FIRST HAWAIIAN, INC.

Previous wording

A number of important factors could cause our actual results to differ materially from those indicated in these forward-looking statements, including the following: the geographic concentration of our business, current and future market and economic conditions generally or in Hawaii, Guam and Saipan in particular, including inflationary pressures and interest rate environment; our dependence on the real estate markets in which we operate; concentrated exposures to certain asset classes and individual obligors; the effect of changes in interest rates on our business, including our net interest income, net interest margin, the fair value of our investment securities, and our mortgage loan originations, mortgage servicing rights and mortgage loans held for sale; the future value of the investment securities that we own; the possibility of a deterioration in credit quality in our portfolio; the possibility we might underestimate the credit losses inherent in our loan and lease portfolio; our ability to attract and retain customer deposits; our inability to receive dividends from our bank, pay dividends to our common stockholders and satisfy obligations as they become due; our access to sources of liquidity and capital to address our liquidity needs; our ability to attract and retain skilled employees or changes in our management personnel; our ability to maintain our Bank's reputation; the failure to properly use and protect our customer and employee information and data; the possibility of employee misconduct or mistakes; the actual or perceived soundness of other financial institutions; the effectiveness of our risk management and internal disclosure controls and procedures; our ability to keep pace with technological changes; any failure or interruption of our information and communications systems; our ability to effectively compete with other financial services companies and the effects of competition in the financial services industry on our business; our ability to identify and address cybersecurity risks; the occurrence of fraudulent activity or effect of a material breach of, or disruption to, the security of any of our or our vendors’ systems; our ability to successfully develop and commercialize new or enhanced products and services; changes in the demand for our products and services; risks associated with the sale of loans and with our use of appraisals in valuing and monitoring loans; the possibility that actual results may differ from estimates and forecasts; fluctuations in the fair value of our assets and liabilities and off-balance sheet exposures; effects of the failure of any component of our business infrastructure provided by a third party; the potential for environmental liability; the risk of being subject to litigation and the outcome thereof; the impact of, and changes in, applicable laws, regulations and accounting standards and policies; possible changes in, or effects of changes of, trade, monetary and fiscal policies of,…

Excerpt shortened here; the source contains the full paragraph.

Current wording

A number of important factors could cause our actual results to differ materially from those indicated in these forward-looking statements, including the following: the geographic concentration of our business, current and future market and economic conditions generally or in Hawaii, Guam and Saipan in particular, including inflationary pressures and interest rate environment; our dependence on the real estate markets in which we operate; concentrated exposures to certain asset classes and individual obligors; the effect of changes in interest rates on our business, including our net interest income, net interest margin, the fair value of our investment securities, and our mortgage loan originations, mortgage servicing rights and mortgage loans held for sale; the future value of the investment securities that we own; the possibility of a deterioration in credit quality in our portfolio; the possibility we might underestimate the credit losses inherent in our loan and lease portfolio; our ability to attract and retain customer deposits; our inability to receive dividends from our bank, pay dividends to our common stockholders and satisfy obligations as they become due; our access to sources of liquidity and capital to address our liquidity needs; our ability to attract and retain skilled employees or changes in our management personnel; our ability to maintain our Bank's reputation; the failure to properly use and protect our customer and employee information and data; the possibility of employee misconduct or mistakes; the actual or perceived soundness of other financial institutions; the effectiveness of our risk management and internal disclosure controls and procedures; our ability to keep pace with technological changes; any failure or interruption of our information and communications systems; our ability to effectively compete with other financial services companies and the effects of competition in the financial services industry on our business; our ability to identify and address cybersecurity risks; the occurrence of fraudulent activity or effect of a material breach of, or disruption to, the security of any of our or our vendors’ systems; the development and use of AI; our ability to successfully develop and commercialize new or enhanced products and services; changes in the demand for our products and services; risks associated with the sale of loans and with our use of appraisals in valuing and monitoring loans; the possibility that actual results may differ from estimates and forecasts; fluctuations in the fair value of our assets and liabilities and off-balance sheet exposures; the effects of the failure of any component of our business infrastructure provided by a third party; the potential for environmental liability; the risk of being subject to litigation and the outcome thereof; the impact of, and changes in, applicable laws, regulations and accounting standards and policies; possible changes in trade, monetary and fiscal poli…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

The foregoing factors should not be considered an exhaustive list and should be read together with the risk factors and other cautionary statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 and Quarterly Report on Form 10-Q for the quarters ended March 31, 2025 and June 30, 2025. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by applicable law.

Current wording

The foregoing factors should not be considered an exhaustive list and should be read together with the risk factors and other cautionary statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by applicable law.

Previous wording

FHI is a bank holding company, which owns 100% of the outstanding common stock of FHB, its only direct, wholly owned subsidiary. FHB was founded in 1858 under the name Bishop & Company and was the first successful banking partnership in the Kingdom of Hawaii and the second oldest bank formed west of the Mississippi River. The Bank operates its business through three operating segments: Retail Banking, Commercial Banking and Treasury and Other.

Current wording

FHI is a bank holding company, which owns 100% of the outstanding common stock of FHB, its only direct, wholly owned subsidiary. FHB was founded in 1858 under the name Bishop & Company and was the first successful banking partnership in the Kingdom of Hawaii and the second oldest bank formed west of the Mississippi River. The Bank operates its business through two operating segments: Retail Banking and Commercial Banking. All other activities, including Treasury, are reported in Corporate/Other.

Previous wording

Hawaii’s economy as a whole continued to experience mixed economic conditions during the quarter ended September 30, 2025. Although the economy remains resilient, the State continues to endure high consumer prices and housing affordability challenges, which are expected to continue with the gradual pass-through of tariffs. According to the State of Hawaii Department of Business, Economic Development and Tourism, the statewide seasonally adjusted unemployment rate was 2.7% at August 31, 2025, compared to the national seasonally adjusted unemployment rate of 4.3%.

Current wording

Despite these challenges, according to the State of Hawaii Department of Business, Economic Development and Tourism, the statewide seasonally adjusted unemployment rate was 2.3% at February 28, 2026, which is lower than the national seasonally adjusted unemployment rate of 4.4%.

Previous wording

Domestic visitor arrivals for the state remain stable, with the average daily domestic passenger counts for the first nine months of 2025 being relatively similar to the average daily domestic passenger counts during the first nine months of 2024, according to the Hawaii Tourism Authority. More generally, Hawaii’s economy depends significantly on conditions of the U.S. economy and key international economies, particularly Japan. International visitor arrivals have not yet recovered to pre-pandemic arrival levels. As such, the Hawaii economy remains more reliant on the U.S. mainland market than pre-pandemic periods.

Current wording

Tourism also remains stable, with the average daily domestic passenger counts for the three months ended March 31, 2026 six percent higher than the average daily domestic passenger counts during the three months ended March 31, 2025, according to the Hawaii Tourism Authority. Hawaii’s economy depends significantly on conditions of the U.S. economy and key international economies, particularly Japan, and the broader demand for travel of these key markets. International visitor arrivals have not yet recovered to pre-pandemic arrival levels and demand for tourism could be negatively impacted by increasing fuel prices.

Previous wording

The local Oahu housing market continues to experience some softening as compared to previous years primarily due to increased interest rates. According to the Honolulu Board of Realtors, the volume of single-family home sales increased by 0.8%, while condominium sales decreased by 3.0%, in each case when comparing the first nine months of 2025 with the same period in 2024. The median price of a single-family home sold on Oahu in the first nine months of 2025 was $1,145,000, an increase of 4.1% from the same period in 2024. The median price of a condominium sold on Oahu in the first nine months of 2025 was $505,000, a decrease of 1.0% from the same period in 2024. As of September 30, 2025, months of inventory of single-family homes and condominiums on Oahu were approximately 3.4 and 6.4 months, respectively.

Current wording

The local Oahu housing market, particularly condominiums, continues to experience some softening as compared to previous years primarily due to continued high interest rates and prices. According to the Honolulu Board of Realtors, the volume of single-family home sales increased by 10.9%, while condominium sales decreased by 3.6%, in each case when comparing the three months ended March 31, 2026 with the same period in 2025. The median price of a single-family home sold on Oahu during the first three months of 2026 was $1,180,000, an increase of 2.6% compared to the same period in 2025. The median price of a condominium sold on Oahu during the first three months of 2026 was $510,000, equivalent to the median price during the same period in 2025. As of March 31, 2026, months of inventory of single-family homes and condominiums on Oahu were approximately 2.8 and 6.3 months, respectively, as compared to 3.3 and 6.2 months, respectively, as of March 31, 2025.

Previous wording

Net income was $206.3 million for the nine months ended September 30, 2025, an increase of $28.7 million or 16% as compared to the same period in 2024. Basic earnings per share was $1.65 for the nine months ended September 30, 2025, an increase of $0.26 or 19% as compared to the same period in 2024. Diluted earnings per share was $1.64 for the nine months ended September 30, 2025, an increase of $0.26 or 19% as compared to the same period in 2024. The increase in net income was primarily due to a $29.5 million increase in net interest income, a $5.1 million increase in noninterest income and a $2.8 million decrease in noninterest expense. This was partially offset by a $4.6 million increase in the provision for income taxes and a $4.0 million increase in the Provision.

Current wording

Net income was $67.8 million for the three months ended March 31, 2026, an increase of $8.5 million or 14% as compared to the same period in 2025. Basic earnings per share was $0.55 for the three months ended March 31, 2026, an increase of $0.08 or 17% as compared to the same period in 2025. Diluted earnings per share was $0.55 for the three months ended March 31, 2026, an increase of $0.08 or 17% as compared to the same period in 2025. The increase in net income was primarily due to a $7.0 million increase in net interest income, a $5.5 million decrease in the provision for credit losses (the “Provision”) and a $2.3 million increase in noninterest income. This was partially offset by a $4.3 million increase in noninterest expense and a $2.0 million increase in the provision for income taxes.

Previous wording

Our return on average total assets was 1.22% for the three months ended September 30, 2025, an increase of 20 basis points from the same period in 2024, and our return on average total stockholders’ equity was 10.81% for the three months ended September 30, 2025, an increase of 136 basis points from the same period in 2024. Our return on average tangible assets was 1.27% for the three months ended September 30, 2025, an increase of 21 basis points from the same period in 2024, and our return on average tangible stockholders’ equity was 17.08% for the three months ended September 30, 2025, an increase of 173 basis points from the same period in 2024. Our efficiency ratio was 55.29% for the three months ended September 30, 2025 compared to 59.77% for the same period in 2024.

Current wording

Our return on average total assets was 1.14% for the three months ended March 31, 2026, an increase of 13 basis points from the same period in 2025, and our return on average total stockholders’ equity was 9.86% for the three months ended March 31, 2026, an increase of 77 basis points for the same period in 2025. Our return on average tangible assets was 1.19% for the three months ended March 31, 2026, an increase of 14 basis points from the same period in 2025, and our return on average tangible stockholders’ equity was 15.33% for the three months ended March 31, 2026, an increase of 74 basis points from the same period in 2025. Our efficiency ratio was 57.77% for the three months ended March 31, 2026 compared to 58.22% for the same period in 2025.

Previous wording

For the nine months ended September 30, 2025, we continued to maintain high levels of liquidity and adequate reserves for credit losses. We also remained well-capitalized. Common Equity Tier 1 (“CET1”) was 13.24% as of September 30, 2025, an increase of 44 basis points from December 31, 2024. The increase in CET1 was primarily due to earnings for the nine months ended September 30, 2025 and a decrease in risk-weighted assets, partially offset by the dividends declared and paid to the Company’s stockholders and common stock repurchased.

Current wording

For the three months ended March 31, 2026, we continued to maintain high levels of liquidity and adequate reserves for credit losses. We also remained well-capitalized. Common Equity Tier 1 (“CET1”) was 13.12% as of March 31, 2026, a decrease of 5 basis points from December 31, 2025. The decrease in CET1 was primarily due to common stock repurchased and dividends declared and paid to the Company’s stockholders and an increase in risk-weighted assets, partially offset by earnings for the three months ended March 31, 2026.

Previous wording

Net interest income, on a fully taxable-equivalent basis, was $170.4 million for the three months ended September 30, 2025, an increase of $12.6 million or 8% compared to the same period in 2024. Our net interest margin was 3.19% for the three months ended September 30, 2025, an increase of 24 basis points from the same period in 2024. The increase in net interest income, on a fully taxable-equivalent basis, was primarily due to lower deposit funding costs and higher average balances on our interest-bearing deposits in other banks, partially offset by lower earning asset yields driven by lower yields in our loan and lease portfolio during the three months ended September 30, 2025, compared to the same period in 2024. Deposit funding costs were $70.8 million for the three months ended September 30, 2025, a decrease of $16.7 million or 19% compared to the same period in 2024, primarily due to a decrease in interest rates. Rates paid on our interest-bearing deposits were 2.08% for the three months ended September 30, 2025, a decrease of 50 basis points compared to the same period in 2024, primarily due to rate decreases. For the three months ended September 30, 2025, the average balance on our interest-bearing deposits in other banks was $1.5 billion, an increase of $450.6 million or 44% compared to the same period in 2024. The yield on our loan and lease portfolio was 5.51% for the three months ended September 30, 2025, a decrease of 23 basis points as compared to the same period in 2024, primarily due to decreases in yields from our adjustable-rate commercial real estate and commercial and industrial loans, which are typically based on the Secured Overnight Financing Rate (“SOFR”).

Current wording

Net interest income, on a fully taxable-equivalent basis, was $168.5 million for the three months ended March 31, 2026, an increase of $6.7 million or 4% compared to the same period in 2025. Our net interest margin was 3.19% for the three months ended March 31, 2026, an increase of 11 basis points from the same period in 2025. The increase in net interest income, on a fully taxable-equivalent basis, was primarily due to lower deposit funding and borrowing costs and higher average balances on our interest-bearing deposits in other banks, partially offset by lower earning asset yields driven by lower yields in our loan and lease portfolio during the three months ended March 31, 2026, compared to the same period in 2025. Deposit funding costs were $62.1 million for the three months ended March 31, 2026, a decrease of $9.6 million or 13% compared to the same period in 2025, primarily due to a decrease in interest rates. Rates paid on our interest-bearing deposits were 1.78% for the three months ended March 31, 2026, a decrease of 38 basis points compared to the same period in 2025, primarily due to rate decreases. Total borrowing costs were nil for the three months ended March 31, 2026, a decrease of $2.6 million compared to the same period in 2025. $250.0 million of FHLB advances matured during the third quarter of 2025. For the three months ended March 31, 2026, the average balance on our interest-bearing deposits in other banks was $1.5 billion, an increase of $283.9 million or 24% compared to the same period in 2025. The yield on our loan and lease portfolio was 5.29% for the three months ended March 31, 2026, a decrease of 15 basis points as compared to the same period in 2025, primarily due to decreases in yields from our adjustable-rate commercial real estate, commercial and industrial and construction loans, which are typically based on the SOFR.

Previous wording

The Federal Reserve influences the general market rates of interest, including the deposit and loan rates offered by many financial institutions. Our loan portfolio is affected by changes in the prime interest rate. The prime rate began in 2024 at 8.50% and decreased 100 basis points (50 basis points in September and 25 basis points in both November and December) to end the year at 7.50%. In September 2025, the prime rate decreased 25 basis points to 7.25%, where it remained as at the end of the third quarter of 2025. As noted above, our loan portfolio is also impacted by changes in the SOFR. At September 30, 2025, the one-month and three-month CME Term SOFR interest rates were 4.13% and 3.98%, respectively. At September 30, 2024, the one-month and three-month CME Term SOFR interest rates were 4.85% and 4.59%, respectively. The target range for the federal funds rate, which is the cost of immediately available overnight funds, began in 2024 at 5.25% to 5.50% and decreased 100 basis points to end the year at 4.25% to 4.50%. As of August 31, 2025, the federal funds rate was in the range of 4.25% to 4.50%. Effective September 18, 2025, the Federal Reserve decreased the federal funds rate to a range of 4.00% to 4.25%. There continues to be uncertainty in the changing market and economic conditions, as a result of an increase in trade restrictions, including the possibility of additional measures that could be taken by the Federal Reserve and other government agencies related to the overall macroeconomic environment.

Current wording

The Federal Reserve influences the general market rates of interest, including the deposit and loan rates offered by many financial institutions. Our loan portfolio is affected by changes in the prime interest rate. The prime rate decreased by75 basis points in 2025 to end the year at 6.75%, where it remained as at the end of the first quarter of 2026. As noted above, our loan portfolio is also impacted by changes in the SOFR. At March 31, 2026, the one-month and three-month CME Term SOFR interest rates were 3.66% and 3.68%, respectively. At March 31, 2025, the one-month and three-month CME Term SOFR interest rates were 4.32% and 4.29%, respectively. The target range for the federal funds rate, which is the cost of immediately available overnight funds, decreased 75 basis points in 2025 to end the year at 3.50% to 3.75%, where it remains as at March 31, 2026. There continues to be uncertainty in the changing market and economic conditions.

Previous wording

The Provision was $4.5 million for the three months ended September 30, 2025, compared to a Provision of $7.4 million for the same period in 2024. The Provision of $4.5 million for the three months ended September 30, 2025, was primarily due to decreases in the provision for consumer loans, home equity lines and construction loans. This was partially offset by increases in the provision for residential mortgage loans and lease financing, and the provision for unfunded construction and home equity line commitments. We recorded net charge-offs of loans and leases of $4.2 million and $3.9 million for the three months ended September 30, 2025 and 2024, respectively. This represented net charge-offs of 0.12% and 0.11% of average loans and leases, on an annualized basis, for the three months ended September 30, 2025 and 2024, respectively. The Provision was $19.5 million for the nine months ended September 30, 2025, compared to a Provision of $15.5 million for the same period in 2024. The Provision of $19.5 million for the nine months ended September 30, 2025, was primarily due to increases in the provision for commercial and industrial loans, home equity lines and consumer loans, and the provision for unfunded construction, home equity line, commercial and industrial and commercial real estate commitments. This was partially offset by decreases in the provision for residential mortgage loans and commercial real estate loans. We recorded net charge-offs of loans and leases of $11.3 million and $10.2 million for the nine months ended September 30, 2025 and 2024, respectively. This represented net charge-offs of 0.11% and 0.10% of average loans and leases, on an annualized basis, for the nine months ended September 30, 2025 and 2024, respectively. The ACL was $165.3 million as of September 30, 2025, an increase of $4.9 million or 3% from December 31, 2024 and represented 1.17% of total outstanding loans and leases as of September 30, 2025, compared to 1.11% of total outstanding loans and leases as of December 31, 2024. The reserve for unfunded commitments was $36.2 million as of September 30, 2025, compared to $32.8 million as of December 31, 2024. The Provision is recorded to maintain the ACL and the reserve for unfunded commitments at levels deemed adequate by management based on the factors noted in the “Risk Governance and Quantitative and Qualitative Disclosures About Market Risk — Credit Risk” section of this MD&A.

Current wording

The Provision was $5.0 million for the three months ended March 31, 2026, a decrease of $5.5 million or 52% compared to the same period in 2025. The decrease was primarily due to decreases in the provision for consumer loans, construction loans and home equity lines and the provision for unfunded commercial and industrial and commercial real estate commitments. This was partially offset by increases in the provision for residential mortgage loans, commercial and industrial loans and commercial real estate loans and the provision for unfunded construction commitments. We recorded net charge-offs of loans and leases of $4.9 million and $3.8 million for the three months ended March 31, 2026 and 2025, respectively. This represented net charge-offs of 0.14% and 0.11% of average loans and leases, on an annualized basis, for the three months ended March 31, 2026 and 2025, respectively. The ACL was $169.3 million as of March 31, 2026, an increase of $0.9 million or 1% from December 31, 2025 and represented 1.17% of total outstanding loans and leases as of March 31, 2026, compared to 1.18% of total outstanding loans and leases as of December 31, 2025. The reserve for unfunded commitments was $34.9 million as of March 31, 2026, compared to $35.7 million as of December 31, 2025. The Provision is recorded to maintain the ACL and the reserve for unfunded commitments at levels deemed adequate by management based on the factors noted in the “Risk Governance and Quantitative and Qualitative Disclosures About Market Risk — Credit Risk” section of this MD&A.

Previous wording

Table 7 presents the major components of noninterest income for the three months ended September 30, 2025 and 2024 and Table 8 presents the major components of noninterest income for the nine months ended September 30, 2025 and 2024:

Current wording

Table 5 presents the major components of noninterest income for the three months ended March 31, 2026 and 2025:

Previous wording

n/m – Denotes a variance that is not a meaningful metric to inform the change in noninterest income for the nine months ended September 30, 2025 to the same period in 2024.

Current wording

n/m – Denotes a variance that is not a meaningful metric to inform the change in noninterest income for the three months ended March 31, 2026 to the same period in 2025.

Previous wording

Credit and debit card fees were $15.9 million for the three months ended September 30, 2025, a decrease of $1.7 million or 10% as compared to the same period in 2024. This decrease was primarily due to a $0.7 million decrease in interchange settlement fees, a $0.6 million increase in network association dues and a $0.3 million decrease in merchant service revenues. Credit and debit card fees were $46.2 million for the nine months ended September 30, 2025, a decrease of $3.3 million or 7% as compared to the same period in 2024. This decrease was primarily due to a $3.2 million decrease in interchange settlement fees, a $0.9 million increase in network association dues and a $0.3 million decrease in ATM interchange and surcharge fees, partially offset by a $1.0 million increase in merchant service revenues.

Current wording

Credit and debit card fees were $15.1 million for the three months ended March 31, 2026, an increase of $0.6 million or 4% as compared to the same period in 2025. This increase was primarily due to a $0.6 million increase in interchange settlement fees, a $0.4 million decrease in network association dues and a $0.3 million increase in merchant service revenues, partially offset by a $0.7 million decrease in ATM interchange and surcharge fees.

Previous wording

Other service charges and fees were $13.8 million for the three months ended September 30, 2025, an increase of $2.0 million or 17% as compared to the same period in 2024. This increase was primarily due to a $1.7 million increase in fees from annuities and securities and a $0.3 million increase in fees from standby letters of credit arrangements. Other service charges and fees were $39.3 million for the nine months ended September 30, 2025, an increase of $6.6 million or 20% as compared to the same period in 2024. This increase was primarily due to a $5.7 million increase in fees from annuities and securities and a $0.8 million increase in fees from standby letters of credit arrangements.

Current wording

Other service charges and fees were $13.8 million for the three months ended March 31, 2026, an increase of $1.6 million or 13% as compared to the same period in 2025. This increase was primarily due to a $1.7 million increase in fees from annuities and securities.

Previous wording

Table 9 presents the major components of noninterest expense for the three months ended September 30, 2025 and 2024 and Table 10 presents the major components of noninterest expense for the nine months ended September 30, 2025 and 2024:

Current wording

Table 6 presents the major components of noninterest expense for the three months ended March 31, 2026 and 2025:

Previous wording

Salaries and employee benefits expense was $61.5 million for the three months ended September 30, 2025, an increase of $2.0 million or 3% as compared to the same period in 2024. This increase was primarily due to a $2.3 million increase in incentive compensation and a $1.0 million increase in base salaries and related payroll taxes, partially offset by a $1.1 million increase in payroll and benefit costs being deferred as loan origination costs and a $0.5 million decrease in retirement plan expenses. Salaries and employee benefits expense was $181.1 million for the nine months ended September 30, 2025, an increase of $4.6 million or 3% as compared to the same period in 2024. This increase was primarily due to a $6.0 million increase in incentive compensation, a $0.7 million increase in base salaries and related payroll taxes and a $0.4 million increase in group health plan costs, partially offset by a $1.6 million increase in payroll and benefit costs being deferred as loan origination costs, a $0.5 million decrease in state unemployment tax expense and a $0.3 million decrease in adjustments made to the deferred compensation plan as a result of market conditions.

Current wording

Salaries and employee benefits expense was $64.1 million for the three months ended March 31, 2026, an increase of $4.0 million or 7% as compared to the same period in 2025. This increase was primarily due to a $1.9 million increase in base salaries and related payroll taxes, a $1.4 million increase in incentive compensation and a $0.5 million increase in group health plan costs.

Previous wording

Contracted services and professional fees were $15.8 million for the three months ended September 30, 2025, an increase of $1.2 million or 8% as compared to the same period in 2024. This increase was primarily due to a $0.5 million increase in contracted data processing expenses, a $0.4 million increase in outside services, primarily attributable to technology-related projects, marketing and new customer services and a $0.2 million increase in audit, legal and consultant fees. Contracted services and professional fees were $46.6 million for the nine months ended September 30, 2025, an increase of $0.2 million as compared to the same period in 2024.

Current wording

Contracted services and professional fees were $14.0 million for the three months ended March 31, 2026, a decrease of $0.9 million or 6% as compared to the same period in 2025. This decrease was primarily due to a $1.0 million decrease in outside services, primarily attributable to technology-related projects, marketing and new customer services.

Previous wording

Equipment expense was $13.8 million for the three months ended September 30, 2025, an increase of $0.8 million or 6% as compared to the same period in 2024. This increase was primarily due to a $0.5 million increase in technology-related amortization and licensing and maintenance fees and a $0.2 million increase in furniture and equipment depreciation. Equipment expense was $41.7 million for the nine months ended September 30, 2025, an increase of $2.1 million or 5% as compared to the same period in 2024. This increase was primarily due to a $1.5 million increase in technology-related amortization and licensing and maintenance fees and a $0.4 million increase in furniture and equipment depreciation.

Current wording

Equipment expense was $14.8 million for the three months ended March 31, 2026, an increase of $0.9 million or 7% as compared to the same period in 2025. This increase was primarily due to a $0.5 million increase in furniture and equipment depreciation and a $0.4 million increase in technology-related amortization and licensing and maintenance fees.

Previous wording

Regulatory assessment and fees were $3.3 million for the three months ended September 30, 2025, a decrease of $0.1 million or 3% as compared to the same period in 2024. Regulatory assessment and fees were $10.9 million for the nine months ended September 30, 2025, a decrease of $4.5 million or 29% as compared to the same period in 2024. This decrease was primarily due to a decrease in the FDIC insurance assessment. During 2023, the FDIC approved a final rule for a special assessment to replenish the deposit insurance fund following bank failures occurring earlier in the year. As a result, the Company previously recorded a related loss of $16.3 million in the fourth quarter of 2023. During the first quarter of 2024, the FDIC issued a notice that the original loss estimate related to the 2023 bank failures was subsequently increased and that this increase would result in an additional assessment expense to affected institutions. The Company estimated a related loss of $4.1 million, which was recorded in the first quarter of 2024. This estimate was later adjusted by $0.3 million in the third quarter of 2024 and $0.3 million in the third quarter of 2025 to bring the net loss related to the special assessment to $3.5 million as of September 30, 2025.

Current wording

Regulatory assessment and fees were $3.2 million for the three months ended March 31, 2026, a decrease of $0.6 million or 15% as compared to the same period in 2025. This decrease was primarily due to a decrease in the FDIC insurance assessment. During 2023, the FDIC approved a final rule for a special assessment to replenish the deposit insurance fund following bank failures occurring earlier in the year. As a result, the Company previously recorded a related loss of $16.3 million in the fourth quarter of 2023. During the first quarter of 2024, the FDIC issued a notice that the original loss estimate related to the 2023 bank failures was subsequently increased and that this increase would result in an additional assessment expense to affected institutions. As a result, we recorded a net expense related to the additional special assessment of $3.5 million for the year ended December 31, 2024. In December 2025, the FDIC reduced the rate at which the assessment is collected for the eighth quarter of the collection period, with an invoice payment date of March 30, 2026, from 3.36 basis points to 2.97 basis points. We recorded a reduction in the expense related to the additional special assessment of $2.6 million in 2025 and $0.2 million in the first quarter of 2026.

Previous wording

Advertising and marketing expense was $2.0 million for the three months ended September 30, 2025, an increase of 0.2 million or 12% as compared to the same period in 2024. Advertising and marketing expense was $6.2 million for the nine months ended September 30, 2025, an increase of $0.1 million or 1% as compared to the same period in 2024.

Current wording

Advertising and marketing expense was $2.3 million for the three months ended March 31, 2026, an increase of $0.1 million or 3% as compared to the same period in 2025.

Previous wording

Card rewards program expense was $8.7 million for the three months ended September 30, 2025, a minimal change as compared to the same period in 2024. Card rewards program expense was $25.0 million for the nine months ended September 30, 2025, a decrease of $0.9 million or 3% as compared to the same period in 2024. This decrease was primarily due to a $0.6 million decrease in priority rewards card redemptions and a $0.4 million decrease in interchange fees paid to our credit card partners.

Current wording

Card rewards program expense was $8.4 million for the three months ended March 31, 2026, an increase of $0.5 million or 6% as compared to the same period in 2025. This increase was primarily due to a $0.4 million increase in interchange fees paid to our credit card partners and a $0.2 million increase in priority rewards card redemptions.

Previous wording

Other noninterest expense was $13.5 million for the three months ended September 30, 2025, a decrease of $4.6 million or 25% as compared to the same period in 2024. This decrease was primarily due to a $3.8 million decrease in expense due to adjustments to certain liabilities assumed as a result of the Reorganization Transactions and a $2.1 million decrease in operational losses and other charge-offs, partially offset by a $0.4 million increase in postage expenses, a $0.4 million increase in charitable contributions and donations, a $0.2 million increase in supplies expense and a $0.2 million increase in brokers fees. Other noninterest expense was $39.5 million for the nine months ended September 30, 2025, a decrease of $6.2 million or 14% as compared to the same period in 2024. This decrease was primarily due to a $4.4 million decrease in operational losses and other charge-offs, a $3.8 million decrease in expense due to adjustments to certain liabilities assumed as a result of the Reorganization Transactions and a $0.7 million decrease in costs associated with a fund acquired by the Company, partially offset by a $0.6 million increase in brokers fees, a $0.6 million increase in charitable contributions and donations, a $0.4 million increase in postage expenses, a $0.3 million increase in software amortization expense, a $0.2 million increase in travel expenses and a $0.2 million decrease in loss recoveries related to natural disasters.

Current wording

Other noninterest expense was $13.3 million for the three months ended March 31, 2026, an increase of $0.6 million or 5% as compared to the same period in 2025. This increase was primarily due to a $0.7 million increase in charitable contributions and a $0.2 million increase in brokers fees, partially offset by a $0.3 million decrease in software amortization expense.

Previous wording

The provision for income taxes was $22.3 million (an effective tax rate of 23.20%) for the three months ended September 30, 2025, compared with a provision for income taxes of $15.0 million (an effective tax rate of 19.56%) for the same period in 2024. The provision for income taxes was $54.9 million (an effective tax rate of 21.00%) for the nine months ended September 30, 2025, compared with a provision for income taxes of $50.2 million (an effective tax rate of 22.04%) for the same period in 2024. The change in the effective tax rate was primarily due to the change in the California apportionment formula for banks, which increased the California effective tax rate and caused a revaluation of the California deferred tax assets.

Current wording

The provision for income taxes was $19.7 million (reflecting an effective tax rate of 22.50%) for the three months ended March 31, 2026, compared with a provision for income taxes of $17.7 million (reflecting an effective tax rate of 23.00%) for the same period in 2025. The change in the effective tax rate was partially due to an increase in tax credits for the three months ended March 31, 2026.

Previous wording

Our business segments are Retail Banking, Commercial Banking and Treasury and Other. Table 11 summarizes net income from our business segments for the three and nine months ended September 30, 2025 and 2024. Additional information about operating segment performance is presented in “Note 17. Reportable Operating Segments” contained in our unaudited interim consolidated financial statements.

Current wording

Our business segments are Retail Banking and Commercial Banking, with all other activities, including Treasury, reported in Corporate/Other. Table 7 summarizes net income (loss) from our business segments and Corporate/Other for the three months ended March 31, 2026 and 2025. Additional information about operating segment performance and Corporate/Other is presented in “Note 16. Reportable Operating Segments” contained in our unaudited interim consolidated financial statements.

Previous wording

During the third quarter of 2025, the Company made changes to the internal measurement of segment operating profits for the purpose of evaluating segment performance and resource allocation. The primary reason for the change was to align loan and deposit balances within the business segment that directly manages them. Specifically, certain loan and deposit balances previously included as part of the Retail and Commercial Banking segments have been reclassified among all three business segments. The reallocation of select loan and deposit balances affected net interest income, net interest income after provision for credit losses, provision for income taxes, net income and segment earning assets. The Company has reported its selected financial information using the new loan and deposit balance alignments for the three and nine months ended September 30, 2025. The Company has recast the selected financial information for the three and nine months ended September 30, 2024 in order to conform with the current presentation.

Current wording

During the quarter ended December 31, 2025, we realigned our internal organizational and management reporting structure. As a result of this change, we reduced our reportable operating segments from three to two. Our reportable segments are now Retail Banking and Commercial Banking. Activities previously reported within the Treasury and Other segment are now included in Corporate/Other, as Treasury exists to support our operating segments. The change in reportable segments reflects how our chief operating decision maker currently evaluates performance and allocates resources. In addition, during the third quarter of 2025, we made changes to the internal measurement of segment operating profits for the purpose of evaluating segment performance and resource allocation. The primary reason for the change was to align loan and deposit balances within the business segment that directly manages them. Specifically, certain loan and deposit balances previously included as part of the Retail Banking and Commercial Banking segments were reclassified among the segments and what is now Corporate/Other. The reallocation of select loan and deposit balances affected net interest income, net interest income after provision for credit losses, provision for income taxes, net income and segment earning assets. We have reported our selected financial information using the new loan and deposit balance alignments and using two reportable operating segments for the three months ended March 31, 2026. Prior-period segment information has been recast to conform to the current presentation.

Previous wording

Retail Banking. Our Retail Banking segment includes the financial products and services we provide to consumers and small businesses. Loan and lease products offered include residential and commercial mortgage loans, home equity lines of credit and loans, automobile loans and leases, secured and unsecured lines of credit, installment loans and small business loans and leases. Deposit products offered include checking, savings and time deposit accounts. Our Retail Banking segment also includes our wealth management services.

Current wording

Retail Banking. Our Retail Banking segment includes the financial products and services we provide to consumers and small businesses. Loan and lease products offered include residential and commercial mortgage loans, home equity lines of credit and loans, automobile loans and leases, secured and unsecured lines of credit, installment loans and small business loans and leases. Deposit products offered include checking, savings and time deposit accounts. Our Retail Banking segment also includes our wealth management services. Products and services from Retail Banking are delivered to customers through 49 banking locations throughout the State of Hawaii, Guam and Saipan.

Previous wording

Net income for the Retail Banking segment was $66.6 million for the three months ended September 30, 2025, an increase of $11.2 million or 20% as compared to the same period in 2024. The increase in net income for the Retail Banking segment was primarily due to a $9.1 million increase in net interest income, a $2.6 million decrease in the Provision, a $1.9 million increase in noninterest income and a $1.5 million decrease in noninterest expense, partially offset by a $3.8 million increase in the provision for income taxes. The increase in net interest income was primarily due to higher deposit spreads and higher loan spreads. The decrease in the Provision allocated to the Retail Banking segment was primarily due to decreases in the provision for consumer loans, home equity lines and construction loans. The increase in noninterest income was primarily due to an increase in other service charges and fees. The decrease in noninterest expense was primarily due to a decrease in operational losses and other charge-offs. The increase in the provision for income taxes was primarily due to the increase in pretax income.

Current wording

Net income for the Retail Banking segment was $60.1 million for the three months ended March 31, 2026, an increase of $2.6 million or 5% as compared to the same period in 2025. The increase in net income for the Retail Banking segment was primarily due to a $3.7 million increase in net interest income, a $2.2 million decrease in the Provision, and a $1.5 million increase in noninterest income, partially offset by a $3.4 million increase in noninterest expense and a $1.3 million increase in the provision for income taxes. The increase in net interest income was primarily due to higher deposit spreads and higher loan spreads. The decrease in the Provision allocated to the Retail Banking segment was primarily due to decreases in the provision for consumer loans, partially offset by increases in the provision for residential loans. The increase in noninterest income was primarily due to an increase in other service charges and fees. The increase in noninterest expense was primarily due to an increase in salaries and employee benefits expense, an increase in occupancy expense and higher overall expenses that were allocated to the Retail Banking segment. The increase in the provision for income taxes was primarily due to the increase in pretax income.

Previous wording

Commercial Banking. Our Commercial Banking segment includes our corporate banking related products, commercial real estate loans, commercial lease financing, secured and unsecured lines of credit, automobile loans and auto dealer financing, business deposit products and credit cards that we provide primarily to middle market and large companies locally, nationally and internationally.

Current wording

Commercial Banking. Our Commercial Banking segment includes our corporate banking related products, commercial real estate loans, commercial lease financing, secured and unsecured lines of credit, automobile loans and auto dealer financing, business deposit products and credit cards. Commercial lending and deposit products are offered primarily to middle-market and large companies locally, nationally and internationally.

Previous wording

Net income for the Commercial Banking segment was $34.6 million for the three months ended September 30, 2025, a decrease of $2.2 million or 6% as compared to the same period in 2024. The decrease in net income for the Commercial Banking segment was primarily due to a $6.6 million decrease in net interest income and a $0.6 million decrease in noninterest income, partially offset by a $2.9 million decrease in the Provision, a $1.0 million decrease in the provision for income taxes and a $1.0 million decrease in noninterest expense. The decrease in net interest income was primarily due to lower loan and lease spreads and lower deposit spreads, partially offset by higher average deposit balances. The decrease in noninterest income was primarily due to a decrease in credit and debit card fees, partially offset by an increase in customer-related interest rate swap fees. The decrease in the Provision allocated to the Commercial Banking segment was primarily due to decreases in the provision for consumer loans, home equity lines and construction loans. The decrease in the provision for income taxes was primarily due to the decrease in pretax income. The decrease in noninterest expense was primarily due to higher overall credits that were allocated to the Commercial Banking segment, partially offset by increases in supplies expense and contracted services and professional fees.

Current wording

Net income for the Commercial Banking segment was $31.4 million for the three months ended March 31, 2026, an increase of $0.6 million or 2% as compared to the same period in 2025. The increase in net income for the Commercial Banking segment was primarily due to a $2.0 million decrease in the Provision, a $0.8 million increase in noninterest income and a $0.2 million decrease in the provision for income taxes, partially offset by a $2.0 million decrease in net interest income and a $0.5 million increase in noninterest expense. The decrease in the Provision allocated to the Commercial Banking segment was primarily due to decreases in the provision for consumer loans, partially offset by increases in the provision for residential loans. The increase in noninterest income was primarily due to an increase in credit and debit card fees and an increase in service charges on deposit accounts. The decrease in the provision for income taxes was primarily due to an increase in tax credits. The decrease in net interest income was primarily due to lower deposit spreads and lower loan and lease spreads, partially offset by higher average deposit balances and higher average loan balances. The increase in noninterest expense was primarily due to higher card reward program expense and higher salaries and empl oyee benefits expense, partially offset by higher overall credits that were allocated to the Commercial Banking segment.

Previous wording

Immediate liquid resources are available in cash, which is primarily on deposit with the Federal Reserve Bank of San Francisco (“FRB”). As of September 30, 2025 and December 31, 2024, cash and cash equivalents were $1.9 billion and $1.2 billion, respectively. Potential sources of liquidity also include investment securities in our available-for-sale portfolio and held-to-maturity portfolio. The carrying values of our available-for-sale investment securities and held-to-maturity investment securities were $2.0 billion and $3.6 billion as of September 30, 2025, respectively. The carrying values of our available-for-sale investment securities and held-to-maturity investment securities were $1.9 billion and $3.8 billion as of December 31, 2024, respectively. As of September 30, 2025 and December 31, 2024, we maintained additional liquidity primarily in collateralized mortgage obligations issued by Ginnie Mae, Fannie Mae and Freddie Mac and mortgage-backed securities issued by Ginnie Mae, Freddie Mac, Fannie Mae, Municipal Housing Authorities and non-agency entities. As of September 30, 2025, our available-for-sale investment securities portfolio was comprised of securities with a weighted average life of approximately 4.7 years and our held-to-maturity investment securities portfolio was comprised of securities with a weighted average life of approximately 7.4 years. These funds offer substantial resources to meet either new loan demand or to help offset reductions in our deposit funding base as they provide quick sources of liquidity by pledging to obtain secured borrowings and repurchase agreements or sales of our available-for-sale securities portfolio. Liquidity is further enhanced by our ability to pledge loans to access secured borrowings from the Federal Home Loan Bank of Des Moines (“FHLB”) and the FRB. As of September 30, 2025, we have borrowing capacity of $3.0 billion from the FHLB and $3.4 billion from the FRB based on the amount of collateral pledged.

Current wording

Immediate liquid resources are available in cash, which is primarily on deposit with the Federal Reserve Bank of San Francisco (“FRB”). As of March 31, 2026 and December 31, 2025, cash and cash equivalents were $1.7 billion and $1.5 billion, respectively. Potential sources of liquidity also include investment securities in our available-for-sale portfolio and held-to-maturity portfolio. As of both March 31, 2026 and December 31, 2025, the carrying values of our available-for-sale investment securities and held-to-maturity investment securities were $2.1 billion and $3.5 billion, respectively. As of March 31, 2026 and December 31, 2025, we maintained additional liquidity primarily in collateralized mortgage obligations issued by Ginnie Mae, Fannie Mae and Freddie Mac and mortgage-backed securities issued by Ginnie Mae, Freddie Mac, Fannie Mae, Municipal Housing Authorities and non-agency entities. As of March 31, 2026, our available-for-sale investment securities portfolio was comprised of securities with a weighted average life of approximately 4.4 years and our held-to-maturity investment securities portfolio was comprised of securities with a weighted average life of approximately 6.9 years. These funds offer substantial resources to meet either new loan demand or to help offset reductions in our deposit funding base as they provide quick sources of liquidity by pledging to obtain secured borrowings and repurchase agreements or sales of our available-for-sale securities portfolio. Liquidity is further enhanced by our ability to pledge loans to access secured borrowings from the Federal Home Loan Bank of Des Moines (“FHLB”) and the FRB. As of March 31, 2026, we have borrowing capacity of $3.5 billion from the FHLB and $3.3 billion from the FRB based on the amount of collateral pledged.

Previous wording

Our core deposits have historically provided us with a long-term source of stable and relatively lower cost of funding. Our core deposits, defined as all deposits exclusive of time deposits exceeding $250,000, totaled $19.3 billion and $19.0 billion as of September 30, 2025 and December 31, 2024, respectively, which represented 93% of our total deposits as of both September 30, 2025 and December 31, 2024. These core deposits are normally less volatile, often with customer relationships tied to other products offered by the Company; however, deposit levels could decrease if interest rates increase significantly or if corporate customers increase investing activities, including alternative investment options, that reduce deposit balances.

Current wording

Our core deposits have historically provided us with a long-term source of stable and relatively lower cost of funding. Our core deposits, defined as all deposits exclusive of time deposits exceeding $250,000, totaled $19.3 billion and $19.1 billion as of March 31, 2026 and December 31, 2025, respectively, which represented 93% of our total deposits as of both March 31, 2026 and December 31, 2025. These core deposits are normally less volatile, often with customer relationships tied to other products offered by the Company; however, deposit levels could decrease if interest rates increase significantly or if corporate customers increase investing activities, including alternative investment options, that reduce deposit balances.

Previous wording

We typically have contractual obligations representing required future payments on certificates of deposits, borrowings, noncancelable operating leases, postretirement benefit contributions, purchase obligations and funding commitments on low-income housing tax credit investments. Our short-term borrowings decreased from $250.0 million as of December 31, 2024 to nil as of September 30, 2025. See “ – Short-term Borrowings” for further details. Other than this change, there have been no material changes to the cash requirements from our current and long-term contractual obligations previously reported as of December 31, 2024. We believe that our existing cash, cash equivalents, investments, and cash expected to be generated from operations, are still sufficient to meet our cash requirements within the next 12 months and beyond.

Current wording

Our material cash requirements from our current and long-term contractual obligations have not changed materially since previously reported as of December 31, 2025. We believe that our existing cash, cash equivalents, investments, and cash expected to be generated from operations, are still sufficient to meet our cash requirements within the next 12 months and beyond.

Previous wording

We hold interests in several unconsolidated variable interest entities (“VIEs”). These unconsolidated VIEs are primarily low-income housing tax credit investments in partnerships and limited liability companies. Variable interests are defined as contractual ownership or other interests in an entity that change with fluctuations in an entity’s net asset value. The primary beneficiary consolidates the VIE. Based on our analysis, we have determined that the Company is not the primary beneficiary of these entities. As a result, we do not consolidate these VIEs. Unfunded commitments to fund these low-income housing tax credit investments were $129.4 million and $98.7 million as of September 30, 2025 and December 31, 2024, respectively.

Current wording

We hold interests in several unconsolidated variable interest entities (“VIEs”). These unconsolidated VIEs are primarily low-income housing tax credit investments in partnerships and limited liability companies. Variable interests are defined as contractual ownership or other interests in an entity that change with fluctuations in an entity’s net asset value. The primary beneficiary consolidates the VIE. Based on our analysis, we have determined that the Company is not the primary beneficiary of these entities. As a result, we do not consolidate these VIEs. Unfunded commitments to fund these low-income housing tax credit investments were $133.8 million and $153.3 million as of March 31, 2026 and December 31, 2025, respectively.

Previous wording

We sell residential mortgage loans on the secondary market, primarily to Fannie Mae or Freddie Mac. The agreements under which we sell residential mortgage loans to Fannie Mae or Freddie Mac contain provisions that include various representations and warranties regarding the origination and characteristics of the residential mortgage loans. Although the specific representations and warranties vary among investors, insurance or guarantee agreements, they typically cover ownership of the loan, validity of the lien securing the loan, the absence of delinquent taxes or liens against the property securing the loan, compliance with loan criteria set forth in the applicable agreement, compliance with applicable federal, state and local laws and other matters. The unpaid principal balance of our portfolio of residential mortgage loans sold was $1.1 billion and $1.3 billion as of September 30, 2025 and December 31, 2024, respectively. The agreements under which we sell residential mortgage loans require delivery of various documents to the investor or its document custodian. Although these loans are primarily sold on a non-recourse basis, we may be obligated to repurchase residential mortgage loans or reimburse investors for losses incurred if a loan review reveals that underwriting and documentation standards were potentially not met in the origination of those loans. Upon receipt of a repurchase request, we work with investors to arrive at a mutually agreeable resolution. Repurchase demands are typically reviewed on an individual loan by loan basis to validate the claims made by the investor to determine if a contractually required repurchase event has occurred. We manage the risk associated with potential repurchases or other forms of settlement through our underwriting and quality assurance practices and by servicing mortgage loans to meet investor and secondary market standards. For the nine months ended September 30, 2025, there were no residential mortgage loan repurchases and there were no pending repurchase requests.

Current wording

We sell residential mortgage loans on the secondary market, primarily to Fannie Mae or Freddie Mac. The agreements under which we sell residential mortgage loans to Fannie Mae or Freddie Mac contain provisions that include various representations and warranties regarding the origination and characteristics of the residential mortgage loans. Although the specific representations and warranties vary among investors, insurance or guarantee agreements, they typically cover ownership of the loan, validity of the lien securing the loan, the absence of delinquent taxes or liens against the property securing the loan, compliance with loan criteria set forth in the applicable agreement, compliance with applicable federal, state and local laws and other matters. The unpaid principal balance of our portfolio of residential mortgage loans sold was $1.1 billion as of both March 31, 2026 and December 31, 2025. The agreements under which we sell residential mortgage loans require delivery of various documents to the investor or its document custodian. Although these loans are primarily sold on a non-recourse basis, we may be obligated to repurchase residential mortgage loans or reimburse investors for losses incurred if a loan review reveals that underwriting and documentation standards were potentially not met in the origination of those loans. Upon receipt of a repurchase request, we work with investors to arrive at a mutually agreeable resolution. Repurchase demands are typically reviewed on an individual loan by loan basis to validate the claims made by the investor to determine if a contractually required repurchase event has occurred. We manage the risk associated with potential repurchases or other forms of settlement through our underwriting and quality assurance practices and by servicing mortgage loans to meet investor and secondary market standards. For the three months ended March 31, 2026, there were no residential mortgage loan repurchases and there were no pending repurchase requests.

Previous wording

In addition to servicing loans in our portfolio, substantially all of the loans we sell to investors are sold with servicing rights retained. We also service loans originated by other mortgage loan originators. As servicer, our primary duties are to: (1) collect payments due from borrowers; (2) advance certain delinquent payments of principal and interest; (3) maintain and administer any hazard, title or primary mortgage insurance policies relating to the mortgage loans; (4) maintain any required escrow accounts for payment of taxes and insurance and administer escrow payments; and (5) foreclose on defaulted mortgage loans, or loan modifications or short sales. Each agreement under which we act as servicer generally specifies a standard of responsibility for actions taken by the Company in such capacity and provides protection against expenses and liabilities incurred by the Company when acting in compliance with the respective servicing agreements. However, if we commit a material breach of obligations as servicer, we may be subject to termination if the breach is not cured within a specified period following notice. The standards governing servicing and the possible remedies for violations of such standards vary by investor. These standards and remedies are determined by servicing guides issued by the investors as well as the contract provisions established between the investors and the Company. Remedies could include repurchase of an affected loan. For the nine months ended September 30, 2025, we had no repurchase requests related to loan servicing activities, nor were there any pending repurchase requests as of September 30, 2025.

Current wording

In addition to servicing loans in our portfolio, substantially all of the loans we sell to investors are sold with servicing rights retained. We also service loans originated by other mortgage loan originators. As servicer, our primary duties are to: (1) collect payments due from borrowers; (2) advance certain delinquent payments of principal and interest; (3) maintain and administer any hazard, title or primary mortgage insurance policies relating to the mortgage loans; (4) maintain any required escrow accounts for payment of taxes and insurance and administer escrow payments; and (5) foreclose on defaulted mortgage loans, or loan modifications or short sales. Each agreement under which we act as servicer generally specifies a standard of responsibility for actions taken by the Company in such capacity and provides protection against expenses and liabilities incurred by the Company when acting in compliance with the respective servicing agreements. However, if we commit a material breach of obligations as servicer, we may be subject to termination if the breach is not cured within a specified period following notice. The standards governing servicing and the possible remedies for violations of such standards vary by investor. These standards and remedies are determined by servicing guides issued by the investors as well as the contract provisions established between the investors and the Company. Remedies could include repurchase of an affected loan. For the three months ended March 31, 2026, we had no repurchase requests related to loan servicing activities, nor were there any pending repurchase requests as of March 31, 2026.

Previous wording

The carrying value of our investment securities portfolio was $5.6 billion as of September 30, 2025, a decrease of $136.3 million or 2% compared to December 31, 2024. Our available-for-sale investment securities are carried at fair value with changes in fair value reflected in other comprehensive income or through the Provision. Our held-to-maturity investment securities are carried at amortized cost.

Current wording

The carrying value of our investment securities portfolio was $5.6 billion as of March 31, 2026, a decrease of $49.3 million or 1% compared to December 31, 2025. The lower balances in investment securities were driven by payments and maturities during the three months ended March 31, 2026, which were placed into cash. Our available-for-sale investment securities are carried at fair value with changes in fair value reflected in other comprehensive income (loss) or through the Provision. Our held-to-maturity investment securities are carried at amortized cost.

Previous wording

As of September 30, 2025, we maintained all of our investment securities in either the available-for-sale category (recorded at fair value) or the held-to-maturity category (recorded at amortized cost) in the unaudited interim consolidated balance sheets, with $3.0 billion invested in collateralized mortgage obligations issued by Ginnie Mae, Fannie Mae and Freddie Mac. Our investment securities portfolio also included $2.4 billion in mortgage-backed securities issued by Ginnie Mae, Freddie Mac, Fannie Mae, Municipal Housing Authorities and non-agency entities, $97.9 million in collateralized loan obligations, $54.9 million in debt securities issued by states and political subdivisions and $47.5 million in debt securities issued by government agencies (U.S. International Development Finance Corporation bonds).

Current wording

As of March 31, 2026, we maintained all of our investment securities in either the available-for-sale category (recorded at fair value) or the held-to-maturity category (recorded at amortized cost) in the unaudited interim consolidated balance sheets, with $2.8 billion invested in collateralized mortgage obligations issued by Ginnie Mae, Fannie Mae and Freddie Mac. Our investment securities portfolio also included $2.6 billion in mortgage-backed securities issued by Ginnie Mae, Freddie Mac, Fannie Mae, Municipal Housing Authorities and non-agency entities, $61.4 million in collateralized loan obligations, $55.1 million in debt securities issued by states and political subdivisions and $46.0 million in debt securities issued by government agencies (U.S. International Development Finance Corporation bonds).

Previous wording

Gross unrealized gains in our investment securities portfolio was $4.2 million and $0.6 million as of September 30, 2025 and December 31, 2024, respectively. Gross unrealized losses in our investment securities portfolio were $579.9 million and $792.7 million as of September 30, 2025 and December 31, 2024, respectively. The decrease in unrealized loss was primarily due to lower market interest rates as of September 30, 2025, relative to December 31, 2024, resulting in a higher valuation. Additionally, the decrease in unrealized loss positions were primarily related to our collateralized mortgage obligations, commercial mortgage-backed securities and residential mortgage-backed securities, the fair value of which is sensitive to changes in market interest rates.

Current wording

Gross unrealized gains in our investment securities portfolio were $2.1 million and $7.1 million as of March 31, 2026 and December 31, 2025, respectively. Gross unrealized losses in our investment securities portfolio were $598.8 million and $521.9 million as of March 31, 2026 and December 31, 2025, respectively. The higher overall unrealized loss position was primarily due to changes in the market value of the securities.