BANC OF CALIFORNIA, INC. (BANC)

CIK: 0001169770. SIC: 6021 National Commercial Banks. Latest 10-K as of: 2026-02-27.

SIC breadcrumb: Finance, Insurance, And Real Estate > Depository Institutions > SIC 6021 National Commercial Banks

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1169770. Latest filing source: 0001628280-26-012946.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-27. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001169770.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-08. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001169770.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001628280-26-032923.

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high. Filing date: 2026-05-08. Report date: 2026-03-31.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is management's discussion and analysis of the major factors that influenced our results of operations and financial condition as of and for the three months ended March 31, 2026. This analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025 and with the unaudited consolidated financial statements and notes thereto set forth in this Quarterly Report on Form 10-Q.

Forward-Looking Information

This Quarterly Report on Form 10-Q contains certain “forward-looking statements” about the Company and its subsidiaries within the meaning of the Private Securities Litigation Reform Act of 1995, including certain plans, strategies, goals, and projections and including statements about our expectations regarding our operating expenses, profitability, ACL, net interest margin, NII, deposit growth, loan and lease portfolio growth and production, acquisitions and related integrations, maintaining capital adequacy, liquidity, goodwill, and IRR management. All statements contained in this Quarterly Report on Form 10-Q that are not clearly historical in nature are forward-looking, and the words “anticipate,” “assume,” “intend,” “believe,” “forecast,” “expect,” “estimate,” “plan,” “continue,” “will,” “should,” “look forward” and similar expressions are generally intended to identify forward-looking statements. All forward-looking statements (including statements regarding future financial and operating results and future transactions and their results) involve risks, uncertainties, and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements.

Actual results could differ materially from those contained or implied by such forward-looking statements for a variety of factors, including without limitation: (i) changes in general economic conditions, either nationally or in our market areas, including the impact of tariffs, supply chain disruptions, and the risk of recession or an economic downturn; (ii) changes in the interest rate environment, including the recent and potential future changes in the FRB benchmark rate, which could adversely affect our revenue and expenses, the value of assets and obligations, the realization of DTAs, the availability and cost of capital and liquidity, and the impacts of continuing or renewed inflation; (iii) the credit risks of lending activities, which may be affected by deterioration in real estate markets and the financial condition of borrowers, and the operational risk of lending activities, including the effectiveness of our underwriting practices and the risk of fraud, any of which may lead to increased loan delinquencies, losses, and non-performing assets, and may result in our ACL not being adequate; (iv) fluctuations in the demand for loans, and fluctuations in commercial and residential real estate values in our market area; (v) the quality and composition of our securities portfolio; (vi) our ability to develop and maintain a strong core deposit base, including among our venture banking clients, or other low cost funding sources necessary to fund our activities particularly in a rising or high interest rate environment; (vii) the rapid withdrawal of a significant amount of demand deposits over a short period of time; (viii) the costs and effects of litigation; (ix) risks related to the Company's acquisitions, including disruption to current plans and operations; difficulties in customer and employee retention; fees, expenses and charges related to these transactions being significantly higher than anticipated; and our inability to achieve expected revenues, cost savings, synergies, and other benefits; (x) results of examinations by regulatory authorities of the Company and the possibility that any such regulatory authority may, among other things, limit our business activities, restrict our ability to invest in certain assets, refrain from issuing an approval or non-objection to certain capital or other actions, increase our ACL, result in write-downs of asset values, restrict our ability or that of our bank subsidiary to pay dividends, or impose fines, penalties or sanctions; (xi) legislative or regulatory changes that adversely affect our business, including changes in tax laws and policies, accounting policies and practices, privacy laws, and regulatory capital or other rules; (xii) the risk that our enterprise risk management framework may not be effective in mitigating risk and reducing the potential for losses; (xiii) errors in estimates of the fair values of certain of our assets and liabilities, as well as the value of collateral supporting our loans, which may result in significant changes in valuation or recoveries; (xiv) failures or security breaches with respect to the network, applications, vendors and computer systems on which we depend, including due to cybersecurity threats; (xv) our ability to attract and retain key members of our senior management team; (xvi) the effects of climate change, severe weather events, natural disasters such as earthquakes and wildfires, pandemics, epidemics and other public health crises, military activity (including the ongoing Iran war) or acts of terrorism, and other external events on our business; (xvii) the impact of bank failures or other adverse developments at other banks on general depositor and investor sentiment regarding the stability and liquidity of banks; (xviii) the possibility that our recorded goodwill could become impaired, which may have an adverse impact on our earnings and capital; (xix) our existing indebtedness, together with any future incurrence of additional indebtedness, could adversely affect our ability to raise additional capital and to meet our debt obligations; (xx) changes in market conditions or strategic balance sheet actions, which may result in realized losses on investment securities or other assets; and (xxi) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services and the other risks described in our Form 10-K for the fiscal year ended December 31, 2025 and from time to time in other documents that we file with or furnish to the SEC.

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All forward-looking statements included in this Quarterly Report on Form 10-Q are based on information available at the time the statement is made. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise except as required by law.

Overview

Banc of California, Inc., a Maryland corporation, was incorporated in March 2002 and serves as the holding company for its wholly owned subsidiary, Banc of California (the “Bank”), a California state-chartered bank and a member of the FRB. When we refer to the "parent" or the “holding company," we are referring to Banc of California, Inc., the parent company, on a stand-alone basis. When we refer to “we,” “us,” “our,” or the “Company,” we are referring to Banc of California, Inc. and its consolidated subsidiaries including the Bank, collectively. The Bank is one of the nation’s premier relationship-based business banks, providing banking and treasury management services to small, middle-market, and venture-backed businesses. The Bank offers a broad range of loan and deposit products and services through 79 full-service branches located throughout California and in Denver, Colorado, and Durham, North Carolina, as well as through regional offices nationwide. The Bank also provides full-service payment processing solutions to its clients and serves the Community Association Management industry nationwide with its technology-forward platform, SmartStreet™. The Bank is committed to its local communities by supporting organizations that provide financial literacy and job training, small business support, affordable housing, and more.

Recent Events

Stock Repurchase Program

On March 23, 2026, we announced the extension of the Company’s existing $300 million stock repurchase program, which had been scheduled to expire in March 2026, through March 16, 2027. During the First Quarter of 2026, the Company repurchased a total of approximately 1.7 million shares of common and common equivalent stock for $31.9 million, at a weighted-average price of $18.68 per share. As of March 31, 2026, the Company had $82.6 million remaining under the stock repurchase authorization. For further information on the stock repurchase program, see "Note 14. Stockholders' Equity", in Item 1 of this Form 10-Q.

Subordinated Debt

On May 1, 2026, the Company redeemed the entire outstanding $385 million aggregate principal amount of 3.25% Fixed-to-Floating Rate Subordinated Notes due 2031, originally issued by Pacific Western Bank, for a redemption price equal to 100% of the principal amount redeemed, plus accrued and unpaid interest. These subordinated notes were scheduled to reset to a floating rate equal to three-month SOFR plus 252 bps beginning May 1, 2026, and were redeemable, in whole or in part, beginning May 1, 2026 at a redemption price equal to 100% of principal amount redeemed, plus any accrued and unpaid interest.

Critical Accounting Policies and Estimates

The following discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements and related notes, which have been prepared in accordance with U.S. GAAP. The preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts and disclosure. We evaluate these estimates and assumptions on a ongoing basis based on historical experience and other relevant factors and circumstances; however, actual results may differ significantly from these estimates and assumptions, which could have a material adverse effect on our financial condition and results of operations.

Our accounting policies and estimates are fundamental to understanding the following discussion and analysis of financial condition and results of operations. We identify critical accounting estimates as those that involve the most significant judgments, uncertainties, and subjective decisions, and that could result in materially different outcomes under different assumptions or conditions. Our critical accounting policies and estimates include those related to the ACL on loans and leases HFI and the realization of deferred tax assets and liabilities. Our critical accounting policies and estimates are described in "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" included in the Form 10-K.

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Non-GAAP Financial Measures

We use certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. This disclosure should not be viewed as a substitute for results determined in accordance with GAAP. The methodology for determining these non-GAAP measures may differ among companies and may not be comparable. Accordingly, we refer to the following non‑GAAP measures in this Quarterly Report on Form 10‑Q.

Return on average tangible common equity, tangible common equity, tangible book value per common share, efficiency ratio, and pre-tax pre-provision income are presented because the use of these measures is prevalent among banking regulators, investors, and analysts. These measures are disclosed in addition to the related GAAP measures of return on average equity, book value per common share, and noninterest expense to total revenue, respectively. Reconciliations of these non‑GAAP measures to the

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-27. Report date: 2025-12-31.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K. In addition to historical data, this discussion and analysis contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our actual results or outcomes may differ materially from those in this discussion and analysis as a result of various factors, including but not limited to those discussed in "Risk Factors" in Item 1A of this Form 10-K.

For the discussion of the financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023, refer to "Part II—Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on March 3, 2025, which is incorporated herein by reference.

Overview

Banc of California, Inc., a Maryland corporation, was incorporated in March 2002 and serves as the holding company for its wholly owned subsidiary, Banc of California (the “Bank”), a California state-chartered bank and a member of the FRB. When we refer to the "parent" or the “holding company," we are referring to Banc of California, Inc., the parent company, on a stand-alone basis. When we refer to “we,” “us,” “our,” or the “Company,” we are referring to Banc of California, Inc. and its consolidated subsidiaries including the Bank, collectively. The Bank is one of the nation’s premier relationship-based business banks, providing banking and treasury management services to small, middle-market, and venture-backed businesses. The Bank offers a broad range of loan and deposit products and services through 79 full-service branches located throughout California and in Denver, Colorado, and Durham, North Carolina, as well as through regional offices nationwide. The Bank also provides full-service payment processing solutions to its clients and serves the Community Association Management industry nationwide with its technology-forward platform, SmartStreet™. The Bank is committed to its local communities by supporting organizations that provide financial literacy and job training, small business support, affordable housing, and more.

Presentation of Results – PacWest Bancorp Merger

On November 30, 2023, PacWest Bancorp merged with and into Banc of California, Inc. (the “Merger”), which remained the legal corporation and completed a $400 million equity capital raise. The Merger, an all-stock transaction, was treated as a reverse merger for accounting, making PacWest Bancorp the acquirer for financial reporting, though Banc of California, Inc. was the legal acquirer. Financial results before November 30, 2023, reflect only PacWest Bancorp and results for December 2023 included the combined company. The shares issued and outstanding, earnings per share, and all references to share quantities or metrics were retrospectively restated to reflect the Merger, and Banc of California, Inc, assets and liabilities were recorded at fair value as of the merger date. Refer to "Note 2. Business Combinations" in Item 8 of this Form 10-K for additional information on this merger.

Recent Events

Stock Repurchase Program

On March 17, 2025, we announced that our Board of Directors authorized the repurchase of up to $150.0 million of our common stock. On April 23, 2025, the Company announced an upsize of its stock repurchase program from $150.0 million to $300.0 million and expanded the program to cover both the Company's common stock and depositary shares representing its preferred stock. The repurchase authorization expires in March 2026.

During the year ended December 31, 2025, the Company repurchased a total of approximately 13.6 million shares of common and common equivalent stock for $185.5 million, at a weighted-average price of $13.59 per share. This included the repurchase of 2.7 million shares in the first quarter, 8.8 million in the second quarter, and 2.2 million in the third quarter of 2025. As of December 31, 2025, the Company had $114.5 million remaining under the stock repurchase authorization. For further information on the stock repurchase program, see "Note 21. Stockholders' Equity" in Item 8 of this Form 10-K.

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Strategic Loan Sales

During the second quarter of 2025, the Company commenced a strategic loan sale process, reclassifying approximately $506.7 million of loans as HFS. While many of the loans sold had sufficient collateral values, they had attributes that drive credit migration, and as a result we commenced the sales process for these loans in the second quarter. As a result of the transfer, the Company recognized charge-offs totaling $36.9 million resulting in an incremental impact to provision expense of $26.3 million in the second quarter. The charge-off and provision impact reflects the estimated fair value based on active bids or other market inputs.

As of December 31, 2025, $292.0 million of these loans had been liquidated through the sale of $236.4 million of loans and the repayment of an additional $55.6 million prior to the sale. The Company recognized a loss of $0.4 million on the loans sold. As of December 31, 2025, $174.6 million of loans remained to be sold.

Key Performance Indicators

Among other factors, our operating results generally depend on the following key performance indicators:

The Level of Net Interest Income

NII is the excess of interest earned on our interest-earning assets over the interest paid on our interest-bearing liabilities. Net interest margin is NII (annualized if related to a non-annual period) expressed as a percentage of average interest-earning assets.

NII is affected by changes in both interest rates and the volume of average interest-earning assets and interest-bearing liabilities. Our primary interest-earning assets are loans and investment securities, and our primary interest-bearing liabilities are deposits and borrowings. While our deposit balances will fluctuate depending on our customers’ liquidity and cash flow, market conditions, and competitive pressures, we seek to minimize the impact of these variances by attracting a high percentage of noninterest-bearing deposits. We continue to focus on growing granular relationship-based deposits as a key component of our core deposit strategy, which supports a stable funding base and strengthens our client franchise.

Loan and Lease Production

We actively seek new lending opportunities under an array of lending products. Our lending activities include real estate mortgage loans, real estate construction and land loans, commercial loans and leases, and a small amount of consumer lending. Our CRE loans and real estate construction loans are secured by a range of property types. Our commercial loans and leases portfolio is diverse and generally includes various asset-secured loans, lender finance loans, equipment-secured loans and leases, venture capital loans to support venture capital firms’ operations and the operations of entrepreneurial and venture-backed companies during the various phases of their early life cycles, warehouse loans, and secured business loans.

Our loan origination process emphasizes credit quality. To augment our internal loan production, we have purchased loans such as SFR mortgage loans, multi-family loans from other banks, and private student loans from third-party lenders. These loan purchases help us manage the concentrations in our portfolio as they diversify the geographic risk, interest-rate risk, credit risk, and product composition of our loan portfolio. Achieving net loan growth is subject to many factors, including maintaining strict credit standards, competition from other lenders, and borrowers that opt to prepay loans.

The Magnitude of Credit Losses

We emphasize credit quality in originating and monitoring our loans and leases, and we measure our success by the levels of our classified loans and leases, nonaccrual loans and leases, and net charge-offs. We maintain an ACL on loans and leases, which is the sum of the ALLL and the reserve for unfunded loan commitments. Provisions for credit losses are charged to operations as and when needed for both on and off-balance sheet credit exposures. Loans and leases that are deemed uncollectable are charged off and deducted from the ALLL. Recoveries on loans and leases previously charged off are added to the ALLL. The provision for credit losses on the loan and lease portfolio is based on our allowance methodology, which considers the impact of assumptions and is reflective of historical experience, economic forecasts viewed to be reasonable and supportable by management, the current loan and lease composition, and relative credit risks known as of the balance sheet date. For originated and acquired credit-deteriorated loans, a provision for credit losses may be recorded to reflect credit deterioration after the origination date or after the acquisition date, respectively.

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We regularly review loans and leases to determine whether there has been any deterioration in credit quality resulting from borrower operations or changes in collateral value or other factors which may affect the collectability of our loans and leases. Changes in economic conditions, such as the rate of economic growth, the unemployment rate, rate of inflation, increases in the general level of interest rates, declines in real estate values, changes in commodity prices, and adverse conditions in borrowers’ businesses, could negatively impact our borrowers and cause us to adversely classify loans and leases. An increase in classified loans and leases generally results in increased provisions for credit losses and an increased ACL. Any deterioration in the real estate market may lead to increased provisions for credit losses because our loans are concentrated in real estate loans.

The Level of Noninterest Expense

Our noninterest expense includes fixed and controllable overhead, the largest components of which are compensation expense, customer related expense, information technology and data processing expense, and occupancy expense. Customer related expenses are primarily ECRs payments to customers and are mostly driven by the HOA business. ECRs are rate-sensitive and fluctuate in response to changes in the federal funds rate. Additionally, noninterest expense includes insurance and assessments, intangible asset amortization, leased equipment depreciation, other professional services, loan expenses, acquisition, integration and organization costs, and other expense. We monitor our efficiency ratio as a key measure of operational performance.

Critical Accounting Policies and Estimates

The following discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements and the notes thereto, which have been prepared in accordance with U.S. GAAP. The preparation of the consolidated financial statements requires us to make a number of estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. On an ongoing basis, we evaluate our estimates and assumptions based upon historical experience and various other factors and circumstances. We believe that our estimates and assumptions are reasonable; however, actual results may ultimately differ significantly from these estimates and assumptions, which could have a material adverse effect on the carrying value of assets and liabilities at the balance sheet dates and on our results of operations for the reporting periods.

Our significant accounting policies and practices are described in "Note 1. Nature of Operations and Summary of Significant Accounting Policies" in Item 8 of this form 10-K. We have identified two policies and estimates as being critical because they require management to make particularly difficult, subjective, and/or complex judgments about matters that are inherently uncertain and because of the likelihood that materially different amounts would be reported under different conditions or using different assumptions. These policies relate to the ACL on loans and leases HFI and the realization of deferred tax assets and liabilities.

Allowance for Credit Losses on Loans and Leases Held for Investment

The ACL represents management’s estimate of current expected credit losses on loans and leases HFI and related unfunded loan commitments. The ACL is evaluated quarterly and reflects management’s judgment based on historical loss experience, current conditions, and reasonable and supportable forecasts. A detailed description of the Company’s accounting policies and methodology is included in the " Balance Sheet Analysis - Allowance for Credit Losses on Loans and Leases Held for Investment" in Item 7 and "Note 1. Nature of Operations and Summary of Significant Accounting Policies - Allowance for Credit Losses on Loans and Leases Held for Investment" in Item 8 of this Form 10-K.

The ACL is sensitive to change in macroeconomic conditions and management's forward-looking assumptions. Management considers multiple economic scenarios to address forecast uncertainty, and changes in the economic outlook, portfolio composition, risk rating migration, and unfunded commitment levels may result in period-to-period volatility in the ACL.

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Deferred Tax Assets and Liabilities

We are subject to the income tax laws of the U.S., its states, and the municipalities in which we operate. These tax laws are complex and subject to different interpretations by the taxpayer and the relevant governing taxing authorities. Our tax returns are subject to audit by taxing authorities, which may result in the taxing authority disputing a tax position taken by the Company. Significant judgment is required in determining the tax accruals and in evaluating the tax positions, including evaluating uncertain tax positions. Changes in the estimate of accrued taxes occur periodically due to changes in tax rates, tax credits, interpretations of tax laws, the status of examinations by the taxing authorities, and newly enacted statutory, judicial, and regulatory guidance that could impact the relative merits and risks of tax positions. These changes, when they occur, impact tax expense and can materially affect our operating results and financial condition. We review income tax expense and the carrying value of deferred tax assets and liabilities quarterly, and as new information becomes available, the balances are adjusted as appropriate. In establishing a provision for income tax expense, we must make judgments and interpretations about the application of these inherently complex tax laws. We must also make estimates about when in the future certain tax items will affect taxable income in the various tax jurisdictions.

Our deferred tax assets and liabilities arise from differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We determine whether a deferred tax asset is realizable based on facts and circumstances, including our current and projected future tax position, the historical level of our taxable income, and estimates of our future taxable income. In most cases, the realization of DTAs is based on our future profitability. If we were to experience either reduced profitability or operating losses in a future period, the realization of our DTAs may no longer be considered more likely than not and, accordingly, we could be required to record a valuation allowance on our DTAs by charging earnings.

Non-GAAP Financial Measures

We use certain non‑GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. This disclosure should not be viewed as a substitute for results determined in accordance with GAAP. The methodology for determining these non-GAAP measures may differ among companies and may not be comparable.

We use the following non-GAAP measures:return on average tangible common equity, tangible common equity ratio, efficiency ratio, adjusted return on average tangible common equity, adjusted net earnings, adjusted diluted earnings per share, and adjusted return on average assets. Given that the use of these measures is prevalent among banking regulators, investors, and analysts, we disclose them in addition to the related GAAP measures of return on average equity, stockholders' equity to assets ratio, noninterest expense to total revenue, and return on average assets, respectively. The reconciliations of these non-GAAP measures to the GAAP measures are presented in the following tables for and as of the periods presented.

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Year Ended December 31,

Return on Average Tangible Common Equity ("ROATCE")

2025

2024

2023

(Dollars in thousands)

Net earnings (loss)

$

228,973 

$

126,888 

$

(1,899,137)

Earnings (loss) before income taxes

$

168,654 

$

(2,211,338)

Add:

Goodwill impairment

— 

1,376,736 

Add:

Intangible asset amortization

33,143 

11,419 

Adjusted earnings (loss) before income taxes for ROATCE

201,797 

(823,183)

Adjusted income tax expense (benefit) (1)

49,965 

(116,233)

Adjustments:

Intangible asset amortization

28,267 

Tax impact of adjustment above (1)

(7,593)

Adjustment to net earnings

20,674 

Adjusted net earnings (loss) for ROATCE

249,647 

151,832 

(706,950)

Less:

Preferred stock dividends

39,788 

39,788 

39,788 

Adjusted net earnings (loss) available to

common and equivalent stockholders for ROATCE

$

209,859 

$

112,044 

$

(746,738)

Average stockholders' equity

$

3,471,278 

$

3,431,364 

$

2,994,428 

Less:

Average goodwill and intangible assets

333,815 

356,960 

379,005 

Less:

Average preferred stock

498,516 

498,516 

498,516 

Average tangible common equity

$

2,638,947 

$

2,575,888 

$

2,116,907 

Return on average equity (2)

6.60 

%

3.70 

%

(63.42)

%

Return on average tangible common equity (3)

7.95 

%

4.35 

%

(35.27)

%

____________________________________________________

(1)     Effective tax rate of 26.86%, 24.76%, and 14.12% for the years ended December 31, 2025, 2024, and 2023.

(2)     Net earnings (loss) divided by average stockholders' equity.

(3)     Adjusted net earnings (loss) available to common and equivalent stockholders for ROATCE divided by average tangible common equity.

December 31,

Tangible Common Equity Ratio

2025

2024

2023

(Dollars in thousands, except per share data)

Stockholders’ equity

$

3,541,277 

$

3,499,949 

$

3,390,765 

Less: Preferred stock

498,516 

498,516 

498,516 

Total common equity

3,042,761 

3,001,433 

2,892,249 

Less: Goodwill and intangible assets

319,808 

347,465 

364,104 

Tangible common equity

$

2,722,953 

$

2,653,968 

$

2,528,145 

Total assets

$

34,797,442 

$

33,542,864 

$

38,534,064 

Less: Goodwill and intangible assets

319,808 

347,465 

364,104 

Tangible assets

$

34,477,634 

$

33,195,399 

$

38,169,960 

Total stockholders' equity to total assets ratio

10.18 

%

10.43 

%

8.80 

%

Tangible common equity ratio (1)

7.90 

%

7.99 

%

6.62 

%

_________________________________________________________________ 

(1)    Tangible common equity divided by tangible assets.

40

Year Ended December 31,

Efficiency Ratio

2025

2024

2023

Noninterest expense (1)

$

735,850 

$

791,740 

$

2,458,181 

Less: Intangible asset amortization

(28,267)

(33,143)

(11,419)

Less: Acquisition, integration, and reorganization costs

— 

14,183 

(142,633)

Less: Goodwill impairment

$

— 

$

— 

$

(1,376,736)

Noninterest expense used for efficiency ratio

$

707,583 

$

772,780 

$

927,393 

Net interest income

$

977,386 

$

926,050 

$

747,128 

Noninterest income (loss)

142,139 

77,145 

(448,285)

Total revenue

1,119,525 

1,003,195 

298,843 

Add: Loss on sale of securities

— 

60,400 

442,413 

Total revenue used for efficiency ratio

$

1,119,525 

$

1,063,595 

$

741,256 

Noninterest expense to total revenue

65.73 

%

78.92 

%

822.57 

%

Efficiency ratio (2)

63.20 

%

72.66 

%

125.11 

%

_______________________________________ 

(1)    Includes customer related expense of $105.4 million, $129.5 million, and $124.1 million for the years ended December 31, 2025, 2024, and 2023.

(2)    Noninterest expense used for efficiency ratio divided by total revenue used for efficiency ratio.

41

Adjusted Return on Average

Year Ended December 31,

Tangible Common Equity ("ROATCE")

2025

2024

2023

(Dollars in thousands)

Net earnings (loss)

$

228,973 

$

126,888 

$

(1,899,137)

Earnings (loss) before income taxes

$

168,654 

$

(2,211,338)

Add: Intangible asset amortization

33,143 

11,419 

Add: Goodwill impairment

— 

1,376,736 

Add: FDIC special assessment

4,814 

32,746 

Add: Loss on sale of securities

59,946 

442,413 

Less: Acquisition, integration, and reorganization costs

(510)

142,633 

Add: Loan fair value loss adjustments

— 

170,971 

Add: Unfunded commitments fair value loss adjustments

— 

106,767 

Adjusted earnings before income taxes used for adjusted ROATCE

266,047 

72,347 

Adjusted income tax expense (1)

65,873 

10,215 

Adjustments:

Intangible asset amortization

28,267 

Provision for credit losses related to transfer of loans to held for sale

26,289 

Total adjustments

54,556 

Tax impact of adjustments above (1)

(14,654)

Income tax related adjustments

9,792 

Adjustments to net earnings

49,694 

Adjusted net earnings for adjusted ROATCE

278,667 

200,174 

62,132 

Less: Preferred stock dividends

39,788 

39,788 

39,788 

Adjusted net earnings available to common and equivalent

stockholders for adjusted ROATCE

$

238,879 

$

160,386 

$

22,344 

Average stockholders' equity

$

3,471,278 

$

3,431,364 

$

2,994,428 

Less: Average goodwill and intangible assets

333,815 

356,960 

379,005 

Less: Average preferred stock

498,516 

498,516 

498,516 

Average tangible common equity

$

2,638,947 

$

2,575,888 

$

2,116,907 

Adjusted ROATCE(2)

9.05 

%

6.23 

%

1.06 

%

_________________________________________________________________ 

(1)    Effective tax rates of 26.86%, 24.76%, and 14.12% used for the years ended December 31, 2025, 2024, and 2023.

(2)    Adjusted net earnings available to common and equivalent stockholders for adjusted ROATCE divided by average tangible common equity.

42

Adjusted Net Earnings, Net Earnings

Available to Common and Equivalent

Year Ended December 31,

Stockholders, Diluted EPS, and ROAA

2025

2024

2023

(Dollars in thousands)

Net earnings (loss)

$

228,973 

$

126,888 

$

(1,899,137)

Earnings (loss) before income taxes

$

168,654 

$

(2,211,338)

Add: FDIC special assessment

4,814 

32,746 

Add: Loss on sale of securities

59,946 

442,413 

Less: Acquisition, integration, and reorganization costs

(510)

142,633 

Add: Loan fair value loss adjustments

— 

170,971 

Add: Unfunded commitments fair value loss adjustments

— 

106,767 

Add: Goodwill impairment

— 

1,376,736 

Adjusted earnings before income taxes

232,904 

60,928 

Adjusted income tax expense (1)

57,667 

8,603 

Adjustments:

Provision for credit losses related to transfer of loans to held for sale

26,289 

Tax impact of adjustments above (1)

(7,061)

Income tax related adjustments

9,792 

Adjustments to net earnings

29,020 

Adjusted net earnings

257,993 

175,237 

52,325 

Less: Preferred stock dividends

39,788 

39,788 

39,788 

Adjusted net earnings available to common and equivalent stockholders

$

218,205 

$

135,449 

$

12,537 

Weighted average diluted common shares outstanding

161,724 

168,684 

85,394 

Diluted earnings (loss) per common share

$

1.17 

$

0.52 

$

(22.71)

Adjusted diluted earnings per common share (2)

$

1.35 

$

0.80 

$

0.15 

Average total assets

$

33,665,738 

$

35,333,488 

$

40,293,380 

Return on average assets (ROAA") (3)

0.68 

%

0.36 

%

(4.71)

%

Adjusted ROAA (4)

0.77 

%

0.50 

%

0.13 

%

_________________________________________________________________ 

(1)    Effective tax rates of 26.86%, 24.76%, and 14.12% used for the years ended December 31, 2025, 2024, and 2023.

(2)    Adjusted net earnings available to common and equivalent stockholders divided by weighted average diluted common shares outstanding.

(3)    Net earnings (loss) divided by average assets.

(4)    Adjusted net earnings divided by average assets.

43

Results of Operations

Earnings Performance

The following table presents performance metrics for the years indicated:

Year Ended December 31,

2025

2024

2023

(Dollars in thousands)

Earnings Summary:

Interest income

$

1,676,653 

$

1,812,705 

$

1,971,000 

Interest expense

(699,267)

(886,655)

(1,223,872)

Net interest income

977,386 

926,050 

747,128 

Provision for credit losses

(70,600)

(42,801)

(52,000)

Noninterest income (loss)

142,139 

77,145 

(448,285)

Operating expense

(735,850)

(805,923)

(938,812)

Acquisition, integration and reorganization costs

— 

14,183 

(142,633)

Goodwill impairment

— 

— 

(1,376,736)

Earnings (loss) before income taxes

313,075 

168,654 

(2,211,338)

Income tax (expense) benefit

(84,102)

(41,766)

312,201 

Net earnings (loss)

228,973 

126,888 

(1,899,137)

Preferred stock dividends

(39,788)

(39,788)

(39,788)

Net earnings (loss) available to common and equivalent stockholders

$

189,185 

$

87,100 

$

(1,938,925)

Per Common Share Data:

Diluted earnings (loss) per share (1)

$

1.17 

$

0.52 

$

(22.71)

Adjusted diluted earnings per share (2)

$

1.35 

$

0.80 

$

0.15 

Performance Ratios:

Return on average assets

0.68 

%

0.36 

%

(4.71)

%

Adjusted return on average assets (2)

0.77 

%

0.50 

%

0.13 

%

Return on average equity

6.60 

%

3.70 

%

(63.42)

%

Return on average tangible common equity (2)

7.95 

%

4.35 

%

(35.27)

%

Adjusted return on average tangible common equity (2)

9.05 

%

6.23 

%

1.06 

%

Net interest margin

3.15 

%

2.85 

%

1.98 

%

Yield on average loans and leases

5.93 

%

6.11 

%

5.92 

%

Cost of average total deposits

2.05 

%

2.52 

%

2.61 

%

Noninterest expense to total revenue (3)

65.73 

%

78.92 

%

822.57 

%

Efficiency ratio (2)

63.20 

%

72.66 

%

125.11 

%

Capital Ratios (consolidated):

Common equity tier 1 capital ratio

10.01 

%

10.55 

%

10.14 

%

Tier 1 capital ratio

12.34 

%

12.97 

%

12.44 

%

Total capital ratio

16.31 

%

17.05 

%

16.43 

%

Tier 1 leverage capital ratio

9.99 

%

10.15 

%

9.00 

%

Risk-weighted assets

$

26,997,617 

$

25,976,675 

$

27,338,852 

_____________________________

(1)    Shares include non-voting common stock equivalents that are participating securities.

(2)    See "Non-GAAP Financial Measures" in Item 7 of this Form 10-K.

(3)    Total revenue equals the sum of NII and noninterest income.

44

Net Interest Income and Net Interest Margin

The following table summarizes the distribution of average assets, liabilities, and stockholders’ equity, as well as interest income and yields earned on average interest‑earning assets and interest expense and rates paid on average interest‑bearing liabilities for the years indicated:

Year Ended December 31,

2025

2024

2023

Interest

Yields

Interest

Yields

Interest

Yields

Average

Income/

and

Average

Income/

and

Average

Income/

and

Balance

Expense

Rates

Balance

Expense

Rates

Balance

Expense

Rates

(Dollars in thousands)

ASSETS:

Loans and leases (1)(2)

$

24,300,808 

$

1,440,397 

5.93 

%

$

24,569,650 

$

1,501,534 

6.11 

%

$

25,330,351 

$

1,498,701 

5.92 

%

Investment securities

4,782,267 

153,326 

3.21 

%

4,686,615 

140,794 

3.00 

%

6,827,059 

174,996 

2.56 

%

Deposits in financial institutions

1,937,775 

82,930 

4.28 

%

3,226,658 

170,377 

5.28 

%

5,746,858 

299,647 

5.21 

%

Total interest‑earning assets (1)

31,020,850 

1,676,653 

5.40 

%

32,482,923 

1,812,705 

5.58 

%

37,904,268 

1,973,344 

5.21 

%

Other assets

2,644,888 

2,850,565 

2,389,112 

Total assets

$

33,665,738 

$

35,333,488 

$

40,293,380 

LIABILITIES AND

STOCKHOLDERS’ EQUITY:

Interest checking

$

7,732,697 

204,070 

2.64 

%

$

7,714,920 

240,913 

3.12 

%

$

6,992,888 

220,735 

3.16 

%

Money market

5,231,379 

122,889 

2.35 

%

5,164,566 

138,176 

2.68 

%

6,724,296 

190,027 

2.83 

%

Savings

1,954,354 

49,186 

2.52 

%

2,005,513 

66,421 

3.31 

%

1,051,117 

30,978 

2.95 

%

Time

4,568,180 

182,295 

3.99 

%

5,714,821 

270,474 

4.73 

%

6,840,920 

306,683 

4.48 

%

Total interest-bearing deposits

19,486,610 

558,440 

2.87 

%

20,599,820 

715,984 

3.48 

%

21,609,221 

748,423 

3.46 

%

Borrowings

1,599,469 

78,761 

4.92 

%

1,838,819 

104,398 

5.68 

%

7,068,826 

416,744 

5.90 

%

Subordinated debt

947,709 

62,066 

6.55 

%

939,528 

66,273 

7.05 

%

875,621 

58,705 

6.70 

%

Total interest‑bearing liabilities

22,033,788 

699,267 

3.17 

%

23,378,167 

886,655 

3.79 

%

29,553,668 

1,223,872 

4.14 

%

Noninterest‑bearing demand deposits

7,698,015 

7,829,976 

7,072,334 

Other liabilities

462,657 

693,981 

672,950 

Total liabilities

30,194,460 

31,902,124 

37,298,952 

Stockholders’ equity

3,471,278 

3,431,364 

2,994,428 

Total liabilities and stockholders' equity

$

33,665,738 

$

35,333,488 

$

40,293,380 

Net interest income (1)

$

977,386 

$

926,050 

$

749,472 

Net interest rate spread (1)

2.23 

%

1.79 

%

1.07 

%

Net interest margin (1)

3.15 

%

2.85 

%

1.98 

%

Total deposits (3)

$

27,184,625 

$

558,440 

2.05 

%

$

28,429,796 

$

715,984 

2.52 

%

$

28,681,555 

$

748,423 

2.61 

%

Total funds (4)

$

29,731,803 

$

699,267 

2.35 

%

$

31,208,143 

$

886,655 

2.84 

%

$

36,626,002 

$

1,223,872 

3.34 

%

_____________________

(1)    In 2023, a $2.3 million adjustment was made to account for tax-exempt income generated from loans, using a federal statutory rate of 21% for the adjustment.

(2)    Total loans are net of deferred fees, related direct costs, and premiums and discounts, but exclude the allowance for loan losses. Includes net loan discount accretion of $64.2 million, $88.0 million and $9.7 million for the years ended 2025 and 2024 and 2023, respectively.

(3)    Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits. The cost of total deposits is calculated as annualized interest expense on total deposits divided by average total deposits.

(4)    Total funds is the sum of total interest-bearing liabilities and noninterest-bearing demand deposits. The cost of total funds is calculated as annualized total interest expense divided by average total funds.

45

NII is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as “volume change.” NII is also affected by changes in yields earned on interest-earning assets and rates paid on interest-bearing liabilities, referred to as “rate change.” Any changes that are not solely due to either volume or rate are allocated in proportion to the percentage changes in average volume and average rate.

The following table presents changes in interest income and interest expense and related changes in rate and volume for the years indicated:

2025 Compared to 2024

2024 Compared to 2023

Total

Increase (Decrease)

Total

Increase (Decrease)

Increase

Due to

Increase

Due to

(Decrease)

Rate

Volume

(Decrease)

Rate

Volume

(In thousands)

Interest Income:

Loans and leases (1)

$

(61,137)

$

(44,579)

$

(16,558)

$

2,833 

$

47,993 

$

(45,160)

Investment securities

12,532 

9,703 

2,829 

(34,202)

26,694 

(60,896)

Deposits in financial institutions

(87,447)

(28,126)

(59,321)

(129,270)

3,964 

(133,234)

Total interest income (1)

(136,052)

(63,002)

(73,050)

(160,639)

78,651 

(239,290)

Interest Expense:

Interest checking deposits

(36,843)

(37,393)

550 

20,178 

(2,780)

22,958 

Money market deposits

(15,287)

(17,075)

1,788 

(51,851)

(9,644)

(42,207)

Savings deposits

(17,235)

(15,571)

(1,664)

35,443 

4,199 

31,244 

Time deposits

(88,179)

(38,633)

(49,546)

(36,209)

16,378 

(52,587)

Total interest-bearing deposits

(157,544)

(108,672)

(48,872)

(32,439)

8,153 

(40,592)

Borrowings

(25,637)

(12,995)

(12,642)

(312,346)

(14,986)

(297,360)

Subordinated debt

(4,207)

(4,774)

567 

7,568 

3,157 

4,411 

Total interest expense

(187,388)

(126,441)

(60,947)

(337,217)

(3,676)

(333,541)

Net interest income (1)

$

51,336 

$

63,439 

$

(12,103)

$

176,578 

$

82,327 

$

94,251 

_____________________

(1)    In 2023, a $2.3 million adjustment was made to account for tax-exempt income generated from loans, using a federal statutory rate of 21% for the adjustment.

2025 Compared to 2024

NII increased by $51.3 million to $977.4 million for the year ended December 31, 2025 from $926.1 million for the year ended December 31, 2024 attributable primarily to the following:

•A decrease of $157.5 million in interest expense on deposits due primarily to lower interest paid on interest-bearing deposits as a result of deposit rate repricing driven by the federal funds rate cuts of 100 basis points in the second half of 2024 and 75 basis points in the second half of 2025 and lower average balances including the paydown of brokered deposits.

•A decrease of $25.6 million in interest expense on borrowings driven by lower average balances resulting from the payoff of higher-cost borrowings in 2024, which were partially replaced with lower-cost long-term FHLB advances and lower market interest rates.

•An increase of $12.5 million in interest income from investment securities reflecting the benefits from 2024 balance sheet repositioning actions and reinvestment in higher-yield securities.

This was offset partially by:

•A decrease of $87.4 million in interest income from deposits in financial institutions driven by lower balances, as we maintained a lower cash target level and lower market interest rates.

•A decrease of $61.1 million in interest income from loans due primarily to lower market interest rates reflective of federal funds rate cuts, lower average balances attributable mainly to our July 2024 sale of $1.95 billion of Civic loans, and by lower net loan discount accretion income.

46

The net interest margin was 3.15% for the year ended December 31, 2025, up 30 basis points from 2.85% for the year ended December 31, 2024. The year-over-year improvement was primarily driven by a 49 basis point decrease in the average total cost of funds to 2.35%, offset by an 18 basis point decrease in the average yield on interest-earning assets to 5.40%.

The average total cost of funds decreased by 49 basis points to 2.35%, driven mainly by lower market interest rates. The average cost of deposits declined by 47 basis points to 2.05%, reflecting the impact of federal funds rate cuts in the second half of 2024 and second half of 2025. Average total deposits decreased by $1.2 billion year over year, including a $1.1 billion reduction in average interest-bearing deposits and a $132.0 million decrease in average noninterest-bearing deposits. Despite the decline, average noninterest-bearing deposits represented 28.3% of average total deposits for the year ended December 31, 2025, up from 27.5% for the comparable period in 2024. The average cost of borrowings also decreased by 76 basis points to 4.92%, reflecting the paydown of higher-cost borrowings in the prior year and their replacement with lower-cost long-term FHLB advances.

The average yield on interest-earning assets declined by 18 basis points to 5.40%, due primarily to an 18 basis point decline in the average yield on loans and leases.

Provision for Credit Losses

The following table sets forth the details of the provision for credit losses on loans and leases HFI, AFS debt securities, and HTM debt securities as well as information regarding credit quality metrics for the years indicated:

Year Ended December 31,

Increase

Increase

2025

(Decrease)

2024

(Decrease)

2023

(Dollars in thousands)

Provision For Credit Losses:

Addition to allowance for loan and lease losses

$

64,780 

$

21,280 

$

43,500 

$

(70,000)

$

113,500 

Addition to (reduction in) reserve for unfunded loan commitments

5,850 

6,350 

(500)

61,000 

(61,500)

Total loan-related provision

70,630 

27,630 

43,000 

(9,000)

52,000 

Addition to (reduction in) allowance for AFS securities

775 

974 

(199)

(199)

— 

Reduction in allowance for HTM securities

(805)

(805)

— 

— 

— 

Total securities-related provision

(30)

169 

(199)

(199)

— 

Total provision for credit losses

$

70,600 

$

27,799 

$

42,801 

$

(9,199)

$

52,000 

Credit Quality Metrics:

Net charge-offs on loans and leases HFI (1)

$

58,528 

$

(27,299)

$

85,827 

$

27,659 

$

58,168 

Net charge-offs to average loans and leases

0.24 

%

0.35 

%

0.23 

%

At year-end:

Allowance for credit losses

$

280,533 

$

12,102 

$

268,431 

$

(42,827)

$

311,258 

Allowance for credit losses to loans and leases HFI

1.12 

%

1.13 

%

1.22 

%

Allowance for credit losses to nonaccrual loans and leases HFI

176.25 

%

141.57 

%

497.80 

%

Nonaccrual loans and leases HFI

$

159,168 

$

(30,437)

$

189,605 

$

127,078 

$

62,527 

Nonaccrual loans and leases HFI to loans and leases HFI

0.64 

%

0.80 

%

0.25 

%

______________________

(1)    See " Balance Sheet Analysis - Allowance for Credit Losses on Loans and Leases Held for Investment" in Item 7 of this Form 10-K for detail of charge-offs and recoveries by loan portfolio segment, class, and subclass for the years presented.

Provisions for credit losses are charged to earnings for both on and off‑balance sheet credit exposures. The provisions for credit losses on our loans and leases HFI, AFS debt securities, and HTM debt securities are based on our allowance methodologies and are expenses that, in our judgment, are required to maintain an appropriate ACL for these assets.

47

2025 Compared to 2024

The provision for credit losses was $70.6 million for the year ended December 31, 2025 compared to $42.8 million for the year ended December 31, 2024. The provision for 2025 included a provision for loan losses of $64.8 million and a provision for unfunded loan commitments of $5.9 million. The provision for credit losses for 2025 included $26.3 million related to loans transferred to HFS in the second quarter of 2025 in connection with a strategic loan sale. The remaining increase in the provision for loan losses and unfunded loan commitments was primarily driven by net charge-off activity experienced in the first half of the year, with additional impacts from changes in loan risk ratings, and higher unfunded commitments. These were offset partially by lower qualitative reserves, lower specific reserves, and a favorable shift in the portfolio mix due to growth in loan segments with lower expected credit losses.

The provision for loan losses and unfunded commitment for 2024 primarily included a $43.5 million provision for loan losses and a $0.5 million reversal of the provision for unfunded loan commitments. The provision for 2024 was driven mainly by net-charge-off activity during the year.

Certain circumstances may lead to increased provisions for credit losses on loans and leases in the future. Examples of such circumstances include an increased amount of classified and/or nonaccrual loans and leases, net loan and lease and unfunded commitment growth, and changes in economic conditions and forecasts. Changes in economic conditions and forecasts include the rate of economic growth, the unemployment rate, the rate of inflation, changes in the general level of interest rates, changes in real estate values, and adverse conditions in borrowers’ businesses.

For information regarding the allowance for credit losses on loans and leases HFI and HTM securities, see “Balance Sheet Analysis - Allowance for Credit Losses on Loans and Leases sections” in Item 7, "Note 1. Nature of Operations and Summary of Significant Accounting Policies," and "Note 5. Loans and Leases" in Item 8 of this Form 10-K.

Noninterest Income (Loss)

The following table summarizes noninterest income (loss) by category for the years indicated:

Year Ended December 31,

Increase

Increase

Noninterest Income (Loss)

2025

(Decrease)

2024

(Decrease)

2023

(In thousands)

Leased equipment income

$

47,717 

$

(3,392)

$

51,109 

$

(12,058)

$

63,167 

Other commissions and fees

38,637 

5,379 

33,258 

(4,828)

38,086 

Service charges on deposit accounts

19,146 

563 

18,583 

2,115 

16,468 

(Loss) gain on sale of loans and leases

(115)

(760)

645 

161,991 

(161,346)

Loss on sale of securities

— 

60,400 

(60,400)

382,013 

(442,413)

Dividends and gains on equity investments

7,992 

10 

7,982 

(7,749)

15,731 

Warrant income (loss)

1,726 

1,318 

408 

1,126 

(718)

LOCOM HFS adjustment

(9)

(224)

215 

8,676 

(8,461)

Other income

27,045 

1,700 

25,345 

(5,856)

31,201 

Total noninterest income (loss)

$

142,139 

$

64,994 

$

77,145 

$

525,430 

$

(448,285)

2025 Compared to 2024

Noninterest income increased by $65.0 million to $142.1 million for the year ended December 31, 2025 from $77.1 million for the year ended December 31, 2024. The prior year period included a $59.9 million loss on the sale of $742 million of securities executed as part of a balance sheet repositioning initiative.

48

Noninterest Expense

The following table summarizes noninterest expense by category for the years indicated:

Year Ended December 31,

Increase

Increase

Noninterest Expense

2025

(Decrease)

2024

(Decrease)

2023

(In thousands)

Compensation

$

349,506 

$

8,110 

$

341,396 

$

9,043 

$

332,353 

Customer related expense

105,425 

(24,046)

129,471 

5,367 

124,104 

Occupancy

60,624 

(7,369)

67,993 

6,325 

61,668 

Information technology and data processing

55,458 

(4,960)

60,418 

8,613 

51,805 

Insurance and assessments

32,750 

(38,029)

70,779 

(64,887)

135,666 

Intangible asset amortization

28,267 

(4,876)

33,143 

21,724 

11,419 

Leased equipment depreciation

26,393 

(2,878)

29,271 

(4,972)

34,243 

Other professional services

23,087 

2,230 

20,857 

(3,766)

24,623 

Loan expense

16,372 

(934)

17,306 

(3,152)

20,458 

Other

37,968 

2,679 

35,289 

(107,184)

142,473 

Total operating expense

735,850 

(70,073)

805,923 

(132,889)

938,812 

Acquisition, integration and reorganization costs

— 

14,183 

(14,183)

(156,816)

142,633 

Goodwill impairment

— 

— 

— 

(1,376,736)

1,376,736 

Total noninterest expense

$

735,850 

$

(55,890)

$

791,740 

$

(1,666,441)

$

2,458,181 

2025 Compared to 2024

Noninterest expense decreased by $55.9 million to $735.9 million for the year ended December 31, 2025 from $791.7 million for the year ended December 31, 2024. The decrease was due mainly to lower insurance and assessments expense of $38.0 million, lower customer related expense of $24.0 million, and lower occupancy expense of $7.4 million, offset partially by $14.2 million in acquisition, integration and reorganization costs from 2024 that did not recur. Insurance and assessments expense decreased due primarily to incremental FDIC special assessments recorded in 2024, which reflected higher assessment rates. Customer related expense decreased due to lower earnings credit rate expenses, driven by the lower federal funds rate. Occupancy expense decreased as a result of cost savings from branch consolidations following the PacWest Bancorp merger. Acquisition, integration and reorganization costs of $14.2 million in 2024 reflected adjustments to the merger-related accruals, as actual expenses were lower than previously estimated.

Income Taxes

2025 Compared to 2024

The effective tax rates were 26.9% and 24.8% for the years ended December 31, 2025 and 2024, respectively. The Company's 2025 blended statutory tax rate for federal and state was 27.7%. The higher 2025 effective tax rate was due primarily to a one-time non-cash tax expense recorded in the second quarter of 2025 for the DTA revaluation resulting from the California state tax changes passed as part of the 2025 California budget enacted on June 30, 2025 and effective retroactively to January 1, 2025. For further information on income taxes, see "Note 16. Income Taxes" in Item 8 of this Form 10-K.

49

Balance Sheet Analysis

The following table provides a summary of our balance sheet highlights as of the dates indicated:

December 31,

Increase

Balance Sheet Highlights

2025

2024

(Decrease)

(In thousands)

Cash and cash equivalents

$

2,307,965 

$

2,502,212 

$

(194,247)

Securities available-for-sale

2,454,058 

2,246,839 

207,219 

Securities held-to-maturity

2,308,636 

2,306,149 

2,487 

Loans HFS

182,936 

26,331 

156,605 

Loans and leases HFI

25,032,679 

23,781,663 

1,251,016 

Total assets

34,797,442 

33,542,864 

1,254,578 

Noninterest-bearing deposits

$

7,822,787 

$

7,719,913 

$

102,874 

Total deposits

27,843,357 

27,191,909 

651,448 

Borrowings

2,063,819 

1,391,814 

672,005 

Subordinated debt

952,740 

941,923 

10,817 

Total liabilities

31,256,165 

30,042,915 

1,213,250 

Total stockholders' equity

3,541,277 

3,499,949 

41,328 

During the second quarter of 2025, as part of our strategic loan sale process, we reclassified approximately $506.7 million of loans as HFS. During the third quarter of 2024, as part of our balance sheet repositioning strategy, we sold $1.95 billion of Civic loans, generating $1.91 billion in net proceeds. This sale provided capital to reposition part of our AFS securities portfolio and reduce higher-cost brokered deposits and borrowings. We sold approximately $742 million of securities with a weighted average yield of 2.94% resulting in a pre-tax loss of $59.9 million and purchased $724 million of similar quality securities with a weighted average yield of 5.65%. The liabilities that were paid off included $1.85 billion of brokered deposits with an average cost of 5.35% at the time of retirement and the remaining $545.0 million in Bank Term Funding Program balance with a rate of 5.40%. We replaced a portion of these higher-cost fundings with the addition of a $500 million long-term FHLB advance with a rate of 3.18%. These balance sheet repositioning actions that we executed resulted in net interest margin expansion and improved both our capital and liquidity.

50

Securities Available-for-Sale

The following table presents the composition and durations of our AFS securities as of the dates indicated:

December 31,

2025

2024

Fair

% of

Duration

Fair

% of

Duration

Security Type

Value

Total

(in years)

Value

Total

(in years)

(Dollars in thousands)

Agency residential CMOs

$

871,624 

36 

%

2.3 

$

446,631 

20 

%

3.2 

Agency residential MBS

834,085 

34 

%

7.6 

861,840 

38 

%

7.6 

Private label residential CMOs

228,975 

9 

%

4.4 

316,910 

14 

%

3.9 

Collateralized loan obligations

200,822 

8 

%

— 

279,416 

12 

%

0.3 

Corporate debt securities

241,596 

10 

%

1.0 

257,712 

12 

%

1.4 

Agency commercial MBS

50,966 

2 

%

3.2 

51,564 

2 

%

1.9 

Asset-backed securities

13,249 

1 

%

0.1 

15,600 

1 

%

0.1 

Private label commercial MBS

9,279 

— 

%

3.1 

12,372 

1 

%

3.6 

SBA securities

3,462 

— 

%

3.0 

4,200 

— 

%

3.2 

Municipal securities

— 

— 

%

— 

594 

— 

%

3.7 

Total securities available-for-sale

$

2,454,058 

100 

%

4.0 

$

2,246,839 

100 

%

4.4 

AFS securities increased by $0.2 billion during the year ended December 31, 2025 to $2.5 billion at December 31, 2025 compared to $2.2 billion at December 31, 2024, due primarily to purchases of $605.4 million and a $88.2 million increase in the fair value of AFS securities due to higher interest rates, offset partially by $478.7 million of principal paydowns and $6.9 million of net amortization.

As of December 31, 2025, AFS securities had aggregate unrealized net after-tax losses in AOCI of $136.6 million compared to $200.1 million at December 31, 2024.

The following table presents a summary of contractual rates and contractual maturities of our AFS securities as of the date indicated:

Due After

Due After

Due

One Year

Five Years

Within

Through

Through

Due After

One Year

Five Years

Ten Years

Ten Years

Total

Fair

Fair

Fair

Fair

Fair

December 31, 2025

Value

Rate(1)

Value

Rate(1)

Value

Rate(1)

Value

Rate(1)

Value

Rate(1)

(Dollars in thousands)

Agency residential CMOs

$

— 

— 

%

$

— 

— 

%

$

13,792 

4.94 

%

$

857,832 

4.68 

%

$

871,624 

4.68 

%

Agency residential MBS

— 

— 

%

— 

— 

%

— 

— 

%

834,085 

3.33 

%

834,085 

3.33 

%

Private label residential CMOs

— 

— 

%

— 

— 

%

— 

— 

%

228,975 

4.08 

%

228,975 

4.08 

%

Collateralized loan obligations

— 

— 

%

208 

5.97 

%

93,793 

5.69 

%

106,821 

5.37 

%

200,822 

5.52 

%

Corporate debt securities

10,750 

8.16 

%

47,033 

7.37 

%

183,813 

5.31 

%

— 

— 

%

241,596 

5.83 

%

Agency commercial MBS

— 

— 

%

40,193 

3.77 

%

— 

— 

%

10,773 

4.14 

%

50,966 

3.85 

%

Asset-backed securities

— 

— 

%

— 

— 

%

— 

— 

%

13,249 

5.08 

%

13,249 

5.08 

%

Private label commercial MBS

— 

— 

%

— 

— 

%

5,638 

3.08 

%

3,641 

2.62 

%

9,279 

2.90 

%

SBA securities

— 

— 

%

— 

— 

%

3,462 

3.06 

%

— 

— 

%

3,462 

3.06 

%

Total securities available-for-sale

$

10,750 

8.16 

%

$

87,434 

5.71 

%

$

300,498 

5.34 

%

$

2,055,376 

4.10 

%

$

2,454,058 

4.33 

%

_______________________________________

(1)    Rates presented are weighted average rates. Rates on tax-exempt securities are contractual rates and are not presented on a tax-equivalent basis.

51

Securities Held-to-Maturity

The following table presents the composition and durations of our HTM securities as of the dates indicated:

December 31,

2025

2024

Amortized

% of

Duration

Amortized

% of

Duration

Security Type

Cost

Total

(in years)

Cost

Total

(in years)

(Dollars in thousands)

Municipal securities (1)

$

1,237,792 

54 

%

7.5 

$

1,251,364 

55 

%

8.0 

Agency commercial MBS

447,283 

19 

%

5.1 

440,476 

19 

%

5.9 

Private label commercial MBS

360,382 

16 

%

4.8 

355,342 

15 

%

5.6 

U.S. Treasury securities

193,022 

8 

%

5.0 

189,985 

8 

%

5.9 

Corporate debt securities

70,852 

3 

%

4.0 

70,482 

3 

%

4.0 

Total securities held-to-maturity

$

2,309,331 

100 

%

6.3 

$

2,307,649 

100 

%

7.0 

_______________________________________

(1)    As of December 31, 2025, our municipal securities are geographically concentrated primarily in California at 26%, Texas at 23%, and Washington at 15% of total municipal securities based on amortized cost.

As of December 31, 2025, HTM securities had aggregate unrealized net after-tax losses in AOCI of $133.4 million remaining from the balance established at the time of the AFS to HTM transfer, compared to $157.9 million at December 31, 2024.

The following table presents a summary of contractual rates and contractual maturities of our HTM securities as of the date indicated:

Due After

Due After

Due

One Year

Five Years

Within

Through

Through

Due After

One Year

Five Years

Ten Years

Ten Years

Total

Amortized

Amortized

Amortized

Amortized

Amortized

December 31, 2025

Cost

Rate(1)

Cost

Rate(1)

Cost

Rate(1)

Cost

Rate(1)

Cost

Rate(1)

(Dollars in thousands)

Municipal securities

$

— 

— 

%

$

149,636 

1.78 

%

$

380,067 

2.19 

%

$

708,089 

3.78 

%

$

1,237,792 

3.05 

%

Agency commercial MBS

— 

— 

%

69,306 

1.46 

%

377,977 

2.07 

%

— 

— 

%

447,283 

1.97 

%

Private label commercial MBS

— 

— 

%

— 

— 

%

37,304 

2.93 

%

323,078 

2.70 

%

360,382 

2.72 

%

U.S. Treasury securities

— 

— 

%

— 

— 

%

193,022 

1.22 

%

— 

— 

%

193,022 

1.22 

%

Corporate debt securities

— 

— 

%

— 

— 

%

53,719 

5.13 

%

17,133 

4.78 

%

70,852 

5.04 

%

Total securities held-to-maturity

$

— 

— 

%

$

218,942 

1.68 

%

$

1,042,089 

2.14 

%

$

1,048,300 

3.46 

%

$

2,309,331 

2.70 

%

_______________________________________

(1)    Rates presented are weighted average rates. Rates on tax-exempt securities are contractual rates and are not presented on a tax-equivalent basis.

Loans Held for Sale

As part of our management of the loans held in our portfolio, on occasion we will transfer loans from HFI to HFS. At December 31, 2025, the loans HFS balance totaled $183 million compared to $26 million at December 31, 2024. The increase is primarily due to transfers of $495 million to HFS, offset partially by loan sales totaling $262 million during the year.

52

Loans and Leases Held for Investment

The following table presents the composition of our total loans and leases HFI by loan portfolio segment, class, and subclass as of the dates indicated:

December 31,

2025

2024

% of

% of

Balance

Total

Balance

Total

(Dollars in thousands)

Real Estate Mortgage:

Commercial real estate

$

3,259,164 

13 

%

$

3,540,612 

15 

%

SBA program

666,424 

3 

%

630,412 

2 

%

Hotel

389,049 

1 

%

407,748 

2 

%

Total commercial real estate mortgage

4,314,637 

17 

%

4,578,772 

19 

%

Multi-family

6,089,417 

24 

%

6,041,713 

26 

%

Residential mortgage

3,307,427 

14 

%

2,682,667 

11 

%

Investor-owned residential

32,567 

— 

%

102,778 

1 

%

Residential renovation

6,739 

— 

%

21,729 

— 

%

Total other residential real estate mortgage

3,346,733 

14 

%

2,807,174 

12 

%

Total real estate mortgage

13,750,787 

55 

%

13,427,659 

57 

%

Real Estate Construction and Land:

Commercial

379,387 

2 

%

799,131 

3 

%

Residential

1,568,240 

6 

%

2,373,162 

10 

%

Total real estate construction and land (1)

1,947,627 

8 

%

3,172,293 

13 

%

Total real estate

15,698,414 

63 

%

16,599,952 

70 

%

Commercial:

Lender finance

1,623,474 

6 

%

727,913 

3 

%

Equipment finance

674,714 

3 

%

621,888 

3 

%

Premium finance

447,939 

2 

%

546,393 

2 

%

Other asset-based

204,883 

1 

%

191,775 

1 

%

Total asset-based

2,951,010 

12 

%

2,087,969 

9 

%

Equity fund loans

1,320,297 

5 

%

746,655 

3 

%

Venture lending

901,800 

4 

%

791,121 

3 

%

Total venture capital

2,222,097 

9 

%

1,537,776 

6 

%

Warehouse lending

2,100,075 

8 

%

1,473,074 

6 

%

Secured business loans

806,597 

3 

%

756,612 

3 

%

Other lending

897,427 

4 

%

923,398 

4 

%

Total other commercial

3,804,099 

15 

%

3,153,084 

13 

%

Total commercial

8,977,206 

36 

%

6,778,829 

28 

%

Consumer

357,059 

1 

%

402,882 

2 

%

Total loans and leases held for investment

$

25,032,679 

100 

%

$

23,781,663 

100 

%

Total unfunded loan commitments

$

5,433,357 

$

4,887,690 

________________________________

(1)    Includes $214.5 million and $223.9 million at December 31, 2025 and 2024 of land acquisition and development loans.

Our non-deposit financial institutions ("NDFI") lending totaled $5.1 billion, or 20.5% as of December 31, 2025, and is diversified across multiple asset classes, including warehouse lending, equity fund loans, and lender finance. The NDFI portfolio has a history of strong asset quality performance with no delinquencies, nonperforming loans, or classified loans at December 31, 2025.

53

The following table presents a roll forward of loans and leases HFI for the years indicated:

Year Ended December 31,

Roll Forward of Loans and Leases HFI

2025

2024

(In thousands)

Balance, beginning of year

$

23,781,663 

$

25,489,687 

Additions:

Production

3,951,397 

2,160,644 

Disbursements

5,600,216 

5,110,783 

Total production and disbursements

9,551,613 

7,271,427 

Reductions:

Payoffs

(3,971,211)

(3,864,489)

Paydowns

(3,751,019)

(3,043,419)

Total payoffs and paydowns

(7,722,230)

(6,907,908)

Sales

(47,225)

(27,516)

Transfers to foreclosed assets

(7,530)

(19,978)

Charge-offs

(75,505)

(94,943)

Transfers to loans held for sale

(448,107)

(1,930,285)

Total reductions

(8,300,597)

(8,980,630)

Transfers from loans held for sale

— 

1,179 

Loans acquired through merger

— 

— 

Net increase (decrease)

1,251,016 

(1,708,024)

Balance, end of year

$

25,032,679 

$

23,781,663 

Loan Concentrations

We mitigate our loan concentration risks by considering the prospects for the borrower's industry and competition, evaluating our past experiences with the borrower and with the collateral type, and adhering to written loan underwriting policies and procedures, including, among other factors, loan structures, and covenants. Each loan request and renewal is individually reviewed, with larger loans subject to approval by our credit committee. We also actively manage our real estate loan portfolio and seek to mitigate credit risks via regular monitoring of economic conditions in the regions or areas in which our borrowers are operating, evaluating borrower performance, and ensuring covenant compliance. We assign a credit risk rating to each loan and verify its accuracy and appropriateness through an independent credit review function. We also conduct regular portfolio reviews to address any loans with unfavorable credit risk ratings and ensure consistency in underwriting for loan modifications and renewals. For more information regarding our real estate loan portfolio and underwriting, see "Lending Activities" in Item 1 of this Form 10-K.

Total real estate loans HFI were $15.7 billion, or 63%, of our loan portfolio at December 31, 2025 and consisted of $13.8 billion of real estate mortgage loans and $1.9 billion of real estate construction and land loans, compared to $16.6 billion, or 70%, of our total loan portfolio at December 31, 2024 and consisted of $13.4 billion of real estate mortgage loans and $3.2 billion of real estate construction and loan loans. For both December 31, 2025 and 2024, 71% of our real estate loans was collateralized by property in California, reflecting the concentration of our community banking operations within the state.

54

The following table presents the composition of our real estate mortgage loans HFI by collateral types as of the dates indicated:

December 31,

2025

2024

% of

% of

Real Estate Mortgage Loans by Collateral Type

Balance

Total

Balance

Total

(Dollars in thousands)

Commercial:

Office

$

956,391 

7 

%

$

992,392 

7 

%

Industrial

951,802 

7 

%

1,008,877 

8 

%

Retail

670,385 

5 

%

812,552 

6 

%

Hotel

413,235 

3 

%

424,345 

3 

%

Healthcare

341,850 

2 

%

338,836 

3 

%

Mixed use

256,759 

2 

%

289,054 

2 

%

All other

894,002 

7 

%

834,303 

6 

%

Total commercial

$

4,484,424 

33 

%

$

4,700,359 

35 

%

Residential:

Multi-family

$

6,010,344 

44 

%

$

6,066,374 

45 

%

Single-family residential

3,025,413 

22 

%

2,481,904 

18 

%

All other

230,606 

1 

%

179,022 

2 

%

Total residential

$

9,266,363 

67 

%

$

8,727,300 

65 

%

Total real estate mortgage loans

$

13,750,787 

100 

%

$

13,427,659 

100 

%

The largest concentration of our real estate mortgage loans is in multi-family properties. At December 31, 2025 and 2024, 73% and 74% of our real estate mortgage loans secured by multi-family properties were located in California where we principally operated.

Loan and Lease Maturities and Interest Rate Characteristics

The following table presents contractual maturity information for loans and leases HFI as of the date indicated:

Due After

Due

One Year

Due After

Within

Through

Five to

Due After

December 31, 2025

One Year

Five Years

15 Years

15 Years

Total

(In thousands)

Real estate mortgage

$

1,277,074 

$

3,183,860 

$

2,796,606 

$

6,493,247 

$

13,750,787 

Real estate construction and land

1,481,484 

449,579 

16,564 

— 

1,947,627 

Commercial

4,465,661 

3,772,558 

524,139 

214,848 

8,977,206 

Consumer

6,924 

30,704 

200,907 

118,524 

357,059 

Total loans and leases held for investment

$

7,231,143 

$

7,436,701 

$

3,538,216 

$

6,826,619 

$

25,032,679 

At December 31, 2025, we had $7.2 billion of loans and leases HFI due to mature over the next twelve months. For any loan modifications made to these borrowers, an assessment of whether the borrower is experiencing financial difficulty is made on the date of the modification. Loans are assessed to determine whether the modification constitutes a new loan or a continuation of the existing loan. Depending on the terms of the modification and nature of the borrower, this may result in a downgrade or placing the loan on nonaccrual status, which in turn would impact the loan’s classification within the ALLL. Because 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 allowance, a change to the ALLL is generally not recorded upon modification.

55

The following table presents the interest rate profile of loans and leases HFI due after one year as of the date indicated:

Due After One Year

December 31, 2025

Fixed Rate

Variable Rate

Total

(In thousands)

Real estate mortgage

$

6,785,249 

$

5,688,464 

$

12,473,713 

Real estate construction and land

190,324 

275,819 

466,143 

Commercial

1,465,130 

3,046,415 

4,511,545 

Consumer

345,233 

4,902 

350,135 

Total

$

8,785,936 

$

9,015,600 

$

17,801,536 

For information regarding our variable-rate loans subject to interest rate floors, see "Quantitative and Qualitative Disclosures About Market Risk" in Item 7A of this Form 10-K.

Allowance for Credit Losses on Loans and Leases Held for Investment

The ACL on loans and leases HFI is the combination of the allowance for loan and lease losses and the reserve for unfunded loan commitments. The allowance for loan and lease losses is reported as a reduction of the amortized cost basis of loans and leases, while the reserve for unfunded loan commitments is included within "Accrued interest payable and other liabilities" on the consolidated balance sheets. The amortized cost basis of loans and leases does not include accrued interest receivable, which is included in "Other assets" on the consolidated balance sheets. The "Provision for credit losses" on the consolidated statements of earnings (loss) is a combination of the provision for loan and lease losses, the provision for unfunded loan commitments, the provision for AFS debt securities, and the provision for HTM debt securities.

Under the CECL methodology, expected credit losses reflect losses over the remaining contractual life of an asset, considering the effect of prepayments and available information about the collectability of cash flows, including information about relevant historical experience, current conditions, and reasonable and supportable forecasts of future events and circumstances. Thus, the CECL methodology incorporates a broad range of information in developing credit loss estimates.

For further information regarding the calculation of the ACL on loans and leases HFI using the CECL methodology, see "Note 1. Nature of Operations and Summary of Significant Accounting Policies - Allowance for Credit Losses on Loans and Leases Held for Investment" in Item 8 of this Form 10-K.

In estimating our ACL, we consider prevailing economic conditions and forward looking assumptions, including the impact of inflation, interest rates, and broader economic uncertainty. Our methodology and framework include reasonable and supportable forecast period after which we revert to the through-the-cycle environment. Certain management assumptions are reassessed every quarter based on current expectations for credit losses, while other assumptions are assessed and updated on at least an annual basis.

In estimating the expected credit losses, we consider multiple forward-looking economic scenarios to address forecast uncertainty with the scenario selection and weighting reflecting management’s assessment of current economic conditions and downside risk over our reasonable and supportable forecast period.

Qualitative adjustments are applied to capture risks not fully reflected in the quantitative model outputs. In 2025, qualitative considerations primarily related to CRE exposure, concentrations within the loan portfolio, and the volume of adversely classified loans. As part of our governance process, we conduct sensitively analysis to evaluate the reasonableness of the ACL. However, due to the interrelated nature of the model assumptions, the impact of changes in individual inputs cannot be isolated.

Management believes the allowance for credit losses appropriately reflects current expected credit losses in our loan and lease portfolio and associated unfunded loan commitments as of the reporting date. It is possible that others, given the same information, may at any point in time reach different conclusions that could result in a significant impact to the Company's financial statements.

56

The following table presents information regarding the ACL on loans and leases HFI as of the dates indicated:

December 31,

 Allowance for Credit Losses Data

2025

2024

(Dollars in thousands)

Allowance for loan and lease losses

$

245,612 

$

239,360 

Reserve for unfunded loan commitments

34,921 

29,071 

Total allowance for credit losses

$

280,533 

$

268,431 

Allowance for credit losses to loans and leases HFI

1.12 

%

1.13 

%

Allowance for credit losses to nonaccrual loans and leases HFI

176.3 

%

141.6 

%

The following table presents the changes in our ACL on loans and leases HFI for the years indicated:

Roll Forward of Allowance for Credit Losses

Year Ended December 31,

on Loans and Leases HFI

2025

2024

(Dollars in thousands)

Balance, beginning of year

$

268,431 

$

311,258 

Provision for credit losses:

Addition to allowance for loan and lease losses

64,780 

43,500 

Addition to (reduction in) reserve for unfunded loan commitments

5,850 

(500)

Total provision for credit losses

70,630 

43,000 

Loans and leases charged off:

Real estate mortgage

(26,507)

(63,117)

Real estate construction and land

(21,536)

— 

Commercial

(22,977)

(26,322)

Consumer

(4,485)

(5,504)

Total loans and leases charged off

(75,505)

(94,943)

Recoveries on loans and leases charged off:

Real estate mortgage

2,786 

2,766 

Real estate construction and land

1,370 

— 

Commercial

12,264 

5,711 

Consumer

557 

639 

Total recoveries on loans and leases charged off

16,977 

9,116 

Net charge-offs

(58,528)

(85,827)

Balance, end of year

$

280,533 

$

268,431 

Net charge-offs to average loans and leases

0.24 

%

0.35 

%

57

The following table presents net charge-offs, average loan balance, and ratio of net charge-offs to average loans by loan portfolio segment for the years indicated:

Year Ended December 31,

Ratio of Net Charge-offs to Average Loans

2025

2024

2023

(Dollars in thousands)

Real Estate Mortgage:

Net charge-offs

$

23,721 

$

60,351 

$

46,485 

Average loan balance

$

13,611,756 

$

14,483,010 

$

14,723,618 

Ratio of net charge-offs to average loans

0.17 

%

0.42 

%

0.32 

%

Real Estate Construction and Land:

Net charge-offs

$

20,166 

$

— 

$

— 

Average loan balance

$

2,487,575 

$

3,278,784 

$

3,677,785 

Ratio of net charge-offs to average loans

0.81 

%

— 

%

— 

%

Commercial:

Net charge-offs

$

10,713 

$

20,611 

$

9,536 

Average loan balance

$

7,778,950 

$

6,111,197 

$

5,717,669 

Ratio of net charge-offs to average loans

0.14 

%

0.34 

%

0.17 

%

Consumer:

Net charge-offs

$

3,928 

$

4,865 

$

2,147 

Average loan balance

$

381,201 

$

427,221 

$

416,797 

Ratio of net charge-offs to average loans

1.03 

%

1.14 

%

0.52 

%

Net charge-offs in 2025 were $58.5 million compared to net charge-offs of $85.8 million in 2024. This change was due primarily to net charge-offs in the real estate mortgage portfolio segment decreasing to $23.7 million in 2025 from $60.4 million in 2024 and net charge-offs in the commercial portfolio segment decreasing to $10.7 million in 2025 from $20.6 million in 2024, offset partially by net charge-offs in the real estate construction and land segment, which increased to $20.2 million in 2025, compared to no charge-offs in 2024.

Net charge-offs in 2024 were $85.8 million compared to net charge-offs of $58.2 million in 2023. This change was due primarily to net charge-offs in the real estate mortgage portfolio segment increasing to $60.4 million in 2024 from $46.5 million in 2023, and to net charge-offs in the commercial portfolio segment increasing to $20.6 million in 2024 from $9.5 million in 2023.

58

The following table presents charge-offs by loan portfolio segment, class, and subclass for the years indicated:

Year Ended December 31,

Allowance for Credit Losses Charge-offs

2025

2024

(In thousands)

Real Estate Mortgage:

Commercial real estate

$

17,411 

$

22,433 

SBA program

634 

1,154 

Hotel

1,685 

— 

Total commercial real estate mortgage

19,730 

23,587 

Multi-family

3,275 

— 

Residential mortgage

849 

242 

Investor-owned residential

2,148 

38,064 

Residential renovation

505 

1,224 

Total other residential real estate mortgage

3,502 

39,530 

Total real estate mortgage

26,507 

63,117 

Real Estate Construction and Land:

Commercial

21,536 

— 

Residential

— 

— 

Total real estate construction and land

21,536 

— 

Total real estate

48,043 

63,117 

Commercial:

Lender finance

— 

— 

Equipment finance

— 

— 

Premium finance

— 

— 

Other asset-based

— 

92 

Total asset-based

— 

92 

Equity fund loans

— 

— 

Venture lending

6,250 

16,414 

Total venture capital

6,250 

16,414 

Secured business loans

4,386 

4,490 

Warehouse lending

— 

— 

Other lending

12,341 

5,326 

Total other commercial

16,727 

9,816 

Total commercial

22,977 

26,322 

Consumer

4,485 

5,504 

Total charge-offs

$

75,505 

$

94,943 

Charge-offs decreased by $19.4 million to $75.5 million in 2025 from $94.9 million in 2024 due mainly to decreases of $35.9 million in the investor-owned residential real estate mortgage subclass and $10.2 million in the venture lending subclass, offset partially by an increase of $21.5 million in the CRE construction and land class.

59

The following table presents recoveries by loan portfolio segment, class, and subclass for the years indicated:

Year Ended December 31,

Allowance for Credit Losses Recoveries

2025

2024

(In thousands)

Real Estate Mortgage:

Commercial real estate

$

2,349 

$

389 

SBA program

312 

480 

Hotel

— 

— 

Total commercial real estate mortgage

2,661 

869 

Multi-family

— 

500 

Residential mortgage

28 

8 

Investor-owned residential

11 

724 

Residential renovation

86 

665 

Total other residential real estate mortgage

125 

1,397 

Total real estate mortgage

2,786 

2,766 

Real Estate Construction and Land:

Commercial

1,370 

— 

Residential

— 

— 

Total real estate construction and land

1,370 

— 

Total real estate

4,156 

2,766 

Commercial:

Lender finance

— 

— 

Equipment finance

— 

— 

Premium finance

20 

— 

Other asset-based

1,878 

113 

Total asset-based

1,898 

113 

Equity fund loans

— 

— 

Venture lending

499 

1,500 

Total venture capital

499 

1,500 

Secured business loans

2,826 

504 

Warehouse lending

— 

— 

Other lending

7,041 

3,594 

Total other commercial

9,867 

4,098 

Total commercial

12,264 

5,711 

Consumer

557 

639 

Total recoveries

$

16,977 

$

9,116 

60

The following table presents the allowance for loan and lease losses on loans and leases HFI by loan portfolio segment as of the dates indicated:

Allocation of the Allowance for Loan and Lease Losses by Portfolio Segment

Real Estate Construction

Real Estate Mortgage

and Land

Commercial

Consumer

Total

(Dollars in thousands)

December 31, 2025

Allowance for loan and lease losses

$

137,401 

$

8,849 

$

86,087 

$

13,275 

$

245,612 

% of loans to total loans

55 

%

8 

%

36 

%

1 

%

100 

%

December 31, 2024

Allowance for loan and lease losses

$

145,754 

$

10,940 

$

67,833 

$

14,833 

$

239,360 

% of loans to total loans

57 

%

13 

%

28 

%

2 

%

100 

%

The allowance for loan and lease losses attributable to real estate mortgage loans was $137.4 million and $145.8 million at December 31, 2025 and 2024. As ratios to real estate mortgage loans at those dates, these percentages were 1.00% and 1.09%. The decrease in the coverage ratio was primarily attributable to lower qualitative reserves for loans secured by office properties, as well as changes in the portfolio mix toward loans with stronger credit quality driven in part by the transfer of certain loans to HFS during the year.

The allowance for loan and lease losses attributable to real estate construction and land loans was $8.8 million and $10.9 million at December 31, 2025 and 2024. As ratios to real estate construction and land loans at those dates, these percentages were 0.45% and 0.34%. The increase in the coverage ratio was primarily due to an increase in classified loans during the year.

The allowance for loan and lease losses attributable to commercial loans and leases was $86.1 million and $67.8 million at December 31, 2025 and 2024. As ratios to commercial loans and leases at those dates, these percentages were 0.96% and 1.00%. The decrease in the coverage ratio was primarily due to a change in the loan portfolio composition, including growth in lending segments with lower historical losses such as lender finance, equity funds, and warehouse lending. This decrease was offset partially by higher reserve in the venture lending portfolio, driven by risk rating migration activity.

61

Credit Quality

Nonperforming Assets, Classified Loans and Leases, and Special Mention Loans and Leases

The following table presents information on our nonperforming assets, classified loans and leases, and special mention loans and leases as of the dates indicated:

December 31,

2025

2024

(Dollars in thousands)

Nonaccrual loans and leases HFI

$

159,168 

$

189,605 

Accruing loans contractually past due 90 days or more

— 

— 

Total nonperforming loans and leases

159,168 

189,605 

Foreclosed assets, net

17,115 

9,734 

Total nonperforming assets

$

176,283 

$

199,339 

Classified loans and leases HFI

$

800,330 

$

563,502 

Special mention loans and leases HFI

458,683 

1,097,315 

Criticized loans and leases HFI

$

1,259,013 

$

1,660,817 

Nonaccrual loans and leases HFI to loans and leases HFI

0.64 

%

0.80 

%

Nonperforming assets to loans and leases HFI and foreclosed assets, net

0.70 

%

0.84 

%

Allowance for credit losses to nonaccrual loans and leases HFI

176.25 

%

141.57 

%

Classified loans and leases HFI to loans and leases HFI

3.20 

%

2.37 

%

Special mention loans and leases HFI to loans and leases HFI

1.83 

%

4.61 

%

Nonaccrual Loans and Leases Held for Investment

Nonperforming loans and leases HFI decreased by $30.4 million to $159.2 million at December 31, 2025 compared to $189.6 million at December 31, 2024, due mainly to principal and other reductions of $108.8 million, charge-offs of $26.0 million, transfers to accrual status of $24.3 million, and transfers to HFS of $5.7 million, offset partially by additions of $134.3 million. As of December 31, 2025, our three largest loan relationships on nonaccrual status had an aggregate carrying value of $43.5 million and represented 27% of total nonaccrual loans and leases.

62

The following table presents our nonaccrual loans and leases HFI and accruing loans and leases past due between 30 and 89 days by loan portfolio segment and class as of the dates indicated:

December 31, 2025

December 31, 2024

Increase (Decrease)

Accruing and

Accruing and

Accruing and

30-89 days

30-89 days

30-89 days

Nonaccrual

Past Due

Nonaccrual

Past Due

Nonaccrual

Past Due

(In thousands)

Real estate mortgage:

Commercial

$

93,334 

$

1,124 

$

97,655 

$

— 

$

(4,321)

$

1,124 

Multi-family

3,358 

32,887 

22,763 

9,442 

(19,405)

23,445 

Other residential

57,984 

28,614 

46,788 

34,417 

11,196 

(5,803)

Total real estate mortgage

154,676 

62,625 

167,206 

43,859 

(12,530)

18,766 

Real estate construction and land:

Commercial

— 

— 

— 

— 

— 

— 

Residential

— 

26,540 

— 

— 

— 

26,540 

Total real estate construction and land

— 

26,540 

— 

— 

— 

26,540 

Commercial:

Asset-based

— 

1,142 

1,940 

1,795 

(1,940)

(653)

Venture capital

625 

— 

6,291 

— 

(5,666)

— 

Other commercial

2,510 

788 

13,544 

2,331 

(11,034)

(1,543)

Total commercial

3,135 

1,930 

21,775 

4,126 

(18,640)

(2,196)

Consumer

1,357 

1,933 

624 

2,804 

733 

(871)

Total held for investment

$

159,168 

$

93,028 

$

189,605 

$

50,789 

$

(30,437)

$

42,239 

Loans and leases accruing and 30-89 days past due increased by $42.2 million to $93.0 million as of December 31, 2025 compared to $50.8 million at December 31, 2024, due mainly to increases of $26.5 million in residential real estate construction and land delinquent loans and $23.4 million in multi-family real estate mortgage delinquent loans.

The amount of interest income that would have been recorded on nonaccrual loans and leases at December 31, 2025 and 2024 had such loans and leases been current in accordance with their original terms was $9.6 million and $7.8 million for 2025 and 2024.

Foreclosed Assets, Net

The following table presents foreclosed assets (primarily OREO), net of the valuation allowance, by property type as of the dates indicated:

December 31,

Property Type

2025

2024

(In thousands)

Single-family residential

$

17,095 

$

9,714 

Total OREO, net

17,095 

9,714 

Other foreclosed assets

20 

20 

Total foreclosed assets, net

$

17,115 

$

9,734 

Foreclosed assets increased by $7.4 million to $17.1 million at December 31, 2025 compared to $9.7 million at December 31, 2024, due mainly to transfers from loans of $22.8 million, offset partially by sales of $14.7 million and a provision for losses of $0.8 million.

63

Classified and Special Mention Loans and Leases Held for Investment

The following table presents the credit risk ratings of our loans and leases HFI as of the dates indicated:

December 31,

Loan and Lease Credit Risk Ratings

2025

2024

(In thousands)

Pass

$

23,773,666 

$

22,120,846 

Special mention

458,683 

1,097,315 

Classified

800,330 

563,502 

Total loans and leases held for investment

$

25,032,679 

$

23,781,663 

Classified and special mention loans and leases fluctuate from period to period as a result of loan repayments and downgrades or upgrades from our ongoing active portfolio management.

The following table presents the classified and special mention credit risk rating categories for loans and leases HFI by loan portfolio segment and class and the related net changes as of the dates indicated:

December 31, 2025

December 31, 2024

Increase (Decrease)

Special

Special

Special

Classified

Mention

Classified

Mention

Classified

Mention

(In thousands)

Real estate mortgage:

Commercial

$

297,606 

$

126,998 

$

301,278 

$

348,014 

$

(3,672)

$

(221,016)

Multi-family

166,385 

216,286 

113,164 

202,690 

53,221 

13,596 

Other residential

58,202 

— 

47,993 

14,351 

10,209 

(14,351)

Total real estate mortgage

522,193 

343,284 

462,435 

565,055 

59,758 

(221,771)

Real estate construction and land:

Commercial

52,828 

— 

— 

148,024 

52,828 

(148,024)

Residential

2,982 

10,714 

— 

203,220 

2,982 

(192,506)

Total real estate construction and land

55,810 

10,714 

— 

351,244 

55,810 

(340,530)

Commercial:

Asset-based

36,732 

7,180 

5,003 

9,547 

31,729 

(2,367)

Venture capital

171,847 

64,577 

75,406 

125,320 

96,441 

(60,743)

Other commercial

12,143 

27,689 

19,949 

38,741 

(7,806)

(11,052)

Total commercial

220,722 

99,446 

100,358 

173,608 

120,364 

(74,162)

Consumer

1,605 

5,239 

709 

7,408 

896 

(2,169)

Total

$

800,330 

$

458,683 

$

563,502 

$

1,097,315 

$

236,828 

$

(638,632)

Classified loans and leases increased by $236.8 million to $800.3 million at December 31, 2025 compared to $563.5 million at December 31, 2024, due mainly to increases of $96.4 million in venture capital classified loans, $53.2 million in multi-family real estate mortgage classified loans, $52.8 million in CRE construction and land classified loans, and $31.7 million in asset-based classified loans.

Special mention loans and leases decreased by $638.6 million to $458.7 million at December 31, 2025 compared to $1.1 billion at December 31, 2024, due primarily to decreases of $221.0 million in CRE mortgage special mention loans, $192.5 million in residential real estate construction and land special mention loans, $148.0 million in CRE construction and land special mention loans, and $60.7 million in venture capital special mention loans.

Deferred Tax Asset

As of December 31, 2025, the net DTA balance totaled $656.8 million, a decrease from $720.6 million as of December 31, 2024, due primarily to the decline in unrealized loss on AFS securities. As of December 31, 2025 and 2024, we have a valuation allowance of $16.1 million and $19.0 million against DTAs.

64

Deposits

The following table presents a summary of our average deposit amounts and average rates paid during the years indicated:

Year Ended December 31,

2025

2024

2023

Weighted

Weighted

Weighted

Average

Average

Average

Average

Average

Average

Deposit Type

Balance

Rate

Balance

Rate

Balance

Rate

(Dollars in thousands)

Interest checking

$

7,732,697 

2.64 

%

$

7,714,920 

3.12 

%

$

6,992,888 

3.16 

%

Money market

5,231,379 

2.35 

%

5,164,566 

2.68 

%

6,724,296 

2.83 

%

Savings

1,954,354 

2.52 

%

2,005,513 

3.31 

%

1,051,117 

2.95 

%

Time

4,568,180 

3.99 

%

5,714,821 

4.73 

%

6,840,920 

4.48 

%

Total interest-bearing deposits

19,486,610 

2.87 

%

20,599,820 

3.48 

%

21,609,221 

3.46 

%

Noninterest-bearing checking

7,698,015 

— 

7,829,976 

— 

7,072,334 

— 

Total deposits

$

27,184,625 

2.05 

%

$

28,429,796 

2.52 

%

$

28,681,555 

2.61 

%

The following table presents the composition of our deposit portfolio by account type as of the dates indicated:

December 31,

2025

2024

Deposit Type

Balance

% of Total

Balance

% of Total

(Dollars in thousands)

Noninterest-bearing checking

$

7,822,787 

28 

%

$

7,719,913 

28 

%

Interest-bearing:

Checking

8,509,587 

30 

%

7,610,705 

28 

%

Money market

4,917,857 

18 

%

5,361,635 

20 

%

Savings

1,905,863 

7 

%

1,933,232 

7 

%

Time:

Non-brokered

2,254,293 

8 

%

2,488,217 

9 

%

Brokered

2,432,970 

9 

%

2,078,207 

8 

%

Total time deposits

4,687,263 

17 

%

4,566,424 

17 

%

Total interest-bearing

20,020,570 

72 

%

19,471,996 

72 

%

Total deposits

$

27,843,357 

100 

%

$

27,191,909 

100 

%

The following table presents time deposits based on the $250,000 FDIC insured limit as of the dates indicated:

December 31,

2025

2024

% of Total

% of Total

Time Deposits

Balance

Deposits

Balance

Deposits

(Dollars in thousands)

Time deposits $250,000 and under

$

3,669,523 

13 

%

$

3,468,376 

13 

%

Time deposits over $250,000

1,017,740 

4 

%

1,098,048 

4 

%

Total time deposits

$

4,687,263 

17 

%

$

4,566,424 

17 

%

Total deposits increased by $651.4 million to $27.8 billion at December 31, 2025 compared to $27.2 billion at December 31, 2024, due primarily to venture banking growth and increase in broker deposits to support loan growth. Our deposit base is also diversified by client type. As of December 31, 2025, no individual deposit relationship represented more than 10% of our total deposits.

As of December 31, 2025, FDIC-insured deposits represented approximately 71% of total deposits, down from 72% as of December 31, 2024.

65

The following table summarizes the maturities of time deposits as of the date indicated:

Time Deposits

$250,000

Over

December 31, 2025

and Under

$250,000

Total

(In thousands)

Maturities:

Due in three months or less

$

916,015 

$

471,687 

$

1,387,702 

Due in over three months through six months

918,748 

170,507 

1,089,255 

Due in over six months through 12 months

1,472,250 

274,493 

1,746,743 

Total due within 12 months

3,307,013 

916,687 

4,223,700 

Due in over 12 months through 24 months

357,088 

94,372 

451,460 

Due in over 24 months

5,422 

6,681 

12,103 

Total due over 12 months

362,510 

101,053 

463,563 

Total

$

3,669,523 

$

1,017,740 

$

4,687,263 

The following table summarizes the maturities of estimated uninsured time deposits as of the date indicated:

Uninsured Time

December 31, 2025

Deposits

(In thousands)

Maturities:

Due in three months or less

$

137,211 

Due in over three months through six months

132,127 

Due in over six months through 12 months

160,152 

Total due within 12 months

429,490 

Total due over 12 months

75,105 

Total

$

504,595 

Client Investment Funds

In addition to deposit products, we also offer alternative, non-depository corporate treasury solutions for clients to invest excess liquidity. These off-balance sheet client funds totaled $1.2 billion at December 31, 2025 and $1.5 billion at December 31, 2024.

Borrowings

The following table presents information on our borrowings as of the dates indicated:

December 31,

2025

2024

2023

Weighted

Weighted

Weighted

Average

Average

Average

Borrowings

Balance

Rate

Balance

Rate

Balance

Rate

(Dollars in thousands)

FHLB secured term advances

$

1,710,185 

3.90 

%

$

1,100,000 

3.93 

%

$

— 

— 

%

Credit-linked notes

113,634 

14.63 

%

118,838 

15.29 

%

123,116 

16.02 

%

Other short-term borrowings

240,000 

3.69 

%

— 

— 

%

— 

— 

%

Senior notes

— 

— 

%

174,000 

5.25 

%

174,000 

5.25 

%

Bank Term Funding Program

— 

— 

%

— 

— 

%

2,618,300 

4.37 

%

Total borrowings

2,063,819 

4.47 

%

1,392,838 

5.06 

%

2,915,416 

4.92 

%

Acquisition discount on Senior Notes

— 

(1,024)

(4,094)

Total borrowings, net

$

2,063,819 

$

1,391,814 

$

2,911,322 

Averages for the year:

Total borrowings, net

$

1,599,469 

4.92 

%

$

1,838,819 

5.68 

%

$

7,068,826 

5.90 

%

66

Borrowings increased by $672.0 million to $2.1 billion at December 31, 2025 compared to $1.4 billion at December 31, 2024, due to higher FHLB secured advances and other short-term borrowings, offset partially by the payoff of $174.0 million of Senior Notes in the second quarter of 2025. We utilized these borrowings to manage liquidity needs, including, but not limited to, funding asset growth, accommodating liability maturities and deposit withdrawals, and supporting business operations.

Subordinated Debt

The following table presents summary information on our subordinated debt as of the dates indicated:

December 31,

2025

2024

Weighted

Weighted

Average

Average

Subordinated Debt

Balance

Rate

Balance

Rate

(Dollars in thousands)

Subordinated debt:

With no unamortized acquisition discount or unamortized issuance costs

$

152,582 

6.47 

%

$

152,582 

7.16 

%

With unamortized acquisition discount or unamortized issuance costs

867,008 

5.15 

%

863,420 

5.18 

%

Total subordinated debt

1,019,590 

5.35 

%

1,016,002 

5.48 

%

Unamortized issuance costs

(3,263)

(3,815)

Unamortized acquisition discount

(63,587)

(70,264)

Total subordinated debt, net

$

952,740 

$

941,923 

Averages for the year:

Total subordinated debt, net

$

947,709 

6.55 

%

$

939,528 

7.05 

%

Subordinated debt increased by $10.8 million to $952.7 million at December 31, 2025 compared to $941.9 million at December 31, 2024, due to accretion of the acquisition discount on acquired subordinated debt and higher valuation of the Euribor-based subordinated debt. At December 31, 2025, $131.0 million of subordinated debt was included in the Company's Tier I capital and $791.6 million was included in Tier II capital.

Regulatory Matters

Capital

Bank regulatory agencies measure capital adequacy through standardized risk-based capital guidelines that compare different levels of capital (as defined by such guidelines) to risk-weighted assets and off-balance sheet obligations. At December 31, 2025, banks considered to be “well capitalized” must maintain a minimum Tier 1 leverage ratio of 5.00%, a minimum CET1 capital ratio of 6.50%, a minimum Tier 1 capital ratio of 8.00%, and a minimum total capital ratio of 10.00%.

Regulatory capital requirements limit the amount of DTAs that may be included when determining the amount of regulatory capital. Deferred tax asset amounts in excess of the calculated limit are disallowed from regulatory capital. At December 31, 2025, such disallowed amounts were $316.7 million for the Company and $294.1 million for the Bank. No assurance can be given that the regulatory capital deferred tax asset limitation will not increase in the future or that the Company and the Bank will not have increased DTAs that are disallowed.

In 2020, the federal bank regulatory authorities approved a rule that delays the estimated impact on regulatory capital resulting from the adoption of CECL. We elected the CECL phase-in option provided by regulatory capital rules which delayed for two years the estimated impact of CECL on regulatory capital and phases it in over a three-year transition period beginning in the first quarter of 2022. The full impact of the CECL standard was phased-in to regulatory capital through December 31, 2024 under this phase-in option, and beginning in the first quarter of 2025, CECL was fully reflected in our regulatory capital.

67

Basel III currently requires all banking organizations to maintain a 2.50% capital conservation buffer above the minimum risk-based capital requirements to avoid certain limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers. The capital conservation buffer is exclusively comprised of CET1 capital, and it applies to each of the three risk-based capital ratios but not to the leverage ratio. Effective January 1, 2019, the CET1, Tier 1, and Total capital ratio minimums inclusive of the capital conservation buffer were 7.00%, 8.50%, and 10.50%. At December 31, 2025, the Company and the Bank were in compliance with the capital conservation buffer requirements.

The following tables present a comparison of our actual capital ratios to the minimum required ratios and well capitalized ratios as of the dates indicated:

Minimum Required

December 31,

For Capital Adequacy

For Capital Conservation

For Well Capitalized

2025

2024

Purposes

Buffer

Classification

Banc of California, Inc.:

Tier 1 leverage capital ratio

9.99%

10.15%

4.00%

N/A

N/A

CET1 capital ratio

10.01%

10.55%

4.50%

7.00%

N/A

Tier 1 capital ratio

12.34%

12.97%

6.00%

8.50%

6.00%

Total capital ratio

16.31%

17.05%

8.00%

10.50%

10.00%

Banc of California:

Tier 1 leverage capital ratio

10.65%

11.08%

4.00%

N/A

5.00%

CET1 capital ratio

13.15%

14.17%

4.50%

7.00%

6.50%

Tier 1 capital ratio

13.15%

14.17%

6.00%

8.50%

8.00%

Total capital ratio

15.61%

16.65%

8.00%

10.50%

10.00%

The Company's consolidated risk-based capital ratios decreased during the year ended December 31, 2025 due mainly to the impact of stock repurchases and increase in risk-weighted assets driven mostly by the growth in loan balances, offset by earnings for the year. The consolidated Tier 1 leverage ratio also decreased during the year ended December 31, 2025 due mainly to the impact of stock repurchases and higher average assets, offset by earnings.

Dividends on Common Stock and Interest on Subordinated Debt

See "Dividends and Share Repurchases" in Item 1 and "Note 22. Dividend Availability and Regulatory Matters" in Item 8 of this Form 10-K, for discussions of factors affecting the availability of dividends and limitations on the ability to declare dividends. Interest payments made on subordinated debt are considered dividend payments under FRB regulations.

Dividends on Preferred Stock

The Company's ability to pay dividends on the Series F preferred stock depends on the ability of the Bank to pay dividends to the holding company. The ability of the Company and the Bank to pay dividends in the future is subject to bank regulatory requirements, including capital regulations and policies established by the FRB and the DFPI, as applicable. Dividends on the Series F preferred stock will not be declared, paid, or set aside for payment to the extent such act would cause us to fail to comply with applicable laws and regulations, including applicable FRB capital adequacy regulations and policies.

Dividends on the Series F preferred stock are not cumulative or mandatory. If the Company's Board of Directors does not declare a dividend on the Series F preferred stock in respect of a dividend period, then no dividend shall be deemed to be payable for such dividend period or be cumulative, and the Company will have no obligation to pay any dividend for that dividend period, whether or not the Board of Directors declares a dividend on the Series F preferred stock or any other class or series of its capital stock for any future dividend period. However, if dividends on the Series F preferred stock have not been declared or paid for the equivalent of six dividend payments, whether or not for consecutive dividend periods, holders of the outstanding shares of Series F preferred stock, together with holders of any other series of the Company's preferred stock ranking equal with the Series F preferred stock with similar voting rights, will generally be entitled to vote for the election of two additional directors. Additionally, so long as any share of Series F preferred stock remains outstanding, unless dividends on all outstanding shares of Series F preferred stock for the most recently completed dividend period have been paid in full or declared and a sum sufficient for the payment thereof has been set aside for payment, no dividend shall be declared or paid or set aside for payment and no distribution shall be declared or made or set aside for payment on the Company's common stock.

68

Liquidity

Liquidity Management

Liquidity is the ongoing ability to accommodate liability maturities and deposit withdrawals, fund asset growth and business operations, and meet contractual obligations through unconstrained access to funding at reasonable market rates. Liquidity management involves forecasting funding requirements and maintaining sufficient capacity to meet the needs and accommodate fluctuations in asset and liability levels due to changes in the Company’s business operations or unanticipated events.

We have a Management Finance Committee ("MFC") that is comprised of members of Senior Management and is responsible for managing commitments to meet the needs of customers while achieving our financial objectives. MFC meets regularly to review funding capacities, current and forecasted loan demand, and investment opportunities.

We manage our liquidity by maintaining pools of liquid assets on-balance sheet, consisting of cash and receivables due from banks, interest-earning deposits in other financial institutions, and unpledged AFS securities, which we refer to as our primary liquidity. We also maintain available borrowing capacity under secured credit lines with the FHLB and the FRBSF, which we refer to as our secondary liquidity.

As a member of the FHLB, the Bank had secured borrowing capacity with the FHLB of $6.9 billion at December 31, 2025, offset partially by $514.1 million pledged for letters of credit and a balance outstanding of $1.7 billion as of that date. The FHLB secured credit line was collateralized by a blanket lien on $10.3 billion of certain qualifying loans and $20.5 million of securities. The Bank also had secured borrowing capacity with the FRBSF under the Discount Window program totaling $5.0 billion at December 31, 2025, of which was $5.0 billion was available. The FRBSF Discount Window secured credit line was collateralized by liens on $4.6 billion of qualifying loans and $1.5 billion of pledged securities.

In addition to its secured lines of credit with the FHLB and FRBSF, the Bank also had credit limits of $215.0 million in the aggregate with several commercial banks, as well as borrowing arrangements with unaffiliated financial institutions that provide for the purchase of overnight funds or other short-term borrowings. The availability of these unsecured borrowings fluctuates regularly and is subject to the discretion of the counterparties. As of December 31, 2025, the Bank had $240.0 million outstanding under these arrangements. Additionally, the holding company has a $100.0 million unsecured revolving line of credit. As of December 31, 2025, there was no balance outstanding.

The following tables provide a summary of the Company’s primary and secondary liquidity levels at the dates indicated:

December 31,

December 31,

Primary Liquidity - On-Balance Sheet

2025

2024

(Dollars in thousands)

Cash and due from banks

$

181,103 

$

192,006 

Interest-earning deposits in financial institutions

2,126,862 

2,310,206 

Total cash, cash equivalents, and restricted cash

2,307,965 

2,502,212 

Less: Restricted cash

(170,229)

(184,159)

Add: Securities available-for-sale, at fair value

2,454,058 

2,246,839 

Add: Allowance on securities available-for-sale

775 

— 

Less: Pledged securities available-for-sale, at fair value

(3,463)

(4,200)

Less: Haircut on securities available-for-sale

(183,265)

(193,191)

Total primary liquidity

$

4,405,841 

$

4,367,501 

Ratio of primary liquidity to total assets

12.7 

%

13.0 

%

69

Secondary Liquidity - Off-Balance Sheet

December 31,

December 31,

Available Secured Borrowing Capacity

2025

2024

(In thousands)

Total secured borrowing capacity with the FHLB

$

6,949,898 

$

6,853,652 

Less: Secured advances outstanding

(1,710,185)

(1,100,000)

Less: Letters of credit

(514,091)

(527,893)

Available secured borrowing capacity with the FHLB

4,725,622 

5,225,759 

Available secured borrowing capacity with the FRBSF

5,044,040 

6,295,540 

Total secondary liquidity

$

9,769,662 

$

11,521,299 

The Company's primary liquidity increased by $38.3 million to $4.4 billion at December 31, 2025 compared to $4.4 billion at December 31, 2024, due mainly to a $218.7 million increase in unpledged AFS securities, net of a haircut, offset partially by a $180.3 million decrease in total cash and cash equivalents excluding restricted cash. We also include certain unencumbered HTM securities in our internal liquidity stress test buffer which are not included in our primary liquidity. The Company's secondary liquidity decreased by $1.8 billion to $9.8 billion at December 31, 2025 compared to $11.5 billion at December 31, 2024, due to decreases in available secured borrowing capacity with the FRB of $1.3 billion and available secured borrowing capacity with the FHLB of $500.1 million.

Obtaining new customer deposits, or having existing customers increase their deposit balances with us, are the primary sources of funding for our operations and is one the highest priorities of the Company. See "- Balance Sheet Analysis - Deposits" in Item 7 of this Form 10-K for additional information and detail of our deposits. Additionally, we fund our operations with cash flows from our loan and securities portfolios.

Our deposit balances may decrease if customers withdraw funds from the Bank. In order to address the Bank’s liquidity risk from fluctuating deposit balances, the Bank maintains adequate levels of available liquidity on and off the balance sheet.

We use brokered deposits, the availability of which is uncertain and subject to competitive market forces and regulation, for liquidity management purposes. At December 31, 2025, brokered deposits totaled $2.9 billion, consisting of $0.5 billion of non-maturity brokered accounts and $2.4 billion of brokered time deposits. At December 31, 2024, brokered deposits totaled $2.7 billion, consisting of $0.6 billion of non-maturity brokered accounts and $2.1 billion of brokered time deposits.

Our Liquidity Management Policy establishes guidelines aligned with the Company's Risk Appetite Framework and includes a range of liquidity and funding concentration metrics designed to monitor balance sheet strength, funding stability, and available liquidity resources. These measures incorporate assessments of on-balance sheet liquidity, contingent funding capacity, and the composition of funding sources. As of December 31, 2025, the Bank was in compliance with all applicable liquidity and funding concentration guidelines.

Holding Company Liquidity

Banc of California, Inc. acts as a source of financial strength for the Bank which can also include being a source of liquidity. The primary sources of liquidity for the holding company include dividends from the Bank, intercompany tax payments from the Bank, and Banc of California, Inc.'s ability to raise capital, issue subordinated and senior debt, and secure outside borrowings. Banc of California, Inc.'s ability to obtain funds for the payment of dividends to our stockholders, the repurchase of shares of common stock and preferred stock, and other cash requirements is largely dependent upon the Bank’s earnings. The Bank is subject to restrictions under certain federal and state laws and regulations that limit its ability to transfer funds to the holding company through intercompany loans, advances, or cash dividends. Banc of California, Inc.'s ability to pay dividends is also subject to the restrictions set forth by the FRB, and by certain covenants contained in our subordinated debt. See "Supervision and Regulation - Banc of California, Inc. - Repurchases/Redemptions; Dividends” in Item 1 and "Note 22. Dividend Availability and Regulatory Matters" in Item 8 of this Form 10-K for discussions of factors affecting the availability of dividends and limitations on the ability to declare dividends.

On December 23, 2024, Banc of California, Inc. entered into an unsecured revolving line of credit agreement as a borrower for $50.0 million. On March 17, 2025, the Company executed an amendment to the credit agreement which increased the Company's unsecured revolving line of credit to $100.0 million. As of December 31, 2025 and December 31, 2024, there was no balance outstanding.

70

On March 17, 2025, we announced that our Board of Directors authorized the repurchase of up to $150.0 million of our common stock. On April 23, 2025, we announced an upsize of our stock repurchase program from $150.0 million to $300.0 million and expanded the program to cover both the Company's common stock and depositary shares representing its preferred stock. The repurchase authorization expires in March 2026. During the year ended December 31, 2025, common and common equivalent stock repurchased under the program totaled 13,648,429 shares at a weighted average price per share of $13.59, or $185.5 million in the aggregate. As of December 31, 2025, the Company had $114.5 million remaining under the stock repurchase authorization. The program may be changed, suspended, or discontinued at any time.

At December 31, 2025, Banc of California, Inc. had $159.7 million in cash and cash equivalents, of which a portion is on deposit at the Bank. We believe this amount of cash, along with anticipated future dividends from the Bank, will be sufficient to fund the holding company’s cash flow needs over the next 12 months.

Material Cash Requirements

Our material contractual obligations are primarily for time deposits, subordinated debt, commitments to contribute capital to investments in LIHTC partnerships, SBICs and CRA-related loan pools, and operating lease obligations. At December 31, 2025, time deposits totaled $4.7 billion, of which $4.2 billion was due within one year. Gross subordinated debt totaled $1.0 billion, of which $75.0 million was due within 5 years and the remaining $941.3 million was due after five years. Our liability to contribute capital to LIHTC partnerships was $40.9 million and our commitment to contribute capital to SBICs and CRA-related loan pools was $122.1 million for a combined total of $163.0 million, of which $87.8 million was due within one year. Our operating lease obligation for leased facilities totaled $135.1 million, of which $30.7 million was due within one year. For further information regarding these items, see "Note 10. Deposits," "Note 11. Borrowings and Subordinated Debt," "Note 8. Other Assets," "Note 13. Commitments and Contingencies," and "Note 9. Leases" in Item 8 of this Form 10-K.

We believe that we will be able to meet our contractual obligations as they come due through the maintenance of adequate liquidity levels. We expect to maintain adequate liquidity levels through profitability, loan and lease payoffs, securities repayments and maturities, and continued deposit gathering activities. We also have in place various borrowing mechanisms for both short-term and long-term liquidity needs.

Our obligations also include off-balance sheet arrangements consisting of loan commitments, of which only a portion is expected to be funded, and standby letters of credit. At December 31, 2025, our loan commitments and standby letters of credit were $5.4 billion and $244.9 million, respectively. The loan commitments, a portion of which will eventually result in funded loans, increase our profitability through NII when drawn and unused commitment fees prior to being drawn. We manage our overall liquidity taking into consideration funded and unfunded commitments as a percentage of our liquidity sources. Our liquidity sources, as described in “Liquidity - Liquidity Management” in Item 7 of this Form 10-K, have been and are expected to be sufficient to meet the cash requirements of our lending activities. For further information on loan commitments, see "Note 13. Commitments and Contingencies" in Item 8 of this Form 10-K.

Recent Accounting Pronouncements

See "Note 1. Nature of Operations and Summary of Significant Accounting Policies" in Item 8 of this Form 10-K for information on recent accounting pronouncements and their expected impact, if any, on our consolidated financial statements.