First Citizens BancShares, Inc. (FCNCO)

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data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .

From 10-Q filed 2026-05-08 (period ending 2026-03-31).

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s discussion and analysis (“MD&A”) of earnings and related financial data is presented to assist in understanding the financial condition and results of operations of First Citizens BancShares, Inc. (the “Parent Company” and, when including all of its subsidiaries on a consolidated basis, “we,” “us,” “our,” or “BancShares”) and its banking subsidiary, First-Citizens Bank & Trust Company (“FCB”). Unless otherwise noted, the terms “we,” “us,” “our,” and “BancShares” in this section refer to the consolidated financial position and consolidated results of operations for BancShares.

This MD&A is expected to provide our investors with a view of our financial condition and results of operations from our management’s perspective. This MD&A should be read in conjunction with the unaudited consolidated financial statements and related notes presented within this Quarterly Report on Form 10-Q (this “Form 10-Q”), along with our consolidated financial statements and related MD&A of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). Throughout this MD&A, references to a specific “Note” refer to Notes to the Consolidated Financial Statements (Unaudited) in Item 1. Financial Statements.

Intercompany accounts and transactions have been eliminated. Refer to Note 1—Significant Accounting Policies and Basis of Presentation for further information.

Management uses certain financial measures that are not presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) in its analysis of the financial condition and results of operations of BancShares. Refer to the "Non-GAAP Financial Measurements" section of this MD&A for a reconciliation of these financial measures to the most directly comparable financial measures in accordance with GAAP.

EXECUTIVE OVERVIEW

The Parent Company is a bank holding company (“BHC”) and financial holding company. The Parent Company is regulated by the Board of Governors of the Federal Reserve System (“Federal Reserve”) under the U.S. Bank Holding Company Act of 1956, as amended. The Parent Company is also registered under the BHC laws of North Carolina and is subject to supervision, regulation and examination by the North Carolina Office of the Commissioner of Banks (the “NCCOB”). BancShares conducts its banking operations through its wholly owned subsidiary, FCB, a state-chartered bank organized under the laws of the state of North Carolina. FCB is regulated by the NCCOB. In addition, FCB, as an insured depository institution, is supervised by the Federal Deposit Insurance Corporation (the “FDIC”).

BancShares provides financial services for a wide range of consumer and commercial clients. BancShares offers deposit products, loans, and wealth management and private banking services to consumer clients. BancShares provides lending, leasing, capital markets and other financial and advisory services, to small and middle-market companies across a variety of industries. Additionally, BancShares provides a full suite of financial products and services to private equity firms, venture capital firms, and commercial clients in innovation markets, such as technology, life sciences and healthcare industries. BancShares also provides deposit, cash management and lending to homeowner associations and property management companies and owns a fleet of railcars and locomotives that are leased to railroads and shippers.

BancShares delivers banking products and services to its customers through an extensive branch network and additionally operates a nationwide digital banking platform that delivers deposit products to consumers (the “Direct Bank”). Services offered at most branches include accepting deposits, cashing checks and providing for consumer and commercial cash needs. Consumer and business customers may also conduct banking transactions through various digital channels.

In addition to our banking operations, we provide various investment products and services through FCB’s wholly owned subsidiaries, including First Citizens Investor Services, Inc. (“FCIS”), First Citizens Asset Management, Inc. (“FCAM”), and First Citizens Delaware Trust Company, and a non-bank subsidiary, First Citizens Capital Securities, LLC (“FCCS”). As a registered broker-dealer, FCIS provides a full range of investment products, including annuities, brokerage services and third-party mutual funds. As registered investment advisers, FCIS and FCAM provide investment management services and advice. FCCS is a broker-dealer that also provides underwriting and private placement services. We also have other wholly owned subsidiaries, including SVB Wealth LLC, SVB Asset Management, and First Citizens Institutional Asset Management, LLC, which are active investment advisers.

Refer to Note 18—Segment Information for further information regarding the products and services we provide.

Refer to the 2025 Form 10-K for a discussion of our strategy.

Recent Events

Equity Transactions

Share Repurchase Programs

During the first quarter of 2026, we repurchased 449,845 shares of our Class A common stock for $900 million and paid a dividend of $2.10 per share on our Class A and Class B common stock. Shares repurchased during the first quarter of 2026 represented 4.04% of Class A common stock and 3.71% of total Class A and Class B common stock outstanding at December 31, 2025. From inception of the 2024 share repurchase program (“2024 SRP”) through March 31, 2026, we have repurchased 2,842,948 shares of our Class A common stock for $5.59 billion, representing 21.02% of Class A common stock and 19.57% of total Class A and Class B common stock outstanding as of June 30, 2024.

From April 1, 2026 through April 30, 2026, BancShares repurchased an additional 102,340 shares of Class A common stock for a total of $203 million and had total capacity remaining under the current share repurchase program (the “2025 SRP”) of $1.71 billion as of April 30, 2026.

Refer to Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds for first quarter 2026 monthly repurchase activity of Class A common stock.

Preferred Stock Issuance

On February 5, 2026, the Parent Company issued and sold 6.625% non-cumulative perpetual preferred stock, series E for a total of $400 million. Refer to Note 13—Stockholders' Equity for further information, including depositary shares and liquidation preference.

Debt Transactions

Prepayments of the Purchase Money Note

In connection with the SVBB Acquisition (as defined in Note 2—Business Combinations), FCB issued a five-year $36.07 billion note payable to the FDIC, maturing March 27, 2028 (the “Purchase Money Note”). The Purchase Money Note had a carrying value of $30.91 billion and $33.39 billion at March 31, 2026 and December 31, 2025, respectively. During the current quarter, we prepaid $2.50 billion of the Purchase Money Note which resulted in an $8 million loss on extinguishment of debt. The outstanding balance of the Purchase Money Note declined from $35.85 billion at September 30, 2025 to $30.91 billion at March 31, 2026. We will continue to monitor the interest rate environment, FCB’s collateral position for the Purchase Money Note, and FCB’s liquidity position to determine the timing and magnitude of further prepayments as discussed below in the Funding, Liquidity and Capital Overview. We expect monthly prepayments to be at least $500 million throughout 2026. In April 2026, we made an additional prepayment of $500 million.

Debt Issuance

On March 3, 2026, the Parent Company issued and sold $500 million aggregate principal amount of its 4.869% Fixed-to-Floating Rate Senior Notes due in 2032 in a public offering (the “Current Quarter Debt Issuance”).

Pending Branch Acquisition

On October 16, 2025, FCB announced the BMO Branch Acquisition (as defined in Note 2—Business Combinations) to acquire 138 branches from BMO Bank N.A.located throughout the Midwest, Great Plains and West regions of the U.S. In connection with the BMO Branch Acquisition, FCB expects to assume approximately $5.3 billion in deposit liabilities and acquire approximately $1.1 billion in loans. We expect the transaction to close in the second half of 2026, subject to customary closing terms and conditions and the receipt of remaining regulatory approvals.

Commercial Banking Brand Alignment

On April 23, 2026, FCB announced plans to expand its commercial banking capabilities and to align brand names later this year. In the fourth quarter of 2026, Silicon Valley Bank (“SVB”), a division of FCB, will rebrand as First Citizens Innovation Banking and First Citizens Fund Banking, and CIT Commercial Services and the Silicon Valley Bank Wine division will rebrand as FCB.

Recent Economic, Industry and Regulatory Developments

Economic conditions reflected heightened uncertainty in the first quarter of 2026, as inflationary pressures, due in part to global energy constraints related to the conflicts in the Middle East, contributed to market volatility. We continue to monitor these developments and the broader macroeconomic environment; however, the ultimate effects remain uncertain and dependent on future events.

Entering 2026, the benchmark federal funds range was between 3.50% - 3.75%. During the January, March, and April 2026 Federal Open Market Committee meetings, the benchmark federal funds rate was left unchanged.

The U.S. government announced changes to its trade policies in 2025 and significantly increased tariffs on certain imports under emergency authorities, including the International Emergency Economic Powers Act (the “IEEPA”). In February 2026, the Supreme Court ruled that the IEEPA does not authorize the President to impose tariffs. The current tariff environment remains dynamic and uncertain, including with respect to refunds of tariffs paid under the IEEPA and replacement measures under other legal authorities. We continue to closely monitor both the impact and potential impact of such measures on our business, our customers and on overall economic conditions in the United States.

On March 19, 2026, federal banking regulators issued revised notices of proposed rulemaking to implement the final components of the Basel III accords (the “Basel III proposals”). The proposals include, among other things, a revised standardized approach to calculating risk-weighted assets applicable to Category III and Category IV banking organizations like us, which the Federal Reserve expects to decrease aggregate Common Equity Tier 1 (“CET1”) risk-based capital requirements. Additionally, the revised proposals would eliminate the requirement to deduct mortgage servicing assets from CET1 capital and instead assign a 250% risk weight. We will continue to monitor further developments regarding the proposals and assess potential impacts to our regulatory capital requirements, including enhanced capital flexibility.

Financial Performance Summary

The following tables in this MD&A include financial data for the three months ended March 31, 2026 (the “current quarter”), December 31, 2025 (the “linked quarter”) and March 31, 2025 (the “prior year quarter”). In accordance with Item 303(c) of Regulation S-K, we focus our discussion of quarterly results of operations on changes compared to the linked quarter for the narrative discussion and analysis as we believe this provides investors and other users of our data with the most relevant information. We also include commentary comparing current quarter to prior year quarter.

We focus the discussion of our financial position by comparing balances as of March 31, 2026 to December 31, 2025. Percent changes within this MD&A are based on unrounded amounts and may not recalculate precisely using the displayed rounded balances.

Table 1
Selected Financial Data

dollars in millions, except share data	Three Months Ended
	March 31, 2026			December 31, 2025			March 31, 2025
Results of Operations:
Interest income	$	2,786		$	2,940		$	2,895
Interest expense	1,165			1,218			1,232
Net interest income	1,621			1,722			1,663
Provision for credit losses	72			54			154
Net interest income after provision for credit losses	1,549			1,668			1,509
Noninterest income	692			715			635
Noninterest expense	1,536			1,572			1,493
Income before income taxes	705			811			651
Income tax expense	171			231			168
Net income	534			580			483
Preferred stock dividends	26			14			15
Net income available to common stockholders	$	508		$	566		$	468
Per Common Share Information:
Weighted average common shares outstanding (diluted)	11,924,899			12,363,028			13,575,231
Diluted earnings per common share	$	42.63		$	45.81		$	34.47
Key Performance Metrics:
Return on average assets	0.93		%	0.99		%	0.87		%
Net interest margin (1)	3.09			3.20			3.26
Net interest margin, excluding purchase accounting accretion or amortization (1) (2)	3.01			3.11			3.12
Select Average Balances:
Investment securities	$	41,757		$	44,306		$	43,555
Total loans and leases (3)	149,890			147,047			140,882
Operating lease equipment, net	9,660			9,495			9,350
Total assets	233,181			233,432			225,449
Total deposits	165,927			163,191			156,378
Total borrowings	35,334			38,196			37,398
Total stockholders’ equity	22,487			22,197			22,457
Select Ending Balances:
Investment securities	$	42,986		$	41,564		$	44,319
Total loans and leases	148,692			147,930			141,358
Operating lease equipment, net	9,685			9,621			9,371
Total assets	235,959			229,698			228,822
Total deposits	170,842			161,578			159,325
Total borrowings	33,962			36,008			38,406
Total stockholders’ equity	22,048			22,238			22,295
Loan to deposit ratio	87.04		%	91.55		%	88.72		%
Noninterest-bearing deposits to total deposits	25.52			25.16			25.59
Capital Ratios:
Total risk-based capital	13.51		%	13.71		%	15.23		%
Tier 1 risk-based capital	11.79			11.91			13.35
Common equity Tier 1	10.83			11.15			12.81
Tier 1 leverage	9.30			9.29			9.75
Select Asset Quality Metrics:
Ratio of nonaccrual loans to total loans	0.96		%	0.88		%	0.85		%
Allowance for loan and lease losses to loans ratio	1.05			1.06			1.19

(1) Calculated net of average credit balances of factoring clients to appropriately reflect the interest-earning portion of factoring receivables.

(2) Net interest margin (“NIM”), excluding purchase accounting accretion or amortization (“PAA”), is a non-GAAP financial measure. Refer to the “Net Interest Income (“NII”), NIM, and Interest Income on Loans and Leases, Excluding PAA” discussion in the “Non-GAAP Financial Measurements” section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.

(3) Average loan balances include loans held for sale and nonaccrual loans.

Financial highlights are summarized below. Further details are discussed in the “Results of Operations” and “Balance Sheet Analysis” sections of this MD&A.

Income Statement Highlights (Current Quarter Compared to Linked Quarter)

•Net income for the current quarter was $534 million, a decrease of $46 million or 8% from $580 million for the linked quarter. Net income available to common stockholders for the current quarter was $508 million, a decrease of $58 million or 10% from $566 million for the linked quarter. Earnings per basic and diluted common share for the current quarter was $42.63, a decrease from $45.81 for the linked quarter. The decreases in net income and net income available to common stockholders were due to lower NII and noninterest income and higher provision for credit losses, partially offset by lower noninterest expense and lower income tax expense, as further discussed below.

•NII for the current quarter was $1.62 billion, a decrease of $101 million or 6% from $1.72 billion for the linked quarter. NIM was 3.09% for the current quarter, a decrease of 11 basis points (“bps”) from 3.20% for the linked quarter. The decreases in NII and NIM were mainly due to lower yields on loans, lower average balances and yields on investment securities and interest-earning deposits at banks, and a higher average balance of interest-bearing deposits, partially offset by the impacts of a higher average balance of loans, lower rate paid on interest-bearing deposits, and a decline in average borrowings largely resulting from prepayments of the Purchase Money Note.

◦PAA for the current quarter was $39 million, a decrease of $10 million from $49 million for the linked quarter. NIM, excluding PAA(1) was 3.01% for the current quarter, a decrease of 10 bps from 3.11% for the linked quarter.

•Noninterest income for the current quarter was $692 million, a decrease of $23 million or 3% from $715 million for the linked quarter, largely due to a decrease in other noninterest income of $15 million, mainly attributable to the linked quarter gain on tax credit investments, an unfavorable change of $9 million in the fair value of marketable equity securities, along with declines of $3 million each in factoring commissions, gain on sale of leasing equipment, and gain on sale of investment securities, partially offset by increases of $7 million in deposit fees and service charges and $5 million in lending-related fees.

•Noninterest expense for the current quarter was $1.54 billion, a decrease of $36 million or 2% from $1.57 billion for the linked quarter, mainly due to decreases in acquisition-related expenses of $28 million, other noninterest expense of $16 million and marketing expense of $15 million, partially offset by an increase in personnel cost of $20 million.

•Provision for credit losses for the current quarter was $72 million, an increase of $18 million or 33% from $54 million for the linked quarter. The current quarter provision for credit losses primarily included a provision for loan and lease losses of $103 million, partially offset by a benefit for off-balance sheet credit exposure of $32 million.

◦The provision for loan and lease losses for the current quarter was $103 million compared to $57 million for the linked quarter. The $46 million increase in the provision for loan and lease losses was mainly attributable to the impact of an $8 million reserve release in the current quarter compared to an $86 million reserve release in the linked quarter, partially offset by a decline of $32 million in net charge-offs in the current quarter. The $8 million allowance for loan and lease losses (“ALLL”) reserve release is discussed below in the Balance Sheet Highlights.

◦The benefit for off-balance sheet credit exposure for the current quarter was $32 million compared to $5 million for the linked quarter, an increase of $27 million, mainly due to changes in the macroeconomic scenarios and trends in the volume of unfunded commitments.

•Income tax expense for the current quarter was $171 million, a decrease of $60 million from $231 million for the linked quarter, largely due to return to provision adjustments reflected in the linked quarter.

•Return on average assets for the current quarter was 0.93%, a decrease of 6 bps from 0.99% for the linked quarter due to the decrease in net income explained above.

(1) NIM, excluding PAA is a non-GAAP measure. Refer to the “NII, NIM, and Interest Income on Loans and Leases, Excluding PAA” discussion in the “Non-GAAP Financial Measurements” section of this MD&A for further discussion.

Income Statement Highlights (Current Quarter Compared to Prior Year Quarter)

•Net income for the current quarter was $534 million, an increase of $51 million or 11% from $483 million for the prior year quarter. Net income available to common stockholders for the current quarter was $508 million, an increase of $40 million or 9% from $468 million for the prior year quarter. Earnings per basic and diluted common share for the current quarter was $42.63, an increase from $34.47 for the prior year quarter. The increases in net income and net income available to common stockholders were due to lower provision for credit losses and higher noninterest income, partially offset by higher noninterest expense and lower NII, as further discussed below.

•NII for the current quarter was $1.62 billion, a decrease of $42 million or 3% from $1.66 billion for the prior year quarter. NIM was 3.09% for the current quarter and 3.26% for the prior year quarter. The decreases in NII and NIM were mainly due to lower yields on loans, lower yields and average balances of interest-earning deposits at banks and investment securities, lower PAA, a higher average balance of interest-bearing deposits, and a modest increase in the rate paid on subordinated debt, partially offset by the impacts of a higher average balance of loans and a decline in the rate paid on interest-bearing deposits.

◦PAA for the current quarter was $39 million, a decrease of $36 million from $75 million for the prior year quarter. NIM, excluding PAA(1) was 3.01% for the current quarter, a decrease of 11 bps from 3.12% for the prior year quarter.

•Noninterest income for the current quarter was $692 million, an increase of $57 million or 9% from $635 million for the prior year quarter, largely due to increases in other noninterest income of $24 million, deposit fees and service charges of $12 million, rental income on operating lease equipment of $11 million, along with a favorable change of $8 million in the fair value of marketable equity securities, and an increase of $6 million in the gain on sale of leasing equipment.

•Noninterest expense for the current quarter was $1.54 billion, an increase of $43 million or 3% from $1.49 billion for the prior year quarter, mainly due to increases in personnel cost of $51 million, third-party processing fees of $30 million, and maintenance and other operating lease expenses of $7 million, partially offset by decreases in acquisition-related expenses of $37 million and other noninterest expense of $8 million.

•Provision for credit losses for the current quarter was $72 million, a decrease of $82 million or 53% from $154 million for the prior year quarter, primarily consisting of the following:

◦The provision for loan and lease losses for the current quarter was $103 million compared to $148 million for the prior year quarter. The $45 million decrease in the provision for loan and lease losses was mainly attributable to a decrease in net charge-offs of $33 million and a $12 million decline in the reserve release. In the current quarter, the reserve release was $8 million, compared to a $4 million reserve build in the prior year quarter. The $8 million ALLL reserve release for the current quarter is discussed below in the Balance Sheet Highlights.

◦The benefit for off-balance sheet credit exposure for the current quarter was $32 million compared to a provision for the prior year quarter of $6 million, resulting in a decrease in provision of $38 million, mainly due to changes in the macroeconomic scenarios and trends in the volume of unfunded commitments.

•Return on average assets for the current quarter was 0.93%, an increase of 6 bps from 0.87% for the prior year quarter due to the increase in net income explained above.

Balance Sheet Highlights

•Loans and leases at March 31, 2026 were $148.69 billion, an increase of $762 million or 1% from $147.93 billion at December 31, 2025. Commercial Bank segment loan growth of $1.35 billion, mainly concentrated in Global Fund Banking, was partially offset by a decrease in General Bank segment loans of $591 million, primarily due to the transfer of $364 million Small Business Administration (“SBA”) loans to held for sale in March 2026.

•Investment securities at March 31, 2026 were $42.99 billion, an increase of $1.42 billion or 3% from $41.56 billion at December 31, 2025, as purchases of short duration available for sale U.S. treasury and agency mortgage-backed securities were partially offset by maturities and paydowns.

•Deposits at March 31, 2026 were $170.84 billion, an increase of $9.26 billion or 6% from $161.58 billion at December 31, 2025. As further discussed and shown in Table 2 below, the increase from December 31, 2025 was attributable to deposit growth in the Commercial Bank segment of $5.66 billion, Corporate of $2.49 billion, and the General Bank segment of $1.12 billion. Noninterest-bearing deposits grew by $2.95 billion or 7% compared to December 31, 2025, and represented 25.5% of total deposits as of March 31, 2026, compared to 25.2% at December 31, 2025.

•Borrowings at March 31, 2026 were $33.96 billion, a decrease of $2.05 billion or 6% from $36.01 billion at December 31, 2025. The decrease was primarily due to prepayments of $2.50 billion on the Purchase Money Note during the current quarter, partially offset by the $500 million Current Quarter Debt Issuance.

•The ALLL was $1.56 billion at March 31, 2026, compared to $1.57 billion at December 31, 2025, resulting in an ALLL reserve release of $8 million for the current quarter, largely due to loan growth concentrated in capital call lines, which have a significantly lower loss rate relative to our other loan portfolios, and changes in the macroeconomic scenarios, partially offset by higher reserves for individually evaluated loans. The ALLL as a percentage of loans was 1.05% at March 31, 2026, a decrease of 1 bp from 1.06% at December 31, 2025.

•Interest-earning deposits at banks were $23.19 billion at March 31, 2026, an increase of $3.39 billion compared to $19.80 billion at December 31, 2025, a function of the balance sheet trends discussed above.

•At March 31, 2026, BancShares remained well capitalized with a total risk-based capital ratio of 13.51%, a Tier 1 risk-based capital ratio of 11.79%, a CET1 ratio of 10.83% and a Tier 1 leverage ratio of 9.30%.

Funding, Liquidity and Capital Overview

Deposit Composition and Trends

We fund our business primarily through deposits. Deposits represented 83% of total funding at March 31, 2026.

Table 2
Deposit Trends

dollars in millions	Deposit Balance
	March 31, 2026		December 31, 2025
General Bank segment	$	75,914	$	74,796
Commercial Bank segment	47,191		41,532
Corporate and Rail segment	47,737		45,250
Total deposits	$	170,842	$	161,578

Deposit trends for the segments and Corporate at March 31, 2026 compared to December 31, 2025 are discussed below:

•Commercial Bank segment deposit growth of $5.66 billion was mainly in Global Fund Banking and Technology and Healthcare Banking. A portion of this deposit growth stems from large short-term deposits which we expect to outflow or move off-balance sheet shortly after March 31, 2026. Most of the growth was in noninterest-bearing demand and money-market deposits.

•Corporate deposit growth of $2.49 billion was primarily due to brokered and Direct Bank deposit increases of $1.83 billion and $606 million, respectively. We utilized brokered deposits more prevalently in the current quarter as rates were favorable relative to Direct Bank deposits. We will continue to monitor the rate environments for brokered and Direct Bank deposits to determine the target growth for these deposit channels.

•General Bank segment deposit growth of $1.12 billion was primarily concentrated in our Branch Network and Community Association Banking (“CAB”). Deposit growth was mostly in money market and interest checking.

Total uninsured deposits were $65.44 billion or 38% of total deposits at March 31, 2026 and $61.81 billion or 38% at December 31, 2025.

Refer to the “Balance Sheet Analysis—Interest-bearing Liabilities—Deposits” section of this MD&A for further discussion of deposits.

Liquidity Position

We strive to maintain a strong liquidity position and our risk appetite for liquidity is low. At March 31, 2026, we had $60.72 billion in high-quality liquid assets consisting of $22.14 billion in cash and interest-earning deposits at banks (primarily held at the Federal Reserve Bank (“FRB”)) and $38.58 billion in high-quality liquid securities (“HQLS”), mainly comprised of U.S. agency mortgage-backed and U.S. Treasury investment securities. Additionally, we have unused borrowing capacity with the Federal Home Loan Bank (“FHLB”) and FRB of $17.35 billion and $12.94 billion, respectively. Refer to the “Risk Management—Liquidity Risk” section of this MD&A for further discussion.

In connection with the SVBB Acquisition, FCB issued a five-year, 3.50% fixed rate Purchase Money Note, which had a carrying value of $30.91 billion at March 31, 2026. While scheduled principal payments are not required until maturity in March 2028, FCB may voluntarily prepay principal without a premium or penalty. FCB prepaid $2.50 billion of the Purchase Money Note during the current quarter and previously prepaid $2.49 billion in December 2025, which reduced the outstanding balance from $35.85 billion at September 30, 2025 to $30.91 billion at March 31, 2026. Additionally, we prepaid $500 million in April 2026. We will continue to monitor the interest rate environment, FCB’s collateral position for the Purchase Money Note, and FCB’s liquidity position to determine the timing and magnitude of further voluntary prepayments. We expect monthly prepayments to be at least $500 million throughout 2026. Potential sources that could fund voluntary prepayments or the amount due at maturity include excess liquidity (primarily comprised of interest-earning deposits at banks and proceeds from maturities and paydowns of investment securities), deposit growth including brokered deposits, loan sales or securitizations, FHLB advances, and issuance of perpetual preferred stock, unsecured debt or other borrowings. At the time of any further voluntary prepayment or maturity, the interest rates for the potential interest-bearing sources of prepayment could be higher than the 3.50% rate.

Investment Securities Duration

At March 31, 2026, our investment securities portfolio primarily consisted of debt securities available for sale and held to maturity as summarized below. We manage debt security market risk by monitoring the average duration of our investment securities portfolio. The duration of our investment securities was 2.6 years at March 31, 2026. The investment securities available for sale portfolio had an average duration of 2.2 years and the held to maturity portfolio had an average duration of 4.0 years. Refer to the “Balance Sheet Analysis—Interest-earning Assets—Investment Securities” section of this MD&A and Note 3—Investment Securities for further information.

Table 3
Investment Securities Summary

dollars in millions	March 31, 2026
	Composition (1)		Amortized Cost		Fair Value		Fair Value to Amortized Cost
Total investment securities available for sale	79.7	%	$	33,663	$	33,314	99.0	%
Total investment securities held to maturity	20.0		9,542		8,360		87.6
Investment in marketable equity securities	0.3		83		130		156.9
Total investment securities	100	%	$	43,288	$	41,804
(1) Calculated as a percentage of the total fair value of investment securities.

Capital Position

At March 31, 2026, all regulatory capital ratios for BancShares and FCB exceeded the prompt corrective action (“PCA”) thresholds, well capitalized thresholds, and Basel III requirements established by the federal banking agencies as further discussed in the “Capital” section of this MD&A.

RESULTS OF OPERATIONS

Net Interest Income and Net Interest Margin

NII is affected by changes in interest rates and changes in the amount and composition of interest-earning assets and interest-bearing liabilities. Interest income and expense and the respective yields and rates include amortization of premiums, accretion of discounts, and impacts from hedging activities.

The following tables present the average balances of interest-earning assets and interest-bearing liabilities with the associated yields and rates, interest income and expense, and changes therein due to changes in volume and yields or rates. Changes in interest income and expense due to changes in (i) volume (average balances of interest-earning assets and interest-bearing liabilities) and (ii) yields or rates are based on the following:

•The change in NII due to volume is calculated as the change in average balance multiplied by the yield or rate from the prior period.

•The change in NII due to yield or rate is calculated as the change in yield or rate multiplied by the average balance from the prior period.

•The change in NII due to changes in both volume and yield or rate (i.e., portfolio mix) is calculated as the change in rate multiplied by the change in volume. This component is allocated between the changes due to volume and yield or rate based on the ratio each component bears to the absolute dollar amounts of their total.

•Tax equivalent NII was not materially different from NII, therefore we present NII in our analysis.

Table 4
Average Balances, Yields and Rates, NII, and NIM (Current Quarter Compared to Linked Quarter)

dollars in millions	Average Balance								Yield / Rate					Interest Income / Expense
	Three Months Ended				Increase (Decrease)				Three Months Ended					Three Months Ended						Increase (Decrease) due to:
	Mar 31, 2026		Dec 31, 2025						Mar 31, 2026		Dec 31, 2025		Increase (decrease) bps	Mar 31, 2026		Dec 31, 2025		Increase (Decrease)		Volume(1)		Yield /Rate(1)
Loans and leases (1) (2)	$	148,666	$	145,689	$	2,977	2.0	%	6.01	%	6.24	%	(23)	$	2,206	$	2,290	$	(84)	$	30	$	(114)
Investment securities	41,757		44,306		(2,549)		(5.8)		3.67		3.80		(13)	382		421		(39)		(25)		(14)
Securities purchased under agreements to resell

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Held by

holders ( registered funds via N-PORT, institutional investors via 13F). Showing top by dollar value.

Holder	Type	ETF	MF	Position ($)	% of holder	Δ % of holder	Holder AUM

Recent insider activity

Last 90 days. Open-market trades (purchases & sales) by directors, officers, and 10%+ owners. 8 transactions across 2 insiders. Net: +852 shares, $404,231.

Date	Insider	Role	Action	Shares	Price	Value
2026-05-12	HOLDING FRANK B JR indirect	Chairman and CEO	Buy	+5,940	$1,726.82	$10,257,311
2026-05-12	HOLDING FRANK B JR indirect	Chairman and CEO	Sell	-5,346	$1,918.69	-$10,257,317
2026-03-19	HOLDING FRANK B JR indirect	Chairman and CEO	Buy	+4	$1,550.00	$6,200
2026-03-17	HOLDING FRANK B JR indirect	Chairman and CEO	Buy	+2	$1,550.00	$3,100
2026-03-19	HOLDING FRANK B JR	Chairman and CEO	Buy	+92	$1,550.00	$142,600
2026-03-13	HOLDING FRANK B JR indirect	Chairman and CEO	Buy	+15	$1,550.00	$23,250
2026-03-13	HOLDING FRANK B JR	Chairman and CEO	Buy	+134	$1,550.00	$207,700
2026-03-05	Snow Ralph Mattox III	Director	Buy	+11	$1,944.22	$21,386

Source: SEC Form 4 filings.

Next expected filings

~2026-08-08 10-Q expected by 2026-08-10 (in 75 days)
~2026-11-07 10-Q expected by 2026-11-09 (in 166 days)
~2027-02-23 10-K expected by 2027-02-28 (in 274 days)
~2027-05-08 10-Q expected by 2027-05-10 (in 348 days)

Predicted from historical filing cadence; not an SEC commitment.

Recent SEC filings

2026-05-08 10-Q Quarterly Report
2026-04-23 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
2026-03-03 8-K Other Events; Financial Statements and Exhibits
2026-02-24 10-K Annual Report
2026-02-05 8-K Material Modification to Rights; Bylaws/Articles Amended; Other Events; Financial Statements and Exhibits
2026-01-23 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
2026-01-14 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
2025-11-18 8-K Material Modification to Rights; Bylaws/Articles Amended; Other Events; Financial Statements and Exhibits
2025-11-07 10-Q Quarterly Report
2025-10-23 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
2025-10-16 8-K Regulation FD Disclosure; Other Events; Financial Statements and Exhibits
2025-09-05 8-K Other Events; Financial Statements and Exhibits
2025-08-08 10-Q Quarterly Report
2025-07-25 8-K Earnings Release; Regulation FD Disclosure; Other Events; Financial Statements and Exhibits
2025-06-26 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits

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