off.
At June 30, 2025, there were $78 million of loans modified in the twelve months ended June 30, 2025, which defaulted subsequent to modification.
27
The following tables present the amortized cost and performance of loans to borrowers experiencing financial difficulties for which the terms of the loan were modified during the referenced periods. The period of delinquency is based on the number of days the scheduled payment is contractually past due.
Modified Loans Payment Status (twelve months ended June 30, 2025)
| dollars in millions | Current | 30–59 Days Past Due | 60–89 Days Past Due | 90 Days or Greater Past Due | Total | ||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||
| Commercial construction | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Owner occupied commercial mortgage | |||||||||||||||||||||||||||||
| Non-owner occupied commercial mortgage | |||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||
| Investor dependent | |||||||||||||||||||||||||||||
| Total commercial | |||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||
| Revolving mortgage | |||||||||||||||||||||||||||||
| Total consumer | |||||||||||||||||||||||||||||
| Total loans and leases | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Modified Loans Payment Status (twelve months ended June 30, 2024)
| dollars in millions | Current | 30–59 Days Past Due | 60–89 Days Past Due | 90 Days or Greater Past Due | Total | ||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||
| Commercial construction | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Owner occupied commercial mortgage | |||||||||||||||||||||||||||||
| Non-owner occupied commercial mortgage | |||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||
| Investor dependent | |||||||||||||||||||||||||||||
| Total commercial | |||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||
| Revolving mortgage | |||||||||||||||||||||||||||||
| Total consumer | |||||||||||||||||||||||||||||
| Total loans and leases | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
At June 30, 2025, there were $13 million of commitments to lend additional funds to debtors experiencing financial difficulty for which the terms of the loan were modified during the six months ended June 30, 2025. At December 31, 2024, there were $55 million of commitments to lend additional funds to debtors experiencing financial difficulty for which the terms of the loan were modified during the year ended December 31, 2024.
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Loans Pledged
The following table provides information regarding loans pledged as collateral for borrowing capacity through the FHLB of Atlanta, the Federal Reserve Bank (“FRB”) and FDIC.
Loans Pledged
| dollars in millions | June 30, 2025 | December 31, 2024 | |||||||||
| FHLB of Atlanta | |||||||||||
| Lendable collateral value of pledged non-PCD loans | $ | $ | |||||||||
| Less: advances | |||||||||||
| Less: letters of credit | |||||||||||
| Available borrowing capacity | $ | $ | |||||||||
| Pledged non-PCD loans | $ | $ | |||||||||
| FRB | |||||||||||
| Lendable collateral value of pledged non-PCD loans | $ | $ | |||||||||
| Less: advances | |||||||||||
| Available borrowing capacity | $ | $ | |||||||||
| Pledged non-PCD loans | $ | $ | |||||||||
| FDIC | |||||||||||
| Lendable collateral value of pledged loans | $ | $ | |||||||||
| Less: advances | |||||||||||
| Less: Purchase Money Note | |||||||||||
Available borrowing capacity (1) | $ | $ | |||||||||
Pledged loans (1) | $ | $ | |||||||||
(1) The draw period ended on March 27, 2025, therefore there is no available borrowing capacity at June 30, 2025. Loans remain pledged as collateral for the Purchase Money Note.
As a member of the FHLB, FCB can access financing based on an evaluation of its creditworthiness, statement of financial position, size and eligibility of collateral. FCB may at any time grant a security interest in, sell, convey or otherwise dispose of any of the assets used for collateral, provided that FCB is in compliance with the collateral maintenance requirement immediately following such disposition.
Under borrowing arrangements with the FRB, BancShares has access to the FRB Discount Window on a secured basis. There were no
In connection with the SVBB Acquisition, FCB and the FDIC entered into financing agreements, including the five-year Purchase Money Note, and the Advance Facility Agreement, which allowed for advances through March 27, 2025. There were no amounts outstanding at the end of the draw period of the facility on March 27, 2025. Refer to Note 2—Business Combinations for further discussion of these agreements and Note 9—Borrowings for the outstanding carrying value of the Purchase Money Note.
29
NOTE 5 — ALLOWANCE FOR LOAN AND LEASE LOSSES
The ALLL is reported as a separate line item on the Consolidated Balance Sheets, while the reserve for off-balance sheet credit exposure is included in other liabilities. The provision or benefit for credit losses related to (i) loans and leases (ii) off-balance sheet credit exposure, and (iii) investment securities available for sale, if any, is reported in the Consolidated Statements of Income as provision or benefit for credit losses.
The ALLL activity for loans and leases is summarized in the following table:
Allowance for Loan and Lease Losses
| dollars in millions | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||
| Commercial | Consumer | Total | Commercial | Consumer | Total | ||||||||||||||||||||||||||||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
Provision for loan and lease losses | |||||||||||||||||||||||||||||||||||||||||||||||
Charge-offs | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Recoveries | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at end of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| dollars in millions | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||
| Commercial | Consumer | Total | Commercial | Consumer | Total | ||||||||||||||||||||||||||||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
Provision (benefit) for loan and lease losses | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Charge-offs | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Recoveries | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at end of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
The decrease of $8 million in the ALLL at June 30, 2025 compared to March 31, 2025 primarily reflected decreases related to Hurricane Helene, other credit quality improvements, and a modest shift in our weighting from the downside to baseline economic scenario, partially offset by higher specific reserves for individually evaluated loans. The decrease of $4 million in the ALLL at June 30, 2025 compared to December 31, 2024 was mainly due to decreases discussed above and the result of a mix shift from investor dependent loans to global fund banking loans, which has a lower loss rate relative to our other loan portfolios, partially offset by the impact of loan growth.
The following table presents the components of the provision for credit losses:
Provision for Credit Losses
| dollars in millions | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||
Provision for loan and lease losses | $ | $ | $ | $ | |||||||||||||||||||||||||
| Provision (benefit) for off-balance sheet credit exposure | ( | ||||||||||||||||||||||||||||
| Provision for credit losses | $ | $ | $ | $ | |||||||||||||||||||||||||
30
Lessee
BancShares’ leases primarily include administrative offices and bank locations. Substantially all of our operating lease liabilities relate to United States real estate leases. Our finance lease liabilities relate to equipment leases, including the lease of certain ATMs. Our real estate leases have remaining lease terms of up to 32 years. Our lease terms may include options to extend or terminate the lease, and our operating leases have renewal terms that can extend from 1 to 25 years. The options are included in the lease term when it is determined that it is reasonably certain the option will be exercised.
The following table presents supplemental balance sheet information and remaining weighted average lease terms and discount rates:
Supplemental Lease Information
| dollars in millions | Classification | June 30, 2025 | December 31, 2024 | ||||||||||||||
| Lease assets: | |||||||||||||||||
| Operating lease ROU assets | Other assets | $ | $ | ||||||||||||||
| Finance leases | Premises and equipment | ||||||||||||||||
| Total lease assets | $ | $ | |||||||||||||||
| Lease liabilities: | |||||||||||||||||
| Operating leases | Other liabilities | $ | $ | ||||||||||||||
| Finance leases | Other borrowings | ||||||||||||||||
| Total lease liabilities | $ | $ | |||||||||||||||
| Weighted-average remaining lease terms: | |||||||||||||||||
| Operating leases | |||||||||||||||||
| Finance leases | |||||||||||||||||
| Weighted-average discount rate: | |||||||||||||||||
| Operating leases | % | % | |||||||||||||||
| Finance leases | |||||||||||||||||
As of June 30, 2025, there were no leases that have not yet commenced that would have a material impact on BancShares’ consolidated financial statements.
The following table presents components of lease cost:
Components of Net Lease Cost
| dollars in millions | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||
| Classification | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||
Operating lease cost | Occupancy expense | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Finance lease ROU asset amortization | Equipment expense | ||||||||||||||||||||||||||||||||||
| Interest on lease liabilities | Interest expense - other borrowings | ||||||||||||||||||||||||||||||||||
Variable lease cost (1) | Occupancy expense | ||||||||||||||||||||||||||||||||||
| Sublease income | Occupancy expense | ( | ( | ( | ( | ||||||||||||||||||||||||||||||
Net lease cost (1) | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
(1) Includes short-term lease cost.
Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term.
For finance leases, the right of use (“ROU”) asset is amortized straight-line over the lease term as equipment expense and interest on the lease liability is recognized separately.
Variable lease cost includes common area maintenance, property taxes, utilities, and other operating expenses related to leased premises recognized in the period in which the expense was incurred. Certain of our lease agreements also include rental payments adjusted periodically for inflation. While lease liabilities are not remeasured because of these changes, these adjustments are treated as variable lease costs and recognized in the period in which the expense is incurred.
Sublease income results from leasing excess building space that BancShares is no longer utilizing under operating leases, which have remaining lease terms of up to 11 years.
31
The following table presents supplemental cash flow information related to leases:
Supplemental Cash Flow Information
| dollars in millions | Six Months Ended June 30, | ||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||
| Operating cash flows from operating leases | $ | $ | |||||||||||||||
| Operating cash flows from finance leases | |||||||||||||||||
| Financing cash flows from finance leases | |||||||||||||||||
| ROU assets obtained in exchange for new operating lease liabilities | |||||||||||||||||
| ROU assets obtained in exchange for new finance lease liabilities | |||||||||||||||||
Lessor
BancShares leases equipment to commercial end-users under operating lease and finance lease arrangements. The majority of operating lease equipment is long-lived rail equipment, which is typically leased several times over its life. We also lease technology and office equipment, and large and small industrial, medical, and transportation equipment under both operating leases and finance leases.
Our Rail operating leases typically do not include purchase options. Many of our finance leases, and other equipment operating leases, offer the lessee the option to purchase the equipment at fair market value or for a nominal fixed purchase option. Many of the leases that do not have a nominal purchase option include renewal provisions resulting in some leases continuing beyond the initial contractual term. Our leases typically do not include early termination options. Continued rent payments are due if leased equipment is not returned at the end of the lease.
The table that follows presents lease income related to BancShares’ operating and finance leases:
Lease Income
| dollars in millions | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||
| Lease income – operating leases | $ | $ | $ | $ | |||||||||||||||||||||||||
Variable lease income – operating leases (1) | |||||||||||||||||||||||||||||
| Rental income on operating leases | |||||||||||||||||||||||||||||
| Interest income – sales type and direct financing leases | |||||||||||||||||||||||||||||
Variable lease income included in other noninterest income (2) | |||||||||||||||||||||||||||||
| Interest income – leveraged leases | |||||||||||||||||||||||||||||
| Total lease income | $ | $ | $ | $ | |||||||||||||||||||||||||
(1) Primarily includes per diem railcar operating lease rental income earned on a time or mileage usage basis.
Goodwill
BancShares had goodwill of $346 no
Core Deposit Intangibles
Core deposit intangibles represent the estimated fair value of core deposits and other customer relationships acquired. Core deposit intangibles are being amortized over their estimated useful lives. The following tables summarize the activity for core deposit intangibles:
Core Deposit Intangibles
| Six Months Ended June 30, | |||||||||||||||||
| dollars in millions | 2025 | ||||||||||||||||
| Balance at beginning of period, net of accumulated amortization | $ | ||||||||||||||||
| Less: amortization for the period | |||||||||||||||||
| Balance at end of period, net of accumulated amortization | $ | ||||||||||||||||
32
The following table summarizes the accumulated amortization balance for core deposit intangibles:
Core Deposit Intangible Accumulated Amortization
| dollars in millions | June 30, 2025 | December 31, 2024 | |||||||||
| Gross balance | $ | $ | |||||||||
| Less: accumulated amortization | |||||||||||
| Balance, net of accumulated amortization | $ | $ | |||||||||
The following table summarizes the expected amortization expense as of June 30, 2025 in subsequent periods for core deposit intangibles:
Core Deposit Intangible Expected Amortization
| dollars in millions | |||||
| Remainder 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Balance, net of accumulated amortization | $ | ||||
NOTE 8 — VARIABLE INTEREST ENTITIES
Unconsolidated VIEs
Unconsolidated VIEs include limited partnership interests and joint ventures where BancShares’ involvement is limited to an investor interest and BancShares does not have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance or obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.
The table below provides a summary of the assets and liabilities included on the Consolidated Balance Sheets associated with unconsolidated VIEs. The table also presents our maximum exposure to loss which consists of outstanding book basis and unfunded commitments for future investments, and represents potential losses that would be incurred under hypothetical circumstances, such that the value of BancShares’ interests and any associated collateral declines to zero and assuming no recovery. BancShares believes the possibility is remote under this hypothetical scenario; accordingly, this disclosure is not an indication of expected loss.
Unconsolidated VIEs Carrying Value
| dollars in millions | June 30, 2025 | December 31, 2024 | |||||||||
| Affordable housing tax credit investments | $ | $ | |||||||||
| Other tax credit equity investments | |||||||||||
| Total tax credit equity investments | $ | $ | |||||||||
| Other unconsolidated investments | |||||||||||
Total affordable housing tax credit and other unconsolidated investments (maximum loss exposure) (1) | $ | $ | |||||||||
Liabilities for commitments to fund tax credit investments (2) | $ | $ | |||||||||
(1) Included in other assets.
(2) Represents commitments to invest in qualified affordable housing investments and other investments qualifying for community reinvestment tax credits. These commitments are payable on demand and included in other liabilities.
We have investments in qualified affordable housing projects, primarily to support our Community Reinvestment Act (“CRA”) initiatives and obtain tax credits. These investments are accounted for using the PAM and provide tax benefits in the form of tax deductions from operating losses and tax credits. Under the PAM, the initial cost of the investment is amortized in proportion to the tax credits and other tax benefits received, and the net investment performance is recognized on the Consolidated Statements of Income as a component of income tax expense.
33
The table below summarizes the amortization of our affordable housing tax credit investments and the related tax credits and other tax benefits that are recognized in income tax expense on the Consolidated Statements of Income.
Tax Credit Investments Recognized in Income Tax Expense
| dollars in millions | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||
Amortization of affordable housing tax credit investments (1) | $ | $ | $ | $ | |||||||||||||||||||||||||
| Tax credits from affordable housing tax credit investments | ( | ( | ( | ( | |||||||||||||||||||||||||
| Other tax benefits from affordable housing tax credit investments | ( | ( | ( | ( | |||||||||||||||||||||||||
Net income tax benefit from affordable housing tax credit investments (2) | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||
(1) Amortization is included in depreciation, amortization, and accretion, net as an adjustment to reconcile net income to net cash provided by operating activities on the Consolidated Statements of Cash Flows.
NOTE 9 — BORROWINGS
Short-term Borrowings
Securities Sold under Agreements to Repurchase
BancShares held $471 million and $367 million at June 30, 2025 and December 31, 2024, respectively, of securities sold under agreements to repurchase that have overnight contractual maturities and are collateralized by government agency securities. The weighted average interest rate for securities sold under agreements to repurchase was 0.52 % and 0.59 % at June 30, 2025 and December 31, 2024, respectively.
BancShares utilizes securities sold under agreements to repurchase to facilitate the needs for collateralization of commercial customers and secure wholesale funding needs. Repurchase agreements are transactions whereby BancShares offers to sell to a counterparty an undivided interest in an eligible security at an agreed upon purchase price, and which obligates BancShares to repurchase the security at an agreed upon date, repurchase price and interest rate. These agreements are recorded at the amount of cash received in connection with the transactions and are reflected as securities sold under customer repurchase agreements.
BancShares monitors collateral levels on a continuous basis and maintains records of each transaction specifically describing the applicable security and the counterparty’s fractional interest in that security, and segregates the security from general assets in accordance with regulations governing custodial holdings of securities. The primary risk with repurchase agreements is market risk associated with the investments securing the transactions, as additional collateral may be required based on fair value changes of the underlying investments. Securities pledged as collateral under repurchase agreements are maintained with safekeeping agents. The carrying value of investment securities pledged as collateral under repurchase agreements was $553 million and $435 million at June 30, 2025 and December 31, 2024, respectively.
34
Long-term Borrowings
On March 12, 2025, the Parent Company issued and sold $500 million aggregate principal amount of its 5.231 % Fixed-to-Floating Rate Senior Notes due in 2031 and $750 million aggregate principal amount of its 6.254 % Fixed-to-Fixed Rate Subordinated Notes due in 2040 in a public offering. On June 15, 2025, the Parent Company redeemed all $350 million aggregate principal amount of its 3.375 % Fixed-to-Floating Rate Subordinated Notes due in 2030.
The following table presents long-term borrowings, net of the respective unamortized purchase accounting adjustments and issuance costs:
Long-term Borrowings
| dollars in millions | Maturity | June 30, 2025 | December 31, 2024 | ||||||||||||||
| Parent Company: | |||||||||||||||||
| Senior: | |||||||||||||||||
Fixed-to-Floating Senior Notes at | March 2031 | $ | $ | ||||||||||||||
| Subordinated: | |||||||||||||||||
Fixed-to-Floating Subordinated Notes at | March 2030 | ||||||||||||||||
Fixed-to-Fixed Subordinated Notes at | March 2040 | ||||||||||||||||
| Subsidiaries: | |||||||||||||||||
| Senior: | |||||||||||||||||
Fixed Senior Unsecured Notes at | April 2036 | ||||||||||||||||
| Subordinated: | |||||||||||||||||
Fixed Subordinated Notes at | March 2028 | ||||||||||||||||
| Secured: | |||||||||||||||||
Purchase Money Note to FDIC fixed at | March 2028 | ||||||||||||||||
| Capital lease obligations | Maturities through May 2057 | ||||||||||||||||
| Total long-term borrowings | $ | $ | |||||||||||||||
(1) The fixed rate period will end March 12, 2030, and the notes will thereafter bear a floating interest rate equal to a benchmark rate based on the Compounded Secured Overnight Financing Rate (“SOFR”) Index Rate plus 141 basis points (“bps”) per annum until the maturity date (or date of earlier redemption).
(2) The fixed rate period ended on March 15, 2025, and the notes converted to a floating interest rate equal to Three-Month Term SOFR plus 246.5 bps per annum. The notes included a callable feature and were redeemed on June 15, 2025.
(3) The interest rate will reset on March 12, 2035, and the notes will thereafter bear a fixed interest rate equal to the Five-year U.S. Treasury Rate as of the day falling two business days prior to the notes reset date plus 197 bps per annum until the maturity date (or date of earlier redemption).
(4) Refer to Note 2—Business Combinations and Note 4—Loans and Leases.
Pledged Assets
NOTE 10 — DERIVATIVE FINANCIAL INSTRUMENTS
Our derivatives designated as hedging instruments include interest rate swap contracts utilized to manage our interest rate exposure for items on our Consolidated Balance Sheets. This includes floating-rate loan portfolio cash flow hedges and fair value hedges of our fixed-rate borrowings and deposits.
Our derivatives not designated as hedging instruments mainly include interest rate and foreign exchange contracts that our customers utilized for their risk management needs. We typically manage our exposure to these customer derivatives by entering into offsetting or “back-to-back” interest rate and foreign exchange contracts with third-party dealers.
Derivative instruments that are cleared through certain central counterparty clearing houses are settled-to-market and reported net of collateral positions.
Refer to Note 11—Fair Value for further information on derivatives.
35
The following table presents notional amounts and fair values of derivative financial instruments:
Notional Amount and Fair Value of Derivative Financial Instruments
| dollars in millions | June 30, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||
| Notional Amount | Asset Fair Value | Liability Fair Value | Notional Amount | Asset Fair Value | Liability Fair Value | ||||||||||||||||||||||||||||||
| Derivatives designated as hedging instruments (Qualifying hedges) | |||||||||||||||||||||||||||||||||||
| Fair Value Hedges | |||||||||||||||||||||||||||||||||||
| Interest rate contracts hedging time deposits | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Interest rate contracts hedging long-term borrowings | |||||||||||||||||||||||||||||||||||
Total fair value hedges (1) (2) | |||||||||||||||||||||||||||||||||||
| Cash Flow Hedges | |||||||||||||||||||||||||||||||||||
Interest rate contracts hedging loans (1) (2) | |||||||||||||||||||||||||||||||||||
| Total derivatives designated as hedging instruments | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Derivatives not designated as hedging instruments (Non-qualifying hedges) | |||||||||||||||||||||||||||||||||||
Interest rate contracts (1) (2) | $ | $ | $ | ( | $ | $ | $ | ( | |||||||||||||||||||||||||||
Foreign exchange contracts (3) | ( | ( | |||||||||||||||||||||||||||||||||
Other contracts (4) | ( | ( | |||||||||||||||||||||||||||||||||
| Total derivatives not designated as hedging instruments | $ | $ | $ | ( | $ | $ | $ | ( | |||||||||||||||||||||||||||
| Gross derivatives fair values presented in the Consolidated Balance Sheets | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||
| Less: gross amounts offset in the Consolidated Balance Sheets | |||||||||||||||||||||||||||||||||||
| Net amount presented in other assets and other liabilities in the Consolidated Balance Sheets | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||
(1) Fair value balances include accrued interest.
(2) BancShares accounts for swap contracts cleared by the Chicago Mercantile Exchange and LCH Clearnet as “settled-to-market.” As a result, the derivative asset and liability fair values in the table above are presented net of the variation margin payments. Refer to the table below for more information.
(3) The foreign exchange contracts exclude foreign exchange spot contracts. The notional and net fair value amounts of these contracts were $300 million and $0 million, respectively, as of June 30, 2025, and $177 million and $0 million, respectively, as of December 31, 2024.
(4) Other derivative contracts not designated as hedging instruments include risk participation agreements and equity warrants.
The following table presents the impact of variation margin netting (form of collateral payment when the underlying fair value changes) on derivative assets and liabilities:
Variation Margin Payments
| dollars in millions | June 30, 2025 | December 31, 2024 | |||||||||||||||||||||
| Asset Fair Value | Liability Fair Value | Asset Fair Value | Liability Fair Value | ||||||||||||||||||||
| Derivatives designated as hedging instruments (Qualifying hedges) | |||||||||||||||||||||||
| Gross fair value | $ | $ | $ | $ | |||||||||||||||||||
| Cleared trades, variation margin netting | ( | ( | |||||||||||||||||||||
| Total derivatives designated as hedging instruments | $ | $ | $ | $ | |||||||||||||||||||
| Derivatives not designated as hedging instruments (Non-qualifying hedges) | |||||||||||||||||||||||
| Gross fair value | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Cleared trades, variation margin netting | ( | ( | |||||||||||||||||||||
| Total derivatives not designated as hedging instruments | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Gross derivatives fair values presented in the Consolidated Balance Sheets | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Amounts subject to master netting agreements (1) | ( | ( | |||||||||||||||||||||
Cash collateral pledged (received) subject to master netting agreements (2) | ( | ( | |||||||||||||||||||||
| Total net derivative fair value | $ | $ | ( | $ | $ | ( | |||||||||||||||||
(1) BancShares’ derivative transactions are governed by International Swaps and Derivatives Association (“ISDA”) agreements that allow for net settlements of certain payments as well as offsetting of all contracts with a given counterparty in the event of bankruptcy or default of one of the two parties to the transaction. BancShares believes its ISDA agreements meet the definition of a master netting arrangement or similar agreement for purposes of the above disclosure.
(2) In conjunction with the ISDA agreements described above, BancShares has entered into collateral arrangements with its counterparties, which provide for the exchange of cash depending on the change in the market valuation of the derivative contracts outstanding. Such collateral is available to be applied in settlement of the net balances upon an event of default of one of the counterparties. Collateral pledged or received is included in other assets or deposits, respectively.
36
Fair Value Hedges
The following table presents the impact of fair value hedges recorded in interest expense on the Consolidated Statements of Income:
Recognized Gains (Losses) on Fair Value Hedges
| dollars in millions | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||
| Interest Expense | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||
| Gain (loss) on hedging instruments - time deposits | Deposits | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||
| Loss on hedging instruments - borrowings | Borrowings | ( | ( | ||||||||||||||||||||||||||||||||
| Gain (loss) on hedged item - time deposits | Deposits | ||||||||||||||||||||||||||||||||||
| Gain on hedged item - borrowings | Borrowings | ||||||||||||||||||||||||||||||||||
| Net gain on fair value hedges | Total interest expense | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||
The following table presents the carrying value of hedged items and associated cumulative hedging adjustment related to fair value hedges:
Carrying Value of Hedged Items
| dollars in millions | Cumulative Fair Value Hedging Adjustment Included in the Carrying Value of Hedged Items | ||||||||||||||||
| Carrying Value of Hedged Items | Currently Designated | No Longer Designated | |||||||||||||||
| June 30, 2025 | |||||||||||||||||
| Long-term borrowings | $ | $ | $ | ||||||||||||||
| Deposits | |||||||||||||||||
| December 31, 2024 | |||||||||||||||||
| Long-term borrowings | |||||||||||||||||
| Deposits | |||||||||||||||||
Cash Flow Hedges
The following table presents the pretax unrealized gain on hedging instruments in cash flow hedges, which are reported in other comprehensive income, and the pretax amount reclassified from accumulated other comprehensive income (“AOCI”) to earnings:
Unrealized Gain on Cash Flow Hedges
| dollars in millions | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||
| Other comprehensive income on cash flow hedge derivatives before reclassifications | $ | $ | $ | $ | |||||||||||||||||||||||||
| Amounts reclassified from AOCI to earnings | ( | ( | |||||||||||||||||||||||||||
| Other comprehensive income on cash flow hedge derivatives | $ | ( | $ | $ | $ | ||||||||||||||||||||||||
The following table presents other information for cash flow hedges:
Other Information for Cash Flow Hedges
| dollars in millions | June 30, 2025 | December 31, 2024 | |||||||||||||||
| Unrealized gain on cash flow hedge derivatives reported in AOCI, net of income taxes | $ | $ | |||||||||||||||
Estimate to be reclassified from AOCI to earnings during the next 12 months, net of income taxes (1) | $ | $ | |||||||||||||||
| Maximum number of months over which forecasted cash flows are hedged | |||||||||||||||||
37
Non-Qualifying Hedges
The following table presents gains on non-qualifying hedges recognized on the Consolidated Statements of Income:
Gains (Losses) on Non-Qualifying Hedges
| dollars in millions | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||
| Amounts Recognized | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||
| Interest rate contracts | Other noninterest income | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Foreign currency forward contracts (1) | Other noninterest income | ( | ( | ||||||||||||||||||||||||||||||||
| Other contracts | Other noninterest income | ( | |||||||||||||||||||||||||||||||||
| Total non-qualifying hedges - income statement impact | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||
NOTE 11 — FAIR VALUE
Fair Value Hierarchy
BancShares measures certain financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP also establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels.
Assets and liabilities are recorded at fair value according to a fair value hierarchy comprised of three levels. The levels are based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. The level within the fair value hierarchy for an asset or liability is based on the lowest level of input significant to the fair value measurement with Level 1 inputs considered highest and Level 3 inputs considered lowest. A brief description of each input level follows:
•Level 1 inputs are quoted prices in active markets for identical assets and liabilities.
•Level 2 inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs other than quoted prices observable for the assets or liabilities and market corroborated inputs.
•Level 3 inputs are unobservable inputs for the asset or liability. These unobservable inputs and assumptions reflect the estimates market participants would use in pricing the asset or liability.
38
Assets and Liabilities Measured at Fair Value - Recurring Basis
The following table presents assets and liabilities measured at fair value on a recurring basis:
Assets and Liabilities Measured at Fair Value - Recurring Basis
| dollars in millions | June 30, 2025 | |||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Investment securities available for sale | ||||||||||||||||||||||||||
| U.S. Treasury | $ | $ | $ | $ | ||||||||||||||||||||||
| Government agency | ||||||||||||||||||||||||||
| Residential mortgage-backed securities | ||||||||||||||||||||||||||
| Commercial mortgage-backed securities | ||||||||||||||||||||||||||
| Corporate bonds | ||||||||||||||||||||||||||
| Municipal bonds | ||||||||||||||||||||||||||
| Total investment securities available for sale | $ | $ | $ | $ | ||||||||||||||||||||||
| Marketable equity securities | ||||||||||||||||||||||||||
| Loans held for sale | ||||||||||||||||||||||||||
| Loans | ||||||||||||||||||||||||||
Derivative assets (1) | ||||||||||||||||||||||||||
| Total qualifying hedge assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Interest rate contracts — non-qualifying hedges | $ | $ | $ | $ | ||||||||||||||||||||||
| Foreign exchange contracts — non-qualifying hedges | ||||||||||||||||||||||||||
| Other derivative contracts — non-qualifying hedges | ||||||||||||||||||||||||||
| Total non-qualifying hedge assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Total derivative assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
Derivative liabilities (1) | ||||||||||||||||||||||||||
| Interest rate contracts — qualifying hedges | $ | $ | $ | $ | ||||||||||||||||||||||
| Interest rate contracts — non-qualifying hedges | $ | $ | $ | $ | ||||||||||||||||||||||
| Foreign exchange contracts — non-qualifying hedges | ||||||||||||||||||||||||||
| Other derivative contracts — non-qualifying hedges | ||||||||||||||||||||||||||
| Total non-qualifying hedge liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
| Total derivative liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
(1) Derivative fair values include accrued interest. | ||||||||||||||||||||||||||
39
| dollars in millions | December 31, 2024 | |||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Investment securities available for sale | ||||||||||||||||||||||||||
| U.S. Treasury | $ | $ | $ | $ | ||||||||||||||||||||||
| Government agency | ||||||||||||||||||||||||||
| Residential mortgage-backed securities | ||||||||||||||||||||||||||
| Commercial mortgage-backed securities | ||||||||||||||||||||||||||
| Corporate bonds | ||||||||||||||||||||||||||
| Municipal bonds | ||||||||||||||||||||||||||
| Total investment securities available for sale | $ | $ | $ | $ | ||||||||||||||||||||||
| Marketable equity securities | ||||||||||||||||||||||||||
| Loans held for sale | ||||||||||||||||||||||||||
Derivative assets (1) | ||||||||||||||||||||||||||
| Total qualifying hedge assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Interest rate contracts — non-qualifying hedges | $ | $ | $ | $ | ||||||||||||||||||||||
| Foreign exchange contracts — non-qualifying hedges | ||||||||||||||||||||||||||
| Other derivative contracts — non-qualifying hedges | ||||||||||||||||||||||||||
| Total non-qualifying hedge assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Total derivative assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
Derivative liabilities (1) | ||||||||||||||||||||||||||
| Interest rate contracts — qualifying hedges | $ | $ | $ | $ | ||||||||||||||||||||||
| Interest rate contracts — non-qualifying hedges | $ | $ | $ | $ | ||||||||||||||||||||||
| Foreign exchange contracts — non-qualifying hedges | ||||||||||||||||||||||||||
| Other derivative contracts — non-qualifying hedges | ||||||||||||||||||||||||||
| Total non-qualifying hedge liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
| Total derivative liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
The methods and assumptions used to estimate the fair value of each class of financial instruments measured at fair value on a recurring basis are as follows:
Investment securities available for sale. The fair value of U.S. Treasury, government agency, mortgage-backed securities, municipal bonds, and a portion of the corporate bonds are generally estimated using a third-party pricing service. To obtain an understanding of the processes and methodologies used, management reviews correspondence from the third-party pricing service. Management also performs a price variance analysis process to corroborate the reasonableness of prices. The third-party provider evaluates securities based on comparable investments with trades and market data and will utilize pricing models which use a variety of inputs, such as benchmark yields, reported trades, issuer spreads, benchmark securities, bids and offers as needed. These securities are generally classified as Level 2. The remaining corporate bonds held are generally measured at fair value based on indicative bids from broker-dealers using inputs that are not directly observable. These securities are classified as Level 3.
Marketable equity securities. Equity securities are measured at fair value using observable closing prices. The valuation also considers the amount of market activity by examining trade volume. Equity securities are classified as Level 1 if they are traded in an active market and as Level 2 if the observable closing price is from a less than active market.
Loans and Loans held for sale. Certain residential real estate loans originated for sale to investors are carried at fair value based on quoted market prices for similar types of loans, which are considered Level 2 inputs. In instances when loans are not sold and subsequently transferred to portfolio, accounting at fair value is continued.
Derivative Assets and Liabilities. Derivatives were valued using models that incorporate inputs depending on the type of derivative. Other than the fair value of equity warrants and credit derivatives, which were estimated using Level 3 inputs, most derivative instruments were valued using Level 2 inputs based on observed pricing for similar assets and liabilities and model-based valuation techniques for which all significant assumptions are observable in the market. Refer to Note 10—Derivative Financial Instruments for notional amounts and fair values.
40
The following tables summarize information about significant unobservable inputs related to BancShares’ categories of Level 3 financial assets and liabilities measured on a recurring basis:
Quantitative Information About Level 3 Fair Value Measurements - Recurring Basis
| dollars in millions | ||||||||||||||||||||||||||||||||||||||
| Financial Instrument | Estimated Fair Value | Valuation Technique | Significant Unobservable Inputs | |||||||||||||||||||||||||||||||||||
| June 30, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||
| Corporate bonds | $ | $ | Indicative bid provided by broker | Multiple factors, including but not limited to, current operations, financial condition, cash flows, and recently executed financing transactions related to the issuer. | ||||||||||||||||||||||||||||||||||
| Interest rate & other derivative — non-qualifying hedges | $ | $ | Internal valuation model | Multiple factors, including but not limited to, private company valuation, illiquidity discount, and estimated life of the instrument. | ||||||||||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||||||||
| Interest rate & other derivative — non-qualifying hedges | $ | $ | Internal valuation model | Not material | ||||||||||||||||||||||||||||||||||
The following table summarizes the changes in estimated fair value for all assets and liabilities measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3):
Changes in Estimated Fair Value of Level 3 Financial Assets and Liabilities - Recurring Basis
| dollars in millions | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |||||||||||||||||||||||||||||||||
| Corporate Bonds | Other Derivative Assets — Non-Qualifying | Other Derivative Liabilities — Non-Qualifying | Corporate Bonds | Other Derivative Assets — Non-Qualifying | Other Derivative Liabilities — Non-Qualifying | ||||||||||||||||||||||||||||||
| Beginning balance | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Purchases | |||||||||||||||||||||||||||||||||||
| Changes in fair value included in earnings | ( | ||||||||||||||||||||||||||||||||||
| Changes in fair value included in comprehensive income | |||||||||||||||||||||||||||||||||||
| Maturity and settlements | ( | ( | |||||||||||||||||||||||||||||||||
| Ending balance | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Fair Value Option
The following table summarizes the difference between the aggregate fair value and the unpaid principal balance (“UPB”) for residential mortgage loans originated for sale measured at fair value:
Aggregate Fair Value and UPB - Residential Mortgage Loans
| dollars in millions | June 30, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||
| Fair Value | Unpaid Principal Balance | Difference | Fair Value | Unpaid Principal Balance | Difference | ||||||||||||||||||||||||||||||
Originated loans held for sale (1) | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
(1) Originated loans held for sale include loans held for sale and loans originated for sale but transferred to portfolio and held for investment.
BancShares has elected the fair value option for residential mortgage loans originated for sale. This election reduces certain timing differences in the Consolidated Statements of Income and better aligns with the management of the portfolio from a business perspective. The changes in fair value that were recorded as a component of other noninterest income were insignificant for the three and six months ended June 30, 2025 and 2024. Interest earned on originated loans held for sale is recorded within interest income on loans and leases in the Consolidated Statements of Income.
41
Assets Measured at Estimated Fair Value on a Non-recurring Basis
Certain assets or liabilities are required to be measured at estimated fair value on a non-recurring basis subsequent to initial recognition. Generally, these adjustments are the result of lower of cost or fair value (“LOCOM”) or other impairment accounting. The following table presents carrying value of assets measured at estimated fair value on a non-recurring basis for which gains and losses have been recorded in the periods. The gains and losses reflect amounts recorded for the respective periods, regardless of whether the asset is still held at period end.
Assets Measured at Fair Value - Non-recurring Basis
| dollars in millions | Fair Value Measurements | ||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | Total Gains (Losses) | |||||||||||||||||||||||||
| June 30, 2025 | |||||||||||||||||||||||||||||
| Assets held for sale - loans | $ | $ | $ | $ | $ | ( | |||||||||||||||||||||||
| Loans - collateral dependent loans | ( | ||||||||||||||||||||||||||||
| Other real estate owned | ( | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ( | |||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||
| Assets held for sale - loans | $ | $ | $ | $ | $ | ( | |||||||||||||||||||||||
| Loans - collateral dependent loans | ( | ||||||||||||||||||||||||||||
| Other real estate owned | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ( | |||||||||||||||||||||||
Certain other assets are adjusted to their fair value on a non-recurring basis, including certain loans, OREO, and goodwill, which are periodically tested for impairment. Most loans held for investment, deposits, and borrowings are not reported at fair value.
The methods and assumptions used to estimate the fair value of each class of financial instruments measured at fair value on a non-recurring basis are as follows:
Assets held for sale - loans. Loans held for investment subsequently transferred to held for sale are carried at the LOCOM. When available, the fair values for the transferred loans are based on quoted prices from the purchase commitments for the individual loans being transferred and are considered Level 1 inputs. The fair value of Level 2 assets was primarily estimated based on prices of recent trades of similar assets. For other loans held for sale, the fair value of Level 3 assets was primarily measured under the income approach using the discounted cash flow model based on Level 3 inputs including discount rate or the price of committed trades. Gains and losses are recorded in noninterest income.
Loans - collateral dependent loans. The population of Level 3 loans measured at fair value that are experiencing financial difficulty and measured on a non-recurring basis includes collateral-dependent loans evaluated individually. Collateral values are determined using appraisals or other third-party value estimates of the subject property discounted based on estimated selling costs, and adjustments for other external factors that may impact the marketability of the collateral. Gains and losses generally reflect the required net provision and charge-offs specific to the loans included in the population for the respective periods and are recorded in the provision for credit losses.
Other real estate owned. OREO is carried at LOCOM. OREO asset valuations are determined by using appraisals or other third-party value estimates of the subject property with discounts, generally between 7 % and 10 %, applied for estimated selling costs and other external factors that may impact the marketability of the property. At June 30, 2025 and December 31, 2024, the weighted average discount applied was 9.46 % and 9.45 %, respectively. Changes to the value of the assets between scheduled valuation dates are monitored through continued communication with brokers and monthly reviews by the asset manager assigned to each asset. If there are any significant changes in the market or the subject property, valuations are adjusted or new appraisals are ordered to ensure the reported values reflect the most current information.
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Financial Instruments Fair Value
The table below presents the carrying values and estimated fair values for financial instruments, excluding leases and certain other assets and liabilities for which these disclosures are not required.
Carrying Values and Fair Values of Financial Assets and Liabilities
| dollars in millions | June 30, 2025 | ||||||||||||||||||||||||||||
| Estimated Fair Value | |||||||||||||||||||||||||||||
| Carrying Value | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
| Financial Assets | |||||||||||||||||||||||||||||
| Cash and due from banks | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Interest-earning deposits at banks | |||||||||||||||||||||||||||||
| Securities purchased under agreements to resell | |||||||||||||||||||||||||||||
| Investment in marketable equity securities | |||||||||||||||||||||||||||||
| Investment securities available for sale | |||||||||||||||||||||||||||||
| Investment securities held to maturity | |||||||||||||||||||||||||||||
| Loans held for sale | |||||||||||||||||||||||||||||
| Net loans | |||||||||||||||||||||||||||||
| Accrued interest receivable | |||||||||||||||||||||||||||||
| Federal Home Loan Bank stock | |||||||||||||||||||||||||||||
| Mortgage servicing rights | |||||||||||||||||||||||||||||
| Derivative assets - non-qualifying hedges | |||||||||||||||||||||||||||||
| Financial Liabilities | |||||||||||||||||||||||||||||
| Deposits with no stated maturity | |||||||||||||||||||||||||||||
| Time deposits | |||||||||||||||||||||||||||||
| Credit balances of factoring clients | |||||||||||||||||||||||||||||
| Securities sold under customer repurchase agreements | |||||||||||||||||||||||||||||
| Long-term borrowings | |||||||||||||||||||||||||||||
| Accrued interest payable | |||||||||||||||||||||||||||||
| Derivative liabilities - non-qualifying hedges | |||||||||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||
| Estimated Fair Value | |||||||||||||||||||||||||||||
| Carrying Value | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
| Financial Assets | |||||||||||||||||||||||||||||
| Cash and due from banks | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Interest-earning deposits at banks | |||||||||||||||||||||||||||||
| Securities purchased under agreements to resell | |||||||||||||||||||||||||||||
| Investment in marketable equity securities | |||||||||||||||||||||||||||||
| Investment securities available for sale | |||||||||||||||||||||||||||||
| Investment securities held to maturity | |||||||||||||||||||||||||||||
| Loans held for sale | |||||||||||||||||||||||||||||
| Net loans | |||||||||||||||||||||||||||||
| Accrued interest receivable | |||||||||||||||||||||||||||||
| Federal Home Loan Bank stock | |||||||||||||||||||||||||||||
| Mortgage servicing rights | |||||||||||||||||||||||||||||
| Derivative assets - qualifying hedges | |||||||||||||||||||||||||||||
| Derivative assets - non-qualifying hedges | |||||||||||||||||||||||||||||
| Financial Liabilities | |||||||||||||||||||||||||||||
| Deposits with no stated maturity | |||||||||||||||||||||||||||||
| Time deposits | |||||||||||||||||||||||||||||
| Credit balances of factoring clients | |||||||||||||||||||||||||||||
| Securities sold under customer repurchase agreements | |||||||||||||||||||||||||||||
| Long-term borrowings | |||||||||||||||||||||||||||||
| Accrued interest payable | |||||||||||||||||||||||||||||
| Derivative liabilities - non-qualifying hedges | |||||||||||||||||||||||||||||
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The methods and assumptions used to estimate the fair value of each class of financial instruments not discussed elsewhere are as follows:
Interest-earning Deposits at Banks. The carrying value of interest-earning deposits at banks approximates its fair value due to its short-term nature and is classified on the fair value hierarchy as Level 1. The balances at June 30, 2025 and December 31, 2024 included $212 million and $211 million, respectively, as a required minimum deposit under the Purchase Money Note.
Net loans. The carrying value of net loans is net of the ALLL. Loans are generally valued by discounting expected cash flows using market inputs with adjustments based on cohort level assumptions for certain loan types as well as internally developed estimates at a business segment level. Due to the significance of the unobservable market inputs and assumptions, as well as the absence of a liquid secondary market for most loans, these loans are classified as Level 3. Certain loans are measured based on observable market prices sourced from external data providers and classified as Level 2. Nonaccrual loans are written down and reported at their estimated recovery value, which approximates their fair value, and classified as Level 3.
Securities Purchased Under Agreements to Resell. The fair value of securities purchased under agreements to resell equal the carrying value due to the short term nature, generally overnight, and therefore present an insignificant risk of change in fair value due to changes in market interest rate, and classified as Level 2.
Investment securities held to maturity. BancShares’ portfolio of debt securities held to maturity consists of mortgage-backed securities issued by government agencies and government sponsored entities, U.S. Treasury notes, unsecured bonds issued by government agencies and government sponsored entities, and securities issued by the Supranational Entities & Multilateral Development Banks. We primarily use prices obtained from pricing services to determine the fair value of securities, which are Level 2 inputs.
FHLB stock. The carrying amount of FHLB stock is a reasonable estimate of fair value, as these securities are not readily marketable and are evaluated for impairment based on the ultimate recoverability of the par value. BancShares considers positive and negative evidence, including the profitability and asset quality of the issuer, dividend payment history and recent redemption experience, when determining the ultimate recoverability of the par value. BancShares investment in FHLB stock is ultimately recoverable at par. The inputs used in the fair value measurement for the FHLB stock are considered Level 2 inputs.
Mortgage servicing rights. The fair value of mortgage servicing rights (“MSRs”) is determined using a pooling methodology. Similar loans are pooled together and a model which relies on discount rates, estimates of prepayment rates and the weighted average cost to service the loans is used to determine the fair value. The inputs used in the fair value measurement for MSRs are considered Level 3 inputs.
Deposits. The estimated fair value of deposits with no stated maturity, such as demand deposit accounts, money market accounts, and savings accounts was the amount payable on demand at the reporting date. The fair value of time deposits was estimated based on a discounted cash flow technique using Level 2 inputs appropriate to the contractual maturity.
Credit balances of factoring clients. The impact of the time value of money from the unobservable discount rate for credit balances of factoring clients is inconsequential due to the short term nature of these balances, therefore, the fair value approximated carrying value, and the credit balances are classified as Level 3.
Short-term borrowed funds. The fair value of short-term borrowed funds, which includes repurchase agreements, approximates carrying value and are classified as Level 2.
Long-term borrowings. For certain long-term senior and subordinated unsecured borrowings, the fair values are sourced from a third-party pricing service. The fair values of other long-term borrowings are determined by discounting future cash flows using current interest rates for similar financial instruments. The inputs used in the fair value measurement for FHLB borrowings, senior and subordinated debentures, and other borrowings are classified as Level 2.
For all other financial assets and financial liabilities, the carrying value is a reasonable estimate of the fair value as of June 30, 2025 and December 31, 2024. The carrying value and fair value for these assets and liabilities are equivalent because they are relatively short-term in nature and there is no interest rate or credit risk that would cause the fair value to differ from the carrying value. Cash and due from banks is classified as Level 1. Accrued interest receivable and accrued interest payable are classified as Level 2.
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NOTE 12 — STOCKHOLDERS' EQUITY
A roll forward of common stock activity is presented in the following table:
Number of Shares of Common Stock
| June 30, 2025 | |||||||||||||||||||||||
| Common Stock Outstanding | |||||||||||||||||||||||
| Class A | Class B | ||||||||||||||||||||||
| Common stock - March 31, 2025 | |||||||||||||||||||||||
| Shares repurchased under authorized repurchase plan | ( | ||||||||||||||||||||||
| Common stock - June 30, 2025 | |||||||||||||||||||||||
| Common stock - December 31, 2024 | |||||||||||||||||||||||
| Shares purchased under authorized repurchase plan | ( | ||||||||||||||||||||||
| Common stock - June 30, 2025 | |||||||||||||||||||||||
Common Stock
The Parent Company has Class A common stock and Class B common stock, each with a par value of $1 one vote per share while Class B common stockholders have 16 votes per share.
Non-Cumulative Perpetual Preferred Stock
The following table summarizes BancShares’ non-cumulative perpetual preferred stock:
Preferred Stock
| dollars in millions, except per share and par value data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Issuance Date | Earliest Redemption Date | Par Value | Shares Authorized, Issued and Outstanding | Liquidation Preference Per Share | Total Liquidation Preference | Dividend | |||||||||||||||||||||||||||||||||||||||||||||||||
| Series A | March 12, 2020 | March 15, 2025 | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
Series B(1) | January 3, 2022 | January 4, 2027 | SOFR + | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series C | January 3, 2022 | January 4, 2027 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Upon conversion to SOFR in 2023, BancShares began paying a credit spread adjustment in addition to the stated dividend.
Dividends on BancShares Series A, B, and C preferred stock (together, “BancShares Preferred Stock”) will be paid when, as, and if declared by the Board of Directors of the Parent Company, or a duly authorized committee thereof, to the extent that the Parent Company has lawfully available funds to pay dividends. If declared, dividends with respect to the BancShares Preferred Stock will accrue and be payable quarterly in arrears on March 15, June 15, September 15, and December 15 of each year. Dividends on the BancShares Preferred Stock will not be cumulative. For further description of BancShares’ Preferred Stock, refer to Note 16—Stockholders’ Equity in the Notes to the Consolidated Financial Statements included in the 2024 Form 10-K.
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NOTE 13 — ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
The following table details the components of AOCI:
Components of Accumulated Other Comprehensive Loss
| dollars in millions | June 30, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||
| Pretax | Income Taxes | Net of Income Taxes | Pretax | Income Taxes | Net of Income Taxes | ||||||||||||||||||||||||||||||
| Unrealized loss on securities available for sale | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||
| Unrealized loss on securities available for sale transferred to held to maturity | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Defined benefit pension items | ( | ( | |||||||||||||||||||||||||||||||||
| Unrealized gain on cash flow hedge derivatives | ( | ( | |||||||||||||||||||||||||||||||||
| Total accumulated other comprehensive loss | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||
The following table details the changes in the components of AOCI, net of income taxes:
Changes in Accumulated Other Comprehensive (Loss) Income by Component
| dollars in millions | Unrealized loss on securities available for sale | Unrealized loss on securities available for sale transferred to held to maturity | Defined benefit pension items | Unrealized gain on cash flow hedge derivatives | Total accumulated other comprehensive loss | ||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | ( | $ | ( | $ | $ | $ | ( | |||||||||||||||||||||||||||
| AOCI activity before reclassifications | ( | ||||||||||||||||||||||||||||||||||
| Amounts reclassified from AOCI to earnings | ( | ( | |||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) for the period | ( | ||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | ( | $ | ( | $ | $ | $ | ( | |||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | ( | $ | ( | $ | $ | $ | ( | |||||||||||||||||||||||||||
| Other comprehensive loss (income) for the period | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | $ | ( | $ | ( | $ | $ | $ | ( | |||||||||||||||||||||||||||
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Other Comprehensive Income The amounts included in the Consolidated Statements of Comprehensive Income are net of income taxes. The following table presents the pretax and after tax components of other comprehensive income:
Other Comprehensive Income (Loss) by Component
| dollars in millions | Three Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||
| Pretax | Income Taxes | Net of Income Taxes | Pretax | Income Taxes | Net of Income Taxes | Income Statement Line Items | |||||||||||||||||||||||||||||||||||
| Unrealized loss on securities available for sale: | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) on securities available for sale | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||
| Defined benefit pension items: | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss for defined benefit pension items | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||
| Unrealized gain on cash flow hedge derivatives: | |||||||||||||||||||||||||||||||||||||||||
| AOCI activity before reclassifications | $ | $ | ( | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
| Amounts reclassified from AOCI to earnings | ( | Interest and fees on loans | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive (loss) income on cash flow hedge derivatives | $ | ( | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
| Total other comprehensive income (loss) | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||
| dollars in millions | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||
| Pretax | Income Taxes | Net of Income Taxes | Pretax | Income Taxes | Net of Income Taxes | Income Statement Line Items | |||||||||||||||||||||||||||||||||||
| Unrealized loss on securities available for sale: | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) on securities available for sale | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||
| Defined benefit pension items: | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss for defined benefit pension items | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||
| Unrealized gain on cash flow hedge derivatives: | |||||||||||||||||||||||||||||||||||||||||
| AOCI activity before reclassifications | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Amounts reclassified from AOCI to earnings | ( | ( | Interest and fees on loans | ||||||||||||||||||||||||||||||||||||||
| Other comprehensive income on cash flow hedge derivatives | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Total other comprehensive income (loss) | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||
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NOTE 14 — EARNINGS PER COMMON SHARE
The following table sets forth the computation of the basic and diluted earnings per common share:
Earnings per Common Share
dollars in millions, except per share data | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||||||||
| Preferred stock dividends | |||||||||||||||||||||||||||||
| Net income available to common stockholders | $ | $ | $ | $ | |||||||||||||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||||||||
| Basic shares outstanding | |||||||||||||||||||||||||||||
| Stock-based awards | |||||||||||||||||||||||||||||
| Diluted shares outstanding | |||||||||||||||||||||||||||||
| Earnings per common share | |||||||||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||||||||
NOTE 15 — INCOME TAXES
BancShares’ global effective income tax rates (“ETRs”) were 24.1 % and 27.8 % for the three months ended June 30, 2025 and 2024, respectively, and 24.9 % and 27.5 % for the six months ended June 30, 2025 and 2024, respectively. The decrease in the ETR for the three and six months ended June 30, 2025 compared to 2024 was mostly due to a reduction in the state and local income tax rate.
The quarterly income tax expense is based on a projection of BancShares’ annual ETR. This annual ETR is applied to the year-to-date consolidated pretax income to determine the interim provision for income taxes before discrete items. The ETR each period is also impacted by a number of factors, including the relative mix of domestic and international earnings, effects of changes in enacted tax laws, adjustments to the valuation allowances, and discrete items. The currently forecasted ETR may vary from the actual year-end 2025 ETR due to the changes in these factors.
On July 4, 2025, President Trump signed into law H.R. 1, referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA contains several provisions that impact corporate taxation. BancShares is in the process of evaluating the impact of the OBBBA on its financial statements.
Uncertain Tax Benefits
BancShares’ recognizes tax benefits when it is more likely than not that the position will prevail, based solely on the technical merits under the tax law of the relevant jurisdiction. BancShares will recognize the tax benefit if the position meets this recognition threshold determined based on the largest amount of the benefit that is more than likely to be realized.
Deferred Tax Assets and Valuation Adjustments
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NOTE 16 — EMPLOYEE BENEFIT PLANS
BancShares sponsors non-contributory defined benefit pension plans for its qualifying employees. The service cost component of net periodic benefit cost is included in salaries and wages, while all other non-service cost components are included in other noninterest expense.
The components of net periodic benefit cost are as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Service cost | $ | $ | $ | $ | |||||||||||||||||||
| Interest cost | |||||||||||||||||||||||
| Expected return on assets | ( | ( | ( | ( | |||||||||||||||||||
| Net periodic benefit | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
NOTE 17 — SEGMENT INFORMATION
Effective January 1, 2025, we made changes to the composition of our reportable segments as further discussed in Note 1—Significant Accounting Policies and Basis of Presentation, and the segment disclosures below for 2024 were recast to conform with those segment composition changes.
BancShares’ segments include the General Bank, the Commercial Bank, SVB Commercial, and Rail. All other financial information not included in the segments is reported in the Corporate section of the segment disclosures. We do not aggregate multiple operating segments into a reportable segment. Therefore, each of our operating segments are reportable segments.
Certain noninterest expenses are directly incurred by a segment, while others are not. Noninterest expenses not directly incurred by a segment are included in Corporate unless allocated to a segment (“Allocated Expenses”). Under our segment expense allocation methodology, Allocated Expenses increase noninterest expense of the applicable segment(s), with an offsetting decrease to Corporate noninterest expense. “All other noninterest expense” in the segment reporting tables below includes the effect of Allocated Expenses, resulting in a reduction to expense (or “Contra Expense”) for Corporate.
General Bank
The General Bank segment delivers products and services to consumers and businesses through our extensive network of branches and various digital channels. We offer a full suite of deposit products, loans (primarily residential mortgages and business and commercial loans), cash management, private banking and wealth management, payment services, and treasury services. We offer conforming and jumbo residential mortgage loans throughout the United States that are primarily originated through branches and retail referrals, employee referrals, internet leads, direct marketing and a correspondent lending channel, as well as through our private banking service. Private banking and wealth management offers a customized suite of products and services to individuals and institutional clients, as well as private equity and venture capital professionals and executive leaders of the innovation companies they support, and premium wine clients. The General Bank segment offers brokerage, investment advisory, private stock loans, other secured and unsecured lending products and vineyard development loans, as well as planning-based financial strategies, family office, financial planning, tax planning and trust services. The General Bank segment also includes a community association bank channel that supports deposit, cash management and lending to homeowner associations and property management companies.
Revenue is primarily generated from interest earned on loans. Noninterest income is primarily generated from fees for banking and advisory services, including lending-related fees, most of BancShares’ income related to deposit fees and service charges, cardholder services, along with essentially all of the wealth management services income. We primarily originate loans by utilizing our branch network and industry referrals, as well as direct digital marketing efforts. We derive our SBA loans through a network of SBA originators. We periodically purchase loans on a whole-loan basis. We also invest in community development that supports the construction of affordable housing in our communities in line with our CRA initiatives.
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Commercial Bank
The Commercial Bank segment provides a range of lending, leasing, capital markets, asset management, and other financial and advisory services, primarily to small and middle market companies in a wide range of industries, including energy, healthcare, technology media and telecommunications, asset-backed lending, capital finance, maritime, aerospace and defense, and sponsor finance. Loans offered are primarily senior secured loans collateralized by accounts receivable, inventory, machinery and equipment, transportation equipment, and/or intangibles, and are often used for working capital, plant expansion, acquisitions, or recapitalizations. These loans include revolving lines of credit and term loans and, depending on the nature of the collateral, may be referred to as collateral-backed loans, asset-based loans or cash flow loans. We provide senior secured loans to developers and other commercial real estate (“CRE”) professionals. Additionally, we provide small business loans and leases, including both capital and operating leases, through a highly automated credit approval, documentation and funding process.
We provide factoring, receivable management and secured financing to businesses that operate in several industries. These include apparel, textile, furniture, home furnishings, and consumer electronics. Factoring entails the assumption of credit risk with respect to trade accounts receivable arising from the sale of goods from our factoring clients to their customers that have been factored (i.e., sold or assigned to the factor). Our factoring clients, which are generally manufacturers or importers of goods, are the counterparties on factoring, financing or receivables purchasing agreements to sell trade receivables to us. Our factoring clients’ customers, which are generally retailers, are the account debtors and obligors on trade accounts receivable that have been factored.
Revenue is primarily generated from interest and fees on loans. Noninterest income is mostly generated from rental income on operating lease equipment, lending-related fees, including most of BancShares’ capital market fees, and other revenue from banking services. Rental income is generally influenced by the size of the operating lease portfolio. Noninterest income also includes all of the commissions earned on factoring-related activities. We derive most of our commercial lending business through direct marketing to borrowers, lessees, manufacturers, vendors, and distributors. We also utilize referrals as a source for commercial lending business. We may periodically buy participations or syndications of loans and lines of credit and purchase loans on a whole-loan basis.
Rental income and depreciation expense on operating lease equipment is related to small and large ticket equipment we own and lease to others. Operating lease equipment is subject to depreciation expense over the useful life of the small and large ticket equipment, which is generally 3 -10 years.
SVB Commercial
The SVB Commercial segment offers products and services to commercial clients and investors across stages, sectors and regions in the innovation ecosystem, as well as private equity and venture capital firms. The SVB Commercial segment provides solutions to the financial needs of commercial clients. Loan products consist of capital call lines of credit, investor dependent loans, and commercial and industrial loans made primarily to technology, life science and healthcare companies.
Revenue is primarily generated from interest earned on loans. Noninterest income is mostly generated from fees, including essentially all of client investment fees and most of the international fees, and other revenue from lending-related activities and banking services.
Deposit products include business and analysis checking accounts, money market accounts, multi-currency accounts, bank accounts, sweep accounts, and positive pay services. Services are provided through online and mobile banking platforms as well as branch locations.
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Rail
The Rail segment offers customized leasing and financing solutions on a fleet of railcars and locomotives to railroads and shippers throughout North America. Railcar types include covered hopper cars used to ship grain and agricultural products, plastic pellets, sand, and cement; tank cars for energy products and chemicals; gondolas for coal, steel coil and mill service products; open-top hopper cars for coal and aggregates; boxcars for paper and auto parts; and centerbeams and flat cars for lumber. Revenue is generated primarily from rental income on operating lease equipment, which is included in noninterest income, and to a lesser extent, gains on sale of leasing equipment. Rental income is generally influenced by the size of the operating lease portfolio, utilization of the railcars, re-pricing of equipment renewed upon lease maturities, and pricing on new leases. Re-pricing refers to the rental rate in the renewed equipment contract compared to the prior contract.
Operating lease equipment is subject to depreciation expense over the useful life of the rail equipment, which is generally longer in duration, 40 -50 years. The Rail segment leases railcars, primarily pursuant to full-service lease contracts under which we, as lessor, are responsible for railcar maintenance and repair. Maintenance and other operating lease expenses relate to equipment ownership and leasing costs associated with the railcar portfolio and tend to be variable due to timing and the number of railcars coming on or off lease as well as asset condition.
Corporate
All other financial information not included in the segments is reported in Corporate. Corporate contains BancShares’ centralized treasury function, which manages the investment security portfolio, interest-earning deposits at banks and corporate/wholesale funding (e.g., borrowings, Direct Bank deposits and brokered deposits). Corporate deposits are primarily comprised of Direct Bank deposits.
Corporate includes interest income on investment securities and interest-earning deposits at banks; interest expense for borrowings, Direct Bank deposits, and brokered deposits; as well as funds transfer pricing allocations. Noninterest income includes gains or losses on sales of investment securities, fair value adjustments on marketable equity securities, and income from bank owned life insurance. Personnel cost in Corporate includes the personnel costs not allocated to the operating segments. Corporate includes acquisition-related expenses and certain items related to accounting for business combinations, such as gains on acquisitions, Day 2 Provision for Credit Losses and discount accretion income for certain acquired loans. Corporate also includes the offsetting impacts of Allocated Expenses as discussed above.
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Segment Results and Select Period End Balances
The following tables present the condensed income statements by segment and include the significant segment expenses and measure of segment profit or loss.
| dollars in millions | Three Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||||
| General Bank | Commercial Bank | SVB Commercial | Rail | Corporate (1) | BancShares (2) | ||||||||||||||||||||||||||||||
| Net interest income (expense) | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Rental income on operating lease equipment | |||||||||||||||||||||||||||||||||||
| All other noninterest income | |||||||||||||||||||||||||||||||||||
| Total noninterest income | |||||||||||||||||||||||||||||||||||
| Total revenue | |||||||||||||||||||||||||||||||||||
| Depreciation on operating lease equipment | |||||||||||||||||||||||||||||||||||
| Maintenance and other operating lease expenses | |||||||||||||||||||||||||||||||||||
| Personnel cost | |||||||||||||||||||||||||||||||||||
| Acquisition-related expenses | |||||||||||||||||||||||||||||||||||
All other noninterest expense (3) | ( | ||||||||||||||||||||||||||||||||||
| Total noninterest expense | |||||||||||||||||||||||||||||||||||
| Provision for credit losses | |||||||||||||||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||||||||||||||
| Income tax expense (benefit) | ( | ||||||||||||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Select Period End Balances | |||||||||||||||||||||||||||||||||||
| Loans and leases | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Operating lease equipment, net | |||||||||||||||||||||||||||||||||||
| Deposits | |||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2024 | |||||||||||||||||||||||||||||||||||
| General Bank | Commercial Bank | SVB Commercial | Rail | Corporate (1) | BancShares (2) | ||||||||||||||||||||||||||||||
| Net interest income (expense) | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Rental income on operating lease equipment | |||||||||||||||||||||||||||||||||||
| All other noninterest income | |||||||||||||||||||||||||||||||||||
| Total noninterest income | |||||||||||||||||||||||||||||||||||
| Total revenue | |||||||||||||||||||||||||||||||||||
| Depreciation on operating lease equipment | |||||||||||||||||||||||||||||||||||
| Maintenance and other operating lease expenses | |||||||||||||||||||||||||||||||||||
| Personnel cost | |||||||||||||||||||||||||||||||||||
| Acquisition-related expenses | |||||||||||||||||||||||||||||||||||
All other noninterest expense (3) | ( | ||||||||||||||||||||||||||||||||||
| Total noninterest expense | |||||||||||||||||||||||||||||||||||
| Provision for credit losses | |||||||||||||||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Select Period End Balances | |||||||||||||||||||||||||||||||||||
| Loans and leases | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Operating lease equipment, net | |||||||||||||||||||||||||||||||||||
| Deposits | |||||||||||||||||||||||||||||||||||
(1) Corporate includes all other financial information that is not included in the reportable segments. | |||||||||||||||||||||||||||||||||||
(2) In the segment reporting table above, there are no reconciling differences between BancShares and the aggregate of all reportable segments and Corporate. | |||||||||||||||||||||||||||||||||||
(3) All other noninterest expense represents “other segment items” under Accounting Standards Codification (“ASC”) 280 and primarily includes Allocated Expenses, net occupancy expense, equipment expense, professional fees, third-party processing fees, FDIC insurance expense, marketing expense, and intangible amortization. All other noninterest expense is presented net of Allocated Expenses in the segment reporting table above, resulting in Contra Expense for Corporate as further discussed above. | |||||||||||||||||||||||||||||||||||
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| dollars in millions | Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||||
| General Bank | Commercial Bank | SVB Commercial | Rail | Corporate (1) | BancShares (2) | ||||||||||||||||||||||||||||||
| Net interest income (expense) | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Rental income on operating lease equipment | |||||||||||||||||||||||||||||||||||
| All other noninterest income | |||||||||||||||||||||||||||||||||||
| Total noninterest income | |||||||||||||||||||||||||||||||||||
| Total revenue | |||||||||||||||||||||||||||||||||||
| Depreciation on operating lease equipment | |||||||||||||||||||||||||||||||||||
| Maintenance and other operating lease expenses | |||||||||||||||||||||||||||||||||||
| Personnel cost | |||||||||||||||||||||||||||||||||||
| Acquisition-related expenses | |||||||||||||||||||||||||||||||||||
All other noninterest expense (3) | ( | ||||||||||||||||||||||||||||||||||
| Total noninterest expense | |||||||||||||||||||||||||||||||||||
| Provision for credit losses | |||||||||||||||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||||||||||||||
| Income tax expense (benefit) | ( | ||||||||||||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Six Months Ended June 30, 2024 | |||||||||||||||||||||||||||||||||||
| General Bank | Commercial Bank | SVB Commercial | Rail | Corporate (1) | BancShares (2) | ||||||||||||||||||||||||||||||
| Net interest income (expense) | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Rental income on operating lease equipment | |||||||||||||||||||||||||||||||||||
| All other noninterest income | |||||||||||||||||||||||||||||||||||
| Total noninterest income | |||||||||||||||||||||||||||||||||||
| Total revenue | |||||||||||||||||||||||||||||||||||
| Depreciation on operating lease equipment | |||||||||||||||||||||||||||||||||||
| Maintenance and other operating lease expenses | |||||||||||||||||||||||||||||||||||
| Personnel cost | |||||||||||||||||||||||||||||||||||
| Acquisition-related expenses | |||||||||||||||||||||||||||||||||||
All other noninterest expense (3) | ( | ||||||||||||||||||||||||||||||||||
| Total noninterest expense | |||||||||||||||||||||||||||||||||||
| Provision for credit losses | |||||||||||||||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
(1) Corporate includes all other financial information that is not included in the reportable segments. | |||||||||||||||||||||||||||||||||||
(2) In the segment reporting table above, there are no reconciling differences between BancShares and the aggregate of all reportable segments and Corporate. | |||||||||||||||||||||||||||||||||||
(3) All other noninterest expense represents “other segment items” under ASC 280 and primarily includes Allocated Expenses, net occupancy expense, equipment expense, professional fees, third-party processing fees, FDIC insurance expense, marketing expense, and intangible amortization. All other noninterest expense is presented net of Allocated Expenses in the segment reporting table above, resulting in Contra Expense for Corporate as further discussed above. | |||||||||||||||||||||||||||||||||||
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NOTE 18 — COMMITMENTS AND CONTINGENCIES
Commitments
To meet the financing needs of its customers, BancShares and its subsidiaries have financial instruments with off-balance sheet risk. These financial instruments involve elements of credit, interest rate or liquidity risk and include commitments to extend credit and standby letters of credit.
The accompanying table summarizes credit-related commitments and other purchase and funding commitments:
| dollars in millions | June 30, 2025 | December 31, 2024 | |||||||||
| Financing Commitments | |||||||||||
| Financing assets (excluding leases) | $ | $ | |||||||||
| Letters of Credit | |||||||||||
| Standby letters of credit | |||||||||||
| Other letters of credit | |||||||||||
| Deferred Purchase Agreements | |||||||||||
Purchase and Funding Commitments (1) | |||||||||||
Financing Commitments
Commitments to extend credit are legally binding agreements to lend to customers. These commitments generally have fixed expiration dates or other termination clauses and may require payment of fees. Established credit standards control the credit risk exposure associated with these commitments. In some cases, BancShares requires collateral be pledged to secure the commitment, including cash deposits, securities and other assets.
Financing commitments, referred to as net unfunded loan commitments or lines of credit, primarily reflect BancShares’ agreements to lend to its customers, subject to the customers’ compliance with contractual obligations. At June 30, 2025 and December 31, 2024, substantially all undrawn financing commitments were senior facilities. Financing commitments also include $172 million and $79 million at June 30, 2025 and December 31, 2024, respectively, related to off-balance sheet commitments to fund equity investments. Commitments to fund equity investments are contingent on events that have yet to occur and may be subject to change.
As financing commitments may not be fully drawn, may expire unused, may be reduced or canceled at the customer’s request, and may require the customer to be in compliance with certain conditions, commitment amounts do not necessarily reflect actual future cash flow requirements.
The table above excludes uncommitted revolving credit facilities extended by Commercial Services to its clients for working capital purposes. In connection with these facilities, Commercial Services has the sole discretion throughout the duration of these facilities to determine the amount of credit that may be made available to its clients at any time and whether to honor any specific advance requests made by its clients under these credit facilities.
Letters of Credit
Standby letters of credit are commitments to pay the beneficiary thereof if drawn upon by the beneficiary upon satisfaction of the terms of the letter of credit. Those commitments are primarily issued to support public and private borrowing arrangements. To mitigate its risk, BancShares’ credit policies govern the issuance of standby letters of credit. The credit risk related to the issuance of these letters of credit is essentially the same as in extending loans to clients and, therefore, these letters of credit are collateralized when necessary. These financial instruments generate fees and involve, to varying degrees, elements of credit risk in excess of amounts recognized in the Consolidated Balance Sheets.
Deferred Purchase Agreements
A deferred purchase agreement (“DPA”) is provided in conjunction with factoring, whereby a client is provided with credit protection for trade receivables without purchasing the receivables. The trade receivables terms generally require payment in 90 days or less. If the client’s customer is unable to pay an undisputed receivable solely as the result of credit risk, BancShares is then required to purchase the receivable from the client, less any borrowings for such client based on such defaulted receivable. The outstanding amount in the table above, less $176 million and $166 million at June 30, 2025 and December 31, 2024, respectively, of borrowings for such clients, is the maximum amount that BancShares would be required to pay under all DPAs. This maximum amount would only occur if all receivables subject to DPAs default in the manner described above, thereby requiring BancShares to purchase all such receivables from the DPA clients.
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The table above includes $1.42 billion and $1.74 billion of DPA exposures at June 30, 2025 and December 31, 2024, respectively, related to receivables on which BancShares has assumed the credit risk. The table also includes $42 million and $59 million available under DPA credit line agreements provided at June 30, 2025 and December 31, 2024, respectively. The DPA credit line agreements specify a contractually committed amount of DPA credit protection and are cancellable by us only after a notice period, which is typically 90 days or less.
Litigation and Other Contingencies
The Parent Company and certain of its subsidiaries have been named as a defendant in legal actions arising from its normal business activities in which damages in various amounts are claimed. BancShares is also exposed to litigation risk relating to the prior business activities of banks from which assets were acquired and liabilities assumed.
BancShares is involved, and from time to time in the future may be involved, in a number of pending and threatened judicial, regulatory, and arbitration proceedings as well as proceedings, investigations, examinations and other actions brought or considered by governmental and self-regulatory agencies. These matters arise in connection with the ordinary conduct of BancShares’ business. At any given time, BancShares may also be in the process of responding to subpoenas, requests for documents, data and testimony relating to such matters and engaging in discussions to resolve the matters (all of the foregoing collectively being referred to as “Litigation”). While most Litigation relates to individual claims, BancShares may be subject to putative class action claims and similar broader claims and indemnification obligations.
In light of the inherent difficulty of predicting the outcome of Litigation matters and indemnification obligations, particularly when such matters are in their early stages or where the claimants seek indeterminate damages, BancShares cannot state with confidence what the eventual outcome of the pending Litigation will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, fines, or penalties related to each pending matter will be, if any. In accordance with applicable accounting guidance, BancShares’ establishes reserves for Litigation when those matters present loss contingencies as to which it is both probable that a loss will occur and the amount of such loss can reasonably be estimated. Based on currently available information, BancShares does not believe that the outcome of Litigation that is currently pending will have a material impact on BancShares’ consolidated financial statements. The actual results of resolving such matters may be substantially higher than the amounts reserved.
For certain Litigation matters in which BancShares is involved, BancShares is able to estimate a range of reasonably possible losses in excess of established reserves and insurance. For other matters for which a loss is probable or reasonably possible, such an estimate cannot be determined. For Litigation and other matters where losses are reasonably possible and estimable, management currently estimates an aggregate range of reasonably possible losses to be up to approximately $10 million in excess of any established reserves and any insurance we reasonably believe we will collect related to those matters. This estimate represents reasonably possible losses (in excess of established reserves and insurance) over the life of such Litigation, which may span a currently indeterminable number of years, and is based on information currently available as of June 30, 2025. The Litigation matters underlying the estimated range will change from time to time, and actual results may vary significantly from this estimate.
Those Litigation matters for which an estimate is not reasonably possible or as to which a loss does not appear to be reasonably possible, based on current information, are not included within this estimated range and, therefore, this estimated range does not represent BancShares’ maximum loss exposure.
The foregoing statements about BancShares’ Litigation are based on BancShares’ judgments, assumptions, and estimates and are necessarily subjective and uncertain. In the event of unexpected future developments, it is possible that the ultimate resolution of these cases, matters, and proceedings, if unfavorable, may be material to BancShares’ consolidated financial position in a particular period.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Management’s discussion and analysis (“MD&A”) of earnings and related financial data is presented to assist in understanding the financial condition and results of operations of First Citizens BancShares, Inc. (the “Parent Company” and, when including all of its subsidiaries on a consolidated basis, “we,” “us,” “our,” or “BancShares”) and its banking subsidiary, First-Citizens Bank & Trust Company (“FCB”). Unless otherwise noted, the terms “we,” “us,” “our,” and “BancShares” in this section refer to the consolidated financial position and consolidated results of operations for BancShares.
This MD&A is expected to provide our investors with a view of our financial condition and results of operations from our management’s perspective. This MD&A should be read in conjunction with the unaudited consolidated financial statements and related notes presented within this Quarterly Report on Form 10-Q (this “Form 10-Q”), along with our consolidated financial statements and related MD&A of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”). Throughout this MD&A, references to a specific “Note” refer to Notes to the Unaudited Consolidated Financial Statements in Item 1. Financial Statements.
Intercompany accounts and transactions have been eliminated. Although certain amounts for prior years have been reclassified to conform with financial statement presentations for 2025, the reclassifications had no effect on stockholders’ equity or net income as previously reported. Refer to Note 1—Significant Accounting Policies and Basis of Presentation.
Management uses certain financial measures that are not presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) in its analysis of the financial condition and results of operations of BancShares. Refer to the "Non-GAAP Financial Measurements" section of this MD&A for a reconciliation of these financial measures to the most directly comparable financial measures in accordance with GAAP.
EXECUTIVE OVERVIEW
The Parent Company is a bank holding company (“BHC”) and financial holding company. The Parent Company is regulated by the Board of Governors of the Federal Reserve System (“Federal Reserve”) under the U.S. Bank Holding Company Act of 1956, as amended. The Parent Company is also registered under the BHC laws of North Carolina and is subject to supervision, regulation and examination by the North Carolina Office of the Commissioner of Banks (the “NCCOB”). BancShares conducts its banking operations through its wholly owned subsidiary, FCB, a state-chartered bank organized under the laws of the state of North Carolina. FCB is regulated by the NCCOB. In addition, FCB, as an insured depository institution, is supervised by the Federal Deposit Insurance Corporation (the “FDIC”).
BancShares provides financial services for a wide range of consumer and commercial clients. This includes retail and mortgage banking, wealth management, small and middle market banking, factoring and leasing. BancShares provides commercial factoring, receivables management and secured financing services to businesses (generally manufacturers or importers of goods) that operate in various industries, including apparel, textile, furniture, home furnishings and consumer electronics. BancShares also provides deposit, cash management and lending to homeowner associations and property management companies. BancShares also owns a fleet of railcars and locomotives that are leased to railroads and shippers.
BancShares delivers banking products and services to its customers through an extensive branch network and additionally operates a nationwide digital banking platform that delivers deposit products to consumers (the “Direct Bank”). Services offered at most branches include accepting deposits, cashing checks and providing for consumer and commercial cash needs. Consumer and business customers may also conduct banking transactions through various digital channels.
In addition to our banking operations, we provide various investment products and services through FCB’s wholly owned subsidiaries, including First Citizens Investor Services, Inc. (“FCIS”) and First Citizens Asset Management, Inc. (“FCAM”), and a non-bank subsidiary First Citizens Capital Securities, LLC (“FCCS”). As a registered broker-dealer, FCIS provides a full range of investment products, including annuities, brokerage services and third-party mutual funds. As registered investment advisers, FCIS and FCAM provide investment management services and advice. FCCS is a broker-dealer that also provides underwriting and private placement services. We also have other wholly owned subsidiaries, including SVB Wealth LLC, SVB Asset Management, and First Citizens Institutional Asset Management, LLC, which are active investment advisers.
Refer to Note 17—Segment Information for further information regarding the products and services we provide.
Refer to the 2024 Form 10-K for a discussion of our strategy.
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Recent Events
Share Repurchase Programs
On July 25, 2025, BancShares announced that the Board of Directors (the “Board”) authorized a new share repurchase program (the “2025 SRP”), which will allow BancShares to repurchase shares of its Class A common stock in an aggregate amount up to $4.0 billion through December 31, 2026. Repurchases under the 2025 SRP may commence upon the completion of the $3.5 billion share repurchase program announced in July 2024 (the “2024 SRP”). The total capacity remaining under the 2024 SRP was $611 million as of June 30, 2025 and $302 million as of July 31, 2025.
During the second quarter of 2025, we repurchased 338,959 shares of our Class A common stock for approximately $613 million. Shares repurchased during the second quarter of 2025 represented 2.73% of Class A common shares and 2.53% of total Class A and Class B common shares outstanding at March 31, 2025. From inception of the 2024 SRP through June 30, 2025, we have repurchased 1,456,283 shares of our Class A common stock for approximately $2.89 billion, representing 10.77% of Class A common shares and 10.02% of total Class A and Class B common shares outstanding as of June 30, 2024. Subsequent to June 30, 2025, BancShares purchased an additional 147,365 shares of Class A common stock through July 31, 2025 under the 2024 SRP.
Refer to Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds for additional information regarding monthly repurchase activity during the second quarter of 2025.
2025 Loan Class Changes
During the second quarter of 2025, the loan classes which were reported in the Silicon Valley Bank (“SVB”) portfolio in the Linked Quarter Form 10-Q and 2024 Form 10-K, were recast to the Commercial portfolio (the “2025 Loan Class Changes”) as further discussed in Note 1—Significant Accounting Policies and Basis of Presentation. Loan and lease and allowance for loan and lease losses (“ALLL”) disclosures for all periods presented in this Form 10-Q were recast to reflect the 2025 Loan Class Changes.
Loan disclosures in the “Results by Segment” section of this MD&A were not recast as a result of the 2025 Loan Class Changes because the composition of reportable segments is separate and distinct from the identification of loan classes.
Debt Transactions
On March 12, 2025, the Parent Company issued and sold $500 million aggregate principal amount of its 5.231% Fixed-to-Floating Rate Senior Notes due 2031 and $750 million aggregate principal amount of its 6.254% Fixed-to-Fixed Rate Subordinated Notes due 2040 in a public offering (the “Linked Quarter Debt Issuances”).
On June 15, 2025, the Parent Company executed a callable feature and redeemed all $350 million aggregate principal amount of 3.375% Fixed-to-Floating Rate Subordinated Notes due in 2030 (the “Current Quarter Debt Redemption”).
Termination of the Shared-Loss Agreement with the FDIC
On April 7, 2025, FCB and the FDIC entered into an agreement (the “Shared-Loss Termination Agreement”) to terminate the Shared-Loss Agreement (as defined in Note 2—Business Combinations). As a result of entering into the Shared-Loss Termination Agreement, all rights and obligations of the parties under the Shared-Loss Agreement terminated as of the date of the Shared-Loss Termination Agreement, including FCB’s reporting covenants and obligations related to FDIC Loss Sharing and FCB reimbursement (each as defined in Note 2—Business Combinations in our 2024 Form 10-K). The decision to enter into the Shared-Loss Termination Agreement was motivated, in part, by FCB’s determination that the likelihood of reaching the $5 billion loss threshold during the five-year period covered by the Shared-Loss Agreement was remote. Additionally, the Shared-Loss Termination Agreement eliminated the reporting responsibilities associated with the Shared-Loss Agreement. There was no impact to our consolidated balance sheets or statements of income resulting from the Shared-Loss Termination Agreement because there was no loss indemnification asset or true-up liability associated with the Shared-Loss Agreement, primarily based on evaluation of historical loss experience and the credit quality of the Covered Assets (as defined in Note 2—Business Combinations in our 2024 Form 10-K).
The risk-based capital ratio impacts resulting from the Shared-Loss Termination Agreement are discussed in the “Capital” section of this MD&A.
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Changes to the Composition of Reportable Segments
We updated our segment reporting during the first quarter of 2025 as further discussed in Note 1—Significant Accounting Policies and Basis of Presentation. We transferred certain components from the SVB Commercial and General Bank segments to the Commercial Bank segment and modified our segment expense allocation methodology. Segment disclosures for 2024 periods included in this Form 10-Q were recast to reflect the segment reporting updates. Refer to Note 17—Segment Information for descriptions of segment products and services and the “Results by Segment” section of this MD&A.
Recent Economic, Industry and Regulatory Developments
Entering 2025, the Federal Open Market Committee (“FOMC”) had reduced the benchmark federal funds rate to a range between 4.25% - 4.50%. In its statement in July 2025, the FOMC cited that uncertainty about the economic outlook remains elevated in its decision to maintain the range for the benchmark federal funds rate.
The Trump administration has imposed, modified and paused tariffs multiple times since the beginning of 2025. Actual and threatened changes to U.S. trade policies have resulted in some countries enacting retaliatory measures. The imposition of increased tariffs and trade restrictions has contributed to uncertainty and volatility in the global financial markets. The current tariff environment is dynamic, and we are closely monitoring both the impact and potential impact of such measures on our business, our customers and on overall economic conditions in the United States.
On July 4, 2025, President Trump signed into law H.R. 1, referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA contains several provisions that impact corporate taxation. BancShares is in the process of evaluating the impact of the OBBBA on its financial statements.
Financial Performance Summary
The following tables in this MD&A include financial data for the three months ended June 30, 2025 (the “Current Quarter”), March 31, 2025 (the “Linked Quarter”) and June 30, 2024 (the “Prior Year Quarter”), along with the six months ended June 30, 2025 (“Current YTD”), and the six months ended June 30, 2024 (“Prior YTD”). In accordance with Item 303(c) of Regulation S-K, we focus our discussion of quarterly results of operations on changes compared to the Linked Quarter for the narrative discussion and analysis as we believe this provides investors and other users of our data with the most relevant information.
We focus the discussion of our financial position by comparing balances as of June 30, 2025 to December 31, 2024, however the tables also provide the Linked Quarter balances.
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Table 1
Selected Financial Data
| dollars in millions, except share data | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||
| June 30, 2025 | March 31, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||||||||||||||||||||
| Results of Operations: | |||||||||||||||||||||||||||||||||||
| Interest income | $ | 2,945 | $ | 2,895 | $ | 3,130 | $ | 5,840 | $ | 6,214 | |||||||||||||||||||||||||
| Interest expense | 1,250 | 1,232 | 1,309 | 2,482 | 2,576 | ||||||||||||||||||||||||||||||
| Net interest income | 1,695 | 1,663 | 1,821 | 3,358 | 3,638 | ||||||||||||||||||||||||||||||
| Provision for credit losses | 115 | 154 | 95 | 269 | 159 | ||||||||||||||||||||||||||||||
| Net interest income after provision for credit losses | 1,580 | 1,509 | 1,726 | 3,089 | 3,479 | ||||||||||||||||||||||||||||||
| Noninterest income | 678 | 635 | 639 | 1,313 | 1,266 | ||||||||||||||||||||||||||||||
| Noninterest expense | 1,500 | 1,493 | 1,386 | 2,993 | 2,762 | ||||||||||||||||||||||||||||||
| Income before income taxes | 758 | 651 | 979 | 1,409 | 1,983 | ||||||||||||||||||||||||||||||
| Income tax expense | 183 | 168 | 272 | 351 | 545 | ||||||||||||||||||||||||||||||
| Net income | 575 | 483 | 707 | 1,058 | 1,438 | ||||||||||||||||||||||||||||||
| Preferred stock dividends | 14 | 15 | 16 | 29 | 31 | ||||||||||||||||||||||||||||||
| Net income available to common stockholders | $ | 561 | $ | 468 | $ | 691 | $ | 1,029 | $ | 1,407 | |||||||||||||||||||||||||
| Per Common Share Information: | |||||||||||||||||||||||||||||||||||
| Weighted average common shares outstanding (diluted) | 13,237,226 | 13,575,231 | 14,534,499 | 13,405,295 | 14,535,472 | ||||||||||||||||||||||||||||||
| Diluted earnings per common share | $ | 42.36 | $ | 34.47 | $ | 47.54 | $ | 76.73 | $ | 96.80 | |||||||||||||||||||||||||
| Key Performance Metrics: | |||||||||||||||||||||||||||||||||||
| Return on average assets | 1.01 | % | 0.87 | % | 1.30 | % | 0.94 | % | 1.33 | % | |||||||||||||||||||||||||
Net interest margin (1) | 3.26 | 3.26 | 3.64 | 3.26 | 3.66 | ||||||||||||||||||||||||||||||
Net interest margin, excluding purchase accounting accretion or amortization (1)(2) | 3.14 | 3.12 | 3.36 | 3.13 | 3.36 | ||||||||||||||||||||||||||||||
| Select Average Balances: | |||||||||||||||||||||||||||||||||||
| Investment securities | $ | 43,935 | $ | 43,555 | $ | 36,445 | $ | 43,746 | $ | 34,546 | |||||||||||||||||||||||||
Total loans and leases (3) | 141,952 | 140,882 | 137,514 | 141,420 | 135,636 | ||||||||||||||||||||||||||||||
| Operating lease equipment, net | 9,419 | 9,350 | 8,888 | 9,385 | 8,847 | ||||||||||||||||||||||||||||||
| Total assets | 227,552 | 225,449 | 218,891 | 226,506 | 217,486 | ||||||||||||||||||||||||||||||
| Total deposits | 157,664 | 156,378 | 150,246 | 157,024 | 148,980 | ||||||||||||||||||||||||||||||
| Total borrowings | 38,379 | 37,398 | 37,480 | 37,892 | 37,530 | ||||||||||||||||||||||||||||||
| Total stockholders’ equity | 22,488 | 22,457 | 22,052 | 22,472 | 21,775 | ||||||||||||||||||||||||||||||
| As of the Period Ending | |||||||||||||||||||||||||||||||||||
| June 30, 2025 | March 31, 2025 | June 30, 2024 | December 31, 2024 | ||||||||||||||||||||||||||||||||
| Select Ending Balances: | |||||||||||||||||||||||||||||||||||
| Investment securities | $ | 43,346 | $ | 44,319 | $ | 37,666 | $ | 44,090 | |||||||||||||||||||||||||||
| Total loans and leases | 141,269 | 141,358 | 139,341 | 140,221 | |||||||||||||||||||||||||||||||
| Operating lease equipment, net | 9,466 | 9,371 | 8,945 | 9,323 | |||||||||||||||||||||||||||||||
| Total assets | 229,653 | 228,822 | 219,827 | 223,720 | |||||||||||||||||||||||||||||||
| Total deposits | 159,935 | 159,325 | 151,079 | 155,229 | |||||||||||||||||||||||||||||||
| Total borrowings | 38,112 | 38,406 | 37,458 | 37,051 | |||||||||||||||||||||||||||||||
| Total stockholders’ equity | 22,296 | 22,295 | 22,487 | 22,228 | |||||||||||||||||||||||||||||||
| Loan to deposit ratio | 88.33 | % | 88.72 | % | 92.23 | % | 90.33 | % | |||||||||||||||||||||||||||
| Noninterest-bearing deposits to total deposits | 25.56 | 25.59 | 26.49 | 24.89 | |||||||||||||||||||||||||||||||
| Capital Ratios: | |||||||||||||||||||||||||||||||||||
| Total risk-based capital | 14.25 | % | 15.23 | % | 15.45 | % | 15.04 | % | |||||||||||||||||||||||||||
| Tier 1 risk-based capital | 12.63 | 13.35 | 13.87 | 13.53 | |||||||||||||||||||||||||||||||
| Common equity Tier 1 | 12.12 | 12.81 | 13.33 | 12.99 | |||||||||||||||||||||||||||||||
| Tier 1 leverage | 9.62 | 9.75 | 10.29 | 9.90 | |||||||||||||||||||||||||||||||
| Select Asset Quality Metrics: | |||||||||||||||||||||||||||||||||||
| Ratio of nonaccrual loans to total loans | 0.93 | % | 0.85 | % | 0.82 | % | 0.84 | % | |||||||||||||||||||||||||||
| Allowance for loan and lease losses to loans ratio | 1.18 | 1.19 | 1.22 | 1.20 | |||||||||||||||||||||||||||||||
(1) Calculated net of average credit balances of factoring clients to appropriately reflect the interest-earning portion of factoring receivables.
(2) Net interest margin (“NIM”), excluding purchase accounting accretion or amortization (“PAA”), is a non-GAAP financial measure. Refer to the “NII, NIM, and Interest and Fees on Loans, Excluding PAA” discussion in the “Non-GAAP Financial Measurements” section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.
(3) Average loan balances include loans held for sale and nonaccrual loans.
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Financial highlights are summarized below. Further details are discussed in the “Results of Operations” and “Balance Sheet Analysis” sections of this MD&A.
Second Quarter Income Statement Highlights
•Net income for the Current Quarter was $575 million, an increase of $92 million or 19% from $483 million for the Linked Quarter. Net income available to common stockholders for the Current Quarter was $561 million, an increase of $93 million or 20% from $468 million for the Linked Quarter. Earnings per basic and diluted common share for the Current Quarter was $42.36, an increase from $34.47 for the Linked Quarter. The increase in net income available to common stockholders was largely due to higher noninterest income, a decrease in the provision for credit losses, and higher net interest income (“NII”), partially offset by a modest increase in noninterest expense as further discussed below.
•NII for the Current Quarter was $1.70 billion, an increase of $32 million or 2% from $1.66 billion for the Linked Quarter, largely due to increases in interest income on loans and interest-earning deposits at banks, mainly a result of higher average balances and a higher day count, partially offset by an increase in interest expense on borrowings due to a higher average balance and rate paid as the Linked Quarter Debt Issuances were outstanding for the entire Current Quarter.
•NIM for the Current Quarter and Linked Quarter was 3.26% as the favorable impact of a lower rate paid on interest-bearing deposits was offset by the unfavorable impacts of a higher average balance of interest-bearing deposits and borrowings, a higher rate paid on borrowings, and lower PAA.
◦PAA for the Current Quarter was $66 million, a decrease of $9 million from $75 million for the Linked Quarter. NIM, excluding PAA(1) for the Current Quarter was 3.14%, an increase of 2 basis points (“bps”) from 3.12% for the Linked Quarter.
•Noninterest income for the Current Quarter was $678 million, an increase of $43 million or 7% from $635 million for the Linked Quarter, primarily the result of an increase in other noninterest income of $28 million, mainly attributable to the positive impacts from fair value changes in customer derivative positions and other non-marketable investments, as well as the Linked Quarter write-down of a held for sale asset. The remaining net increase included a favorable change in the fair value of marketable equity securities of $7 million.
•Noninterest expense for the Current Quarter was $1.50 billion, an increase of $7 million or 1% from $1.49 billion for the Linked Quarter, mainly due to other noninterest expense accruals totaling $15 million and an increase in professional fees of $5 million, partially offset by decreases in personnel cost of $8 million, equipment expense of $5 million, and acquisition-related expenses of $4 million.
•Provision for credit losses for the Current Quarter was $115 million, a decrease of $39 million from $154 million for the Linked Quarter.
◦The provision for loan and lease losses for the Current Quarter was $111 million, a decrease of $37 million from $148 million for the Linked Quarter, mainly attributable to a decrease in net charge-offs of $25 million and a decrease of $8 million in the ALLL for the Current Quarter, compared to an increase of $4 million in the ALLL for the Linked Quarter. Changes in the ALLL are discussed in the “Provision for Credit Losses” section of this MD&A.
◦The provision for off-balance sheet credit exposure for the Current Quarter was $4 million, a decrease of $2 million compared to $6 million for the Linked Quarter, mostly due to the modest shift in our scenario weighting as further discussed in the “ALLL Methodology” section of this MD&A.
•Income tax expense for the Current Quarter was $183 million, an increase of $15 million from $168 million for the Linked Quarter, mostly reflecting higher income before income taxes.
•Return on average assets for the Current Quarter was 1.01%, an increase of 14 bps from 0.87% for the Linked Quarter due to the increase in net income discussed above.
(1) NIM, excluding PAA is a non-GAAP measure. Refer to the “NII, NIM, and Interest and Fees on Loans, Excluding PAA” discussion in the “Non-GAAP Financial Measurements” section of this MD&A for further discussion.
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Year-to-Date Income Statement Highlights
•Net income for the Current YTD was $1.06 billion, a decrease of $380 million or 27% from $1.44 billion for the Prior YTD. Net income available to common stockholders for the Current YTD was $1.03 billion, a decrease of 27% from $1.41 billion for the Prior YTD. Earnings per diluted common share for the Current YTD was $76.73, a decrease from $96.80 for the Prior YTD. The decrease in net income available to common stockholders was due to lower NII, higher noninterest expense and higher provision for credit losses, partially offset by lower income tax expense and higher noninterest income as further discussed below.
•NII for the Current YTD was $3.36 billion, a decrease of $280 million or 8% from $3.64 billion for the Prior YTD. NIM for the Current YTD was 3.26%, a decrease of 40 bps from 3.66% for the Prior YTD. The decreases in NII and NIM were mainly due to lower yields on loans and interest-earning deposits at banks, a mix shift from interest-earning deposits at banks to investment securities, a higher average balance of interest-bearing deposits, and a higher average balance and rate paid for borrowings, partially offset by a decline in the rate paid on interest-bearing deposits and a higher average balance of loans.
◦PAA for the Current YTD was $142 million, a decrease of $156 million from $298 million for the Prior YTD. NIM, excluding PAA,(1) for the Current YTD was 3.13%, a decrease of 23 bps from 3.36% for the Prior YTD.
•Noninterest income for the Current YTD was $1.31 billion, an increase of $47 million from $1.27 billion for the Prior YTD, mostly due to increases in rental income on operating lease equipment of $28 million, lending-related fees of $13 million, wealth management services of $8 million, and international fees of $8 million, partially offset by a decrease in other noninterest income of $21 million.
•Noninterest expense for the Current YTD was $2.99 billion, an increase of $231 million or 8% from $2.76 billion for the Prior YTD, mostly due to increases in personnel cost of $139 million, marketing expense of $32 million, equipment expense of $27 million, third-party processing fees of $8 million, and other noninterest expense of $32 million, partially offset by a decrease in acquisition-related expenses of $22 million.
•Provision for credit losses for the Current YTD was $269 million, an increase of $110 million from $159 million for the Prior YTD.
◦The provision for loan and lease losses for the Current YTD was $259 million, an increase of $71 million from $188 million for the Prior YTD, mainly attributable to a $43 million decline in the ALLL reserve release for the Current YTD, and an increase in net charge-offs of $28 million. Changes in the ALLL are discussed in the “Provision for Credit Losses” section of this MD&A.
◦The provision for off-balance sheet credit exposure for the Current YTD was $10 million, compared to a benefit of $29 million for the Prior YTD. The increase in expense of $39 million was mostly due to trends in the volume of unfunded commitments, partially offset by a modest shift in our weighting from the downside to baseline economic scenario as further discussed in the “ALLL Methodology” section of this MD&A.
•Income tax expense for the Current YTD was $351 million, a decrease of $194 million from $545 million for the Prior YTD, primarily due to lower income before income taxes and a lower effective income tax rate (“ETR”).
•Return on average assets for the Current YTD was 0.94% compared to 1.33% for the Prior YTD due to the decrease in net income explained above.
(1) NIM, excluding PAA is a non-GAAP measure. Refer to the “NII, NIM, and Interest and Fees on Loans, Excluding PAA” discussion in the “Non-GAAP Financial Measurements” section of this MD&A for further discussion.
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Balance Sheet Highlights
•Loans and leases at June 30, 2025 were $141.27 billion, an increase of $1.05 billion or 1% from $140.22 billion at December 31, 2024. Loan growth in the Commercial Bank segment of $793 million was mainly in our industry vertical, primarily technology media and telecommunications (“TMT”) and healthcare, and in the equipment finance portfolios. Loan growth of $155 million in the SVB Commercial segment was concentrated in the global fund banking portfolio, partially offset by a decline in our investor dependent portfolio. Loan growth of $100 million in the General Bank segment was primarily in the wealth portfolio.
•Investment securities at June 30, 2025 were $43.35 billion, a decrease of $744 million or 2% from $44.09 billion at December 31, 2024, as maturities and paydowns more than offset net purchases.
•Deposits at June 30, 2025 were $159.94 billion, an increase of $4.71 billion or 3% from $155.23 billion at December 31, 2024. As shown in Table 3 below, the increase from December 31, 2024 was mainly attributable to deposit growth in Corporate of $3.51 billion (which primarily includes the Direct Bank), the SVB Commercial segment of $1.27 billion, and the General Bank segment of $543 million, partially offset by a decline of $603 million in the Commercial Bank segment.
•Borrowings at June 30, 2025 were $38.11 billion, an increase of $1.06 billion or 3% from $37.05 billion at December 31, 2024, primarily due to the Linked Quarter Debt Issuances with aggregate principal amounts totaling $1.25 billion, partially offset by the $350 million Current Quarter Debt Redemption.
•The ALLL at June 30, 2025 was $1.67 billion, a decrease of $4 million from $1.68 billion at December 31, 2024 as discussed above in the Second Quarter and Year-to-Date Income Statement Highlights. The ALLL as a percentage of loans was 1.18% at June 30, 2025, a decrease of 2 bps from 1.20% at December 31, 2024.
•At June 30, 2025, BancShares remained well capitalized with a total risk-based capital ratio of 14.25%, a Tier 1 risk-based capital ratio of 12.63%, a common equity Tier 1 (“CET1”) ratio of 12.12% and a Tier 1 leverage ratio of 9.62%.
Funding, Liquidity and Capital Overview
Deposit Composition and Trends
We fund our business primarily through deposits. Deposits represented approximately 81% of total funding at June 30, 2025. The following table summarizes the composition, average size and uninsured percentages of our deposits:
Table 2
Select Deposit Data
| Deposits as of June 30, 2025 | |||||||||||||||||
| Ending Balance (in millions) | Average Size (in thousands) | Uninsured % | |||||||||||||||
| General Bank segment | $ | 73,499 | $ | 36 | 35 | % | |||||||||||
| Commercial Bank segment | 2,899 | 603 | 80 | ||||||||||||||
| SVB Commercial segment | 37,798 | 533 | 68 | ||||||||||||||
Corporate and Rail segment(1) | 45,739 | 59 | 9 | ||||||||||||||
| Total | $ | 159,935 | 55 | 36 | |||||||||||||
(1) The average size is reflective of the Direct Bank deposits and excludes brokered deposits and rail.
The General Bank segment mainly includes deposits in our Branch Network, which deploys a relationship-based approach to deposit gathering. The Commercial Bank segment includes deposits of commercial customers, and the SVB Commercial segment includes deposits related to its commercial customer base. Deposits in Corporate mainly included $45.11 billion in our Direct Bank, with the balance including brokered and other deposits.
As displayed in the table above, the average size of deposits varies across our business segments. The uninsured percentage is the percentage of uninsured deposits to total deposits at period end for the respective segments and Corporate. Total uninsured deposits were approximately $57.80 billion or 36% of total deposits at June 30, 2025 and $59.51 billion or 38% at December 31, 2024.
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Table 3
Deposit Trends
| dollars in millions | Deposit Balance | ||||||||||||||||||||||
| June 30, 2025 | March 31, 2025 | December 31, 2024 | |||||||||||||||||||||
| General Bank segment | $ | 73,499 | $ | 74,309 | $ | 72,956 | |||||||||||||||||
| Commercial Bank segment | 2,899 | 2,994 | 3,502 | ||||||||||||||||||||
| SVB Commercial segment | 37,798 | 37,020 | 36,524 | ||||||||||||||||||||
| Corporate and Rail segment | 45,739 | 45,002 | 42,247 | ||||||||||||||||||||
| Total deposits | $ | 159,935 | $ | 159,325 | $ | 155,229 | |||||||||||||||||
Deposit trends for the segments and Corporate at June 30, 2025 compared to December 31, 2024 are discussed below:
•General Bank segment deposit growth of $543 million was primarily in the Branch Network.
•SVB Commercial segment deposits increased $1.27 billion, despite the strategic decision to move $2.4 billion in select cash sweep deposits to off-balance sheet client funds during the Linked Quarter. Deposit growth was mainly in noninterest-bearing deposits, partially offset by declines in interest-bearing checking.
•Corporate deposit growth of $3.51 billion was mainly in the Direct Bank.
•Commercial Bank segment deposit decline of $603 million was mostly in noninterest-bearing deposits.
Refer to the “Results by Segments” for a discussion of deposits at June 30, 2025 compared to March 31, 2025.
Liquidity Position
We strive to maintain a strong liquidity position and our risk appetite for liquidity is low. At June 30, 2025, we had $63.62 billion in high-quality liquid assets consisting of $25.33 billion in cash and interest-earning deposits at banks (primarily held at the Federal Reserve Bank (“FRB”)) and $38.28 billion in high-quality liquid securities (“HQLS”). HQLS are mainly composed of U.S. agency mortgage-backed and U.S. Treasury investment securities. Additionally, we have unused borrowing capacity with the Federal Home Loan Bank (“FHLB”) and FRB of $17.85 billion and $10.56 billion, respectively.
In connection with the SVBB Acquisition (as defined and described in Note 2—Business Combinations), FCB and the FDIC, as lender and as collateral agent, entered into the Advance Facility Agreement (as defined and described in Note 2—Business Combinations). The draw period under the Advance Facility Agreement ended March 27, 2025, as of which date, FCB had no outstanding amounts under the facility. During the Current Quarter, we increased our borrowing capacity under agreements with the FRB through expansion of the eligible loan population to targeted loans historically not pledged to the FRB. Refer to the “Liquidity Risk” section of this MD&A for further discussion.
Also in connection with the SVBB Acquisition, FCB issued a five-year, 3.50% fixed rate Purchase Money Note (as defined in Note 2—Business Combinations), which had a carrying value of $35.84 billion at June 30, 2025. While scheduled principal payments are not required until maturity in March 2028, FCB may voluntarily prepay principal without a premium or penalty. We will continue to monitor the interest rate environment and assess whether any voluntary prepayments are prudent considering the fixed rate of 3.50%. Potential sources that could fund voluntary prepayments or the amount due at maturity include excess liquidity (primarily comprised of interest-earning deposits at banks and proceeds from maturities and paydowns of investment securities), FHLB advances, deposit growth, and issuance of unsecured debt or other borrowings. At the time of voluntary prepayment or maturity, the interest rates for the potential interest-bearing sources of repayment could be higher than the 3.50% rate.
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Investment Securities Duration
At June 30, 2025, our investment securities portfolio primarily consisted of debt securities available for sale and held to maturity as summarized below. We manage debt security market risk by monitoring the average duration of our investment securities portfolio. The duration of our investment securities was approximately 2.7 years at June 30, 2025. The investment securities available for sale portfolio had an average duration of 2.3 years and the held to maturity portfolio had an average duration of 4.2 years. Refer to the “Interest-earning Assets—Investment Securities” section of this MD&A and Note 3—Investment Securities for further information.
Table 4
Investment Securities
| dollars in millions | June 30, 2025 | ||||||||||||||||||||||||||||||||||||||||
Composition(1) | Amortized Cost | Fair Value | Fair Value to Amortized Cost | ||||||||||||||||||||||||||||||||||||||
| Total investment securities available for sale | 78.6 | % | $ | 33,381 | $ | 33,060 | 99.0 | % | |||||||||||||||||||||||||||||||||
| Total investment securities held to maturity | 21.2 | 10,189 | 8,888 | 87.2 | |||||||||||||||||||||||||||||||||||||
| Investment in marketable equity securities | 0.2 | 78 | 97 | 124.4 | |||||||||||||||||||||||||||||||||||||
| Total investment securities | 100 | % | $ | 43,648 | $ | 42,045 | |||||||||||||||||||||||||||||||||||
(1) Calculated as a percentage of the total fair value of investment securities. | |||||||||||||||||||||||||||||||||||||||||
Capital Position
At June 30, 2025, all regulatory capital ratios for BancShares and FCB exceeded the Prompt Corrective Action (“PCA”) well capitalized thresholds and Basel III requirements as further discussed in the “Capital” section of this MD&A.
RESULTS OF OPERATIONS
Net Interest Income and Net Interest Margin
NII is affected by changes in interest rates and changes in the amount and composition of interest-earning assets and interest-bearing liabilities. Interest income and expense and the respective yields and rates include amortization of premiums, accretion of discounts, and impacts from hedging activities.
The following tables present the average balances of interest-earning assets and interest-bearing liabilities with the associated yields and rates, interest income and expense, and changes therein due to changes in volume and yields or rates. Changes in interest income and expense due to changes in (i) volume (average balances of interest-earning assets and interest-bearing liabilities) and (ii) yields or rates are based on the following:
•The change in NII due to volume is calculated as the change in average balance multiplied by the yield or rate from the prior period.
•The change in NII due to yield or rate is calculated as the change in yield or rate multiplied by the average balance from the prior period.
•The change in NII due to changes in both volume and yield or rate (i.e., portfolio mix) is calculated as the change in rate multiplied by the change in volume. This component is allocated between the changes due to volume and yield or rate based on the ratio each component bears to the absolute dollar amounts of their total.
•Tax equivalent NII was not materially different from NII, therefore we present NII in our analysis.
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Table 5
Average Balances, Yields and Rates, NII, and NIM (Current Quarter to Linked Quarter)
| dollars in millions | Average Balance | Yield / Rate | Interest Income / Expense | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Increase (Decrease) | Three Months Ended | Three Months Ended | Increase (Decrease) due to: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2025 | Mar 31, 2025 | Increase (decrease) bps | Jun 30, 2025 | Mar 31, 2025 | Increase (Decrease) | Volume(1) | Yield /Rate(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and leases(1)(2) | $ | 140,699 | $ | 139,491 | $ | 1,208 | 1 | % | 6.47 | % | 6.49 | % | (2) | $ | 2,270 | $ | 2,236 | $ | 34 | $ | 36 | $ | (2) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities | 43,935 | 43,555 | 380 | 1 | 3.79 | 3.79 | — | 416 | 411 | 5 | 5 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities purchased under agreements to resell | 237 | 283 | (46) | (16) | 4.34 | 4.37 | (3) | 3 | 3 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning deposits at banks | 23,304 | 22,699 | 605 | 3 | 4.40 | 4.38 | 2 | 256 | 245 | 11 | 9 | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total interest-earning assets(2) | $ | 208,175 | $ | 206,028 | $ | 2,147 | 1 | 5.67 | 5.68 | (1) | $ | 2,945 | $ | 2,895 | $ | 50 | $ | 50 | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-earning assets | 19,377 | 19,421 | (44) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 227,552 | $ | 225,449 | $ | 2,103 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Checking with interest | $ | 22,929 | $ | 23,931 | $ | (1,002) | (4) | % | 1.69 | % | 1.77 | % | (8) | $ | 97 | $ | 104 | $ | (7) | $ | (3) | $ | (4) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Money market | 37,980 | 36,760 | 1,220 | 3 | 2.84 | 2.83 | 1 | 269 | 257 | 12 | 11 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Savings | 46,163 | 43,918 | 2,245 | 5 | 3.72 | 3.85 | (13) | 428 | 417 | 11 | 24 | (13) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits | 11,510 | 12,615 | (1,105) | (9) | 3.48 | 3.71 | (23) | 100 | 115 | (15) | (9) | (6) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 118,582 | 117,224 | 1,358 | 1 | 3.02 | 3.09 | (7) | 894 | 893 | 1 | 23 | (22) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Borrowings: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities sold under customer repurchase agreements | 471 | 428 | 43 | 10 | 0.57 | 0.52 | 5 | — | 1 | (1) | (1) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior unsecured borrowings | 555 | 169 | 386 | 229 | 5.27 | 4.88 | 39 | 8 | 2 | 6 | 5 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subordinated debt | 1,473 | 959 | 514 | 54 | 5.23 | 3.36 | 187 | 19 | 8 | 11 | 5 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other borrowings | 35,880 | 35,842 | 38 | — | 3.66 | 3.66 | — | 329 | 328 | 1 | 1 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term borrowings | 37,908 | 36,970 | 938 | 3 | 3.74 | 3.66 | 8 | 356 | 338 | 18 | 11 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total borrowings | 38,379 | 37,398 | 981 | 3 | 3.71 | 3.62 | 9 | 356 | 339 | 17 | 10 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | 156,961 | $ | 154,622 | $ | 2,339 | 2 | 3.19 | 3.22 | (3) | $ | 1,250 | $ | 1,232 | $ | 18 | $ | 33 | $ | (15) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing liabilities | $ | 48,103 | $ | 48,370 | $ | (267) | (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' equity | 22,488 | 22,457 | 31 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 227,552 | $ | 225,449 | $ | 2,103 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest spread(2) | 2.48 | % | 2.46 | % | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin and net interest income (2) | 3.26 | % | 3.26 | % | — | $ | 1,695 | $ | 1,663 | $ | 32 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Loans and leases include nonaccrual loans and loans held for sale. Interest income on loans and leases includes accretion income and loan fees.
(2) The average balances and yields for loans and leases are calculated net of average credit balances of factoring clients to appropriately reflect the interest-earning portion of factoring receivables.
65
NII, NIM, and Average Balances (Current Quarter Compared to Linked Quarter)
The table above quantifies the increases or decreases for the Current Quarter compared to the Linked Quarter for NII and NIM, as well as average balances of interest-earning assets and interest-bearing liabilities, and the respective yields earned and rates paid. The main reasons for the increases and decreases are explained below:
NII and NIM
•NII for the Current Quarter was $1.70 billion, an increase of $32 million or 2% from $1.66 billion for the Linked Quarter. NII, excluding PAA,(1) was $1.63 billion for the Current Quarter, an increase of $41 million from $1.59 billion for the Linked Quarter. The main reasons for the increases in NII and NII, excluding PAA,(1) are explained below:
◦Interest and fees on loans for the Current Quarter was $2.27 billion, an increase of $34 million or 2% from $2.24 billion for the Linked Quarter. The increase was primarily due to a higher average balance and a higher day count.
▪Loan PAA was $75 million for the Current Quarter, a decrease of $9 million from $84 million for the Linked Quarter.
▪Interest and fees on loans, excluding loan PAA,(1) was $2.20 billion for the Current Quarter, an increase of $43 million from $2.15 billion for the Linked Quarter.
◦Interest income on interest-earning deposits at banks for the Current Quarter was $256 million, an increase of $11 million or 4% from $245 million for the Linked Quarter, primarily due to a higher average balance and day count.
◦Interest income on investment securities (including securities purchased under agreements to resell) for the Current Quarter was $419 million, an increase of $5 million or 1% from $414 million for the Linked Quarter, mostly due to a higher average balance.
◦Interest expense on borrowings for the Current Quarter was $356 million, an increase of $17 million or 5% from $339 million for the Linked Quarter, primarily due to a higher average balance and rate paid as the Linked Quarter Debt Issuances were outstanding for the entire Current Quarter. Refer to the “Recent Events” section of this MD&A for further discussion.
◦Interest expense on interest-bearing deposits for the Current Quarter was $894 million, a modest increase of $1 million from $893 million for the Linked Quarter, as the impacts of a higher average balance and a higher day count were mostly offset by a lower rate paid.
•NIM for the Current Quarter and Linked Quarter was 3.26%, as a lower rate paid on interest-bearing deposits was offset by a higher average balance of interest-bearing deposits and borrowings, a higher rate paid on borrowings, and lower PAA. NIM, excluding PAA,(1) was 3.14% for the Current Quarter, an increase of 2 bps from 3.12% for the Linked Quarter.
◦The yield on average interest-earning assets for the Current Quarter was 5.67%, a decrease of 1 bp from 5.68% for the Linked Quarter, mainly due to lower loan PAA.
◦The rate paid on average interest-bearing liabilities for the Current Quarter was 3.19%, a decrease of 3 bps from 3.22% for the Linked Quarter, primarily due to a lower rate paid on interest-bearing deposits, partially offset by the impacts of a higher average balance of interest-bearing deposits and borrowings, and a higher rate paid on borrowings.
Refer to the “Financial Performance Summary—Balance Sheet Highlights,” “Interest-earning Assets,” and “Interest-bearing Liabilities” sections of this MD&A for discussions of balance sheet trends that impact average interest-earning assets, average interest-bearing liabilities, and the related yields earned and rates paid.
(1) Refer to the “NII, NIM, and Interest and Fees on Loans, Excluding PAA” discussion in the “Non-GAAP Financial Measurements” section of this MD&A for further information.
66
Table 6
Average Balances, Yields and Rates, NII, and NIM (Current Quarter to Prior Year Quarter)
| dollars in millions | Average Balance | Yield / Rate | Interest Income / Expense | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Increase (Decrease) from Prior Year Quarter | Three Months Ended | Three Months Ended | Increase (Decrease) due to: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2025 | Jun 30, 2024 | Increase (decrease) bps | Jun 30, 2025 | Jun 30, 2024 | Increase (Decrease) | Volume(1) | Yield /Rate(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and leases(1)(2) | $ | 140,699 | $ | 135,965 | $ | 4,734 | 4 | % | 6.47 | % | 7.15 | % | (68) | $ | 2,270 | $ | 2,422 | $ | (152) | $ | 83 | $ | (235) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities | 43,935 | 36,445 | 7,490 | 21 | 3.79 | 3.60 | 19 | 416 | 327 | 89 | 71 | 18 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities purchased under agreements to resell | 237 | 236 | 1 | — | 4.34 | 5.37 | (103) | 3 | 3 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning deposits at banks | 23,304 | 28,059 | (4,755) | (17) | 4.40 | 5.42 | (102) | 256 | 378 | (122) | (58) | (64) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total interest-earning assets(2) | $ | 208,175 | $ | 200,705 | $ | 7,470 | 4 | 5.67 | 6.26 | (59) | $ | 2,945 | $ | 3,130 | $ | (185) | $ | 96 | $ | (281) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-earning assets | 19,377 | 18,186 | 1,191 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 227,552 | $ | 218,891 | $ | 8,661 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Checking with interest | $ | 22,929 | $ | 24,427 | $ | (1,498) | (6) | % | 1.69 | % | 2.26 | % | (57) | $ | 97 | $ | 137 | $ | (40) | $ | (8) | $ | (32) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Money market | 37,980 | 32,003 | 5,977 | 19 | 2.84 | 3.14 | (30) | 269 | 250 | 19 | 44 | (25) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Savings | 46,163 | 38,429 | 7,734 | 20 | 3.72 | 4.35 | (63) | 428 | 415 | 13 | 78 | (65) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits | 11,510 | 16,043 | (4,533) | (28) | 3.48 | 4.33 | (85) | 100 | 173 | (73) | (43) | (30) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 118,582 | 110,902 | 7,680 | 7 | 3.02 | 3.54 | (52) | 894 | 975 | (81) | 71 | (152) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Borrowings: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities sold under customer repurchase agreements | 471 | 380 | 91 | 24 | 0.57 | 0.46 | 11 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior unsecured borrowings | 555 | 375 | 180 | 48 | 5.27 | 2.49 | 278 | 8 | 3 | 5 | 1 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subordinated debt | 1,473 | 901 | 572 | 64 | 5.23 | 3.32 | 191 | 19 | 7 | 12 | 6 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other borrowings | 35,880 | 35,824 | 56 | — | 3.66 | 3.61 | 5 | 329 | 324 | 5 | 1 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term borrowings | 37,908 | 37,100 | 808 | 2 | 3.74 | 3.60 | 14 | 356 | 334 | 22 | 8 | 14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total borrowings | 38,379 | 37,480 | 899 | 2 | 3.71 | 3.56 | 15 | 356 | 334 | 22 | 8 | 14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | 156,961 | $ | 148,382 | $ | 8,579 | 6 | 3.19 | 3.54 | (35) | $ | 1,250 | $ | 1,309 | $ | (59) | $ | 79 | $ | (138) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing liabilities | $ | 48,103 | $ | 48,457 | $ | (354) | (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' equity | 22,488 | 22,052 | 436 | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 227,552 | $ | 218,891 | $ | 8,661 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest spread(2) | 2.48 | % | 2.72 | % | (24) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin and net interest income (2) | 3.26 | % | 3.64 | % | (38) | $ | 1,695 | $ | 1,821 | $ | (126) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Loans and leases include nonaccrual loans and loans held for sale. Interest income on loans and leases includes accretion income and loan fees.
(2) The average balances and yields for loans and leases are calculated net of average credit balances of factoring clients to appropriately reflect the interest-earning portion of factoring receivables.
67
Table 7
Average Balances, Yields and Rates, NII, and NIM (Current YTD to Prior Year YTD)
| dollars in millions | Average Balance | Yield / Rate | Interest Income / Expense | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended | Increase (Decrease) from Prior Year Quarter | Six Months Ended | Six Months Ended | Increase (Decrease) due to: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2025 | Jun 30, 2024 | Increase (decrease) bps | Jun 30, 2025 | Jun 30, 2024 | Increase (Decrease) | Volume(1) | Yield /Rate(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and leases(1)(2) | $ | 140,099 | $ | 134,139 | $ | 5,960 | 4 | % | 6.48 | % | 7.15 | % | (67) | $ | 4,506 | $ | 4,776 | $ | (270) | $ | 200 | $ | (470) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities | 43,746 | 34,546 | 9,200 | 27 | 3.79 | 3.51 | 28 | 827 | 606 | 221 | 171 | 50 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities purchased under agreements to resell | 260 | 240 | 20 | 8 | 4.36 | 5.38 | (102) | 6 | 6 | — | 1 | (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning deposits at banks | 23,003 | 30,721 | (7,718) | (25) | 4.39 | 5.41 | (102) | 501 | 826 | (325) | (186) | (139) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total interest-earning assets(2) | $ | 207,108 | $ | 199,646 | $ | 7,462 | 4 | 5.67 | 6.25 | (58) | $ | 5,840 | $ | 6,214 | $ | (374) | $ | 186 | $ | (560) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-earning assets | 19,398 | 17,840 | 1,558 | 9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 226,506 | $ | 217,486 | $ | 9,020 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Checking with interest | $ | 23,427 | $ | 24,195 | $ | (768) | (3) | % | 1.73 | % | 2.22 | % | (49) | $ | 201 | $ | 267 | $ | (66) | $ | (8) | $ | (58) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Money market | 37,373 | 31,470 | 5,903 | 19 | 2.84 | 3.08 | (24) | 526 | 482 | 44 | 84 | (40) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Savings | 45,046 | 37,456 | 7,590 | 20 | 3.79 | 4.33 | (54) | 845 | 806 | 39 | 149 | (110) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits | 12,060 | 16,361 | (4,301) | (26) | 3.60 | 4.27 | (67) | 215 | 348 | (133) | (83) | (50) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 117,906 | 109,482 | 8,424 | 8 | 3.06 | 3.50 | (44) | 1,787 | 1,903 | (116) | 142 | (258) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Borrowings: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities sold under customer repurchase agreements | 450 | 406 | 44 | 11 | 0.55 | 0.47 | 8 | 1 | 1 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior unsecured borrowings | 363 | 376 | (13) | (3) | 5.16 | 2.50 | 266 | 10 | 5 | 5 | — | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subordinated debt | 1,218 | 906 | 312 | 34 | 4.49 | 3.30 | 119 | 27 | 15 | 12 | 6 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other borrowings | 35,861 | 35,842 | 19 | — | 3.66 | 3.64 | 2 | 657 | 652 | 5 | 1 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term borrowings | 37,442 | 37,124 | 318 | 1 | 3.70 | 3.62 | 8 | 694 | 672 | 22 | 7 | 15 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total borrowings | 37,892 | 37,530 | 362 | 1 | 3.66 | 3.58 | 8 | 695 | 673 | 22 | 7 | 15 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | 155,798 | $ | 147,012 | $ | 8,786 | 6 | 3.20 | 3.52 | (32) | $ | 2,482 | $ | 2,576 | $ | (94) | $ | 149 | $ | (243) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing liabilities | $ | 48,236 | $ | 48,699 | $ | (463) | (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' equity | 22,472 | 21,775 | 697 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 226,506 | $ | 217,486 | $ | 9,020 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest spread(2) | 2.47 | % | 2.73 | % | (26) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin and net interest income (2) | 3.26 | % | 3.66 | % | (40) | $ | 3,358 | $ | 3,638 | $ | (280) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Loans and leases include nonaccrual loans and loans held for sale. Interest income on loans and leases includes accretion income and loan fees.
(2) The average balances and yields for loans and leases are calculated net of average credit balances of factoring clients to appropriately reflect the interest-earning portion of factoring receivables.
68
NII and NIM - Current YTD compared to Prior YTD
The table above quantifies the increases or decreases for the Current YTD compared to the Prior YTD for NII and NIM, as well as average balances of interest-earning assets and interest-bearing liabilities, and the respective yields earned and rates paid. The main reasons for the increases and decreases are explained below:
NII and NIM
•NII for the Current YTD was $3.36 billion, a decrease of $280 million or 8% from $3.64 billion for the Prior YTD. NII, excluding PAA,(1) was $3.22 billion for the Current YTD, a decrease of $124 million from $3.34 billion for the Prior YTD. The main reasons for the decreases in NII and NII, excluding PAA,(1) are explained below:
◦Interest and fees on loans for the Current YTD was $4.51 billion, a decrease of $270 million or 6% from $4.78 billion for the Prior YTD, mainly due to lower yields and loan PAA, partially offset by the impact of a higher average balance.
•Loan PAA was $159 million in the Current YTD, a decrease of $149 million from $308 million for the Prior YTD.
•Interest and fees on loans, excluding loan PAA,(1) was $4.35 billion for the Current YTD, a decrease of $121 million from $4.47 billion for the Prior YTD.
◦Interest income on investment securities (including securities purchased under agreements to resell) for the Current YTD was $833 million, an increase of $221 million or 36% from $612 million for the Prior YTD. The increase was mainly due to a higher yield and average balance.
◦Interest income on interest-earning deposits at banks for the Current YTD was $501 million, a decrease of $325 million or 39% from $826 million for the Prior YTD, due to a lower average balance and a decline in the federal funds rate.
◦Interest expense on interest-bearing deposits for the Current YTD was $1.79 billion, a decrease of $116 million or 6% from $1.90 billion for the Prior YTD, as a lower rate paid was partially offset by the impact of a higher average balance.
◦Interest expense on borrowings for the Current YTD was $695 million, an increase of $22 million or 3% from $673 million for the Prior YTD, primarily due to a higher average balance and rate paid as a result of the Linked Quarter Debt Issuances.
•NIM for the Current YTD was 3.26%, a decrease of 40 bps from 3.66% for the Prior YTD. NIM compression was mainly due to the unfavorable impacts of lower yields on loans and interest-earning deposits at banks, a mix shift from interest-earning deposits at banks to investment securities, a higher average balance of interest-bearing deposits, lower PAA, and a higher average balance and rate paid on borrowings, partially offset by the favorable impacts of a decline in the rate paid on interest-bearing deposits and a higher average balance of loans. NIM, excluding PAA,(1) was 3.13% for the Current YTD, a decrease of 23 bps from 3.36% for the Prior YTD.
◦The yield on average interest-earning assets for the Current YTD was 5.67%, a decrease of 58 bps from 6.25% for the Prior YTD, mainly due to declines in yields on loans and interest-earning deposits at banks, as well as lower loan PAA, partially offset by a higher yield on investment securities.
◦The rate paid on average interest-bearing liabilities for the Current YTD was 3.20%, a decrease of 32 bps from 3.52% for the Prior YTD, primarily due to a lower rate paid on interest-bearing deposits, partially offset by the impacts of a higher average balance of interest-bearing deposits, and a higher average balance and rate paid for borrowings as a result of the Linked Quarter Debt Issuances.
Refer to the “Financial Performance Summary—Balance Sheet Highlights,” “Interest-earning Assets,” and “Interest-bearing Liabilities” sections of this MD&A for discussions of balance sheet trends that impact average interest-earning assets, average interest-bearing liabilities, and the related yields and rates paid.
(1) Refer to the “NII, NIM, and Interest and Fees on Loans, Excluding PAA” discussion in the “Non-GAAP Financial Measurements” section of this MD&A for further information.
The following table shows the types of average interest-earning assets as a percentage of total average interest-earning assets.
Table 8
Average Interest-earning Asset Mix
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| June 30, 2025 | March 31, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||||||||||||||||||||
| Loans and leases | 68 | % | 68 | % | 68 | % | 68 | % | 67 | % | |||||||||||||||||||||||||
| Investment securities | 21 | 21 | 18 | 21 | 17 | ||||||||||||||||||||||||||||||
| Interest-earning deposits at banks | 11 | 11 | 14 | 11 | 16 | ||||||||||||||||||||||||||||||
| Total interest-earning assets | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||
69
The following table shows the types of average interest-bearing liabilities as a percentage of total average interest-bearing liabilities.
Table 9
Average Interest-bearing Liability Mix
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| June 30, 2025 | March 31, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 76 | % | 76 | % | 75 | % | 76 | % | 75 | % | |||||||||||||||||||||||||
| Long-term borrowings | 24 | 24 | 25 | 24 | 25 | ||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||
Provision for Credit Losses
Table 10
Provision for Credit Losses
| dollars in millions | Three Months Ended | Increase (Decrease) from Linked Quarter | Six Months Ended | Increase (Decrease) Year to Date | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2025 | March 31, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for loan and lease losses | $ | 111 | $ | 148 | $ | 95 | $ | (37) | (26) | % | $ | 259 | $ | 188 | $ | 71 | 38 | % | |||||||||||||||||||||||||||||||||||||||||
| Provision (benefit) for off-balance sheet credit exposure | 4 | 6 | — | (2) | (23) | 10 | (29) | 39 | 136 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | $ | 115 | $ | 154 | $ | 95 | $ | (39) | (26) | % | $ | 269 | $ | 159 | $ | 110 | 70 | % | |||||||||||||||||||||||||||||||||||||||||
The provision for credit losses for the Current Quarter was $115 million, a decrease of $39 million from $154 million for the Linked Quarter.
•The provision for loan and lease losses for the Current Quarter was $111 million, a decrease of $37 million from $148 million for the Linked Quarter, mainly attributable to a decrease in net charge-offs of $25 million and a decrease of $8 million in the ALLL for the Current Quarter, compared to an increase of $4 million in the ALLL for the Linked Quarter.
◦The decrease of $8 million in the ALLL at June 30, 2025 compared to March 31, 2025 primarily reflected decreases related to Hurricane Helene, other credit quality improvements, and a modest shift in our weighting from the downside to baseline economic scenario as further discussed in the “ALLL Methodology” section of this MD&A, partially offset by higher specific reserves for individually evaluated loans.
•The provision for off-balance sheet credit exposure for the Current Quarter was $4 million, a decrease of $2 million compared to $6 million for the Linked Quarter, mostly due to the modest shift in our scenario weighting discussed above.
The provision for credit losses for the Current YTD was $269 million, an increase of $110 million from $159 million for the Prior YTD.
•The provision for loan and lease losses for the Current YTD was $259 million, an increase of $71 million from $188 million for the Prior YTD, mainly attributable to a $43 million decline in the ALLL reserve release for the Current YTD, and an increase in net charge-offs of $28 million.
◦The decrease of $4 million in the ALLL at June 30, 2025 compared to December 31, 2024 reflected the decreases discussed above in the Linked Quarter comparison and the result of a mix shift from the investor dependent portfolio to the global fund banking portfolio, which has a lower loss rate relative to our other loan portfolios, partially offset by the impact of loan growth.
•The provision for off-balance sheet credit exposure for the Current YTD was $10 million, compared to a benefit of $29 million for the Prior YTD. The increase in expense of $39 million was mostly due to trends in the volume of unfunded commitments (which declined in the Prior YTD resulting in the benefit of $29 million), partially offset by a modest shift in our weighting from the downside to baseline economic scenario as further discussed in the “ALLL Methodology” section of this MD&A.
The ALLL and net charge-offs are further discussed in the “Risk Management—Credit Risk” section of this MD&A and in Note 5—Allowance for Loan and Lease Losses.
70
Noninterest Income
The primary sources of noninterest income consist of rental income on operating lease equipment, lending-related fees, deposit fees and service charges, client investment fees, wealth management services, international fees, factoring commissions, cardholder and merchant services, and insurance commissions.
Table 11
Noninterest Income
| dollars in millions | Three Months Ended | Increase (Decrease) from Linked Quarter | Six Months Ended | Increase (Decrease) Year to Date | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2025 | March 31, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rental income on operating lease equipment | $ | 272 | $ | 270 | $ | 259 | $ | 2 | 1 | % | $ | 542 | $ | 514 | $ | 28 | 6 | % | |||||||||||||||||||||||||||||||||||||||||
| Lending-related fees | 69 | 66 | 63 | 3 | 5 | 135 | 122 | 13 | 11 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Deposit fees and service charges | 59 | 58 | 57 | 1 | 3 | 117 | 115 | 2 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Client investment fees | 52 | 53 | 54 | (1) | (4) | 105 | 104 | 1 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Wealth management services | 55 | 56 | 52 | (1) | (2) | 111 | 103 | 8 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| International fees | 33 | 32 | 29 | 1 | 1 | 65 | 57 | 8 | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Factoring commissions | 18 | 17 | 19 | 1 | 3 | 35 | 36 | (1) | (2) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Cardholder services, net | 41 | 41 | 40 | — | — | 82 | 80 | 2 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Merchant services, net | 13 | 14 | 12 | (1) | (10) | 27 | 24 | 3 | 11 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Insurance commissions | 14 | 14 | 13 | — | 2 | 28 | 28 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value adjustment on marketable equity securities, net | 2 | (5) | (2) | 7 | 146 | (3) | (6) | 3 | 56 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Gain on sale of leasing equipment, net | 8 | 5 | 4 | 3 | 23 | 13 | 14 | (1) | (3) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | — | — | — | — | — | — | (2) | 2 | 100 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other noninterest income | 42 | 14 | 39 | 28 | 219 | 56 | 77 | (21) | (28) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total noninterest income | $ | 678 | $ | 635 | $ | 639 | $ | 43 | 7 | % | $ | 1,313 | $ | 1,266 | $ | 47 | 4 | % | |||||||||||||||||||||||||||||||||||||||||
Noninterest income for the Current Quarter was $678 million, an increase of $43 million or 7%, from $635 million for the Linked Quarter, primarily due to the following:
•The increase in other noninterest income of $28 million was mainly attributable to the positive impacts from fair value changes in customer derivative positions and other non-marketable investments, as well as the Linked Quarter write-down of a held for sale asset.
•The favorable change of $7 million in the fair value of marketable equity securities.
Noninterest income for the Current YTD was $1.31 billion, an increase of $47 million or 4%, from $1.27 billion for the Prior YTD as further discussed below:
•The increase in rental income on operating lease equipment of $28 million was mainly the result of growth in the railcar portfolio.
•The increase in lending-related fees of $13 million was primarily due to higher syndication fees.
•The increase in wealth management services of $8 million reflected growth in assets under management.
•The increase in international fees of $8 million reflected higher volumes and commissions on foreign currency exchange transactions.
•The decrease in other noninterest income of $21 million was largely due a lower favorable impact from the fair value changes in customer derivative positions, as well as the write-down of a held for sale asset in the Current YTD, partially offset by favorable changes in the fair value of non-marketable equity securities.
71
Noninterest Expense
Table 12
Noninterest Expense
| dollars in millions | Three Months Ended | Increase (Decrease) from Linked Quarter | Six Months Ended | Increase (Decrease) Year to Date | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2025 | March 31, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation on operating lease equipment | $ | 100 | $ | 98 | $ | 98 | $ | 2 | 1 | % | $ | 198 | $ | 194 | $ | 4 | 2 | % | |||||||||||||||||||||||||||||||||||||||||
| Maintenance and other operating lease expenses | 55 | 58 | 60 | (3) | (3) | 113 | 105 | 8 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Personnel cost | 810 | 818 | 745 | (8) | (1) | 1,628 | 1,489 | 139 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net occupancy expense | 61 | 58 | 58 | 3 | 7 | 119 | 120 | (1) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Equipment expense | 131 | 136 | 126 | (5) | (4) | 267 | 240 | 27 | 11 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Professional fees | 30 | 25 | 24 | 5 | 17 | 55 | 49 | 6 | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Third-party processing fees | 63 | 63 | 58 | — | 1 | 126 | 118 | 8 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| FDIC insurance expense | 38 | 38 | 33 | — | — | 76 | 74 | 2 | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Marketing expense | 32 | 32 | 18 | — | 1 | 64 | 32 | 32 | 102 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition-related expenses | 38 | 42 | 44 | (4) | (10) | 80 | 102 | (22) | (21) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible asset amortization | 13 | 15 | 15 | (2) | (12) | 28 | 32 | (4) | (12) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other noninterest expense | 129 | 110 | 107 | 19 | 17 | 239 | 207 | 32 | 15 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total noninterest expense | $ | 1,500 | $ | 1,493 | $ | 1,386 | $ | 7 | 1 | % | $ | 2,993 | $ | 2,762 | $ | 231 | 8 | % | |||||||||||||||||||||||||||||||||||||||||
Noninterest expense for the Current Quarter was $1.50 billion, an increase of $7 million or 1%, from $1.49 billion for the Linked Quarter as further discussed below:
•The increase in other noninterest expense of $19 million was mainly due to accruals totaling $15 million resulting from a vendor dispute and an increase in litigation reserves.
•The increase in professional fees of $5 million was mostly related to higher consulting costs.
•The decrease in personnel cost of $8 million was mainly due to seasonal increases in the Linked Quarter associated with employee benefits and payroll taxes, partially offset by the impact of annual merit increases being included for the entire Current Quarter.
•The decrease in equipment expense of $5 million was mainly due to lower software-related costs, mostly related to accelerated depreciation in the Linked Quarter.
•The decrease in acquisition-related expenses of $4 million is summarized in the table below.
Noninterest expense for the Current YTD was $2.99 billion, an increase of $231 million or 8% from $2.76 billion for the Prior YTD as further discussed below:
•The increase in personnel cost of $139 million was mainly due to annual merit increases and promotions, as well as net staff additions.
•The increase in marketing expense of $32 million was primarily due to marketing for Direct Bank deposits.
•The increase in other noninterest expense of $32 million was due to increases in various noninterest expense line items, as well as the other noninterest expense accruals discussed above.
•The increase in equipment expense of $27 million was mostly due to higher software-related costs, including accelerated depreciation.
•The increase in depreciation on operating lease equipment of $4 million and the increase of $8 million in maintenance and other operating lease expenses are discussed in the “Results by Segment” section of this MD&A.
•The decrease in acquisition-related expenses of $22 million is summarized in Table 13 below.
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Table 13
Acquisition-related Expenses
| dollars in millions | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||
| June 30, 2025 | March 31, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||||||||||||||||||||
| Personnel cost | $ | 15 | $ | 15 | $ | 12 | $ | 30 | $ | 41 | |||||||||||||||||||||||||
| Professional fees | 20 | 26 | 23 | 46 | 49 | ||||||||||||||||||||||||||||||
| Other acquisition-related expense | 3 | 1 | 9 | 4 | 12 | ||||||||||||||||||||||||||||||
| Total acquisition-related expense | $ | 38 | $ | 42 | $ | 44 | $ | 80 | $ | 102 | |||||||||||||||||||||||||
Acquisition-related personnel cost primarily includes severance and retention costs for employees associated with business combinations. These amounts are recognized over the requisite service period, if any.
Acquisition-related professional fees mainly include consulting, legal and accounting costs associated with business combinations and the related integration, optimization, and business process reengineering, including enhancements to technology. These amounts are expensed as incurred.
Income Taxes
Table 14
Income Tax Data
| dollars in millions | Three Months Ended | Increase (Decrease) from Linked Quarter | Six Months Ended | Increase (Decrease) Year to Date | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2025 | March 31, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income before income taxes | $ | 758 | $ | 651 | $ | 979 | $ | 107 | 17 | % | $ | 1,409 | $ | 1,983 | $ | (574) | (29) | % | |||||||||||||||||||||||||||||||||||||||||
| Income tax expense | $ | 183 | $ | 168 | $ | 272 | $ | 15 | 9 | % | $ | 351 | $ | 545 | $ | (194) | (36) | % | |||||||||||||||||||||||||||||||||||||||||
| Effective income tax rate | 24.1 | % | 25.8 | % | 27.8 | % | 24.9 | % | 27.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
The ETR was 24.1% for the Current Quarter compared to 25.8% for the Linked Quarter. The lower ETR for the Current Quarter was mostly due to the revaluation of the deferred tax liability due to a change in state law enacted in the Current Quarter. The ETR was 24.9% for the Current YTD compared to 27.5% for the Prior YTD. The decrease for the Current YTD ETR compared to the Prior YTD was primarily due to a reduction in the state and local income tax rate.
The ETR is impacted by a number of factors, including the relative mix of domestic and international earnings, effects of changes in enacted tax laws, adjustments to valuation allowances, and discrete items. The ETR in future periods may vary from the Current Quarter ETR due to changes in these factors.
BancShares monitors and evaluates the potential impact of current events on the estimates used to establish income tax expense and income tax liabilities. On a periodic basis, we evaluate our income tax positions based on current tax law and positions taken by various tax auditors within the jurisdictions where BancShares is required to file income tax returns, as well as potential or pending audits or assessments by tax auditors. Refer to Note 15—Income Taxes for additional information.
Refer to the “Executive Overview—Recent Events” for a brief discussion on tax reform legislation enacted on July 4, 2025.
RESULTS BY SEGMENT
We made changes to the composition of our reportable segments during the first quarter of 2025 as further discussed in Note 1—Significant Accounting Policies and Basis of Presentation and briefly summarized in the “Recent Events” section earlier in this MD&A. Segment disclosures for 2024 periods included in this Form 10-Q were recast to reflect the changes.
BancShares’ segments include the General Bank, the Commercial Bank, SVB Commercial, and Rail. All other financial information not included in the segments is reported in the Corporate section of the segment disclosures. Certain noninterest expenses are directly incurred by a segment, while others are not. Noninterest expenses not directly incurred by a segment are included in Corporate unless allocated to a segment (“Allocated Expenses”). Under our segment expense allocation methodology, Allocated Expenses increase noninterest expense of the applicable segment(s), with an offsetting decrease to Corporate noninterest expense. “All other noninterest expense” in the segment reporting tables below includes the effect of Allocated Expenses, resulting in a reduction to expense (or “Contra Expense”) for Corporate.
Refer to Note 17—Segment Information for descriptions of segment products and services.
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General Bank
Table 15
General Bank: Financial Data
| dollars in millions | Three Months Ended | Increase (Decrease) from Linked Quarter | Six Months Ended | Increase (Decrease) Year to Date | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Summary | June 30, 2025 | March 31, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 824 | $ | 788 | $ | 730 | $ | 36 | 5 | % | $ | 1,612 | $ | 1,414 | $ | 198 | 14 | % | |||||||||||||||||||||||||||||||||||||||||
| Total noninterest income | 164 | 164 | 152 | — | — | 328 | 297 | 31 | 11 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | 988 | 952 | 882 | 36 | 4 | 1,940 | 1,711 | 229 | 13 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Personnel cost | 210 | 214 | 185 | (4) | (1) | 424 | 392 | 32 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| All other noninterest expense | 370 | 351 | 316 | 19 | 5 | 721 | 637 | 84 | 13 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total noninterest expense | 580 | 565 | 501 | 15 | 3 | 1,145 | 1,029 | 116 | 11 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | 13 | 46 | 37 | (33) | (73) | 59 | 58 | 1 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Income before income taxes | 395 | 341 | 344 | 54 | 16 | 736 | 624 | 112 | 18 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Income tax expense | 101 | 88 | 92 | 13 | 15 | 189 | 171 | 18 | 10 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 294 | $ | 253 | $ | 252 | $ | 41 | 17 | $ | 547 | $ | 453 | $ | 94 | 21 | |||||||||||||||||||||||||||||||||||||||||||
Pre-provision net revenue (“PPNR”) (1) | $ | 408 | $ | 387 | $ | 381 | $ | 21 | 5 | % | $ | 795 | $ | 682 | $ | 113 | 17 | % | |||||||||||||||||||||||||||||||||||||||||
| Select Period End Balances | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans and leases | $ | 64,987 | $ | 64,847 | $ | 63,327 | $ | 140 | — | % | $ | 64,987 | $ | 63,327 | $ | 1,660 | 3 | % | |||||||||||||||||||||||||||||||||||||||||
| Deposits | 73,499 | 74,309 | 71,261 | (810) | (1) | 73,499 | 71,261 | 2,238 | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
(1) PPNR is a non-GAAP measure. Refer to the “Non-GAAP Financial Measurements” section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.
General Bank segment net income for the Current Quarter increased $41 million compared to the Linked Quarter, primarily due to higher NII and lower provision for credit losses, partially offset by increases in all other noninterest expenses and income tax expense.
•The $36 million increase in NII was largely due to lower rates paid on interest-bearing deposits and loan growth.
•The $33 million decrease in provision for credit losses reflected the decreases related to Hurricane Helene and the modest shift in our weighting from the downside to baseline economic scenario as further discussed in the “ALLL Methodology” section of this MD&A.
•The $19 million net increase in all other noninterest expenses is spread amongst various accounts, including Allocated Expenses. Refer to the “Noninterest Expense” discussion in the “Results of Operations” section of this MD&A for further information regarding trends in consolidated noninterest expense.
•The $13 million increase in income tax expense reflected higher income before income taxes.
General Bank segment loans were $64.99 billion at June 30, 2025, an increase of $140 million compared to $64.85 billion at March 31, 2025, largely related to loan growth in Wealth, partially offset by a decline in business and commercial loans in the Branch Network.
General Bank segment deposits were $73.50 billion at June 30, 2025, a decrease of $810 million compared to $74.31 billion at March 31, 2025, mostly related to declines in the Branch Network and Wealth due to seasonal tax outflows, and lower net growth.
General Bank segment net income for the Current YTD increased $94 million compared to the Prior YTD, primarily due to higher NII and noninterest income, partially offset by increases in personnel cost, all other noninterest expenses, and income tax expense.
•The $198 million increase in NII was mainly due to lower rates paid on interest-bearing deposits and loan growth, partially offset by the impact of deposit growth.
•The $31 million increase in total noninterest income was mostly due to increases in wealth management services, deposit fees and service charges, and cardholder services.
•The $32 million increase in personnel cost was mainly due to annual merit increases and promotions.
•The $84 million net increase in all other noninterest expenses is spread amongst various accounts, including Allocated Expenses. Refer to the “Noninterest Expense” discussion in the “Results of Operations” section of this MD&A for further information regarding trends in consolidated noninterest expense.
•The $18 million increase in income tax expense reflected higher income before income taxes.
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Commercial Bank
Table 16
Commercial Bank: Financial Data
| dollars in millions | Three Months Ended | Increase (Decrease) from Linked Quarter | Six Months Ended | Increase (Decrease) Year to Date | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Summary | June 30, 2025 | March 31, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 299 | $ | 293 | $ | 311 | $ | 6 | 2 | % | $ | 592 | $ | 611 | $ | (19) | (3) | % | |||||||||||||||||||||||||||||||||||||||||
| Noninterest Income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rental income on operating lease equipment | 54 | 56 | 58 | (2) | (2) | 110 | 115 | (5) | (3) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Less: depreciation on operating lease equipment | 44 | 44 | 48 | — | — | 88 | 94 | (6) | (6) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net rental income on operating lease equipment (1) | 10 | 12 | 10 | (2) | (17) | 22 | 21 | 1 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| All other noninterest income | 98 | 69 | 77 | 29 | 42 | 167 | 160 | 7 | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total noninterest income (2) | 152 | 125 | 135 | 27 | 22 | 277 | 275 | 2 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest income, net of depreciation (1) | 108 | 81 | 87 | 27 | 33 | 189 | 181 | 8 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | 451 | 418 | 446 | 33 | 8 | 869 | 886 | (17) | (2) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue, net of depreciation (1) | 407 | 374 | 398 | 33 | 9 | 781 | 792 | (11) | (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest Expense | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Personnel cost | 69 | 72 | 63 | (3) | (6) | 141 | 137 | 4 | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| All other noninterest expense | 154 | 159 | 135 | (5) | (2) | 313 | 275 | 38 | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total noninterest expense (3) | 267 | 275 | 246 | (8) | (3) | 542 | 506 | 36 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest expense, net of depreciation (1) | 223 | 231 | 198 | (8) | (3) | 454 | 412 | 42 | 10 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | 47 | 85 | 39 | (38) | (44) | 132 | 59 | 73 | 123 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Income before income taxes | 137 | 58 | 161 | 79 | 138 | 195 | 321 | (126) | (39) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Income tax expense | 35 | 15 | 44 | 20 | 136 | 50 | 86 | (36) | (42) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 102 | $ | 43 | $ | 117 | $ | 59 | 139 | % | $ | 145 | $ | 235 | $ | (90) | (38) | % | |||||||||||||||||||||||||||||||||||||||||
PPNR (1) | $ | 184 | $ | 143 | $ | 200 | $ | 41 | 30 | % | $ | 327 | $ | 380 | $ | (53) | (14) | % | |||||||||||||||||||||||||||||||||||||||||
| Select Period End Balances | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans and leases | $ | 38,691 | $ | 38,631 | $ | 36,835 | $ | 60 | — | % | $ | 38,691 | $ | 36,835 | $ | 1,856 | 5 | % | |||||||||||||||||||||||||||||||||||||||||
| Operating lease equipment, net | 750 | 731 | 767 | 19 | 3 | 750 | 767 | (17) | (2) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Deposits | 2,899 | 2,994 | 3,294 | (95) | (3) | 2,899 | 3,294 | (395) | (12) | ||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Net rental income on operating lease equipment; noninterest income, net of depreciation; revenue, net of depreciation; noninterest expense, net of depreciation; and PPNR are non-GAAP measures. Refer to the “Non-GAAP Financial Measurements” section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.
(2) Total noninterest income includes rental income on operating lease equipment and all other noninterest income.
(3) Total noninterest expense includes depreciation on operating lease equipment.
Commercial Bank segment net income for the Current Quarter increased $59 million compared to the Linked Quarter, mostly due to lower provision for credit losses and higher noninterest income, partially offset by higher income tax expense.
•The $38 million decrease in provision for credit losses was mainly due to lower net charge-offs compared to the Linked Quarter and a modest shift in our weighting from the downside to baseline economic scenario as further discussed in the “ALLL Methodology” section of this MD&A.
•The $29 million increase in all other noninterest income was mainly attributable to the positive impacts from fair value changes in customer derivative positions, higher lending-related fees and other non-marketable investments, as well as the Linked Quarter write-down of a held for sale asset.
•The $20 million increase in income tax expense reflected higher income before income taxes.
Commercial Bank segment loans were $38.69 billion at June 30, 2025, an increase of $60 million compared to $38.63 billion at March 31, 2025, primarily due to growth in the real estate finance and equipment finance portfolios.
Commercial Bank segment deposits were $2.90 billion at June 30, 2025, a decrease of $95 million from $2.99 billion at March 31, 2025, mostly due to a decline in checking with interest.
Commercial Bank segment net income for the Current YTD decreased $90 million compared to the Prior YTD, primarily due to higher provision for credit losses, higher noninterest expense, and lower NII, partially offset by lower income tax expense.
75
•The $73 million increase in provision for credit losses was mainly due to higher net charge-offs in the Current YTD and the impact of loan growth, partially offset by the modest shift in our scenario weighting as further discussed in the “ALLL Methodology” section of this MD&A.
•The $38 million net increase in all other noninterest expenses is spread amongst various accounts, including Allocated Expenses. Refer to the “Noninterest Expense” discussion in the “Results of Operations” section of this MD&A for further information regarding trends in consolidated noninterest expense.
•The $19 million decrease in NII was mostly due to lower loan yields, partially offset by the impact of loan growth.
•The $36 million decrease in income tax expense reflected lower income before income taxes.
SVB Commercial
Table 17
SVB Commercial: Financial Data
| dollars in millions | Three Months Ended | Increase (Decrease) from Linked Quarter | Six Months Ended | Increase (Decrease) Year to Date | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Summary | June 30, 2025 | March 31, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 490 | $ | 493 | $ | 553 | $ | (3) | (1) | % | $ | 983 | $ | 1,076 | $ | (93) | (9) | % | |||||||||||||||||||||||||||||||||||||||||
| Total noninterest income | 130 | 132 | 134 | (2) | (1) | 262 | 268 | (6) | (2) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | 620 | 625 | 687 | (5) | (1) | 1,245 | 1,344 | (99) | (7) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Personnel cost | 110 | 114 | 123 | (4) | (4) | 224 | 242 | (18) | (8) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| All other noninterest expense | 272 | 265 | 246 | 7 | 3 | 537 | 493 | 44 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total noninterest expense | 382 | 379 | 369 | 3 | 1 | 761 | 735 | 26 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | 55 | 23 | 19 | 32 | 135 | 78 | 42 | 36 | 87 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Income before income taxes | 183 | 223 | 299 | (40) | (18) | 406 | 567 | (161) | (29) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Income tax expense | 47 | 57 | 85 | (10) | (19) | 104 | 160 | (56) | (35) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 136 | $ | 166 | $ | 214 | $ | (30) | (18) | % | $ | 302 | $ | 407 | $ | (105) | (26) | % | |||||||||||||||||||||||||||||||||||||||||
PPNR (1) | $ | 238 | $ | 246 | $ | 318 | $ | (8) | (4) | % | $ | 484 | $ | 609 | $ | (125) | (21) | % | |||||||||||||||||||||||||||||||||||||||||
| Select Period End Balances | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans and leases | $ | 37,529 | $ | 37,818 | $ | 39,117 | $ | (289) | (1) | % | $ | 37,529 | $ | 39,117 | $ | (1,588) | (4) | % | |||||||||||||||||||||||||||||||||||||||||
| Deposits | 37,798 | 37,020 | 35,773 | 778 | 2 | 37,798 | 35,773 | 2,025 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||
(1) PPNR is a non-GAAP measure. Refer to the “Non-GAAP Financial Measurements” section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.
SVB Commercial segment net income for the Current Quarter decreased $30 million compared to the Linked Quarter, mainly due to higher provision for credit losses, partially offset by lower income tax expense.
•The $32 million increase in the provision for credit losses was largely due to higher specific reserves for individually evaluated credits in the investor dependent loan class, partially offset by lower net charge-offs and a modest shift in our weighting from the downside to baseline economic scenario as further discussed in the “ALLL Methodology” section of this MD&A.
•The $10 million decrease in income tax expense reflected the decrease in income before income taxes.
SVB Commercial segment loans were $37.53 billion at June 30, 2025, a decrease of $289 million compared to $37.82 billion at March 31, 2025, mostly related to declines in Tech and Healthcare Banking loans, partially offset by growth in Global Fund Banking.
SVB Commercial segment deposits were $37.80 billion at June 30, 2025, an increase of $778 million compared to $37.02 billion at March 31, 2025, mainly due to deposit growth in Global Fund Banking and Tech & Healthcare.
SVB Commercial segment net income for the Current YTD decreased $105 million compared to the Prior YTD, mainly due to lower NII, higher all other noninterest expense, and higher provision for credit losses, partially offset by lower income tax expense.
•The $93 million decrease in NII was largely due to lower loan yields, partially offset by a lower rate paid on interest-bearing deposits.
•The $44 million net increase in all other noninterest expenses is spread amongst various accounts, including Allocated Expenses. Refer to the “Noninterest Expense” discussion in the “Results of Operations” section of this MD&A for further information regarding trends in consolidated noninterest expense.
•The $36 million increase in provision for credit losses primarily reflected an increase in the provision for off-balance sheet credit exposure, mostly due to trends in the volume of unfunded commitments (which declined in the Prior YTD), partially offset by lower net charge-offs and a modest shift in our weighting from the downside to baseline economic scenario as further discussed in the “ALLL Methodology” section of this MD&A.
76
•The $56 million decrease in income tax expense reflected the decrease in income before income taxes.
Rail
Table 18
Rail: Financial Data
| dollars in millions | Three Months Ended | Increase (Decrease) from Linked Quarter | Six Months Ended | Increase (Decrease) Year to Date | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Summary | June 30, 2025 | March 31, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income (expense) | $ | (53) | $ | (52) | $ | (45) | $ | 1 | 4 | % | $ | (105) | $ | (88) | $ | (17) | 19 | % | |||||||||||||||||||||||||||||||||||||||||
| Noninterest Income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rental income on operating lease equipment | 218 | 214 | 201 | 4 | 2 | 432 | 399 | 33 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Less: depreciation on operating lease equipment | 56 | 54 | 50 | 2 | 1 | 110 | 100 | 10 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Less: maintenance and other operating lease expenses | 55 | 58 | 60 | (3) | (3) | 113 | 105 | 8 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net rental income on operating lease equipment (1) | 107 | 102 | 91 | 5 | 5 | 209 | 194 | 15 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| All other noninterest income | 3 | 2 | 2 | 1 | 56 | 5 | 6 | (1) | (6) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total noninterest income (2) | 221 | 216 | 203 | 5 | 2 | 437 | 405 | 32 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest income, net of depreciation and maintenance (1) | 110 | 104 | 93 | 6 | 6 | 214 | 200 | 14 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | 168 | 164 | 158 | 4 | 2 | 332 | 317 | 15 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue, net of depreciation and maintenance (1) | 57 | 52 | 48 | 5 | 10 | 109 | 112 | (3) | (3) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest Expense | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Personnel cost | 6 | 8 | 6 | (2) | (23) | 14 | 14 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| All other noninterest expense | 26 | 14 | 15 | 12 | 68 | 40 | 29 | 11 | 42 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total noninterest expense (3) | 143 | 134 | 131 | 9 | 6 | 277 | 248 | 29 | 12 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest expense, net of depreciation and maintenance (1) | 32 | 22 | 21 | 10 | 45 | 54 | 43 | 11 | 26 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Income before income taxes | 25 | 30 | 27 | (5) | (15) | 55 | 69 | (14) | (20) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Income tax expense | 6 | 8 | 8 | (2) | (15) | 14 | 19 | (5) | (26) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 19 | $ | 22 | $ | 19 | $ | (3) | (15) | % | $ | 41 | $ | 50 | $ | (9) | (18) | % | |||||||||||||||||||||||||||||||||||||||||
PPNR (1) | $ | 25 | $ | 30 | $ | 27 | $ | (5) | (15) | % | $ | 55 | $ | 69 | $ | (14) | (21) | % | |||||||||||||||||||||||||||||||||||||||||
| Select Period End Balances | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans and leases | $ | 62 | $ | 62 | $ | 62 | $ | — | — | % | $ | 62 | $ | 62 | $ | — | — | % | |||||||||||||||||||||||||||||||||||||||||
| Operating lease equipment, net | 8,716 | 8,640 | 8,178 | 76 | 1 | 8,716 | 8,178 | 538 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Deposits | 3 | 12 | 10 | (9) | (77) | 3 | 10 | (7) | (73) | ||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Net rental income on operating lease equipment; noninterest income, net of depreciation and maintenance; noninterest expense, net of depreciation and maintenance; revenue, net of depreciation and maintenance; and PPNR are non-GAAP measures. Refer to the “Non-GAAP Financial Measurements” section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.
(2) Total noninterest income includes rental income on operating lease equipment and all other noninterest income.
(3) Total noninterest expense includes depreciation on operating lease equipment.
Rail segment net income for the Current Quarter decreased $3 million compared to the Linked Quarter, mostly due to higher all other noninterest expense, partially offset by higher net rental income.
•The $12 million increase in all other noninterest expense was primarily due to the previously mentioned vendor dispute.
•The $5 million increase in net rental income on operating lease equipment reflected higher rental income, mainly the result of fleet additions and strong repricing of renewed equipment. Depreciation on operating lease equipment increased $2 million, primarily due to fleet additions. Maintenance and other operating lease expenses decreased $3 million. Maintenance and other operating lease expenses tend to be variable due to timing and the number of railcars coming on or off lease as well as asset condition.
77
Rail segment net income for the Current YTD decreased $9 million compared to the Prior YTD, mostly due to lower NII and higher all other noninterest expenses, partially offset by higher net rental income on operating leases.
•The $17 million decrease in NII was primarily due to higher funding costs.
•The $11 million increase in all other noninterest expense was primarily due to the previously mentioned vendor dispute.
•The $15 million increase in net rental income on operating lease equipment reflected higher rental income on portfolio growth and strong repricing, partially offset by higher depreciation and maintenance costs. Depreciation on operating lease equipment increased $10 million, primarily due to growth of the rail assets, and maintenance and other operating lease expenses increased $8 million.
Railcar Portfolio
Our fleet is diverse and the average re-pricing of equipment upon lease maturities was 132% of the average prior or expiring lease rate during the Current Quarter. Railcar utilization, including commitments to lease, was 96.9% at June 30, 2025, stable with 97.0% at December 31, 2024.
Rail segment customers include all of the U.S. and Canadian Class I railroads (i.e., railroads with annual revenues of approximately $500 million and greater) and other railroads, as well as manufacturers and commodity shippers. Our total operating lease fleet at June 30, 2025 consisted of approximately 127,300 railcars and locomotives.
The following tables reflect the proportion of railcars by type based on units and net investment, and rail operating lease equipment by obligor industry:
Table 19
Operating Lease Railcar Portfolio by Type (units and net investment)
| June 30, 2025 | March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||
| Railcar Type | Total Owned Fleet - % Total Units | Total Owned Fleet - % Total Net Investment | Total Owned Fleet - % Total Units | Total Owned Fleet - % Total Net Investment | Total Owned Fleet - % Total Units | Total Owned Fleet - % Total Net Investment | |||||||||||||||||||||||||||||||||||||||||
| Covered hoppers | 45 | % | 41 | % | 45 | % | 41 | % | 45 | % | 42 | % | |||||||||||||||||||||||||||||||||||
| Tank cars | 28 | 39 | 27 | 39 | 27 | 38 | |||||||||||||||||||||||||||||||||||||||||
| Mill/ coil gondolas | 8 | 6 | 8 | 6 | 8 | 6 | |||||||||||||||||||||||||||||||||||||||||
| Coal | 7 | 1 | 7 | 1 | 7 | 1 | |||||||||||||||||||||||||||||||||||||||||
| Boxcars | 6 | 5 | 6 | 5 | 6 | 6 | |||||||||||||||||||||||||||||||||||||||||
| Other | 6 | 8 | 7 | 8 | 7 | 7 | |||||||||||||||||||||||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||||||||||||
Table 20
Rail Operating Lease Equipment by Obligor Industry
| dollars in millions | June 30, 2025 | March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| Manufacturing | $ | 3,659 | 42 | % | $ | 3,545 | 41 | % | $ | 3,467 | 40 | % | |||||||||||||||||||||||||||||||||||
| Rail | 2,011 | 23 | 2,011 | 23 | 2,003 | 23 | |||||||||||||||||||||||||||||||||||||||||
| Wholesale | 1,550 | 18 | 1,553 | 18 | 1,505 | 18 | |||||||||||||||||||||||||||||||||||||||||
| Oil and gas extraction / services | 483 | 5 | 518 | 6 | 583 | 7 | |||||||||||||||||||||||||||||||||||||||||
| Energy and utilities | 222 | 3 | 240 | 3 | 239 | 3 | |||||||||||||||||||||||||||||||||||||||||
| Other | 791 | 9 | 773 | 9 | 776 | 9 | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 8,716 | 100 | % | $ | 8,640 | 100 | % | $ | 8,573 | 100 | % | |||||||||||||||||||||||||||||||||||
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Corporate
Table 21
Corporate: Financial Data
| dollars in millions | Three Months Ended | Increase (Decrease) from Linked Quarter | Six Months Ended | Increase (Decrease) Year to Date | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Summary | June 30, 2025 | March 31, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 135 | $ | 141 | $ | 272 | $ | (6) | (5) | % | $ | 276 | $ | 625 | $ | (349) | (56) | % | |||||||||||||||||||||||||||||||||||||||||
| Total noninterest income | 11 | (2) | 15 | 13 | (754) | 9 | 21 | (12) | (58) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | 146 | 139 | 287 | 7 | 4 | 285 | 646 | (361) | (56) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Personnel cost | 415 | 410 | 368 | 5 | 1 | 825 | 704 | 121 | 17 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition-related expenses | 38 | 42 | 44 | (4) | (10) | 80 | 102 | (22) | (21) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| All other noninterest expense | (325) | (312) | (273) | (13) | 4 | (637) | (562) | (75) | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total noninterest expense | 128 | 140 | 139 | (12) | (9) | 268 | 244 | 24 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Income (loss) income before income taxes | 18 | (1) | 148 | 19 | NM | 17 | 402 | (385) | (96) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Income tax (benefit) expense | (6) | — | 43 | (6) | NM | (6) | 109 | (115) | (106) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | 24 | $ | (1) | $ | 105 | $ | 25 | NM | $ | 23 | $ | 293 | $ | (270) | (92) | % | ||||||||||||||||||||||||||||||||||||||||||
PPNR (1) | $ | 18 | $ | (1) | $ | 148 | $ | 19 | NM | $ | 17 | $ | 402 | $ | (385) | (96) | % | ||||||||||||||||||||||||||||||||||||||||||
| Select Period End Balances | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deposits | 45,736 | 44,990 | 40,741 | 746 | 2 | 45,736 | 40,741 | 4,995 | 12 | ||||||||||||||||||||||||||||||||||||||||||||||||||
(1) PPNR is a non-GAAP measure. Refer to the “Non-GAAP Financial Measurements” section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.
NM - not meaningful
Corporate net income increased $25 million compared to the Linked Quarter, mainly due to higher noninterest income and lower noninterest expense.
•The $13 million increase in noninterest income was largely due to a favorable change in the fair value of marketable equity securities.
•The $13 million net decrease in all other noninterest expenses is spread amongst various accounts, including Allocated Expenses.
Corporate deposits were $45.74 billion at June 30, 2025, an increase of $746 million compared to $44.99 billion at March 31, 2025, mainly due to growth in the Direct Bank. Total deposits in Corporate primarily include $45.11 billion of Direct Bank deposits, with the remaining balance consisting of brokered and other deposits.
Corporate net income for the Current YTD decreased $270 million compared to the Prior YTD, primarily reflecting lower NII and higher personnel cost, partially offset by lower all other noninterest expense, acquisition-related expenses and income tax expense.
•The $349 million decrease in NII was mainly due to the unfavorable impacts of a lower average balance of interest-earning deposits at banks, a higher average balance of interest-bearing deposits and lower loan PAA, partially offset by the favorable impacts of a higher average balance of investment securities and a lower rate paid on interest-bearing deposits.
•The $121 million increase in personnel cost was mainly due to annual merit increases and promotions, as well as net staff additions.
•The $22 million decrease in acquisition-related expenses is discussed in the “Noninterest Expense” section of this MD&A.
•The $75 million net decrease in all other noninterest expenses is spread amongst various accounts, including Allocated Expenses. Refer to the “Noninterest Expense” discussion in the “Results of Operations” section of this MD&A for further information regarding trends in consolidated noninterest expense.
•The $115 million decrease in income tax expense reflected lower income before income taxes.
79
BALANCE SHEET ANALYSIS
The following discussion provides additional information about the major components of our balance sheet. Information regarding our ALLL is included in the “Risk Management—Credit Risk—ALLL Methodology” section of this MD&A and in Note 5—Allowance for Loan and Lease Losses. Information regarding our capital and regulatory capital is included in the “Capital” section of this MD&A.
Interest-earning Assets
Interest-earning assets include interest-earning deposits at banks, securities purchased under agreements to resell, investment securities, loans held for sale, and loans and leases, all of which reflect varying interest rates based on the risk level and repricing characteristics of the underlying asset. Higher-risk investments typically carry a higher interest rate, but expose us to higher levels of market and/or credit risk. We strive to maintain a high level of interest-earning assets relative to total assets.
Interest-earning Deposits at Banks
Interest-earning deposits at banks are primarily comprised of interest-earning deposits at the FRB. Interest-earning deposits at banks as of June 30, 2025 totaled $26.18 billion, an increase of $4.82 billion or 23% from $21.36 billion at December 31, 2024. The increase from December 31, 2024 is related to continued liquidity and funding management and reflected deposit growth and net increases in debt, partially offset by the impacts of Class A common share repurchases, loan growth, and net purchases of investment securities.
Securities Purchased Under Agreements to Resell
Securities purchased under agreements to resell at June 30, 2025 totaled $300 million, an increase of $142 million or 89% from $158 million at December 31, 2024.
Investment Securities
The primary objective of the investment portfolio is to generate incremental income by deploying excess funds into securities that have minimal liquidity risk and low to moderate interest rate risk and credit risk. Other objectives include acting as a stable source of liquidity, serving as a tool for asset and liability management and maintaining an interest rate risk profile compatible with our objectives. Additionally, purchases of equities and corporate bonds in other financial institutions have been made under a long-term earnings optimization strategy. Changes in the total balance of our investment securities portfolio result from trends in balance sheet funding and market performance. Generally, when inflows arising from deposit and treasury services products exceed loan and lease demand, we invest excess funds into the securities portfolio or into interest-earning deposits at banks. Conversely, when loan demand exceeds growth in deposits and short-term borrowings, we allow interest-earning deposits at banks to decline and use proceeds from maturing securities and prepayments to fund loan growth. Refer to Note 3—Investment Securities and “Funding, Liquidity and Capital Overview” in the “Executive Overview” section of this MD&A for additional disclosures regarding investment securities.
The carrying value of investment securities at June 30, 2025 totaled $43.35 billion, a decrease of $744 million or 2% from $44.09 billion at December 31, 2024. The decrease from December 31, 2024 resulted from maturities, sales, and payments of $4.45 billion that offset purchases of $3.13 billion, which were primarily U.S agency residential mortgage-backed and short-duration U.S. Treasury investment securities, and non-cash items, such as fair value changes for investment securities available for sale and marketable equity securities along with amortization and accretion.
Our portfolio of investment securities available for sale consists of mortgage-backed securities issued by government agencies and government sponsored entities, U.S. Treasury securities, corporate bonds, and municipal bonds. Investment securities available for sale are reported at fair value and unrealized gains and losses are included as a component of accumulated other comprehensive income (“AOCI”), net of deferred taxes. As of June 30, 2025, investment securities available for sale had a net pretax unrealized loss of $321 million, compared to $762 million as of December 31, 2024, primarily reflecting changes in interest rates and maturities. The fair value of investment securities is impacted by interest rates, credit spreads, market volatility and liquidity conditions. The fair value of the investment securities portfolio generally increases when interest rates decrease or when credit spreads tighten. Given the consistently strong credit rating of the U.S. Treasury, and the long history of no credit losses on debt securities issued by government agencies and government sponsored entities, no allowance for credit loss was required as of June 30, 2025. For corporate bonds, we analyzed the changes in interest rates relative to when the investment securities were purchased or acquired, and considered other factors including changes in credit ratings, delinquencies, and other macroeconomic factors. We determined no allowance for credit loss was required as of June 30, 2025.
80
Our portfolio of investment securities held to maturity consists of similar mortgage-backed securities, U.S. Treasury securities and government agency securities described above, as well as securities issued by the Supranational Entities & Multilateral Development Banks and FDIC guaranteed certificates of deposit with other financial institutions. Given the consistently strong credit rating of the U.S. Treasury and the Supranational Entities & Multilateral Development Banks, and the long history of no credit losses on debt securities issued by government agencies and government sponsored entities, we determined that no allowance for credit loss was required for investment securities held to maturity at June 30, 2025.
The following table presents the investment securities portfolio, segregated by major category:
Table 22
Investment Securities
| dollars in millions | June 30, 2025 | March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Amortized Cost | Fair Value | Composition(1) | Amortized Cost | Fair Value | Composition(1) | Amortized Cost | Fair Value | Composition(1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities available for sale: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Treasury | $ | 12,125 | $ | 12,170 | 29.0 | % | $ | 13,105 | $ | 13,150 | 30.6 | % | $ | 13,897 | $ | 13,903 | 32.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Government agency | 62 | 60 | 0.1 | 71 | 69 | 0.2 | 79 | 77 | 0.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage-backed securities | 17,118 | 16,924 | 40.3 | 16,905 | 16,605 | 38.6 | 16,161 | 15,620 | 36.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial mortgage-backed securities | 3,695 | 3,536 | 8.4 | 3,759 | 3,594 | 8.4 | 3,869 | 3,666 | 8.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate bonds | 364 | 353 | 0.8 | 483 | 465 | 1.1 | 489 | 467 | 1.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Municipal bonds | 17 | 17 | — | 17 | 17 | — | 17 | 17 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total investment securities available for sale | $ | 33,381 | $ | 33,060 | 78.6 | % | $ | 34,340 | $ | 33,900 | 78.9 | % | $ | 34,512 | $ | 33,750 | 79.3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment in marketable equity securities | $ | 78 | $ | 97 | 0.2 | % | $ | 78 | $ | 95 | 0.2 | % | $ | 79 | $ | 101 | 0.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities held to maturity: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Treasury | $ | 486 | $ | 465 | 1.1 | % | $ | 484 | $ | 459 | 1.1 | % | $ | 483 | $ | 452 | 1.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Government agency | 1,493 | 1,415 | 3.4 | 1,491 | 1,400 | 3.3 | 1,489 | 1,374 | 3.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage-backed securities | 4,548 | 4,002 | 9.5 | 4,668 | 4,090 | 9.5 | 4,558 | 3,878 | 9.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial mortgage-backed securities | 3,359 | 2,726 | 6.5 | 3,378 | 2,748 | 6.4 | 3,407 | 2,729 | 6.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Supranational securities | 302 | 279 | 0.7 | 301 | 274 | 0.6 | 300 | 267 | 0.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 1 | 1 | — | 2 | 2 | — | 2 | 2 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total investment securities held to maturity | $ | 10,189 | $ | 8,888 | 21.2 | % | $ | 10,324 | $ | 8,973 | 20.9 | % | $ | 10,239 | $ | 8,702 | 20.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total investment securities | $ | 43,648 | $ | 42,045 | 100.0 | % | $ | 44,742 | $ | 42,968 | 100.0 | % | $ | 44,830 | $ | 42,553 | 100.0 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Calculated as a percentage of the total fair value of investment securities. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
81
The following table presents the weighted average yields for investment securities available for sale and held to maturity at June 30, 2025, segregated by major category with ranges of contractual maturities. The weighted average yields represent the yields of the underlying securities as of the specified date, June 30, 2025, within the specified maturity range. The weighted average yield on the portfolio was calculated using security-level annualized yields based on book yield to maturity and takes into account amortization of premiums and accretion of discounts. The total weighted average yields for investment securities available for sale and held to maturity are based on the underlying weighted average amortized cost.
Table 23
Weighted Average Yield on Investment Securities
| June 30, 2025 | |||||||||||||||||||||||||||||
| Within One Year | One to Five Years | Five to 10 Years | After 10 Years | Total | |||||||||||||||||||||||||
| Investment securities available for sale: | |||||||||||||||||||||||||||||
| U.S. Treasury | 4.46 | % | 4.18 | % | — | % | — | % | 4.33 | % | |||||||||||||||||||
| Government agency | 1.59 | 4.14 | 4.02 | — | 4.09 | ||||||||||||||||||||||||
Residential mortgage-backed securities (1) | — | 4.22 | 4.66 | 4.02 | 4.17 | ||||||||||||||||||||||||
Commercial mortgage-backed securities (1) | 4.15 | 4.77 | 5.50 | 2.91 | 4.05 | ||||||||||||||||||||||||
| Corporate bonds | 6.66 | 8.08 | 5.07 | — | 6.75 | ||||||||||||||||||||||||
| Municipal bonds | — | — | — | 7.00 | 7.00 | ||||||||||||||||||||||||
| Total investment securities available for sale | 4.45 | % | 4.41 | % | 4.69 | % | 3.92 | % | 4.24 | % | |||||||||||||||||||
| Investment securities held to maturity: | |||||||||||||||||||||||||||||
| U.S. Treasury | 1.18 | % | 1.42 | % | 1.57 | % | — | % | 1.38 | % | |||||||||||||||||||
| Government agency | 1.26 | 1.57 | 1.92 | — | 1.54 | ||||||||||||||||||||||||
Residential mortgage-backed securities (1) | — | — | 2.08 | 2.57 | 2.57 | ||||||||||||||||||||||||
Commercial mortgage-backed securities (1) | — | 1.85 | — | 2.51 | 2.50 | ||||||||||||||||||||||||
| Supranational securities | 1.23 | 1.49 | 1.68 | — | 1.56 | ||||||||||||||||||||||||
| Other | 3.55 | — | — | — | 3.55 | ||||||||||||||||||||||||
| Total investment securities held to maturity | 1.24 | % | 1.54 | % | 1.76 | % | 2.54 | % | 2.31 | % | |||||||||||||||||||
(1) Residential mortgage-backed and commercial mortgage-backed securities, which are not due at a single maturity date, have been included in maturity groupings based on the contractual maturity at June 30, 2025. The expected life will differ from contractual maturities because borrowers have the right to prepay the underlying loans.
Assets Held for Sale
Assets held for sale at June 30, 2025 were $125 million, an increase of $40 million or 48% from $85 million at December 31, 2024.
Table 24
Assets Held for Sale
| Increase (Decrease) from: | |||||||||||||||||||||||||||||||||||||||||||||||
| dollars in millions | June 30, 2025 | March 31, 2025 | December 31, 2024 | March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||
| Loans and leases: | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial (1) | $ | 40 | $ | 113 | $ | 27 | $ | (73) | (65) | % | $ | 13 | 47 | % | |||||||||||||||||||||||||||||||||
| Consumer | 83 | 70 | 55 | 13 | 19 | % | 28 | 52 | % | ||||||||||||||||||||||||||||||||||||||
| Loans and leases | 123 | 183 | 82 | (60) | (33) | % | 41 | 50 | % | ||||||||||||||||||||||||||||||||||||||
| Operating lease equipment | 2 | 2 | 3 | — | — | % | (1) | (17) | % | ||||||||||||||||||||||||||||||||||||||
| Total assets held for sale | $ | 125 | $ | 185 | $ | 85 | $ | (60) | (32) | % | $ | 40 | 48 | % | |||||||||||||||||||||||||||||||||
(1) Includes nonaccrual loans held for sale of $22 million as of June 30, 2025 and $19 million as of March 31, 2025. There were no nonaccrual loans held for sale at December 31, 2024.
Loans and Leases
The loan and lease disclosures for the Linked Quarter and 2024 periods presented in this Form 10-Q were recast to reflect the 2025 Loan Class Changes summarized in the “Recent Events” section of this MD&A and further discussed in Note 1—Significant Accounting Policies and Basis of Presentation.
Loans and leases at June 30, 2025 were $141.27 billion, an increase of $1.05 billion or 1% from $140.22 billion at December 31, 2024. Loan growth in the Commercial Bank segment of $793 million was mainly in our industry verticals, primarily TMT and healthcare, as well as the equipment finance portfolios. Loan growth of $155 million in the SVB Commercial segment was concentrated in global fund banking loans, partially offset by a decline in our investor dependent loans. Loan growth of $100 million in the General Bank segment was primarily in the wealth portfolio.
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The unamortized discount related to acquired loans was $1.45 billion at June 30, 2025, a decrease of $148 million from $1.60 billion at December 31, 2024.
Refer to Note 4—Loans and Leases for further information.
The following table presents loans and leases by loan segment and loan class, and the respective proportion to total loans:
Table 25
Loans and Leases
| dollars in millions | June 30, 2025 | March 31, 2025 | December 31, 2024 | Balance Increase (Decrease) from: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance | % to Total Loans | Balance | % to Total Loans | Balance | % to Total Loans | March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial construction | $ | 5,714 | 4 | % | $ | 5,529 | 4 | % | $ | 5,109 | 4 | % | $ | 185 | 3 | % | $ | 605 | 12 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Owner occupied commercial mortgage | 17,053 | 12 | 16,951 | 12 | 16,842 | 12 | 102 | 1 | 211 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial mortgage | 16,100 | 11 | 16,139 | 11 | 16,194 | 12 | (39) | — | (94) | (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | 40,658 | 30 | 41,040 | 30 | 40,737 | 28 | (382) | (1) | (79) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases | 2,028 | 1 | 2,022 | 1 | 2,014 | 1 | 6 | — | 14 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Global fund banking | 28,677 | 20 | 28,572 | 20 | 27,904 | 20 | 105 | — | 773 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investor dependent | 2,777 | 2 | 2,958 | 2 | 3,193 | 3 | (181) | (6) | (416) | (13) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial | $ | 113,007 | 80 | % | $ | 113,211 | 80 | % | $ | 111,993 | 80 | % | $ | (204) | — | % | $ | 1,014 | 1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage | $ | 23,059 | 16 | % | $ | 23,060 | 16 | % | $ | 23,152 | 16 | % | $ | (1) | — | % | $ | (93) | — | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Revolving mortgage | 2,736 | 2 | 2,635 | 2 | 2,567 | 2 | 101 | 4 | 169 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer auto | 1,490 | 1 | 1,487 | 1 | 1,523 | 1 | 3 | — | (33) | (2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer other | 977 | 1 | 965 | 1 | 986 | 1 | 12 | 1 | (9) | (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer | $ | 28,262 | 20 | % | $ | 28,147 | 20 | % | $ | 28,228 | 20 | % | $ | 115 | — | % | $ | 34 | — | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loans and leases | $ | 141,269 | 100 | % | $ | 141,358 | 100 | % | $ | 140,221 | 100 | % | $ | (89) | — | % | $ | 1,048 | 1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for loan and lease losses | (1,672) | (1,680) | (1,676) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loans and leases | $ | 139,597 | $ | 139,678 | $ | 138,545 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Lease Equipment, Net
Our operating lease portfolio mostly relates to the Rail segment, with the remainder included in the Commercial Bank segment as summarized in the following table. Refer to the “Results by Segment” section of this MD&A for further details on the operating lease equipment portfolio in Rail.
Table 26
Operating Lease Equipment, Net
| dollars in millions | Increase (Decrease) from: | ||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2025 | March 31, 2025 | December 31, 2024 | March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||
| Railcars and locomotives | $ | 8,716 | $ | 8,640 | $ | 8,573 | $ | 76 | 1 | % | $ | 143 | 2 | % | |||||||||||||||||||||||||||||||||
| Other equipment | 750 | 731 | 750 | 19 | 3 | — | — | ||||||||||||||||||||||||||||||||||||||||
Total (1) | $ | 9,466 | $ | 9,371 | $ | 9,323 | $ | 95 | 1 | % | $ | 143 | 2 | % | |||||||||||||||||||||||||||||||||
(1) Includes off-lease rail equipment of $242 million at June 30, 2025, $256 million at March 31, 2025, and $219 million at December 31, 2024.
Interest-bearing Liabilities
Interest-bearing liabilities include interest-bearing deposits, securities sold under agreements to repurchase, and borrowings. Interest-bearing liabilities at June 30, 2025 totaled $157.17 billion, an increase of $3.52 billion or 2% from $153.65 billion at December 31, 2024. The increase from December 31, 2024 was mainly due to deposit growth as well as the Linked Quarter Debt Issuances, partially offset by the Current Quarter Debt Redemption as further discussed below.
83
Deposits
Total deposits at June 30, 2025 were $159.94 billion, an increase of $4.71 billion or 3% from $155.23 billion at December 31, 2024.
Deposit changes within our business segments compared to December 31, 2024 are discussed in the “Executive Overview—Funding, Liquidity and Capital Overview” section of this MD&A and changes from the Linked Quarter are discussed in the “Results by Segment” section of this MD&A.
The following table summarizes the types of deposits:
Table 27
Deposits
| dollars in millions | Increase (Decrease) from: | ||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2025 | March 31, 2025 | December 31, 2024 | March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing demand | $ | 40,879 | $ | 40,767 | $ | 38,633 | $ | 112 | — | % | $ | 2,246 | 6 | % | |||||||||||||||||||||||||||||||||
| Checking with interest | 23,283 | 23,041 | 25,343 | 242 | 1 | (2,060) | (8) | ||||||||||||||||||||||||||||||||||||||||
| Money market | 37,654 | 37,705 | 35,722 | (51) | — | 1,932 | 5 | ||||||||||||||||||||||||||||||||||||||||
| Savings | 46,877 | 45,817 | 42,278 | 1,060 | 2 | 4,599 | 11 | ||||||||||||||||||||||||||||||||||||||||
| Time | 11,242 | 11,995 | 13,253 | (753) | (6) | (2,011) | (15) | ||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | 119,056 | 118,558 | 116,596 | 498 | — | 2,460 | 2 | ||||||||||||||||||||||||||||||||||||||||
| Total deposits | $ | 159,935 | $ | 159,325 | $ | 155,229 | $ | 610 | — | % | $ | 4,706 | 3 | % | |||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits to total deposits | 25.6 | % | 25.6 | % | 24.9 | % | |||||||||||||||||||||||||||||||||||||||||
We strive to maintain a strong liquidity position, and therefore, deposit retention remains a key business objective. We believe traditional bank deposit products remain an attractive option for many customers. As economic conditions change, we recognize that our liquidity position could be adversely affected if bank deposits are withdrawn. Our ability to fund future loan growth is significantly dependent on our success in retaining existing deposits and generating new deposits at a reasonable cost.
Deposit Concentrations
BancShares operates a network of branches and offices, predominantly located in the Southeast, Mid-Atlantic, Midwest and Western United States, providing a broad range of financial services to individuals, businesses and professionals. Based on branch location, our top state deposit concentrations as of June 30, 2025 were in North Carolina, South Carolina, and California, which represented approximately 25.2%, 7.7%, and 7.0%, respectively, of total deposits.
The Direct Bank had $45.11 billion or 28.2% of our total deposits as of June 30, 2025. The Direct Bank deposits mainly consist of savings deposit accounts.
SVB Commercial segment deposits as of June 30, 2025 were $37.80 billion or 23.6% of total deposits and are primarily concentrated in online banking. Deposits in the SVB Commercial segment include large dollar accounts with private equity and venture capital clients, primarily in the technology, life science and healthcare industries.
Deposit accounts with balances in excess of $50 million totaled approximately $6.30 billion as of June 30, 2025, compared to approximately $8.01 billion as of December 31, 2024.
Brokered deposits, included in time deposits in the preceding table, are a source of deposit funding but remain an immaterial amount of total deposits at less than 1% as of June 30, 2025 and December 31, 2024.
Uninsured Deposits
The amount of uninsured deposits is estimated consistent with the methodologies and assumptions utilized in providing information to the FDIC and Federal Reserve. We estimate total uninsured deposits were $57.80 billion, which represented approximately 36.1% of total deposits at June 30, 2025, compared to $59.51 billion or 38.3% of total deposits at December 31, 2024.
Refer to the “Executive Overview—Funding, Liquidity and Capital Overview” and “Results by Segment” sections of this MD&A for further discussion of deposit composition, uninsured deposits, and recent deposit trends.
84
The following table provides the expected maturity of time deposits with balances in excess of $250,000 as of June 30, 2025:
Table 28
Maturities of Time Deposits In Excess of $250,000
| dollars in millions | June 30, 2025 | ||||
| Time deposits maturing in: | |||||
| Three months or less | $ | 659 | |||
| Over three months through six months | 373 | ||||
| Over six months through 12 months | 300 | ||||
| More than 12 months | 14 | ||||
| Total | $ | 1,346 | |||
Borrowings
Total borrowings at June 30, 2025 were $38.11 billion, an increase of $1.06 billion or 3% from $37.05 billion at December 31, 2024. The increase from December 31, 2024 primarily related to the Linked Quarter Debt Issuances (refer to the table below), as well as higher securities sold under agreements to repurchase, partially offset by the Current Quarter Debt Redemption.
The following table presents borrowings, net of the respective unamortized purchase accounting adjustments and issuance costs:
Table 29
Borrowings
| dollars in millions | Increase (Decrease) from: | ||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2025 | March 31, 2025 | December 31, 2024 | March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||
| Securities sold under agreements to repurchase | $ | 471 | $ | 450 | $ | 367 | $ | 21 | 5 | % | $ | 104 | 28 | % | |||||||||||||||||||||||||||||||||
| Federal Deposit Insurance Corporation | |||||||||||||||||||||||||||||||||||||||||||||||
3.500% fixed rate note due March 2028(1) | 35,841 | 35,829 | 35,816 | 12 | — | 25 | — | ||||||||||||||||||||||||||||||||||||||||
| Senior Unsecured Borrowings | |||||||||||||||||||||||||||||||||||||||||||||||
5.231% fixed-to-floating rate notes due March 2031(2) | 497 | 497 | — | — | — | 497 | 100 | ||||||||||||||||||||||||||||||||||||||||
| 6.000% fixed rate notes due April 2036 | 58 | 58 | 58 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Subordinated debt | |||||||||||||||||||||||||||||||||||||||||||||||
3.375% fixed-to-floating rate notes due March 2030(3) | — | 350 | 350 | (350) | (100) | (350) | (100) | ||||||||||||||||||||||||||||||||||||||||
| 6.125% fixed rate notes due March 2028 | 437 | 441 | 445 | (4) | (1) | (8) | (2) | ||||||||||||||||||||||||||||||||||||||||
6.254% fixed-to-fixed rate notes due March 2040(4) | 745 | 745 | — | — | — | 745 | 100 | ||||||||||||||||||||||||||||||||||||||||
| Capital lease obligations | 63 | 36 | 15 | 27 | 75 | 48 | 320 | ||||||||||||||||||||||||||||||||||||||||
| Total borrowings | $ | 38,112 | $ | 38,406 | $ | 37,051 | $ | (294) | (1) | % | $ | 1,061 | 3 | % | |||||||||||||||||||||||||||||||||
(1) Issued in connection with the SVBB Acquisition and secured by collateral. Refer to Note 2—Business Combinations and Note 4—Loans and Leases. The unamortized discount related to this borrowing was $150 million, $163 million, and $176 million at June 30, 2025, March 31, 2025, and December 31, 2024, respectively.
(2) The fixed rate period will end on March 12, 2030, and the notes will thereafter bear a floating interest rate equal to a benchmark rate based on the Compounded Secured Overnight Financing Rate (“SOFR”) Index Rate plus 141 bps per annum until the maturity date (or date of earlier redemption).
(3) The fixed rate period ended on March 15, 2025, and the notes converted to a floating interest rate equal to Three-Month Term SOFR plus 246.5 bps per annum. The notes included a callable feature and were redeemed on June 15, 2025.
(4) The interest rate will reset on March 12, 2035, and the notes will thereafter bear a fixed interest rate equal to the Five-year U.S. Treasury Rate as of the day falling two business days prior to the notes reset date plus 197 bps per annum until the maturity date (or date of earlier redemption).
85
The following summarizes the Linked Quarter Debt Issuances:
Table 30
Parent Company Notes Issued
| Issuance Date | Amount | Description | ||||||||||||
| March 12, 2025 | $500 Million | $500 million aggregate principal amount of senior fixed-to-floating rate notes with a maturity date of March 12, 2031. Interest is payable semi-annually in arrears on March 12 and September 12 of each year, beginning on September 12, 2025, and ending on March 12, 2030 (or date of earlier redemption), at a fixed rate of 5.231% per annum. The fixed rate period will end on March 12, 2030, and the notes will thereafter bear a floating interest rate equal to a benchmark rate based on the Compounded SOFR plus 141 bps per annum until the maturity date (or date of earlier redemption). During the floating rate period, interest on the notes will be payable quarterly in arrears on June 12, 2030, September 12, 2030, December 12, 2030, and on the maturity date (or date of earlier redemption). | ||||||||||||
| March 12, 2025 | $750 Million | $750 million aggregate principal amount of subordinated fixed-to-fixed rate notes with a maturity date of March 12, 2040. Interest is payable semi-annually in arrears on March 12 and September 12 of each year and on the maturity date (or date of earlier redemption), commencing on September 12, 2025, at a fixed rate of 6.254% per annum. The interest rate will reset on March 12, 2035, and the notes will thereafter bear a fixed interest rate equal to the Five-year U.S. Treasury Rate as of the day falling two business days prior to the notes reset date plus 197 bps per annum until the maturity date (or date of earlier redemption). | ||||||||||||
We continually monitor our capital needs and market conditions in an effort to diversify our borrowing base when appropriate. Additionally, we continue to monitor the status of the notice of proposed rulemaking (“NPR”) issued by the federal banking agencies discussing, among other items, the proposed requirement to maintain a certain level of long-term debt that would be available to absorb losses in the event of failure as further discussed in the “Regulatory Considerations” section in Item 1. Business of the 2024 Form 10-K.
Refer to the “Liquidity Risk” section of this MD&A and Note 9—Borrowings for further information regarding liquidity and borrowings.
Other Assets and Liabilities
The following table includes the components of other assets:
Table 31
Other Assets
| dollars in millions | Increase (Decrease) from: | ||||||||||||||||||||||||||||||||||||||||
| June 30, 2025 | March 31, 2025 | December 31, 2024 | March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||
Affordable housing tax credit and other unconsolidated investments (1) | $ | 2,592 | $ | 2,578 | $ | 2,516 | $ | 14 | 1 | % | $ | 76 | 3 | % | |||||||||||||||||||||||||||
| Accrued interest receivable | 902 | 920 | 902 | (18) | (2) | — | — | ||||||||||||||||||||||||||||||||||
| Fair value of derivative financial instruments | 626 | 553 | 660 | 73 | 13 | (34) | (5) | ||||||||||||||||||||||||||||||||||
| Pension and other retirement plan assets | 671 | 667 | 658 | 4 | 1 | 13 | 2 | ||||||||||||||||||||||||||||||||||
| Right of use assets for operating leases, net | 318 | 300 | 316 | 18 | 6 | 2 | 1 | ||||||||||||||||||||||||||||||||||
| Income tax receivable | 500 | 500 | 505 | — | — | (5) | (1) | ||||||||||||||||||||||||||||||||||
| Counterparty receivables | 164 | 87 | 69 | 77 | 89 | 95 | 137 | ||||||||||||||||||||||||||||||||||
| Bank-owned life insurance | 107 | 107 | 106 | — | 1 | 1 | 1 | ||||||||||||||||||||||||||||||||||
| Nonmarketable equity securities | 140 | 136 | 127 | 4 | 3 | 13 | 11 | ||||||||||||||||||||||||||||||||||
| Other real estate owned | 97 | 97 | 56 | — | — | 41 | 74 | ||||||||||||||||||||||||||||||||||
| Mortgage servicing rights | 29 | 28 | 27 | 1 | 4 | 2 | 7 | ||||||||||||||||||||||||||||||||||
| Federal Home Loan Bank stock | 19 | 20 | 20 | (1) | (4) | (1) | (4) | ||||||||||||||||||||||||||||||||||
| Other | 899 | 803 | 778 | 96 | 12 | 121 | 16 | ||||||||||||||||||||||||||||||||||
| Total other assets | $ | 7,064 | $ | 6,796 | $ | 6,740 | $ | 268 | 4 | % | $ | 324 | 5 | % | |||||||||||||||||||||||||||
(1) Refer to Note 8—Variable Interest Entities for additional information.
86
The following table includes the components of other liabilities:
Table 32
Other Liabilities
| dollars in millions | Increase (Decrease) from: | ||||||||||||||||||||||||||||||||||||||||
| June 30, 2025 | March 31, 2025 | December 31, 2024 | March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||
| Deferred taxes | $ | 3,560 | $ | 3,525 | $ | 3,534 | $ | 35 | 1 | % | $ | 26 | 1 | % | |||||||||||||||||||||||||||
| Commitments to fund tax credit investments | 1,163 | 1,234 | 1,214 | (71) | (6) | (51) | (4) | ||||||||||||||||||||||||||||||||||
Accrued personnel cost (1) | 697 | 495 | 1,024 | 202 | 41 | (327) | (32) | ||||||||||||||||||||||||||||||||||
| Fair value of derivative financial instruments | 631 | 541 | 625 | 90 | 17 | 6 | 1 | ||||||||||||||||||||||||||||||||||
| Lease liabilities | 356 | 340 | 357 | 16 | 5 | (1) | — | ||||||||||||||||||||||||||||||||||
| Reserve for off-balance sheet credit exposure | 288 | 284 | 278 | 4 | 2 | 10 | 4 | ||||||||||||||||||||||||||||||||||
| Accrued interest payable | 120 | 107 | 134 | 13 | 13 | (14) | (10) | ||||||||||||||||||||||||||||||||||
| Accounts payable and other | 1,418 | 1,125 | 1,030 | 293 | 26 | 388 | 38 | ||||||||||||||||||||||||||||||||||
| Total other liabilities | $ | 8,233 | $ | 7,651 | $ | 8,196 | $ | 582 | 8 | % | $ | 37 | 1 | % | |||||||||||||||||||||||||||
(1) Includes accruals for annual incentive compensation which is typically paid during the first quarter. Additionally, accrued personnel cost can fluctuate based on timing of the payroll cycle.
A reserve for off-balance sheet credit exposure is established for unfunded commitments and is included in other liabilities. BancShares estimates the expected funding amounts and applies its probability of obligor default (“PD”) and loss given default (“LGD”) models to those expected funding amounts to estimate the reserve. The reserve for off-balance sheet credit exposure was $288 million at June 30, 2025, an increase of $10 million compared to $278 million at December 31, 2024 and an increase of $4 million compared to $284 million at March 31, 2025. Refer to the “Provision for Credit Losses” section of this MD&A for further discussion. Refer to Note 18—Commitments and Contingencies for information relating to off-balance sheet commitments.
RISK MANAGEMENT
Risk is inherent in any business. BancShares has defined a moderate risk appetite and a balanced approach to risk taking with a philosophy that does not preclude higher risk business activities commensurate with acceptable returns while meeting regulatory objectives. Through the comprehensive Risk Management Framework and Risk Appetite Framework and Statement, senior management has primary responsibility for day-to-day management of the risks we face with accountability of and support from all associates. Senior management applies various strategies to reduce the risks to which BancShares may be exposed, with effective challenge by independent risk management and oversight by management committees. The Board strives to ensure that risk management is a part of our business culture and that our policies and procedures to identify, assess, respond, and monitor risk are part of the decision-making process. The Board’s role in risk oversight is an integral part of our overall Risk Management Framework and Risk Appetite Framework. The Board administers its risk oversight function primarily through its Risk Committee.
The Risk Committee structure is designed to allow for information flow, effective challenge and timely escalation of risk-related issues. The Risk Committee monitors adherence to our Risk Management Framework and Risk Appetite Framework and Statement and provides quarterly updates to the Board on risk management. Our Chief Risk Officer also provides regular reports to the Risk Committee and the Board. Management and independent risk functions make regular reports to the Risk Committee on key risk areas, including credit, market, capital, liquidity, operational, compliance, strategic, and reputational risks. The Risk Committee also reviews reports of examination by and communications from regulatory agencies, the results of internal and third-party testing and qualitative and quantitative assessments related to risk management, and any other matters within the scope of the Risk Committee’s oversight responsibilities. The Risk Committee monitors management’s response to certain risk-related regulatory and audit issues. In addition, the Risk Committee may coordinate with the Audit Committee, Technology Committee and the Compensation, Nominations and Governance Committee for the review of financial statements and related risks, technology and cybersecurity risk, compensation risk management, and other areas of responsibility.
In combination with other risk management and monitoring practices, enterprise-wide stress testing activities are conducted within a defined framework. Stress tests are performed for various risks to ensure the financial institution can support continued operations during stressed periods.
BancShares monitors and stress tests its capital and liquidity consistent with the safety and soundness expectations of the federal regulators. Refer to the “Regulatory Considerations” section of Item 1. Business included in the 2024 Form 10-K for further discussion.
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BancShares has been assessing the emerging impacts of recent and potential U.S. and international tariffs and other retaliatory actions and has continued monitoring the international tensions that could impact the economy and exacerbate headwinds of elevated market volatility, global supply chain disruptions, and recessionary pressures. BancShares also continues to assess operational risks such as those associated with potential cyberattacks for FCB and third parties upon whom it relies. Assessments have not identified material impacts to date, but those assessments will remain ongoing as the conditions continue to exist and develop. BancShares is also assessing the potential risk of an economic slowdown or recession that could create increased credit and market risk having downstream impacts on earnings, capital, and/or liquidity. While economic data continues to be mixed, baseline economic forecasts reflect a decline in commercial real estate (“CRE”) property values due to current interest rate levels that impacted the ALLL forecasts. Key indicators will continue to be monitored, and impacts assessed as part of our ongoing risk management framework.
Credit Risk
Credit risk is the risk of not collecting payments pursuant to the contractual terms of loans, leases and certain investment securities. Loans and leases we originate are underwritten in accordance with our credit policies and procedures and are subject to periodic ongoing reviews. Acquired loans, regardless of whether purchased credit deteriorated (“PCD”) or Non-PCD, are recorded at fair value as of the acquisition date and are subject to periodic reviews to identify any further credit deterioration. Our independent credit review function conducts risk reviews and analyses of both originated and acquired loans to ensure compliance with credit policies and to monitor asset quality trends and borrower financial strength. These reviews include portfolio analysis by geographic location, industry, collateral type, and product. We strive to identify potential problem loans as early as possible, to record charge-offs as appropriate and to maintain an appropriate ALLL that accounts for expected losses over the life of the loan and lease portfolios.
Commercial Lending and Leasing
BancShares employs a credit ratings system where each commercial loan is assigned a PD, LGD, and/or overall credit rating using scorecards developed to rate each type of transaction incorporating assessments of both quantitative and qualitative factors. When commercial loans and leases are graded during underwriting, or when updated periodically thereafter, a model is run to generate a preliminary risk rating. These models incorporate both internal and external historical default and loss data, as well as other borrower and loan characteristics, to assign a risk rating. The preliminary risk rating assigned by the model can be adjusted as a result of borrower specific facts and circumstances that, in management’s judgment, warrant a modification of the modeled risk rating to arrive at the final approved risk ratings.
Consumer Lending
Consumer lending begins with an evaluation of a consumer borrower’s credit profile against published standards. Credit decisions are made after analyzing quantitative and qualitative factors to assess the borrower’s ability to repay the loan, and secondary sources of repayment, such as collateral value.
Consumer products use traditional and measurable standards to document and assess the creditworthiness of a loan applicant. Credit standards follow industry standard documentation requirements. Performance is largely evaluated based on an acceptable pay history along with a quarterly assessment which incorporates current market conditions. Loans may also be monitored during quarterly reviews of the borrower’s refreshed credit score. When warranted, an additional review of the loan-to-value of the underlying collateral may be conducted.
ALLL Methodology
Our ALLL methodology is discussed further in the 2024 Form 10-K, in the section entitled “Critical Accounting Estimates” of the MD&A and Note 1—Significant Accounting Policies and Basis of Presentation.
The loan and ALLL disclosures for the Linked Quarter and 2024 periods presented in this Form 10-Q were recast to reflect the 2025 Loan Class Changes summarized in the “Recent Events” section of this MD&A and further discussed in Note 1—Significant Accounting Policies and Basis of Presentation.
Our ALLL estimate as of June 30, 2025 included extensive reviews of the changes in credit risk associated with the uncertainties around macroeconomic forecasts. These loss estimates consider industry risk and the actual net losses incurred during prior periods of economic stress as well as recent credit trends.
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Macroeconomic Forecasts Utilized in the Estimate of the ALLL
While management utilizes its best judgment and information available, the ultimate adequacy of our ALLL is dependent upon a variety of factors beyond our control which are inherently difficult to predict, the most significant being the macroeconomic scenario forecasts that determine the economic variables, including the U.S. unemployment rate, U.S. real gross domestic product (“GDP”), home price index (“HPI”), and CRE price index utilized in the ALLL models. These economic variables are based on macroeconomic scenario forecasts with a forecast horizon that covers the reasonable and supportable period. Due to the inherent uncertainty in the macroeconomic forecasts, BancShares utilizes baseline, upside, and downside macroeconomic scenarios and weights the scenarios based on review of variable forecasts for each scenario and comparison to expectations.
For the Current Quarter, the potential impacts of new trade, tariff and other economic policies in the United States were more prevalently reflected in the baseline macroeconomic scenario, which resulted in a modest shift in our weighting from the downside to baseline economic scenario.
At June 30, 2025, ALLL estimates ranged from approximately $1.42 billion, when weighing the upside scenario 100%, to approximately $2.12 billion when weighting the downside scenario 100%. BancShares management determined that an ALLL of $1.67 billion was appropriate as of June 30, 2025.
The following table presents the U.S. unemployment rate, U.S. real GDP, HPI, and CRE price index based on the weighted-average scenario forecasts used in determining the ALLL at June 30, 2025 and December 31, 2024. The projected trends in the macroeconomic variables below may fluctuate depending on the underlying scenarios and our scenario weighting assumptions utilized for the applicable period.
Table 33
Select Variables in ALLL Weighted-average Scenarios
| Assumptions as of June 30, 2025 | |||||||||||||||||
| 2025 | 2026 | 2027 | |||||||||||||||
U.S. unemployment rate (1) | 4.5 | % | 5.5 | % | 5.5 | % | |||||||||||
U.S. real GDP (2) | 1.2 | % | 0.9 | % | 2.1 | % | |||||||||||
HPI (2) | 1.9 | % | (0.7) | % | 2.5 | % | |||||||||||
CRE price index (2) | (0.4) | % | (2.8) | % | 5.9 | % | |||||||||||
| Assumptions as of December 31, 2024 | |||||||||||||||||
| 2025 | 2026 | 2027 | |||||||||||||||
U.S. unemployment rate (1) | 5.0 | % | 5.1 | % | 4.7 | % | |||||||||||
U.S. real GDP (2) | 1.4 | % | 1.7 | % | 2.3 | % | |||||||||||
HPI (2) | (1.3) | % | 2.0 | % | 2.8 | % | |||||||||||
CRE price index (2) | (3.6) | % | 0.4 | % | 8.8 | % | |||||||||||
(1) Represents the quarterly average U.S. unemployment rate for the years ending December 31, 2025, 2026 and 2027.
(2) Represents the year-over-year percent changes.
Qualitative Component of the ALLL
ALLL model outputs may be adjusted through a qualitative assessment to reflect trends that may not be adequately reflected within the models, which could include economic conditions, uncertainty in macroeconomic forecasts, credit quality, risk to specific industry concentrations, and any significant policy and underwriting changes. These qualitative adjustments are also used to accommodate for the imprecision of certain assumptions and uncertainties inherent in the model calculations.
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ALLL and Net Charge-offs
The ALLL and net charge-offs are summarized below.
Table 34
ALLL for Loans and Leases
| dollars in millions | Three Months Ended June 30, 2025 | ||||||||||||||||||||||
| Commercial | Consumer | Total | |||||||||||||||||||||
| Balance at beginning of period | $ | 1,517 | $ | 163 | $ | 1,680 | |||||||||||||||||
| Provision for loan and lease losses | 111 | — | 111 | ||||||||||||||||||||
| Charge-offs | (137) | (7) | (144) | ||||||||||||||||||||
| Recoveries | 21 | 4 | 25 | ||||||||||||||||||||
| Balance at end of period | $ | 1,512 | $ | 160 | $ | 1,672 | |||||||||||||||||
| Net charge-off ratio | 0.33 | % | |||||||||||||||||||||
| Net charge-offs | $ | 116 | $ | 3 | $ | 119 | |||||||||||||||||
| Average loans | $ | 141,791 | |||||||||||||||||||||
| Percent of loans in each category to total loans | 80 | % | 20 | % | 100 | % | |||||||||||||||||
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||
| Commercial | Consumer | Total | |||||||||||||||||||||
| Balance at beginning of period | $ | 1,518 | $ | 158 | $ | 1,676 | |||||||||||||||||
| Provision for loan and lease losses | 138 | 10 | 148 | ||||||||||||||||||||
| Charge-offs | (159) | (8) | (167) | ||||||||||||||||||||
| Recoveries | 20 | 3 | 23 | ||||||||||||||||||||
| Balance at end of period | $ | 1,517 | $ | 163 | $ | 1,680 | |||||||||||||||||
| Net charge-off ratio | 0.41 | % | |||||||||||||||||||||
| Net charge-offs | $ | 139 | $ | 5 | $ | 144 | |||||||||||||||||
| Average loans | $ | 140,780 | |||||||||||||||||||||
| Percent of loans in each category to total loans | 80 | % | 20 | % | 100 | % | |||||||||||||||||
| Three Months Ended June 30, 2024 | |||||||||||||||||||||||
| Commercial | Consumer | Total | |||||||||||||||||||||
| Balance at beginning of period | $ | 1,582 | $ | 155 | $ | 1,737 | |||||||||||||||||
| Provision for loan and lease losses | 94 | 1 | 95 | ||||||||||||||||||||
| Charge-offs | (153) | (6) | (159) | ||||||||||||||||||||
| Recoveries | 24 | 3 | 27 | ||||||||||||||||||||
| Balance at end of period | $ | 1,547 | $ | 153 | $ | 1,700 | |||||||||||||||||
| Net charge-off ratio | 0.38 | % | |||||||||||||||||||||
| Net charge-offs | $ | 129 | $ | 3 | $ | 132 | |||||||||||||||||
| Average loans | $ | 137,426 | |||||||||||||||||||||
| Percent of loans in each category to total loans | 80 | % | 20 | % | 100 | % | |||||||||||||||||
The ALLL at June 30, 2025 was $1.67 billion, representing a decrease of $8 million compared to March 31, 2025, primarily due to decreases related to Hurricane Helene, other credit quality improvements, and a modest shift in our weighting from the downside to baseline economic scenario as further discussed in the “ALLL Methodology” section of this MD&A, partially offset by higher specific reserves for individually evaluated loans.
Net charge-offs for the Current Quarter were $119 million, a decrease of $25 million from $144 million for the Linked Quarter, mainly due to lower net charge-offs in investor dependent and non-owner occupied commercial mortgage loan classes, partially offset by higher net charge-offs in the commercial and industrial loan class.
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Table 35
ALLL for Loans and Leases
| dollars in millions | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||
| Commercial | Consumer | Total | Commercial | Consumer | Total | ||||||||||||||||||||||||||||||||||||||||||
| Balance at beginning of period | $ | 1,518 | $ | 158 | $ | 1,676 | $ | 1,581 | $ | 166 | $ | 1,747 | |||||||||||||||||||||||||||||||||||
| Provision (benefit) for loan and lease losses | 249 | 10 | 259 | 193 | (5) | 188 | |||||||||||||||||||||||||||||||||||||||||
| Charge-offs | (296) | (15) | (311) | (274) | (13) | (287) | |||||||||||||||||||||||||||||||||||||||||
| Recoveries | 41 | 7 | 48 | 47 | 5 | 52 | |||||||||||||||||||||||||||||||||||||||||
| Balance at end of period | $ | 1,512 | $ | 160 | $ | 1,672 | $ | 1,547 | $ | 153 | $ | 1,700 | |||||||||||||||||||||||||||||||||||
| Net charge-off ratio | 0.37 | % | 0.35 | % | |||||||||||||||||||||||||||||||||||||||||||
| Net charge-offs | $ | 255 | $ | 8 | $ | 263 | $ | 227 | $ | 8 | $ | 235 | |||||||||||||||||||||||||||||||||||
| Average loans | $ | 141,288 | $ | 135,565 | |||||||||||||||||||||||||||||||||||||||||||
| Percent of loans in each category to total loans | 80 | % | 20 | % | 100 | % | 80 | % | 20 | % | 100 | % | |||||||||||||||||||||||||||||||||||
The ALLL at June 30, 2025 was $1.67 billion, representing a decrease of $4 million from December 31, 2024, mainly due to the decreases discussed above and the result of a mix shift from the investor dependent loan class to the global fund banking loan class, which has a lower loss rate relative to our other loan classes, partially offset by the impact of loan growth.
Net charge-offs for the Current YTD were $263 million, an increase of $28 million from $235 million for the Prior YTD. The higher net charge-offs within commercial loans were mainly due to the commercial and industrial and non-owner occupied commercial mortgage loan classes, partially offset by lower net charge-offs in the investor dependent loan class.
Table 36
ALLL Ratios
| dollars in millions | June 30, 2025 | March 31, 2025 | December 31, 2024 | ||||||||||||||||||||
| ALLL | $ | 1,672 | $ | 1,680 | $ | 1,676 | |||||||||||||||||
| Total loans and leases | $ | 141,269 | $ | 141,358 | $ | 140,221 | |||||||||||||||||
| ALLL to total loans and leases | 1.18 | % | 1.19 | % | 1.20 | % | |||||||||||||||||
| Commercial loans and leases: | |||||||||||||||||||||||
| ALLL - commercial | $ | 1,512 | $ | 1,517 | $ | 1,518 | |||||||||||||||||
| Commercial loans and leases | $ | 113,007 | $ | 113,211 | $ | 111,993 | |||||||||||||||||
| Commercial ALLL to commercial loans and leases | 1.34 | % | 1.34 | % | 1.35 | % | |||||||||||||||||
| Consumer loans: | |||||||||||||||||||||||
| ALLL - consumer | $ | 160 | $ | 163 | $ | 158 | |||||||||||||||||
| Consumer loans | $ | 28,262 | $ | 28,147 | $ | 28,228 | |||||||||||||||||
| Consumer ALLL to consumer loans | 0.56 | % | 0.58 | % | 0.56 | % | |||||||||||||||||
The ALLL as a percentage of total loans and leases at June 30, 2025 was 1.18%, compared to 1.19% at March 31, 2025 and 1.20% at December 31, 2024. The trends in the ALLL are discussed above.
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Table 37
ALLL by Loan Class
| dollars in millions | June 30, 2025 | March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| ALLL | ALLL as a Percentage of Loans | ALLL | ALLL as a Percentage of Loans | ALLL | ALLL as a Percentage of Loans | ||||||||||||||||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial construction | $ | 67 | 1.17 | % | $ | 61 | 1.10 | % | $ | 53 | 1.03 | % | |||||||||||||||||||||||||||||||||||
| Owner occupied commercial mortgage | 53 | 0.31 | 54 | 0.32 | 51 | 0.30 | |||||||||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial mortgage | 318 | 1.98 | 331 | 2.05 | 340 | 2.10 | |||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | 781 | 1.92 | 784 | 1.91 | 768 | 1.88 | |||||||||||||||||||||||||||||||||||||||||
| Leases | 36 | 1.75 | 36 | 1.79 | 36 | 1.80 | |||||||||||||||||||||||||||||||||||||||||
| Global fund banking | 80 | 0.28 | 75 | 0.26 | 75 | 0.27 | |||||||||||||||||||||||||||||||||||||||||
| Investor dependent | 177 | 6.37 | 176 | 5.97 | 195 | 6.10 | |||||||||||||||||||||||||||||||||||||||||
| Total commercial | 1,512 | 1.34 | 1,517 | 1.34 | 1,518 | 1.35 | |||||||||||||||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage | 89 | 0.39 | 87 | 0.38 | 85 | 0.37 | |||||||||||||||||||||||||||||||||||||||||
| Revolving mortgage | 19 | 0.70 | 23 | 0.87 | 21 | 0.83 | |||||||||||||||||||||||||||||||||||||||||
| Consumer auto | 9 | 0.63 | 9 | 0.60 | 5 | 0.35 | |||||||||||||||||||||||||||||||||||||||||
| Consumer other | 43 | 4.32 | 44 | 4.59 | 47 | 4.75 | |||||||||||||||||||||||||||||||||||||||||
| Total consumer | 160 | 0.56 | 163 | 0.58 | 158 | 0.56 | |||||||||||||||||||||||||||||||||||||||||
| Total ALLL | $ | 1,672 | 1.18 | % | $ | 1,680 | 1.19 | % | $ | 1,676 | 1.20 | % | |||||||||||||||||||||||||||||||||||
The ALLL may vary significantly from period to period due to changes in economic conditions, economic forecasts and the composition and credit quality of the loan and lease portfolio, and the related impacts on the ALLL models.
Credit Metrics
Nonperforming Assets
Nonperforming assets include nonaccrual loans and leases, other real estate owned (“OREO”) and repossessed assets. Accounting policies related to nonperforming assets are discussed in Note 1—Significant Accounting Policies and Basis of Presentation in the 2024 Form 10-K.
Table 38
Non-Performing Assets
| dollars in millions | June 30, 2025 | March 31, 2025 | December 31, 2024 | ||||||||||||||||||||
| Nonaccrual loans: | |||||||||||||||||||||||
| Commercial loans | $ | 1,107 | $ | 1,010 | $ | 1,003 | |||||||||||||||||
| Consumer loans | 212 | 196 | 181 | ||||||||||||||||||||
| Total nonaccrual loans | 1,319 | 1,206 | 1,184 | ||||||||||||||||||||
| Other real estate owned and repossessed assets | 103 | 105 | 64 | ||||||||||||||||||||
| Total nonperforming assets | $ | 1,422 | $ | 1,311 | $ | 1,248 | |||||||||||||||||
| ALLL to total loans and leases | 1.18 | % | 1.19 | % | 1.20 | % | |||||||||||||||||
| Ratio of total nonperforming assets to total loans, leases, other real estate owned and repossessed assets | 1.01 | 0.93 | 0.89 | ||||||||||||||||||||
| Ratio of nonaccrual loans and leases to total loans and leases | 0.93 | 0.85 | 0.84 | ||||||||||||||||||||
| Ratio of ALLL to nonaccrual loans and leases | 126.75 | 139.25 | 141.58 | ||||||||||||||||||||
Nonaccrual loans and leases at June 30, 2025 were $1.32 billion, representing increases of $135 million and $113 million compared to December 31, 2024 and March 31, 2025, respectively, mainly due to one individually evaluated nonaccrual credit in the commercial and industrial loan class (and the SVB Commercial segment).
OREO and repossessed assets were $103 million at June 30, 2025 compared to $64 million at December 31, 2024 and $105 million at March 31, 2025. The increase of $39 million compared to December 31, 2024 mainly reflects additional foreclosed CRE properties.
Delinquencies
Accruing loans 30 days or more past due were 0.52% of total loans at June 30, 2025, compared to 0.54% at December 31, 2024 and 0.73% at March 31, 2025. Delinquency status by loan class is presented in Note 4—Loans and Leases.
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CRE Portfolio
Our CRE portfolio is diversified across various property types. The following table provides an overview of the property type exposures within our CRE portfolio:
Table 39
Commercial AG真人官方 Estate Portfolio (1)
| dollars in millions | June 30, 2025 | ||||||||||||||||||||||||||||||||||
| Balance | % to Total Loans and Leases | ||||||||||||||||||||||||||||||||||
| Multi-Family | $ | 5,151 | 3.65 | % | |||||||||||||||||||||||||||||||
| Medical Office | 3,829 | 2.71 | |||||||||||||||||||||||||||||||||
| Industrial/Warehouse | 3,697 | 2.62 | |||||||||||||||||||||||||||||||||
| General Office | 2,218 | 1.57 | |||||||||||||||||||||||||||||||||
| Retail | 1,714 | 1.21 | |||||||||||||||||||||||||||||||||
| Healthcare | 1,330 | 0.94 | |||||||||||||||||||||||||||||||||
| Hotel/Motel | 867 | 0.61 | |||||||||||||||||||||||||||||||||
| Other | 4,733 | 3.35 | |||||||||||||||||||||||||||||||||
| Total | $ | 23,539 | 16.66 | % | |||||||||||||||||||||||||||||||
(1) The definition of CRE in this table is aligned with the Federal Reserve and FDIC guidance on CRE and includes the following: construction loans, loans where the primary repayment is from third party rental income, and loans not secured by real estate but for the purpose of real estate. This table excludes the owner occupied commercial mortgage loan class.
Evolving macroeconomic and social conditions (including the shift to more hybrid work arrangements) may result in changes for General Office demand moving forward. Our General Office portfolio has experienced more negative credit quality trends relative to our other CRE portfolios. Select metrics for our General Office portfolio are summarized in the following table:
Table 40
Select General Office Loan Metrics
| dollars in millions | June 30, 2025 | March 31, 2025 | December 31, 2024 | ||||||||||||||
| % of total loans and leases | 1.57 | % | 1.68 | % | 1.77 | % | |||||||||||
| % of CRE loans | 9.42 | % | 10.16 | % | 10.81 | % | |||||||||||
| Average loan balance | $ | 2 | $ | 2 | $ | 2 | |||||||||||
| Net charge-offs (YTD annualized %) | 4.09 | % | 4.77 | % | 3.95 | % | |||||||||||
| Delinquencies as a % of General Office loans | 6.59 | % | 11.08 | % | 10.92 | % | |||||||||||
| Non-performing loans as a % of General Office loans | 9.03 | % | 10.87 | % | 12.10 | % | |||||||||||
| ALLL ratio | 4.59 | % | 4.35 | % | 4.59 | % | |||||||||||
Concentration Risk
We strive to minimize the risks associated with large concentrations within specific geographic areas, collateral types or industries. Despite our focus on diversification, several characteristics of our loan portfolio subject us to risk, such as our concentrations of real estate secured loans, revolving mortgage loans and healthcare-related loans. Additionally, commercial loans may be concentrated in loans with large balances and loans in certain industries and customer groups, including private equity and venture capital.
Loan concentration data regarding our commercial and consumer loan portfolios is summarized below.
Commercial Loan Concentrations
Current Quarter changes to loan classes are discussed above under “Recent Events—2025 Loan Class Changes” and in Note 1—Significant Accounting Policies and Basis of Presentation. Concentration disclosures for the Linked Quarter and at December 31, 2024 included in this Form 10-Q were recast to reflect the 2025 Loan Class Changes.
93
Geographic Concentrations
The following table summarizes state concentrations of 5.0% or greater of our loans. Data is based on obligor location.
Table 41
Commercial Loans and Leases - Geography
| dollars in millions | June 30, 2025 | March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| State | |||||||||||||||||||||||||||||||||||||||||||||||
| California | $ | 25,874 | 22.9 | % | $ | 25,304 | 22.4 | % | $ | 24,491 | 21.9 | % | |||||||||||||||||||||||||||||||||||
| North Carolina | 11,051 | 9.8 | 10,974 | 9.7 | 10,985 | 9.8 | |||||||||||||||||||||||||||||||||||||||||
| New York | 10,470 | 9.3 | 9,891 | 8.7 | 10,202 | 9.1 | |||||||||||||||||||||||||||||||||||||||||
| Texas | 8,620 | 7.6 | 8,276 | 7.3 | 8,459 | 7.6 | |||||||||||||||||||||||||||||||||||||||||
| Massachusetts | 7,880 | 7.0 | 6,947 | 6.1 | 7,259 | 6.5 | |||||||||||||||||||||||||||||||||||||||||
| Florida | 5,629 | 5.0 | 5,842 | 5.2 | 5,845 | 5.2 | |||||||||||||||||||||||||||||||||||||||||
| All other states | 40,519 | 35.8 | 43,157 | 38.1 | 42,217 | 37.6 | |||||||||||||||||||||||||||||||||||||||||
| Total U.S. | $ | 110,043 | 97.4 | % | $ | 110,391 | 97.5 | % | $ | 109,458 | 97.7 | % | |||||||||||||||||||||||||||||||||||
| Total International | 2,964 | 2.6 | 2,820 | 2.5 | 2,535 | 2.3 | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 113,007 | 100.0 | % | $ | 113,211 | 100.0 | % | $ | 111,993 | 100.0 | % | |||||||||||||||||||||||||||||||||||
Industry Concentrations
The following table represents loans by industry of obligor:
Table 42
Commercial Loans and Leases - Industry
| dollars in millions | June 30, 2025 | March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| Finance and Insurance | $ | 31,902 | 28.3 | % | $ | 31,832 | 28.1 | % | $ | 31,162 | 27.8 | % | |||||||||||||||||||||||||||||||||||
| AG真人官方 Estate | 18,348 | 16.2 | 18,198 | 16.1 | 17,898 | 16.0 | |||||||||||||||||||||||||||||||||||||||||
| Healthcare | 11,083 | 9.8 | 11,001 | 9.7 | 11,053 | 9.9 | |||||||||||||||||||||||||||||||||||||||||
| Information | 9,490 | 8.4 | 9,596 | 8.5 | 9,569 | 8.5 | |||||||||||||||||||||||||||||||||||||||||
| Business Services | 9,217 | 8.2 | 9,180 | 8.0 | 9,089 | 8.1 | |||||||||||||||||||||||||||||||||||||||||
| Transportation, Communication, Gas, Utilities | 7,909 | 7.0 | 8,194 | 7.2 | 8,175 | 7.3 | |||||||||||||||||||||||||||||||||||||||||
| Manufacturing | 6,998 | 6.2 | 7,000 | 6.2 | 7,160 | 6.4 | |||||||||||||||||||||||||||||||||||||||||
| Service Industries | 4,192 | 3.7 | 4,136 | 3.7 | 4,124 | 3.7 | |||||||||||||||||||||||||||||||||||||||||
| Retail | 4,120 | 3.6 | 4,319 | 3.8 | 4,141 | 3.7 | |||||||||||||||||||||||||||||||||||||||||
| Wholesale | 3,481 | 3.1 | 3,461 | 3.1 | 3,437 | 3.1 | |||||||||||||||||||||||||||||||||||||||||
| Other | 6,267 | 5.5 | 6,294 | 5.6 | 6,185 | 5.5 | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 113,007 | 100.0 | % | $ | 113,211 | 100.0 | % | $ | 111,993 | 100.0 | % | |||||||||||||||||||||||||||||||||||
The following table provides a summary of commercial loans by size and class. The breakout below is based on total client balances (individually or in the aggregate) as of June 30, 2025:
Table 43
Commercial Loans by Size and Class
| dollars in millions | Less Than $10 Million | $10 to < $30 Million | > $30 Million | Total Commercial Loans | |||||||||||||||||||
| Commercial construction | $ | 1,256 | $ | 1,494 | $ | 2,964 | $ | 5,714 | |||||||||||||||
| Owner occupied commercial mortgage | 14,466 | 1,957 | 630 | 17,053 | |||||||||||||||||||
| Non-owner occupied commercial mortgage | 6,543 | 4,975 | 4,582 | 16,100 | |||||||||||||||||||
| Commercial and industrial | 15,226 | 12,297 | 13,135 | 40,658 | |||||||||||||||||||
| Leases | 1,651 | 295 | 82 | 2,028 | |||||||||||||||||||
| Global fund banking | 2,241 | 4,847 | 21,589 | 28,677 | |||||||||||||||||||
| Investor dependent | 1,761 | 754 | 262 | 2,777 | |||||||||||||||||||
| Total | $ | 43,144 | $ | 26,619 | $ | 43,244 | $ | 113,007 | |||||||||||||||
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Consumer Loan Concentrations
Loan concentrations may exist when multiple borrowers could be similarly impacted by economic or other conditions. The following table summarizes state concentrations greater than 5.0% based on customer address:
Table 44
Consumer Loans - Geography
| dollars in millions | June 30, 2025 | March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| State | |||||||||||||||||||||||||||||||||||||||||||||||
| California | $ | 8,335 | 29.5 | % | $ | 8,450 | 30.0 | % | $ | 8,655 | 30.7 | % | |||||||||||||||||||||||||||||||||||
| North Carolina | 7,067 | 25.0 | 6,965 | 24.7 | 6,923 | 24.5 | |||||||||||||||||||||||||||||||||||||||||
| South Carolina | 3,660 | 12.9 | 3,618 | 12.9 | 3,607 | 12.8 | |||||||||||||||||||||||||||||||||||||||||
| Massachusetts | 1,644 | 5.8 | 1,678 | 6.0 | 1,692 | 6.0 | |||||||||||||||||||||||||||||||||||||||||
| Other states | 7,556 | 26.8 | 7,436 | 26.4 | 7,351 | 26.0 | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 28,262 | 100.0 | % | $ | 28,147 | 100.0 | % | $ | 28,228 | 100.0 | % | |||||||||||||||||||||||||||||||||||
Market Risk
Interest rate risk management
BancShares is exposed to the risk that changes in market conditions may affect interest rates and negatively impact earnings. The risk arises from the nature of BancShares’ business activities, the composition of BancShares’ balance sheet, and changes in the level or shape of the yield curve. BancShares manages this inherent risk strategically based on prescribed guidelines and approved limits.
Interest rate risk can arise from many of BancShares’ business activities, such as lending, leasing, investing, deposit taking, derivatives, and funding activities. We evaluate and monitor interest rate risk primarily through two metrics.
•Net Interest Income Sensitivity (“NII Sensitivity”) measures the net impact of hypothetical changes in interest rates on forecasted NII; and
•Economic Value of Equity (“EVE”) Sensitivity (“EVE Sensitivity”) measures the net impact of these hypothetical changes on the value of equity by assessing the economic value of assets, liabilities and off-balance sheet instruments.
BancShares uses a holistic process to measure and monitor both short term and long term risks, which includes, but is not limited to, gradual and immediate parallel rate shocks, changes in the shape of the yield curve, and changes in the relationship of various yield curves. NII Sensitivity generally focuses on shorter term earnings risk, while EVE Sensitivity assesses the longer-term risk of the existing balance sheet.
Our exposure to NII Sensitivity is guided by the Risk Appetite Framework and Statement and a range of risk metrics and BancShares may utilize tools across the balance sheet to adjust its interest rate risk exposures, including through business line actions and actions within the investment, funding and derivative portfolios.
The composition of our interest rate sensitive assets and liabilities generally results in a net asset-sensitive position for NII Sensitivity, whereby our assets will reprice faster than our liabilities. A component of our interest rate risk management strategy is the use of derivative instruments to manage fluctuations in earnings caused by changes in market interest rates. Interest rate swaps are the primary type of derivative instrument that we use as part of our interest rate risk management strategy. These derivatives hedge interest income variability of floating rate loans indexed to SOFR, as well as fair value changes of fixed rate time deposits and long-term debt indexed to SOFR. Refer to Note 10—Derivative Financial Instruments for further information on our derivative portfolio.
Our funding sources consist primarily of deposits, and we also support our funding needs through wholesale funding sources (including unsecured and secured borrowings).
The deposit rates we offer are influenced by market conditions and competitive factors. Market rates are the key factors of deposit costs, and we continue to optimize deposit costs by improving our deposit mix. Changes in interest rates, expected funding needs, as well as actions by competitors, can affect our deposit taking activities and deposit pricing. We believe our targeted non-maturity deposit customer retention is strong and we remain focused on optimizing our mix of deposits. We regularly assess the effect of deposit rate changes on our balances and seek to achieve optimal alignment between assets and liabilities.
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The following table summarizes the results of 12-month NII Sensitivity simulations produced by our asset/liability management system. These simulations assume static balance sheet replacement with like products and implied forward market rates, and also incorporate additional internal models and assumptions, which we may update periodically, including rate dependent prepayment for certain loans and securities and repricing of interest-bearing non-maturity deposits. The below simulations assume an immediate 100 and 200 bps parallel increase and decrease from current interest rates.
Table 45
Net Interest Income Sensitivity Simulation Analysis
| Estimated (Decrease) Increase in NII | ||||||||||||||||||||||||||
| Change in interest rate (bps) | June 30, 2025 | March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||
| -200 | (12.4) | % | (11.4) | % | (10.6) | % | ||||||||||||||||||||
| -100 | (6.6) | (6.1) | (6.1) | |||||||||||||||||||||||
| +100 | 7.8 | 5.9 | 6.9 | |||||||||||||||||||||||
| +200 | 15.2 | 12.3 | 11.1 | |||||||||||||||||||||||
NII Sensitivity metrics at June 30, 2025, compared to December 31, 2024, were primarily affected by cash increase from deposit growth and the Linked Quarter Debt Issuances, as well as impacts from changes in forward rate curve expectations.
As of June 30, 2025, BancShares continues to have an asset sensitive interest rate risk profile and the potential exposure to forecasted earnings was largely due to the composition of the balance sheet (primarily due to floating rate commercial loans and cash), as well as estimates of modest future deposit betas. Approximately 64% of our loans have floating contractual reference rates, indexed primarily to SOFR and the U.S. prime rate. Deposit betas are currently modeled to have a portfolio average of approximately 35%-40% over the twelve-month forecast horizon, including 45%-50% for interest-bearing non-maturity deposits. Deposit beta is the portion of a change in the federal funds rate that is passed on to the deposit rate. Actual deposit betas may be different than modeled, depending on various factors, including liquidity requirements, deposit mix and competitive pressures. Impacts to NII Sensitivity may change due to actual results differing from modeled expectations.
As noted above, EVE Sensitivity supplements NII simulations as it estimates risk exposures beyond a twelve-month horizon. EVE Sensitivity measures the change in the EVE due to changes in assets, liabilities, and off-balance sheet instruments in response to a change in interest rates. EVE Sensitivity was calculated by estimating the change in the net present value of assets, liabilities, and off-balance sheet items under various rate movements, including utilizing a dynamic rate level dependent modeling approach for our deposit attrition assumption. In addition to interest rate changes, other key assumptions used in our EVE Sensitivity simulations include asset prepayments, as well as balance attrition and pricing of non-maturity deposits.
The below simulations assume an immediate 100 and 200 bps parallel increase and decrease from current interest rates and the estimated impact on our EVE profile based on our current modeling approach:
Table 46
Economic Value of Equity Modeling Analysis
| Estimated Increase (Decrease) in EVE | ||||||||||||||||||||||||||
| Change in interest rate (bps) | June 30, 2025 | March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||
| -200 | 2.0 | % | 3.2 | % | 5.4 | % | ||||||||||||||||||||
| -100 | 2.0 | 2.5 | 3.1 | |||||||||||||||||||||||
| +100 | (2.2) | (2.9) | (3.2) | |||||||||||||||||||||||
| +200 | (4.0) | (5.5) | (7.0) | |||||||||||||||||||||||
In addition to the above reported sensitivities, a wide variety of potential interest rate scenarios are simulated within our asset/liability management system. Scenarios that impact balance sheet composition or the sensitivity to key assumptions are also evaluated.
We use results of our various interest rate risk analyses to formulate and implement asset and liability management strategies, in coordination with the Asset and Liability Committee, to achieve the desired risk profile, while managing our objectives for market risk and other strategic objectives. Specifically, we may manage our interest rate risk position through certain pricing strategies and product design for loans and deposits, our investment portfolio, funding portfolio, or by using derivatives to mitigate earnings volatility.
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The above sensitivities provide an estimate of our interest rate sensitivity; however, they do not account for potential changes in credit quality, size, mix, or changes in the competition for business in the industries we serve. They also do not account for other business developments and other actions. Accordingly, we can give no assurance that actual results would not differ materially from the estimated outcomes of our simulations.
Loan Maturity and Loan Interest Rate Sensitivity
The following table provides loan maturity distribution information:
Table 47
Loan Maturity Distribution
| dollars in millions | At June 30 2025, Maturing | ||||||||||||||||||||||||||||
| Within One Year | One to Five Years | Five to 15 Years | After 15 Years | Total | |||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||
| Commercial construction | $ | 1,430 | $ | 3,490 | $ | 748 | $ | 46 | $ | 5,714 | |||||||||||||||||||
| Owner occupied commercial mortgage | 1,793 | 8,178 | 6,622 | 460 | 17,053 | ||||||||||||||||||||||||
| Non-owner occupied commercial mortgage | 3,310 | 9,942 | 2,045 | 803 | 16,100 | ||||||||||||||||||||||||
| Commercial and industrial | 10,409 | 24,645 | 4,566 | 1,038 | 40,658 | ||||||||||||||||||||||||
| Leases | 632 | 1,319 | 77 | — | 2,028 | ||||||||||||||||||||||||
| Global fund banking | 26,330 | 2,313 | 34 | — | 28,677 | ||||||||||||||||||||||||
| Investor dependent | 366 | 2,411 | — | — | 2,777 | ||||||||||||||||||||||||
| Total commercial | 44,270 | 52,298 | 14,092 | 2,347 | 113,007 | ||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||
| Residential mortgage | 671 | 2,860 | 7,720 | 11,808 | 23,059 | ||||||||||||||||||||||||
| Revolving mortgage | 59 | 187 | 1,021 | 1,469 | 2,736 | ||||||||||||||||||||||||
| Consumer auto | 338 | 1,020 | 132 | — | 1,490 | ||||||||||||||||||||||||
| Consumer other | 290 | 556 | 122 | 9 | 977 | ||||||||||||||||||||||||
| Total consumer | 1,358 | 4,623 | 8,995 | 13,286 | 28,262 | ||||||||||||||||||||||||
| Total loans and leases | $ | 45,628 | $ | 56,921 | $ | 23,087 | $ | 15,633 | $ | 141,269 | |||||||||||||||||||
As noted above, approximately 64% of our total loans have floating contractual reference rates, indexed primarily to SOFR and the U.S. prime rate. The following table provides information regarding fixed and variable interest rate loans and leases maturing one year or after, as of June 30, 2025:
Table 48
Fixed and Variable Interest Rate Loans
| dollars in millions | Loans Maturing One Year or After with | ||||||||||
| Fixed Interest Rates | Variable Interest Rates | ||||||||||
| Commercial | |||||||||||
| Commercial construction | $ | 1,385 | $ | 2,899 | |||||||
| Owner occupied commercial mortgage | 13,352 | 1,908 | |||||||||
| Non-owner occupied commercial mortgage | 6,263 | 6,527 | |||||||||
| Commercial and industrial | 10,054 | 20,195 | |||||||||
| Leases | 1,389 | 7 | |||||||||
| Global fund banking | 1 | 2,346 | |||||||||
| Investor dependent | 20 | 2,391 | |||||||||
| Total commercial | 32,464 | 36,273 | |||||||||
| Consumer | |||||||||||
| Residential mortgage | 8,636 | 13,752 | |||||||||
| Revolving mortgage | 30 | 2,647 | |||||||||
| Consumer auto | 1,152 | — | |||||||||
| Consumer other | 273 | 414 | |||||||||
| Total consumer | 10,091 | 16,813 | |||||||||
| Total loans and leases | $ | 42,555 | $ | 53,086 | |||||||
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Liquidity Risk
Our liquidity risk management and monitoring process is designed to ensure the availability of adequate cash and collateral resources and funding capacity to meet our obligations. Our overall liquidity management strategy is intended to ensure appropriate liquidity to meet expected and contingent funding needs under both normal and stressed environments. Consistent with this strategy, we maintain sufficient amounts of available cash and HQLS. Additional sources of liquidity include committed credit facilities, repurchase agreements, brokered certificates of deposit issuances, unsecured debt issuances, and cash collections generated by portfolio asset sales to third parties.
We utilize measurement tools to assess and monitor the level and adequacy of our liquidity position, liquidity conditions and trends. We measure and forecast liquidity and liquidity risks under different hypothetical scenarios and across different horizons. We use a liquidity stress testing framework to better understand the range of potential risks and their impacts to which BancShares is exposed. Stress test results inform our business strategy, risk appetite, levels of liquid assets, and contingency funding plans. Also included among our liquidity measurement tools are key risk indicators that assist in identifying potential liquidity risk and stress events.
BancShares maintains a framework to establish liquidity risk tolerances, monitoring, and breach escalation protocol to alert management of potential funding and liquidity risks and to initiate mitigating actions as appropriate. Further, BancShares maintains a contingent funding plan, which details protocols and potential actions to be taken under liquidity stress conditions.
Liquidity includes available cash and HQLS. At June 30, 2025 we had $63.62 billion of high-quality liquid assets (27.7% of total assets) and $28.51 billion of contingent liquidity sources available. The higher available cash level presented below was due in part from deposit growth, maturing investment securities, and funds received in connection with the Linked Quarter Debt Issuances. During the Current Quarter, we increased our borrowing capacity under agreements with the FRB through expansion of the eligible loan population to targeted loans historically not pledged to the FRB. As noted below, the draw period under the Advance Facility Agreement with the FDIC ended March 27, 2025, as of which date, FCB had no outstanding amounts under the facility.
Table 49
Liquidity
| dollars in millions | June 30, 2025 | March 31, 2025 | December 31, 2024 | |||||||||||||||||
Available cash | $ | 25,332 | $ | 23,769 | $ | 20,545 | ||||||||||||||
High-quality liquid securities (1) | 38,284 | 39,018 | 38,794 | |||||||||||||||||
| High-quality liquid assets | $ | 63,616 | $ | 62,787 | $ | 59,339 | ||||||||||||||
Current Capacity (2) of Credit Facilities: | ||||||||||||||||||||
FHLB facility (3) | $ | 17,852 | $ | 16,542 | $ | 16,423 | ||||||||||||||
| FRB facility | 10,561 | 5,612 | 5,475 | |||||||||||||||||
FDIC facility (4) | — | — | 5,291 | |||||||||||||||||
| Line of credit | 100 | 100 | 100 | |||||||||||||||||
| Total contingent sources | $ | 28,513 | $ | 22,254 | $ | 27,289 | ||||||||||||||
| Total liquid assets and contingent sources | $ | 92,129 | $ | 85,041 | $ | 86,628 | ||||||||||||||
| Total uninsured deposits | $ | 57,805 | $ | 58,063 | $ | 59,510 | ||||||||||||||
| Coverage ratio of total liquid assets and contingent sources to uninsured deposits | 159 | % | 146 | % | 146 | % | ||||||||||||||
(1) Consists of readily marketable, unpledged securities, as well as securities pledged but not drawn against at the FHLB and available for sale, and generally is comprised of U.S. Treasury and U.S. agency investment securities held outright or via reverse repurchase agreements.
(2) Current capacity is based on the amount of collateral pledged and available for use at June 30, 2025, March 31, 2025 and December 31, 2024.
(3) Refer to Table 50 for additional details.
(4) The Advance Facility Agreement with the FDIC was obtained in connection with SVBB Acquisition and the draw period ended on March 27, 2025.
We fund our operations through deposits and borrowings. Our primary source of liquidity is derived from our various deposit channels, including our Branch Network and Direct Bank. Total deposits at June 30, 2025 were $159.94 billion, an increase of $4.71 billion or 3% from $155.23 billion at December 31, 2024.
We use borrowings to diversify the funding of our business operations. In addition to the Purchase Money Note and FHLB advances, borrowings also include senior unsecured notes, securities sold under customer repurchase agreements, and subordinated notes. Total borrowings at June 30, 2025 were $38.11 billion, an increase of $1.06 billion or 3% from $37.05 billion at December 31, 2024. The increase is primarily due to the Linked Quarter Debt Issuances with aggregate principal amounts totaling $1.25 billion and partially offset by the Current Quarter Debt Redemption with aggregate principal amounts totaling $350 million, as detailed in the “Interest-bearing Liabilities—Borrowings” section of this MD&A. We continually monitor our capital needs and market conditions in an effort to diversify our borrowing base when appropriate.
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FHLB Capacity
A source of available funds is advances from the FHLB of Atlanta. We may pledge assets for secured borrowing transactions, which include borrowings from the FHLB and/or FRB, or for other purposes as required or permitted by law. The debt issued in conjunction with these transactions is collateralized by certain discrete receivables, securities, loans, leases and/or underlying equipment. Certain related cash balances are restricted.
Table 50
FHLB Balances
| dollars in millions | June 30, 2025 | March 31, 2025 | December 31, 2024 | ||||||||||||||||||||
| Total borrowing capacity | $ | 18,552 | $ | 17,992 | $ | 17,873 | |||||||||||||||||
| Less: | |||||||||||||||||||||||
| Advances | — | — | — | ||||||||||||||||||||
Letters of credit (1) | 700 | 1,450 | 1,450 | ||||||||||||||||||||
| Available capacity | $ | 17,852 | $ | 16,542 | $ | 16,423 | |||||||||||||||||
| Pledged Non-PCD loans | $ | 30,835 | $ | 30,112 | $ | 30,421 | |||||||||||||||||
(1) Letters of credit were established with the FHLB to collateralize public funds. One of the letters of credit expired during the Current Quarter and was replaced subsequent to June 30, 2025.
FRB Capacity
Under borrowing arrangements with the FRB, FCB has access to $10.56 billion on a secured basis. During the Current Quarter, we pledged additional loan collateral and increased our borrowing capacity under agreements with the FRB. There were no outstanding borrowings with the FRB Discount Window at June 30, 2025, March 31, 2025 and December 31, 2024.
FDIC Credit Facility
FCB and the FDIC entered into the Advance Facility Agreement, dated as of March 27, 2023, and effective as of November 20, 2023, providing total advances available through March 27, 2025 of up to $70 billion solely to provide liquidity to offset deposit withdrawal or runoff of former SVBB deposit accounts and to fund the unfunded commercial lending commitments acquired in the SVBB Acquisition. There were no amounts outstanding at the end of the draw period on March 27, 2025.
Refer to Note 2—Business Combinations for further discussion.
Contractual Obligations and Commitments
The following table includes significant contractual obligations and commitments as of June 30, 2025, representing required and potential cash outflows, including impacts from purchase accounting adjustments and deferred fees. Refer to Note 18—Commitments and Contingencies for additional information regarding commitments. Financing commitments, letters of credit and deferred purchase commitments are presented at contractual amounts and do not necessarily reflect future cash outflows, as many are expected to expire unused or partially used.
Table 51
Contractual Obligations and Commitments
| dollars in millions | Payments Due by Period | ||||||||||||||||||||||||||||
| Less than 1 year | 1-3 years | 4-5 years | Thereafter | Total | |||||||||||||||||||||||||
| Contractual obligations: | |||||||||||||||||||||||||||||
| Time deposits | $ | 10,962 | $ | 229 | $ | 51 | $ | — | $ | 11,242 | |||||||||||||||||||
| Short-term borrowings | 471 | — | — | — | 471 | ||||||||||||||||||||||||
Long-term borrowings (1)(2) | (40) | 36,320 | (1) | 1,362 | 37,641 | ||||||||||||||||||||||||
| Total contractual obligations | $ | 11,393 | $ | 36,549 | $ | 50 | $ | 1,362 | $ | 49,354 | |||||||||||||||||||
| Commitments: | |||||||||||||||||||||||||||||
Financing commitments | $ | 29,986 | $ | 14,373 | $ | 1,839 | $ | 6,608 | $ | 52,806 | |||||||||||||||||||
Letters of credit | 1,764 | 530 | 13 | 17 | 2,324 | ||||||||||||||||||||||||
| Deferred purchase agreements | 1,463 | — | — | — | 1,463 | ||||||||||||||||||||||||
| Purchase and funding commitments | 57 | — | — | — | 57 | ||||||||||||||||||||||||
Affordable housing partnerships (1) | 554 | 525 | 35 | 49 | 1,163 | ||||||||||||||||||||||||
| Total commitments | $ | 33,824 | $ | 15,428 | $ | 1,887 | $ | 6,674 | $ | 57,813 | |||||||||||||||||||
(1) Long-term borrowings are presented net of purchase accounting adjustments of $107 million. On-balance sheet commitments for affordable housing partnerships are included in other liabilities and presented net of a purchase accounting adjustment of $22 million.
(2) Balance in parenthesis represents the estimated amortization of the purchase accounting adjustment and deferred costs in excess of any principal balance.
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Long-term Borrowings
As displayed above in Table 51, we do not have any significant long-term debt obligations due until the Purchase Money Note matures. While scheduled principal payments are not required until maturity in March 2028, FCB may voluntarily prepay principal without a premium or penalty. We will continue to monitor the interest rate environment and assess whether any voluntary prepayments are prudent considering the fixed rate of 3.50%. Potential sources that could fund voluntary prepayments or the amount due at maturity include excess liquidity (primarily comprised of interest-earning deposits at banks and proceeds from maturities and paydowns of investment securities), FHLB advances, deposit growth, and issuance of unsecured debt or other borrowings. At the time of voluntary prepayment or maturity, the interest rates for the potential interest-bearing sources of repayment could be higher than the 3.50% rate.
Refer to the respective “Deposits” and “Borrowings” discussions in the “Interest-bearing Liabilities” section of this MD&A for further details. The Purchase Money Note is discussed further in Note 2—Business Combinations.
Counterparty Risk
We enter into interest rate and foreign exchange derivatives as part of our overall risk management practices and also on behalf of our clients. We establish risk metrics and evaluate and manage the counterparty risk associated with these derivative instruments in accordance with the comprehensive Risk Management Framework and Risk Appetite Framework and Statement.
Counterparty credit exposure or counterparty risk is a primary risk of derivative instruments, relating to the ability of a counterparty to perform its financial obligations under the derivative contract. We seek to control credit risk of derivative agreements through counterparty credit approvals, pre-established exposure limits and monitoring procedures, which are integrated with our cash and issuer related credit processes.
Derivative agreements for BancShares’ risk management purposes and for the hedging of client transactions are primarily executed with investment grade financial institutions, with others cleared through certain central party clearing houses. Credit exposure is mitigated via the exchange of collateral between the counterparties covering mark-to-market valuations. Client related derivative transactions, which are primarily related to lending activities, are incorporated into our loan underwriting and reporting processes.
Asset Risk
Asset risk is a form of price risk that is a primary risk of our leasing businesses. This relates to the risk of earning capital arising from changes in the value of owned leasing equipment. Asset risk in our leasing business is evaluated and managed in the divisions and overseen by risk management processes. In our asset-based lending business, we also use residual value guarantees to mitigate or partially mitigate exposure to end of lease residual value exposure on certain of our finance leases. Our business process consists of: (1) setting residual values at transaction inception, (2) systematic periodic residual value reviews, and (3) monitoring levels of residual realizations. Residual realizations, by business and product, are reviewed as part of the quarterly financial and asset quality review. Reviews for impairment are performed at least annually.
In combination with other risk management and monitoring practices, asset risk is monitored through reviews of the equipment markets, including utilization rates and traffic flows; the evaluation of supply and demand dynamics; the impact of new technologies; and changes in regulatory requirements on different types of equipment. At a high level, demand for equipment is correlated with GDP growth trends for the markets the equipment serves, as well as the more immediate conditions of those markets. Cyclicality in the economy and shifts in trade flows due to specific events represent risks to the earnings that can be realized by these businesses. In the Rail segment, BancShares seeks to mitigate these risks by maintaining a relatively young fleet of assets, which can bolster attractive lease and utilization rates.
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CAPITAL
Capital requirements applicable to BancShares are discussed in the “Regulatory Considerations” section in Item 1. Business of the 2024 Form 10-K, including a discussion of an NPR issued on July 27, 2023 by the federal banking agencies regarding enhanced capital requirements. We will continue to monitor the status of the NPR.
BancShares’ total consolidated assets are between $100 billion and $250 billion, and, as such, BancShares is required to comply with certain enhanced prudential standards applicable to Category IV banking organizations, subject to the applicable transition periods. Additionally, an NPR released by federal banking agencies on August 29, 2023, could change the long-term debt requirements for banks with total consolidated assets of $100 billion or more. If this NPR is finalized as proposed, we expect we would need to issue additional long-term debt to satisfy the requirements. For further discussion, refer to the section entitled “Regulatory Considerations—Enhanced Prudential Standards—Proposed Long-Term Debt & Clean Holding Company Requirements” in Item 1. Business of the 2024 Form 10-K.
BancShares maintains a comprehensive capital adequacy process. BancShares establishes internal capital risk limits and warning thresholds, which utilize Risk-Based and Leverage-Based Capital calculations, internal and external early warning indicators, its capital planning process, and stress testing to evaluate BancShares' capital adequacy for multiple types of risk in both normal and stressed environments. The capital management framework requires contingency plans be defined and may be employed at management’s discretion.
Common and Preferred Stock Dividends
During the first and second quarters of 2025, we paid quarterly dividends of $1.95 per share on the Class A common stock and Class B common stock. In July 2025, the Board declared a quarterly dividend on the Class A common stock and Class B common stock of $1.95 per common share. The dividends are payable on September 15, 2025 to stockholders of record as of August 29, 2025.
During the first and second quarters of 2025, we paid quarterly dividends on our Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock as disclosed in Note 12—Stockholders' Equity. In July 2025, the Board declared dividends on our Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock in accordance with their terms. The dividends are payable on September 15, 2025.
Capital Composition and Ratios
As discussed earlier in the “Recent Events” section of this MD&A, the Board authorized the Class A common stock 2024 SRP and the new 2025 SRP that may commence repurchases upon completion of the 2024 SRP. During the Current Quarter and Current YTD, we repurchased 338,959 and 641,642 shares, respectively, under the 2024 SRP. Refer to the “Recent Events” section above for more information and Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds for our monthly repurchase activity during the Current Quarter.
The following table details the change in outstanding Class A common stock through June 30, 2025. Refer to Note 12—Stockholders' Equity for additional information.
Table 52
Changes in Shares of Class A Common Stock Outstanding
| Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | |||||||||||||||||||
| Class A common stock shares outstanding at beginning of period | 12,409,753 | 12,712,436 | ||||||||||||||||||
| Shares repurchased under authorized repurchase plan | (338,959) | (641,642) | ||||||||||||||||||
| Class A common stock shares outstanding at end of period | 12,070,794 | 12,070,794 | ||||||||||||||||||
We also had 1,005,185 Class B common stock outstanding at June 30, 2025 and December 31, 2024.
We are committed to effectively managing our capital to protect our depositors, creditors and stockholders. We continually monitor the capital levels and ratios for BancShares and FCB to ensure they exceed the minimum requirements imposed by regulatory authorities and to ensure they are appropriate given growth projections, risk profile and potential changes in the regulatory or external environment. Failure to meet certain capital requirements may result in actions by regulatory agencies that could have a material impact on our operations or consolidated financial statements.
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In accordance with GAAP, the unrealized gains and losses on certain assets and liabilities, net of deferred taxes, are included in accumulated other comprehensive loss within stockholders’ equity. These amounts are excluded from the calculation of our regulatory capital ratios under current regulatory guidelines.
Table 53
Analysis of Capital Adequacy
| dollars in millions | Basel III Requirements | PCA Well Capitalized Thresholds | June 30, 2025 | March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Amount | Ratio | Amount | Ratio | Adjusted Ratio (1) | Amount | Ratio | Adjusted Ratio (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BancShares | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk-based capital ratios | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total risk-based capital | 10.50 | % | 10.00 | % | $ | 24,713 | 14.25 | % | $ | 25,071 | 15.23 | % | 14.49 | % | $ | 24,610 | 15.04 | % | 14.27 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 risk-based capital | 8.50 | 8.00 | 21,896 | 12.63 | 21,970 | 13.35 | 12.70 | 22,137 | 13.53 | 12.84 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common equity Tier 1 | 7.00 | 6.50 | 21,015 | 12.12 | 21,089 | 12.81 | 12.19 | 21,256 | 12.99 | 12.33 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 leverage ratio | 4.00 | 5.00 | 21,896 | 9.62 | 21,970 | 9.75 | n/a (2) | 22,137 | 9.90 | n/a (2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FCB | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk-based capital ratios | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total risk-based capital | 10.50 | % | 10.00 | % | $ | 24,361 | 14.06 | % | $ | 23,758 | 14.45 | % | 13.74 | % | $ | 23,975 | 14.66 | % | 13.91 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 risk-based capital | 8.50 | 8.00 | 22,289 | 12.87 | 21,682 | 13.18 | 12.54 | 21,852 | 13.37 | 12.68 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common equity Tier 1 | 7.00 | 6.50 | 22,289 | 12.87 | 21,682 | 13.18 | 12.54 | 21,852 | 13.37 | 12.68 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 leverage ratio | 4.00 | 5.00 | 22,289 | 9.81 | 21,682 | 9.63 | n/a (2) | 21,852 | 9.78 | n/a (2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Adjusted capital ratios exclude the impact of the FDIC Shared-Loss Agreement and are considered non-GAAP measures. Refer to the “Non-GAAP Financial Measurements” section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.
(2) The adjusted tier 1 leverage ratio is not applicable because the FDIC Shared-Loss Agreement did not impact the tier 1 leverage ratio.
As of June 30, 2025, BancShares and FCB had risk-based capital ratio conservation buffers of 6.25% and 6.06%, respectively, which are in excess of the Basel III conservation buffer of 2.50%. As of December 31, 2024, BancShares and FCB’s risk-based capital ratio conservation buffers were 7.04% and 6.66%, respectively. The capital ratio conservation buffers represent the excess of the regulatory capital ratios as of June 30, 2025 and December 31, 2024 over the Basel III minimum for the applicable ratio. Additional Tier 1 capital for BancShares includes perpetual preferred stock.
Additional Tier 2 capital for BancShares and FCB primarily consists of qualifying ALLL and qualifying subordinated debt.
Termination of the Shared-Loss Agreement with the FDIC
The risk-based capital ratios of FCB and BancShares for periods in which the Shared Loss Agreement (as defined in Note 2—Business Combinations) was effective were calculated using favorable risk-weighted assets (“RWA”) assumptions permissible for Covered Assets (as defined in Note 2—Business Combinations in our 2024 Form 10-K). FCB and the FDIC entered into the Shared-Loss Termination Agreement on April 7, 2025 (the “Shared-Loss Termination Date”) as further discussed in the “Recent Events” section of this MD&A. FCB and BancShares are not permitted after the Shared-Loss Termination Date to apply the favorable RWA assumptions to assets that were previously Covered Assets under the Shared-Loss Agreement. The table above includes risk-based capital ratios as of March 31, 2025 and December 31, 2024, both including and excluding the impact of the Shared Loss Agreement to illustrate the approximated decreases in the risk-based capital ratios as a result of entering into the Shared-Loss Termination Agreement. Refer to the “Non-GAAP Financial Measurements” section of this MD&A for further discussion.
102
CRITICAL ACCOUNTING ESTIMATES
The accounting and reporting policies of BancShares are described in Note 1—Significant Accounting Policies and Basis of Presentation in the 2024 Form 10-K.
The ALLL is considered a critical accounting estimate. For more information regarding the ALLL, refer to the “Credit Risk— ALLL Methodology” section of this MD&A and Note 5—Allowance for Loan and Lease Losses.
RECENT ACCOUNTING PRONOUNCEMENTS
The following Accounting Standards Updates (“ASUs”) were issued by the Financial Accounting Standards Board but are not yet effective for BancShares:
| Standard | Summary of Guidance | Effect on BancShares’ Financial Statements | ||||||
| ASU No. 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures Issued December 2023 | This ASU enhances income tax disclosure requirements primarily by requiring disclosure of specific categories in the rate reconciliation table and disaggregation of income taxes paid by jurisdiction. | Effective for BancShares beginning with our financial statements for the year ending December 31, 2025. | ||||||
| ASU No. 2024-03 - Income Statement -Reporting Comprehensive Income - Expense Disaggregation Disclosures Issued November 2024 | This ASU enhances expense disclosures primarily by requiring footnote disaggregation of specified expenses in a tabular format. The ASU does not change the requirements for the presentation of expenses on the face of the income statement. | Effective for BancShares beginning with our financial statements for the year ending December 31, 2027. Early adoption is permitted and the guidance can be applied prospectively or retrospectively. We are currently evaluating the impact of this ASU on our footnote disclosures. | ||||||
NON-GAAP FINANCIAL MEASUREMENTS
BancShares provides certain non-GAAP information in reporting its financial results to give investors additional data to evaluate its operations. A non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance or financial position that may either exclude or include amounts, or is adjusted in some way to the effect of including or excluding amounts, as compared to the most directly comparable measure calculated and presented in accordance with GAAP financial statements. BancShares’ management believes that non-GAAP financial measures, when reviewed in conjunction with GAAP financial information, can provide transparency about, or an alternate means of assessing, its operating results and financial position to its investors, analysts and management. These non-GAAP measures should be considered in addition to, and not superior to or a substitute for, GAAP measures presented in BancShares’ consolidated financial statements and other publicly filed reports. In addition, our non-GAAP measures may be different from or inconsistent with non-GAAP financial measures used by other institutions.
Whenever we refer to a non-GAAP financial measure we will generally define and present the most directly comparable financial measure calculated and presented in accordance with GAAP, along with a reconciliation between the GAAP financial measure and the non-GAAP financial measure. We describe each of these measures below and explain why we believe the measure to be useful.
103
PPNR
PPNR is a non-GAAP measure of profit or loss calculated as net income plus the provision for credit losses and income tax expense (benefit). PPNR is a measure of segment profit or loss that is meaningful because it enables management and external users of financial statements to assess income before income taxes excluding the provision for credit losses, which can be more volatile when economic conditions are more dynamic.
The following table provides a reconciliation of net income, the comparable GAAP measure, to PPNR:
Table 54
PPNR
| dollars in millions | Three Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||||
| General Bank | Commercial Bank | SVB Commercial | Rail | Corporate | Total BancShares | ||||||||||||||||||||||||||||||
| Net income (GAAP) | $ | 294 | $ | 102 | $ | 136 | $ | 19 | $ | 24 | $ | 575 | |||||||||||||||||||||||
| Plus: provision for credit losses | 13 | 47 | 55 | — | — | 115 | |||||||||||||||||||||||||||||
| Plus: income tax expense (benefit) | 101 | 35 | 47 | 6 | (6) | 183 | |||||||||||||||||||||||||||||
| PPNR (non-GAAP) | $ | 408 | $ | 184 | $ | 238 | $ | 25 | $ | 18 | $ | 873 | |||||||||||||||||||||||
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||||||||
| General Bank | Commercial Bank | SVB Commercial | Rail | Corporate | Total BancShares | ||||||||||||||||||||||||||||||
| Net income (GAAP) | $ | 253 | $ | 43 | $ | 166 | $ | 22 | $ | (1) | $ | 483 | |||||||||||||||||||||||
| Plus: provision for credit losses | 46 | 85 | 23 | — | — | 154 | |||||||||||||||||||||||||||||
| Plus: income tax expense (benefit) | 88 | 15 | 57 | 8 | — | 168 | |||||||||||||||||||||||||||||
| PPNR (non-GAAP) | $ | 387 | $ | 143 | $ | 246 | $ | 30 | $ | (1) | $ | 805 | |||||||||||||||||||||||
| Three Months Ended June 30, 2024 | |||||||||||||||||||||||||||||||||||
| General Bank | Commercial Bank | SVB Commercial | Rail | Corporate | Total BancShares | ||||||||||||||||||||||||||||||
| Net income (GAAP) | $ | 252 | $ | 117 | $ | 214 | $ | 19 | $ | 105 | $ | 707 | |||||||||||||||||||||||
| Plus: provision for credit losses | 37 | 39 | 19 | — | — | 95 | |||||||||||||||||||||||||||||
| Plus: income tax expense | 92 | 44 | 85 | 8 | 43 | 272 | |||||||||||||||||||||||||||||
| PPNR (non-GAAP) | $ | 381 | $ | 200 | $ | 318 | $ | 27 | $ | 148 | $ | 1,074 | |||||||||||||||||||||||
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||
| General Bank | Commercial Bank | SVB Commercial | Rail | Corporate | Total BancShares | ||||||||||||||||||||||||||||||
| Net income (GAAP) | $ | 547 | $ | 145 | $ | 302 | $ | 41 | $ | 23 | $ | 1,058 | |||||||||||||||||||||||
| Plus: provision for credit losses | 59 | 132 | 78 | — | — | 269 | |||||||||||||||||||||||||||||
| Plus: income tax expense (benefit) | 189 | 50 | 104 | 14 | (6) | 351 | |||||||||||||||||||||||||||||
| PPNR (non-GAAP) | $ | 795 | $ | 327 | $ | 484 | $ | 55 | $ | 17 | $ | 1,678 | |||||||||||||||||||||||
| Six Months Ended June 30, 2024 | |||||||||||||||||||||||||||||||||||
| General Bank | Commercial Bank | SVB Commercial | Rail | Corporate | Total BancShares | ||||||||||||||||||||||||||||||
| Net income (GAAP) | $ | 453 | $ | 235 | $ | 407 | $ | 50 | $ | 293 | $ | 1,438 | |||||||||||||||||||||||
| Plus: provision for credit losses | 58 | 59 | 42 | — | — | 159 | |||||||||||||||||||||||||||||
| Plus: income tax expense | 171 | 86 | 160 | 19 | 109 | 545 | |||||||||||||||||||||||||||||
| PPNR (non-GAAP) | $ | 682 | $ | 380 | $ | 609 | $ | 69 | $ | 402 | $ | 2,142 | |||||||||||||||||||||||
104
Net Rental Income on Operating Lease Equipment for Commercial Bank and Rail Segments
Net rental income on operating lease equipment is a non-GAAP measure calculated as rental income on operating lease equipment less depreciation on operating lease equipment, as well as maintenance and other operating lease expenses, if any. Presentation of net rental income for the Commercial Bank and Rail segments also results in the noninterest income, noninterest expense, and revenue subtotals being presented net of depreciation and maintenance. These measures are meaningful because they enable management to monitor the performance and profitability of operating leases after deducting direct expenses.
The following tables reconcile the most comparable GAAP measures to the non-GAAP measures for the Commercial Bank and Rail segments.
Table 55
Commercial Bank Segment
| dollars in millions | Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||
| June 30, 2025 | March 31, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | ||||||||||||||||||||||||||||||||||
| Rental income on operating leases (GAAP) | $ | 54 | $ | 56 | $ | 58 | $ | 110 | $ | 115 | ||||||||||||||||||||||||||||
| Less: depreciation on operating lease equipment | a | 44 | 44 | 48 | 88 | 94 | ||||||||||||||||||||||||||||||||
| Net rental income on operating lease equipment (non-GAAP) | $ | 10 | $ | 12 | $ | 10 | $ | 22 | $ | 21 | ||||||||||||||||||||||||||||
| Total noninterest income (GAAP) | b | $ | 152 | $ | 125 | $ | 135 | $ | 277 | $ | 275 | |||||||||||||||||||||||||||
| Noninterest income, net of depreciation (non-GAAP) | b-a | 108 | 81 | 87 | 189 | 181 | ||||||||||||||||||||||||||||||||
| Total revenue (GAAP) | c | 451 | 418 | 446 | 869 | 886 | ||||||||||||||||||||||||||||||||
| Revenue, net of depreciation (non-GAAP) | c-a | 407 | 374 | 398 | 781 | 792 | ||||||||||||||||||||||||||||||||
| Total noninterest expense (GAAP) | d | 267 | 275 | 246 | 542 | 506 | ||||||||||||||||||||||||||||||||
| Noninterest expense, net of depreciation (non-GAAP) | d-a | 223 | 231 | 198 | 454 | 412 | ||||||||||||||||||||||||||||||||
Rail segment net income, rental income on operating lease equipment and net rental income on operating lease equipment are utilized to measure profitability. Net rental income on operating lease equipment is calculated as rental income on operating lease equipment reduced by depreciation, maintenance and other operating lease expenses. Due to the nature of our portfolio, which is essentially all operating lease equipment, certain financial measures commonly used by banks, such as NII, are not as meaningful for this segment. NII is not used because it includes the impact of debt costs funding our operating lease assets but excludes the associated net rental income.
Table 56
Rail Segment
| dollars in millions | Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||
| June 30, 2025 | March 31, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | ||||||||||||||||||||||||||||||||||
| Rental income on operating leases (GAAP) | $ | 218 | $ | 214 | $ | 201 | $ | 432 | $ | 399 | ||||||||||||||||||||||||||||
| Less: depreciation on operating lease equipment | a | 56 | 54 | 50 | 110 | 100 | ||||||||||||||||||||||||||||||||
| Less: maintenance and other operating lease expenses | b | 55 | 58 | 60 | 113 | 105 | ||||||||||||||||||||||||||||||||
| Net rental income on operating lease equipment (non-GAAP) | $ | 107 | $ | 102 | $ | 91 | $ | 209 | $ | 194 | ||||||||||||||||||||||||||||
| Total noninterest income (GAAP) | c | $ | 221 | $ | 216 | $ | 203 | $ | 437 | $ | 405 | |||||||||||||||||||||||||||
| Noninterest income, net of depreciation and maintenance (non-GAAP) | c-a-b | 110 | 104 | 93 | 214 | 200 | ||||||||||||||||||||||||||||||||
| Total revenue (GAAP) | d | 168 | 164 | 158 | 332 | 317 | ||||||||||||||||||||||||||||||||
| Revenue, net of depreciation and maintenance (non-GAAP) | d-a-b | 57 | 52 | 48 | 109 | 112 | ||||||||||||||||||||||||||||||||
| Total noninterest expense (GAAP) | e | 143 | 134 | 131 | 277 | 248 | ||||||||||||||||||||||||||||||||
| Noninterest expense, net of depreciation and maintenance (non-GAAP) | e-a-b | 32 | 22 | 21 | 54 | 43 | ||||||||||||||||||||||||||||||||
105
NII, NIM, and Interest and Fees on Loans, Excluding PAA
NII and NIM, excluding PAA, and interest and fees on loans, excluding loan PAA are meaningful metrics as they allow management to analyze NII, NIM and loan interest income trends more directly related to the rates of the underlying interest-earning assets and interest-bearing liabilities. Loan PAA is primarily related to the loan discount in the SVBB Acquisition. Other PAA is primarily related to the discount on the Purchase Money Note and the premium on deposits assumed in the merger with CIT Group Inc.
The following table reconciles NII to NII, excluding PAA, NIM to NIM, excluding PAA, and interest and fees on loans to interest and fees on loans, excluding loan PAA:
Table 57
NII, NIM, and Interest and Fees on Loans, Excluding PAA
| dollars in millions | Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||
| June 30, 2025 | March 31, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | ||||||||||||||||||||||||||||||||||
| NII (GAAP) | a | $ | 1,695 | $ | 1,663 | $ | 1,821 | $ | 3,358 | $ | 3,638 | |||||||||||||||||||||||||||
| Loan PAA | b | 75 | 84 | 145 | 159 | 308 | ||||||||||||||||||||||||||||||||
| Other PAA | c | (9) | (9) | (5) | (17) | (10) | ||||||||||||||||||||||||||||||||
| PAA | d = (b+c) | 66 | 75 | 140 | 142 | 298 | ||||||||||||||||||||||||||||||||
| NII, excluding PAA (non-GAAP) | e = (a-d) | $ | 1,629 | $ | 1,588 | $ | 1,681 | $ | 3,216 | $ | 3,340 | |||||||||||||||||||||||||||
| Annualized NII | f = a annualized | $ | 6,800 | $ | 6,744 | $ | 7,322 | $ | 6,772 | $ | 7,315 | |||||||||||||||||||||||||||
| Annualized NII, excluding PAA | g = e annualized | 6,533 | 6,439 | 6,760 | 6,486 | 6,715 | ||||||||||||||||||||||||||||||||
| Average interest-earning assets | h | $ | 208,175 | $ | 206,028 | $ | 200,705 | $ | 207,108 | $ | 199,646 | |||||||||||||||||||||||||||
| NIM (GAAP) | f/h | 3.26 | % | 3.26 | % | 3.64 | % | 3.26 | % | 3.66 | % | |||||||||||||||||||||||||||
| NIM, excluding PAA (non-GAAP) | g/h | 3.14 | 3.12 | 3.36 | 3.13 | 3.36 | ||||||||||||||||||||||||||||||||
| Interest and fees on loans (GAAP) | $ | 2,270 | $ | 2,236 | $ | 2,422 | $ | 4,506 | $ | 4,776 | ||||||||||||||||||||||||||||
| Less: loan PAA | b | 75 | 84 | 145 | 159 | 308 | ||||||||||||||||||||||||||||||||
| Interest and fees on loans, excluding loan PAA (non-GAAP) | $ | 2,195 | $ | 2,152 | $ | 2,277 | $ | 4,347 | $ | 4,468 | ||||||||||||||||||||||||||||
106
Adjusted Risk-Based Capital Ratios
FCB and the FDIC entered into the Shared-Loss Termination Agreement on April 7, 2025, after which time FCB and BancShares were no longer permitted to apply favorable RWA assumptions to the Covered Assets under the Shared-Loss Agreement. Adjusted risk-based capital ratios exclude the favorable impact of the Shared-Loss Agreement and are meaningful metrics as these ratios are expected to decrease in future periods.
The following table reconciles the Shared-Loss Agreement impact to the total risk-based, CET1 and tier 1 capital ratios of BancShares and FCB:
Table 58
Adjusted Risk-Based Capital Ratios
| March 31, 2025 | December 31, 2024 | |||||||||||||||||||
| BancShares | FCB | BancShares | FCB | |||||||||||||||||
| Risk-weighted assets (GAAP) | a | $ | 164,574 | $ | 164,455 | $ | 163,615 | $ | 163,493 | |||||||||||
| Plus: impact of FDIC Shared-Loss Agreement | 8,459 | 8,459 | 8,813 | 8,813 | ||||||||||||||||
| Adjusted risk-weighted assets (non-GAAP) | b | $ | 173,033 | $ | 172,914 | $ | 172,428 | $ | 172,306 | |||||||||||
| Total Risk-Based Capital Ratio | ||||||||||||||||||||
| Total risk-based capital | c | $ | 25,071 | $ | 23,758 | $ | 24,610 | $ | 23,975 | |||||||||||
| Total risk-based capital ratio (GAAP) | c/a | 15.23 | % | 14.45 | % | 15.04 | % | 14.66 | % | |||||||||||
| Less: impact of FDIC Shared-Loss Agreement | 0.74 | 0.71 | 0.77 | 0.75 | ||||||||||||||||
| Adjusted total risk-based capital ratio (non-GAAP) | c/b | 14.49 | % | 13.74 | % | 14.27 | % | 13.91 | % | |||||||||||
| CET1 Capital Ratio | ||||||||||||||||||||
| CET1 capital | d | $ | 21,089 | $ | 21,682 | $ | 21,256 | $ | 21,852 | |||||||||||
| CET1 capital ratio (GAAP) | d/a | 12.81 | % | 13.18 | % | 12.99 | % | 13.37 | % | |||||||||||
| Less: impact of FDIC Shared-Loss Agreement | 0.62 | 0.64 | 0.66 | 0.69 | ||||||||||||||||
| Adjusted CET1 capital ratio (non-GAAP) | d/b | 12.19 | % | 12.54 | % | 12.33 | % | 12.68 | % | |||||||||||
| Tier 1 Risk-Based Capital Ratio | ||||||||||||||||||||
| Tier 1 risk-based capital | e | $ | 21,970 | $ | 21,682 | $ | 22,137 | $ | 21,852 | |||||||||||
| Tier 1 risk-based capital ratio (GAAP) | e/a | 13.35 | % | 13.18 | % | 13.53 | % | 13.37 | % | |||||||||||
| Less: impact of FDIC Shared-Loss Agreement | 0.65 | 0.64 | 0.69 | 0.69 | ||||||||||||||||
| Adjusted tier 1 risk-based capital ratio (non-GAAP) | e/b | 12.70 | % | 12.54 | % | 12.84 | % | 12.68 | % | |||||||||||
107
Forward-Looking Statements
Statements in this Quarterly Report on Form 10-Q contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the financial condition, results of operations, business plans, asset quality, future performance, and other strategic goals of BancShares. Words such as “anticipates,” “believes,” “estimates,” “expects,” “predicts,” “forecasts,” “intends,” “plans,” “projects,” “targets,” “designed,” “could,” “may,” “should,” “will,” “potential,” “continue,” “aims,” “strives” or other similar words and expressions are intended to identify these forward-looking statements. These forward-looking statements are based on BancShares’ current expectations and assumptions regarding BancShares’ business, the economy, and other future conditions.
Because forward-looking statements relate to future results and occurrences, they are subject to inherent risks, uncertainties, changes in circumstances and other factors that are difficult to predict. Many possible events or factors could affect BancShares’ future financial results and performance and could cause actual results, performance or achievements of BancShares to differ materially from any anticipated results expressed or implied by such forward-looking statements. Such risks and uncertainties include, among others, general competitive, economic (including the imposition of tariffs or trade barriers on trading partners), political (including the makeup of the U.S. Congress and Trump administration), geopolitical (including conflicts in Ukraine and the Middle East), natural disasters and market conditions, including changes in competitive pressures among financial institutions and the impacts related to or resulting from previous bank failures, the risks and impacts of future bank failures and other volatility in the banking industry, public perceptions of our business practices, including our deposit pricing and acquisition activity, the financial success or changing conditions or strategies of BancShares’ vendors or customers, including changes in demand for deposits, loans and other financial services, fluctuations in interest rates, changes in the quality or composition of BancShares’ loan or investment portfolio, actions of government regulators, including interest rate decisions by the Federal Reserve, changes to estimates of future costs and benefits of actions taken by BancShares, BancShares’ ability to maintain adequate sources of funding and liquidity, the potential impact of decisions by the Federal Reserve on BancShares’ capital plans, adverse developments with respect to U.S. or global economic conditions, including significant turbulence in the capital or financial markets, the impact of any sustained or elevated inflationary environment, the impact of any cyberattack, information or security breach, the impact of implementation and compliance with current or proposed laws (including the OBBBA), regulations and regulatory interpretations, including potential increased regulatory requirements, limitations, and costs, such as FDIC special assessments, increases to FDIC deposit insurance premiums and the proposed interagency rule on regulatory capital, along with the risk that such laws, regulations and regulatory interpretations may change, the availability of capital and personnel, and the risks associated with BancShares’ previous acquisition transactions or any future transactions.
BancShares’ 2024 SRP allows BancShares to repurchase shares of its Class A common stock through 2025. After completion of maximum repurchases under the 2024 SRP, BancShares’ 2025 SRP allows BancShares to repurchase shares of its Class A common stock through 2026. BancShares is not obligated under the 2024 SRP or the 2025 SRP to repurchase any minimum or particular number of shares, and repurchases may be suspended or discontinued at any time (subject to the terms of any Rule 10b5-1 plan in effect) without prior notice. The authorizations to repurchase Class A common stock pursuant to the 2024 SRP and the 2025 SRP will be utilized at management’s discretion. The actual timing and amount of Class A common stock that may be repurchased under either plan will depend on a number of factors, including the terms of any Rule 10b5-1 plan then in effect, price, general business and market conditions, regulatory requirements, and alternative investment opportunities or capital needs.
Except to the extent required by applicable laws or regulations, BancShares disclaims any obligation to update forward-looking statements or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments. Additional factors which could affect the forward-looking statements can be found in the 2024 Form 10-K and BancShares’ other filings with the Securities and Exchange Commission.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Market risk is the potential economic loss resulting from changes in market prices and interest rates. This risk can either result in diminished current fair values of financial instruments or reduced NII in future periods. Changes in fair value that result from movement in market rates cannot be predicted with any degree of certainty. Therefore, the impact that future changes in market rates will have on the fair values of financial instruments is uncertain.
The information required by this Item 3. Quantitative and Qualitative Disclosures about Market Risk is set forth in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations within the “Risk Management” section and in Item 1. Financial Statements within Note 10—Derivative Financial Instruments and Note 11—Fair Value of this Form 10-Q.
Item 4. Controls and Procedures.
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision of and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that we are able to record, process, summarize and report in a timely manner the information required to be disclosed in the reports we file under the Exchange Act.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
We review our internal controls over financial reporting on an ongoing basis and make changes intended to ensure the quality of our financial reporting. There were no changes in our internal control over financial reporting during the second quarter of 2025 that have materially affected, or are reasonably likely to materially affect, BancShares’ internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
The Parent Company and certain of its subsidiaries are named as defendants in various legal actions arising from our normal business activities in which damages in various amounts were claimed. Although the amount of any ultimate liability with respect to those matters cannot be determined, in the opinion of management, no legal actions currently exist that would be material to BancShares’ consolidated financial statements. Additional information relating to legal proceedings is set forth in Note 18—Commitments and Contingencies of the Notes to Consolidated Financial Statements contained in Item 1. Financial Statements.
Item 1A. Risk Factors.
Except for the updated risk factor set forth below, there have been no material changes in the risk factors during 2025 from those reported in our 2024 Form 10-K. For a discussion of the risks and uncertainties that management believes are material to an investment in us, refer to Part I, Item 1A. Risk Factors, of our 2024 Form 10-K, and Forward-Looking Statements of this Form 10-Q.
Changes in domestic and foreign trade policies, including the imposition of tariffs and retaliatory tariffs, and other factors beyond our control may adversely impact our business, financial condition, and results of operations.
The U.S. government recently announced changes to its trade policies, including increasing tariffs on imports, in some cases significantly, and potentially renegotiating or terminating existing trade agreements. The current tariff environment is dynamic and uncertain, as the U.S. government has announced widespread tariff reform, with the effectiveness delayed in many cases. Changes to tariffs and other trade restrictions can be announced at any time with little or no notice. We cannot predict with certainty the future trade policy of the United States or other countries. Additionally, potential tariffs or other U.S. trade policy measures have triggered retaliatory actions by other countries such as China. Increased tariffs and trade restrictions may cause the prices of our customers’ products to increase, which could reduce demand for such products, or reduce our customers’ margins, and adversely impact their revenues, financial results, and ability to service debt. This, in turn, could adversely impact our financial condition and results of operations. Tariffs or other trade restrictions may lead to continuing uncertainty and volatility in U.S. and global financial markets and economic conditions. Disruptions and volatility in the financial markets may lead to adverse changes in the availability, terms and cost of capital, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
(c) The following table summarizes our monthly Class A common stock repurchase activity during the three months ended June 30, 2025. Subsequent to June 30, 2025, BancShares purchased an additional 147,365 shares of Class A common stock through July 31, 2025 under the 2024 SRP.
Table 59
Issuer Purchases of Class A Common Stock
| dollars in millions, except per share data | Total Number of Class A Shares Purchased | Average Price Paid per Share | Total Number of Shares Repurchased as Part of Publicly Announced Plan | Approximate Dollar Value of Shares that May Yet be Purchased Under Plan | ||||||||||||||||||||||
| Repurchases from April 1 - 30, 2025 | 120,558 | $ | 1,701.14 | 120,558 | $ | 1,019 | ||||||||||||||||||||
| Repurchases from May 1 - 31, 2025 | 110,947 | 1,869.70 | 110,947 | 811 | ||||||||||||||||||||||
| Repurchases from June 1 - 30, 2025 | 107,454 | 1,865.64 | 107,454 | 611 | ||||||||||||||||||||||
| Total | 338,959 | $ | 1,808.46 | 338,959 | $ | 611 | ||||||||||||||||||||
On July 25, 2024, BancShares announced that the Board authorized the 2024 SRP, which allows BancShares to repurchase shares of its Class A common stock in an aggregate amount up to $3.5 billion through December 31, 2025.
On July 25, 2025, BancShares announced that the Board authorized the new 2025 SRP, which will allow BancShares to repurchase shares of its Class A common stock in an aggregate amount up to $4.0 billion. Repurchases under the 2025 SRP may commence upon completion of the 2024 SRP and may be made through December 31, 2026.
Under the authorized 2024 SRP and 2025 SRP, shares of BancShares’ Class A common stock may be purchased from time to time on the open market or in privately negotiated transactions, including through a Rule 10b5-1 plan, but the Board’s action does not obligate BancShares to repurchase any minimum or particular number of shares, and repurchases may be suspended or discontinued at any time (subject to the terms of any Rule 10b5-1 plan in effect) without prior notice.
Item 5. Other Information.
(c) Director and Officer 10b5-1 Trading Arrangements
During the second quarter of 2025, none of BancShares’ directors or officers adopted terminated
Item 6. Exhibits.
EXHIBIT INDEX
| 10.1 | Termination Agreement dated April 7, 2025, by and between the Federal Deposit Insurance Corporation, as receiver for Silicon Valley Bridge Bank, N.A., and First-Citizens Bank & Trust Company (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed April 7, 2025) | |||||||
| 31.1 | Certification of Chief Executive Officer (filed herewith) | |||||||
| 31.2 | Certification of Chief Financial Officer (filed herewith) | |||||||
| 32.1 | Certification of Chief Executive Officer (filed herewith) | |||||||
| 32.2 | Certification of Chief Financial Officer (filed herewith) | |||||||
| *101.INS | Inline XBRL Instance Document (filed herewith) | |||||||
| *101.SCH | Inline XBRL Taxonomy Extension Schema (filed herewith) | |||||||
| *101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase (filed herewith) | |||||||
| *101.LAB | Inline XBRL Taxonomy Extension Label Linkbase (filed herewith) | |||||||
| *101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase (filed herewith) | |||||||
| *101.DEF | Inline XBRL Taxonomy Definition Linkbase (filed herewith) | |||||||
| *104 | Cover Page Interactive Data File (embedded within the Inline XBRL document filed as Exhibit 101) | |||||||
| * | Interactive data files are furnished but not filed for purposes of Sections 11 and 12 of the Securities Act of 1933, as amended, and Section 18 of the Securities Exchange Act of 1934, as amended. | |||||||
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SIGNATURES
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 thereunto duly authorized.
| Date: | August 8, 2025 | First Citizens BancShares, Inc. | ||||||||||||
| (Registrant) | ||||||||||||||
| By: | /s/ Craig L. Nix | |||||||||||||
| Craig L. Nix | ||||||||||||||
| Chief Financial Officer | ||||||||||||||
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Source:
FAQ
What were First Citizens (FCNCA) consolidated net income and EPS for the quarter?
Consolidated net income was $575 million and diluted earnings per share were $42.36 for the quarter ended June 30, 2025.
How did First Citizens' net interest income and loan interest change year-over-year?
Net interest income was $1,695 million this quarter versus $1,821 million a year earlier; interest and fees on loans decreased to $2,270 million from $2,422 million.
What is the size of First Citizens' loan portfolio and allowance for loan losses?
Total loans and leases were $141.3 billion and the allowance for loan and lease losses was $1.672 billion at June 30, 2025.
Did First Citizens return capital to shareholders during the period?
Yes. The company repurchased 641,642 Class A shares year-to-date for $1.239 billion, including 338,959 shares repurchased this quarter for $619 million.
How did credit metrics change鈥攑rovisions, charge-offs, and nonaccruals?
Provision for credit losses was $115 million this quarter, six-month charge-offs were $311 million, and nonaccrual loans totaled $1.319 billion.
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