WESTERN ALLIANCE BANCORPORATION

Previous wording

Certain statements contained in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including without limitation, statements regarding our expectations with respect to our business, financial and operating results, including our deposits and deposit optimization strategy, liquidity and funding, changes in economic conditions and the related impact on the Company's business, and statements that are related to or are dependent on estimates or assumptions relating to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts.

Current wording

Certain statements contained in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2026 are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including without limitation, statements regarding our expectations with respect to our business, financial and operating results, including our deposits and deposit optimization strategy, liquidity and funding, changes in economic conditions and the related impact on the Company's business, and statements that are related to or are dependent on estimates or assumptions relating to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar statements concerning matters that are not historical facts.

Previous wording

The forward-looking statements contained in this Form 10-Q reflect the Company's current views about future events and financial performance and are subject to certain risks, uncertainties, assumptions, and changes in circumstances that may cause the Company's actual results to differ significantly from historical results and those expressed in any forward-looking statement. Risks and uncertainties include those set forth in the Company's filings with the SEC and the following factors that could cause actual results to differ materially from historical or expected results: 1) adverse financial market and economic conditions, including the effects of inflation and any recession in the United States, adverse developments in the financial services industry generally, U.S. and global trade policies and tensions, including changes in, or the imposition of, tariffs and/or trade barriers, and any related impact on customer behavior, the potential impact on borrowers of supply chain disruptions and the economic and market impacts of the geopolitical conflicts; 2) changes in interest rates and increased rate competition; 3) the discontinuation of or substantial changes to interest rate benchmarks utilized in our lending, borrowing and hedging activities; 4) exposure of financial instruments to certain market risks that may increase the volatility of earnings and AOCI; 5) the inherent risk associated with accounting estimates, including the impact to the allowance, provision for credit losses, and capital levels; 6) exposure to natural and man-made disasters in markets where we operate and the impact of climate change and sustainability practices on us and our customers; 7) the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts, geopolitical conflicts or public health events, and of governmental and societal responses thereto; 8) higher defaults on our loan portfolio than we expect; 9) increased foreclosures and ownership of real property; 10) changes in management's estimate of the adequacy of the allowance for credit losses; 11) dependency on real estate and events that negatively impact the real estate market; 12) concentrations in certain business lines or product types within our loan portfolio; 13) residual risk retained by us on reference pools covered by credit linked notes; 14) exposures related to the properties to which we acquire title; 15) ability to compete in a highly competitive market; 16) expansion strategies through acquisitions or implementation of new lines of business or new products and services that may not be successful and supervisory actions by regulatory agencies which may limit our ability to pursue certain growth opportunities; 17) uncertainty associated with digital payment initiatives; 18) ability to recruit and retain qualified employees and implement adequate succession planning to mitigate the loss of key members of our senior management team; 19) abil…

Excerpt shortened here; the source contains the full paragraph.

Current wording

The forward-looking statements contained in this Form 10-Q reflect the Company's current views about future events and financial performance and are subject to certain risks, uncertainties, assumptions, and changes in circumstances that may cause the Company's actual results to differ significantly from historical results and those expressed in any forward-looking statement. Risks and uncertainties include those set forth in the Company's filings with the SEC and the following factors that could cause actual results to differ materially from historical or expected results: 1) adverse financial market and economic conditions, including the effects of inflation and any recession in the United States, adverse developments in the financial services industry generally, U.S. and global trade policies and tensions, including changes in, or the imposition of, tariffs and/or trade barriers, and any related impact on customer behavior, the potential impact on borrowers of supply chain disruptions and the economic and market impacts of geopolitical conflicts; 2) changes in interest rates and increased rate competition; 3) the discontinuation of or substantial changes to interest rate benchmarks utilized in our lending, borrowing and hedging activities; 4) exposure of financial instruments to certain market risks that may increase the volatility of earnings and AOCI; 5) the inherent risk associated with accounting estimates, including the impact to the allowance, provision for credit losses, and capital levels; 6) exposure to natural and man-made disasters in markets where we operate and the impact of climate change and sustainability practices on us and our customers; 7) the potential adverse effects of unusual and infrequently occurring events, such as terrorist acts or public health events, and of governmental and societal responses thereto; 8) higher defaults on our loan portfolio than we expect; 9) increased foreclosures and ownership of real property; 10) changes in management's estimate of the adequacy of the allowance for credit losses; 11) dependency on real estate and events that negatively impact the real estate market; 12) concentrations in certain business lines or product types within our loan portfolio; 13) residual risk retained by us on reference pools covered by credit linked notes; 14) exposures related to the properties to which we acquire title; 15) ability to compete in a highly competitive market; 16) expansion strategies through acquisitions or implementation of new lines of business or new products and services that may not be successful and supervisory actions by regulatory agencies which may limit our ability to pursue certain growth opportunities; 17) uncertainty associated with digital payment initiatives; 18) ability to recruit and retain qualified employees and implement adequate succession planning to mitigate the loss of key members of our senior management team; 19) ability to meet capital adequacy and liquidity requirements…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

During the second quarter of 2026, the Company initiated a deposit optimization strategy designed to improve profitability by reducing higher-cost deposit balances. These efforts lowered period-end deposits relative to the prior quarter, including the reduction of more than $1 billion of higher-cost deposits near quarter-end. This strategy is designed to reposition the Company’s funding mix by reducing deposit costs and improving net interest margin over time.

Current wording

During the second quarter of 2026, the Company initiated a deposit optimization strategy designed to improve profitability by reducing higher-cost deposit balances. This strategy aims to reposition the Company’s funding mix by lowering deposit costs and improving net interest margin over time. These efforts continued to reduce higher-cost period-end deposits compared with the prior two quarters. During the third quarter of 2026, the Company transitioned out approximately $3.0 billion of higher-cost deposits, bringing the cumulative reduction since the initiative began to approximately $4.5 billion.

Previous wording

The Company's loan portfolio includes significant credit exposure to the CRE market, with CRE related loans comprising approximately 26% and 27% of total loans at June 30, 2026 and December 31, 2025, respectively. Approximately 13% and 14% of CRE loans, excluding construction and land loans, were owner occupied at June 30, 2026 and December 31, 2025, respectively. Less than 4% of HFI loans were non-owner occupied office loans at June 30, 2026 and December 31, 2025. During the three and six months ended June 30, 2026, the Company recognized gross charge-offs on CRE non-owner occupied loans totaling $32.0 million and $59.7 million, respectively. As the Company continues to focus on moving nonperforming loans through its standard credit resolution process, the Company took possession of one CRE office property during the six months ended June 30, 2026. While the Company believes its reserve levels are adequate, CRE market conditions may worsen, which could result in further deterioration of asset quality in this portfolio.

Current wording

The Company's loan portfolio includes significant credit exposure to the CRE market, with CRE related loans comprising approximately 27% of total loans at September 30, 2026 and December 31, 2025. Approximately 13% and 14% of CRE loans, excluding construction and land loans, were owner occupied at September 30, 2026 and December 31, 2025, respectively. During the three and nine months ended September 30, 2026, the Company recognized gross charge-offs on CRE non-owner occupied loans totaling $25.7 million and $85.4 million, respectively. As the Company continues to focus on moving nonperforming loans through its standard credit resolution process, the Company took possession of two CRE office properties during the nine months ended September 30, 2026. While the Company believes its reserve levels are adequate, CRE market conditions may worsen, which could result in further deterioration of asset quality in this portfolio.

Previous wording

In August 2025, the Bank initiated a lawsuit in Los Angeles Superior Court against Cantor Group V, LLC and certain individual guarantors in connection with the Bank's note finance revolving credit facility to Cantor Group V, LLC, alleging fraud by the borrower for failing to provide collateral loans in the first position, seeking appointment of a receiver and recovery of funds, and seeking other forms of relief and damages related to claims against the borrower. In addition, under certain circumstances such as fraud, the Bank holds both a limited guaranty and full guaranty from two ultra-high net worth individuals. As of September 30, 2025, the Bank moved the $98.5 million facility to nonaccrual status and established a specific allowance of $29.6 million for this loan. During the three months ended March 31, 2026, management reevaluated the existing collateral based on updated “as-is” appraisals and due to the expected duration of the resolution process, recognized a charge-off of $26.1 million from the previously established reserve. No additional charge-offs were recognized during the three months ended June 30, 2026.

Current wording

In August 2025, the Bank initiated a lawsuit in Los Angeles Superior Court against Cantor Group V, LLC and certain individual guarantors in connection with the Bank's note finance revolving credit facility to Cantor Group V, LLC, alleging fraud by the borrower for failing to provide collateral loans in the first position, seeking appointment of a receiver and recovery of funds, and seeking other forms of relief and damages related to claims against the borrower. In addition, under certain circumstances such as fraud, the Bank holds both a limited guaranty and full guaranty from two ultra-high net worth individuals. As of September 30, 2025, the Bank moved the $98.5 million facility to nonaccrual status and established a specific allowance of $29.6 million for this loan. Management reevaluated the existing collateral based on updated “as-is” appraisals and due to the expected duration of the resolution process, recognized a charge-off of $26.1 million from the previously established reserve during the three months ended March 31, 2026.

Previous wording

Financial Results Highlights for the Second Quarter of 2026

Current wording

Financial Results Highlights for the Third Quarter of 2026

Previous wording

•PPNR 1 of $412.4 million, up 24.5% from $331.2 million in the second quarter 2025

Current wording

•PPNR 1 of$419.1 million, increased 6.4% from$393.8 million in the third quarter 2025

Previous wording

•Nonperforming loans to funded HFI loans increased to 0.92%, compared to 0.85% at December 31, 2025

Current wording

•Nonaccrual loans to funded HFI loans improved to 0.79% from 0.85% at December 31, 2025

Previous wording

•Nonperforming assets (nonaccrual loans and repossessed assets) increased to 0.70% of total assets, compared to 0.69% at December 31, 2025

Current wording

•Nonperforming assets (nonaccrual loans and repossessed assets) improved to 0.66% of total assets from 0.69% at December 31, 2025

Previous wording

•Annualized net loan charge-offs to average loans outstanding of 0.37%, compared to 0.22% for the second quarter 2025

Current wording

•Annualized net loan charge-offs to average loans outstanding were 0.30%, compared to 0.22% for the third quarter 2025

Previous wording

•Tangible common equity ratio 1 of 7.0%, compared to 7.3% at December 31, 2025

Current wording

•CET1 ratio of 10.9% and tangible common equity ratio 1 of 6.9%, compared to 11.0% and 7.3%, respectively, at December 31, 2025

Previous wording

•Tangible book value per share, net of tax 1, of $63.24, an increase of $1.95, or 3.2%, from $61.29 at December 31, 2025

Current wording

•Tangible book value per share, net of tax 1, increased$0.93, or 1.5%, to$62.22 from$61.29 at December 31, 2025

Previous wording

The impact to the Company from these items, and others of both a positive and negative nature, are discussed in more detail below as they pertain to the Company’s overall comparative performance for the three and six months ended June 30, 2026.

Current wording

The impact to the Company from these items, and others of both a positive and negative nature, are discussed in more detail below as they pertain to the Company’s overall comparative performance for the three and nine months ended September 30, 2026.

Previous wording

For all banks and bank holding companies, asset quality plays a significant role in the overall financial condition of the institution and results of operations. The Company measures asset quality in terms of nonaccrual loans as a percentage of gross loans and net charge-offs as a percentage of average loans. Net charge-offs are calculated as the difference between charged-off loans and recovery payments received on previously charged-off loans. The following table summarizes the Company's key asset quality metrics for loans HFI:

Current wording

Asset quality is a key factor in assessing a banking institution’s overall financial condition and results of operations. The Company measures asset quality in terms of nonaccrual loans as a percentage of gross loans and net charge-offs as a percentage of average loans. Net charge-offs are calculated as the difference between charged-off loans and recovery payments received on previously charged-off loans. The following table summarizes the Company's key asset quality metrics for loans HFI:

Previous wording

The adjusted non-GAAP revenue, earnings and return metrics presented below for the six months ended June 30, 2026 exclude, as applicable, the provision for credit losses related to the charge-off of the remaining Leucadia Asset Management LLC loan balance and gains on investment security sales executed during the three month ended March 31, 2026 as part of the Company's mitigation strategy.

Current wording

The adjusted non-GAAP revenue, earnings and return metrics presented below for the nine months ended September 30, 2026 exclude, as applicable, the provision for credit losses related to the charge-off of the remaining Leucadia Asset Management LLC loan balance and gains on investment security sales executed during the three months ended March 31, 2026 as part of the Company's mitigation strategy.

Previous wording

(1)Yields on loans and securities have been adjusted to a TEB. The taxable-equivalent adjustment was $10.1 million and $10.2 million for the three months ended June 30, 2026 and 2025, respectively.

Current wording

(1)Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $10.4 million and $9.7 million for the three months ended September 30, 2026 and 2025, respectively.

Previous wording

(3)Included in the yield computation are net loan fees of $49.4 million and $49.3 million for the six months ended June 30, 2026 and 2025, respectively.

Current wording

(2)Included in the yield computation are net loan fees of $23.9 million and $28.1 million for the three months ended September 30, 2026 and 2025, respectively.

Previous wording

(2)Interest income includes a reduction for earnings credits totaling $52.5 million and $61.3 million for the three months ended June 30, 2026 and 2025, respectively.

Current wording

(3)Interest income includes a reduction for earnings credits totaling $56.7 million and $64.9 million for the three months ended September 30, 2026 and 2025, respectively.

Previous wording

(5)Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis.

Current wording

(5)Net interest margin is computed by dividing net interest income on a tax equivalent basis by total average earning assets, annualized on an actual/actual basis.

Previous wording

(1)Yields on loans and securities have been adjusted to a TEB. The taxable-equivalent adjustment was $20.2 million and $20.3 million for the six months ended June 30, 2026 and 2025, respectively.

Current wording

(1)Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $30.7 million and $30.1 million for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

(3)Included in the yield computation are net loan fees of $25.5 million for each of the three months ended June 30, 2026 and 2025.

Current wording

(2)Included in the yield computation are net loan fees of $73.3 million and $77.4 million for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

(2)Interest income includes a reduction for earnings credits totaling $101.2 million and $119.4 million for the six months ended June 30, 2026 and 2025, respectively.

Current wording

(3)Interest income includes a reduction for earnings credits totaling $157.9 million and $184.3 million for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

(5)Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis.

Current wording

(5)Net interest margin is computed by dividing net interest income on a tax equivalent basis by total average earning assets, annualized on an actual/actual basis.

Previous wording

The Company's primary source of revenue is interest income. For the three months ended June 30, 2026, interest income totaled $1.2 billion, an increase of $77.5 million, or 6.7%, from the same period in 2025. This growth was primarily the result of higher interest income from investment securities and loans HFI, which increased by $43.9 million and $16.3 million, respectively, driven by a $4.5 billion increase in average balances for each of these asset categories.

Current wording

The Company's primary source of revenue is interest income. For the three months ended September 30, 2026, interest income totaled $1.3 billion, an increase of $31.8 million, or 2.6%, from the same period in 2025. The increase primarily reflected $20.0 million in higher interest income from loans HFI and $13.2 million from loans HFS, driven by increases in average balances of $4.6 billion and $849 million, respectively.

Previous wording

For the six months ended June 30, 2026, interest income totaled $2.4 billion, an increase of $170.1 million, or 7.6%, compared to $2.3 billion for the same period in 2025. This increase was primarily the result of higher interest income from investment securities, loans HFI, and loans HFS, which increased by $95.8 million, $37.3 million, and $24.6 million, respectively, largely due to higher average balances for each of these asset categories.

Current wording

For the nine months ended September 30, 2026, interest income totaled $3.7 billion, an increase of $201.9 million, or 5.8%, from $3.5 billion for the same period in 2025. This increase was primarily the result of higher interest income from investment securities, loans HFI, and loans HFS, which increased by $102.2 million, $57.4 million, and $37.7 million, respectively, largely due to higher average balances for each of these asset categories of $3.4 billion, $4.6 billion, and $936 million, respectively.

Previous wording

For the three months ended June 30, 2026, interest expense totaled $435.0 million, a decrease of $21.8 million, or 4.8%, compared to $456.8 million for the same period in 2025. The decrease was driven by lower interest expense on long-term debt and deposits, which declined $18.3 million and $7.3 million, respectively. The decrease in interest expense on long-term debt resulted from a $1.3 billion reduction in the average balance of long-term debt, while lower rates drove the decline in interest expense on deposits. These decreases were partially offset by an increase in interest expense on qualifying debt of $5.6 million, resulting from a $245 million increase in the average balance and higher interest rates.

Current wording

For the three months ended September 30, 2026, interest expense totaled $449.7 million, a decrease of $25.4 million, or 5.3%, compared to $475.1 million for the same period in 2025. The decrease was driven by lower interest expense on long-term debt and deposits, which declined $18.9 million and $15.7 million, respectively. The decrease in interest expense on long-term debt was due to a $1.3 billion reduction in the average balance, while lower rates drove the decline in interest expense on deposits. These decreases were partially offset by an increase in interest expense on qualifying debt of $11.1 million as a result of a $389 million increase in the average balance and higher interest rates.

Previous wording

For the six months ended June 30, 2026, interest expense totaled $856.9 million, a decrease of $44.9 million, or 5.0%, compared to $901.8 million for the same period in 2025. The decline was driven by lower interest expense on long-term debt and deposits, which declined $36.3 million and $24.9 million, respectively. The decrease in interest expense on long-term debt resulted from a $1.3 billion reduction in the average balance of long-term debt, while lower rates drove the decline in interest expense on deposits. These decreases were partially offset by an increase in interest expense on qualifying debt of $9.4 million, resulting from a $212 million increase in the average balance and higher rates.

Current wording

For the nine months ended September 30, 2026, interest expense totaled $1.3 billion, a decrease of $70.3 million, or 5.1%, compared to $1.4 billion for the same period in 2025. The decline was driven by lower interest expense on long-term debt and deposits, which declined $55.1 million and $40.6 million, respectively. The decrease in interest expense on long-term debt was due to a $1.3 billion reduction in the average balance, while lower rates drove the decline in interest expense on deposits. These decreases were partially offset by an increase in interest expense on qualifying debt of $20.5 million, as a result of a $272 million increase in the average balance and higher rates.

Previous wording

For the three months ended June 30, 2026, net interest income totaled $796.9 million, an increase of $99.3 million, or 14.2%, compared to $697.6 million for the same period in 2025. The increase in net interest income was driven by an increase in average interest earning assets of $11.1 billion and lower interest bearing deposit rates, partially offset by lower yields on interest earning assets and higher average interest bearing liability balances. Net interest margin was unchanged at 3.53%, as lower funding costs from the lower-rate environment were offset by declining yields on interest earning assets.

Current wording

For the three months ended September 30, 2026, net interest income totaled $807.6 million, an increase of $57.2 million, or 7.6%, compared to $750.4 million for the same period in 2025. The increase in net interest income was driven by an increase in average interest earning assets of $5.5 billion and lower rates on interest bearing deposits, partially offset by lower yields on interest earning assets and higher average interest bearing liability balances. Net interest margin improved 4 basis points to 3.57%, as lower funding costs driven by the lower-rate environment compared to the third quarter of 2025 more than offset the impact of declining yields on interest earning assets.

Previous wording

For the six months ended June 30, 2026, net interest income totaled $1.6 billion, an increase of $215.0 million, or 15.9%, compared to $1.3 billion for the same period in 2025. The increase in net interest income was driven by an increase in average interest earning assets of $11.5 billion and lower interest bearing deposit rates, partially offset by lower yields on interest earning assets and a higher average interest bearing liability balances. Net interest margin improved 4 basis points to 3.54%, as lower funding costs in the declining rate environment more than offset the impact of lower yields on interest earning assets.

Current wording

For the nine months ended September 30, 2026, net interest income totaled $2.4 billion, an increase of $272.2 million, or 13.0%, compared to $2.1 billion for the same period in 2025. The increase in net interest income was driven by an increase in average interest earning assets of $9.5 billion and lower rates on interest bearing deposits, partially offset by lower yields on interest earning assets and higher average interest bearing liability balances. Net interest margin improved 4 basis points to 3.55%, as lower funding costs more than offset the impact of lower yields on interest earning assets.

Previous wording

The provision for credit losses in each period is reflected as a reduction in earnings for that period and includes amounts related to funded loans, unfunded loan commitments, and investment securities. The provision is equal to the amount required to maintain the ACL at a level adequate to absorb estimated lifetime credit losses inherent in the loan and investment securities portfolios based on remaining contractual maturity, adjusted for estimated prepayments as of each period end. The Company's CECL models incorporate historical experience, current conditions, and reasonable and supportable forecasts in measuring expected credit losses. For the three and six months ended June 30, 2026, the Company recorded a provision for credit losses of $80.4 million and $293.6 million, compared to $39.9 million and $71.1 million for the three and six months ended June 30, 2025. The provision for credit losses for the three and six months ended June 30, 2026 is primarily reflective of loan growth and net loan charge-offs of $55.0 million and $263.5 million, respectively. Charge-offs for the six months ended June 30, 2026 included $126.4 million for the remaining balance of the Leucadia Asset Management LLC loan and $26.1 million from the specific reserve previously established on the Cantor Group V, LLC loan.

Current wording

The provision for credit losses in each period is reflected as a reduction in earnings for that period and includes amounts related to funded loans, unfunded loan commitments, and investment securities. The provision is equal to the amount required to maintain the ACL at a level adequate to absorb estimated lifetime credit losses in the loan and investment securities portfolios based on remaining contractual maturity, adjusted for estimated prepayments as of each period end. The Company's CECL models incorporate historical experience, current conditions, and reasonable and supportable forecasts in measuring expected credit losses. For the three and nine months ended September 30, 2026, the Company recorded a provision for credit losses of $80.0 million and $373.6 million, compared to $80.0 million and $151.1 million for the three and nine months ended September 30, 2025. The provision for credit losses for the three and nine months ended September 30, 2026 is primarily reflective of net loan charge-offs of $45.8 million and $309.3 million, respectively, as well as loan growth and provisioning for macroeconomic risks associated with the higher interest rate environment. Loan charge-offs for the nine months ended September 30, 2026 included $126.4 million for the remaining balance of the Leucadia Asset Management LLC loan and $26.1 million from the specific reserve previously established on the Cantor Group V, LLC loan.

Previous wording

Total non-interest income for the six months ended June 30, 2026 increased $175.7 million from the same period in 2025 primarily due to higher service charges and fees, gain on sales of investment securities, net gain on mortgage loan origination and sale activities, and income from equity investments. Service charges and fees rose by $71.4 million, driven by higher commercial banking, disbursements, and unused commitment fees. Gain on sales of investment securities increased $40.0 million, reflecting a series of security sales executed by management during the first quarter of 2026. Net gain on mortgage loan origination and sale activities increased $37.2 million, as discussed in the preceding paragraph. Income from equity investments increased $27.1 million, which was primarily driven by a loss on a solar investment in the second quarter of 2025 that did not recur and gains on warrant valuations. These increases were partially offset by a $30.1 million decrease in net loan servicing revenue, as discussed in the preceding paragraph.

Current wording

Total non-interest income for the nine months ended September 30, 2026 increased $194.5 million from the same period in 2025, primarily reflecting higher commercial banking income and related fees, gain on sales of investment securities, income from equity investments, and net gain on mortgage loan origination and sale activities. Commercial banking income and related fees rose $108.7 million, driven by higher disbursement and other commercial banking fees. Gain on sales of investment securities increased $48.3 million, reflecting a series of security sales executed by management during the first quarter of 2026 and additional sales thereafter. Income from equity investments increased $27.1 million, primarily driven by certain losses on solar investments in 2025 that did not recur and gains on warrant valuations in the current year. Net gain on mortgage loan origination and sale activities increased $17.4 million, as higher origination volumes boosted production revenue, partially offset by lower secondary marketing revenues. These increases were partially offset by a $25.4 million decrease in net loan servicing revenue, reflecting MSR fair value losses, net of hedging, from elevated market volatility, partially offset by higher servicing revenue from growth in the average servicing portfolio balance.

Previous wording

Total non-interest expense for the three months ended June 30, 2026 increased $68.6 million from the same period in 2025, primarily due to higher deposit costs and salaries and employee benefits. Deposit costs increased$31.8 million driven by higher average ECR balances, which increased approximately$6.0 billion to$31.6 billion. Salaries and employee benefits rose by$24.4 million, reflecting higher average salaries and headcount.

Current wording

Total non-interest expense for the three months ended September 30, 2026 increased $50.7 million from the same period in 2025, primarily due to higher salaries and employee benefits, partially offset by lower deposit costs. Salaries and employee benefits rose by $32.6 million, reflecting higher average salaries, incentive compensation, and employee headcount. Deposit costs decreased $9.7 million as deposit optimization efforts reduced ECR balances and rates.

Previous wording

Total non-interest expense for the six months ended June 30, 2026 increased $142.6 million from the same period in 2025, primarily due to higher deposit costs, salaries and employee benefits, other expense, and data processing expenses. Deposit costs increased $58.3 million, driven by an increase of approximately$5.6 billion in average ECR related deposit balances to$30.5 billion. Salaries and employee benefits rose by $47.5 million, reflecting higher average salaries and headcount. Other expense increased $19.4 million, primarily from costs associated with operating OREO properties and supporting growth in the Company's disbursements business. Data processing expenses increased $15.0 million due to higher software-related costs. These increases were partially offset by a reduction in insurance expense of $22.3 million, driven by lower FDIC assessment fees.

Current wording

Total non-interest expense for the nine months ended September 30, 2026 increased $193.3 million from the same period in 2025, primarily due to higher salaries and employee benefits, deposit costs, and data processing expenses. Salaries and employee benefits rose by $80.1 million, reflecting higher average salaries, incentive compensation, and employee headcount. Deposit costs increased $48.6 million, as average ECR related deposit balances increased approximately $4.4 billion to $30.4 billion. Data processing expenses increased $22.7 million due to higher software-related costs. These increases were partially offset by a decline in insurance expense of $21.3 million due to lower FDIC assessment fees.

Previous wording

The Company's effective tax rate was 19.0% and 18.4% for the three months ended June 30, 2026 and 2025, respectively, and 18.7% and 18.8% for the six months ended June 30, 2026 and 2025, respectively. The increase in the effective tax rate for the three months ended June 30, 2026 compared to the same period in 2025 was primarily attributable to an increase in pretax income and a decrease in investment tax credits. For the six months ended June 30, 2026 and 2025, the effective tax rate remained substantially consistent.

Current wording

The Company's effective tax rate was 18.3% and 17.0% for the three months ended September 30, 2026 and 2025, respectively, and 18.5% and 18.1% for the nine months ended September 30, 2026 and 2025, respectively. The increase in the effective tax rate for the three months and nine months ended September 30, 2026 compared to the same periods in 2025 was primarily attributable to an increase in pretax income.

Previous wording

Total assets increased $5.9 billion, or 6.4%, to $98.7 billion at June 30, 2026, compared to $92.8 billion at December 31, 2025. Higher deposit levels supported an increase in cash of $2.3 billion, and also funded HFI and HFS loan growth. Loans HFI increased $2.3 billion, or 3.9%, to $60.9 billion as of June 30, 2026, compared to $58.7 billion as of December 31, 2025. By loan type, commercial and industrial, residential, and construction and land development loans increased $1.8 billion, $396 million, and $186 million, respectively, from December 31, 2025. Loans HFS increased $849 million from $3.5 billion as of December 31, 2025 primarily due to an increase in government-insured or guaranteed and agency-conforming mortgage loans.

Current wording

Total assets increased $5.3 billion, or 5.7%, to $98.1 billion at September 30, 2026, compared to $92.8 billion at December 31, 2025. Higher deposit levels supported an increase in cash of $1.7 billion, and also funded HFI and HFS loan growth. Loans HFI increased $2.9 billion, or 4.9%, to $61.5 billion as of September 30, 2026, compared to $58.7 billion as of December 31, 2025. By loan type, commercial and industrial, commercial real estate non-owner occupied, and residential real estate loans increased $2.2 billion, $357 million, and $285 million, respectively, from December 31, 2025. Loans HFS increased $453 million, or 13.0%, from $3.5 billion as of December 31, 2025, primarily reflecting increased early buyout activity, partially offset by higher sales activity and unfavorable fair value changes driven by higher interest rates.

Previous wording

Total liabilities increased $5.7 billion to $90.6 billion at June 30, 2026, compared to $84.8 billion at December 31, 2025 as total deposits increased $4.7 billion, or 6.1%, to $81.9 billion. By type, the increase in deposits from December 31, 2025 was driven by increases of $3.5 billion in non-interest bearing deposits, $843 million in interest bearing demand deposits, $300 million in savings and money market accounts, and $105 million in certificates of deposit. Other borrowings increased $996 million from December 31, 2025, primarily due to an increase in overnight borrowings.

Current wording

Total liabilities increased $5.3 billion to $90.1 billion at September 30, 2026, compared to $84.8 billion at December 31, 2025 as total deposits increased $4.6 billion, or 6.0%, to $81.8 billion. By type, the increase in deposits from December 31, 2025 was driven by increases of $1.7 billion in interest bearing demand deposits, $1.4 billion in non-interest bearing deposits, $859 million in certificates of deposit, and $624 million in savings and money market accounts. Other borrowings increased $373 million from December 31, 2025, primarily due to an increase in overnight borrowings.

Previous wording

Total equity of $8.1 billion at June 30, 2026 increased $189 million, or 2.4%, from December 31, 2025. This increase was primarily attributable to net income of $458.0 million for the six months ended June 30, 2026, partially offset by unrealized fair value losses on AFS securities of $106.8 million, recorded net of tax in OCI, share repurchases, and quarterly dividends totaling $112.5 million to common and preferred stockholders, including REIT preferred stockholders.

Current wording

Total equity was unchanged at $7.9 billion at September 30, 2026 and December 31, 2025. Net income of $735.2 million for the nine months ended September 30, 2026 was offset by unrealized fair value losses on AFS securities, recorded net of tax in OCI, quarterly dividends totaling $168.6 million to common and preferred stockholders (including REIT preferred stockholders), and $145.7 million in share repurchases.

Previous wording

The increase in total debt securities of $184 million from December 31, 2025 was primarily driven by net purchases of CLOs and Residential MBS issued by GSEs and GNMA, partially offset by sales of U.S. Treasury securities and commercial MBS during the six months ended June 30, 2026 as the Company sold securities to secure gains.

Current wording

Total debt securities decreased $197 million from December 31, 2025 primarily due to sales of U.S. Treasury securities to secure gains, partially offset by purchases of CLOs during the nine months ended September 30, 2026.

Previous wording

The Company purchases and originates residential mortgage loans that are held for sale or securitization through its AmeriHome mortgage banking business channel. As of June 30, 2026, loans HFS totaled $4.3 billion, an increase of $849 million, or 24.3%, compared to $3.5 billion at December 31, 2025. The increase in loans HFS from December 31, 2025 primarily related to an increase in government-insured or guaranteed and agency-conforming mortgage loans.

Current wording

The Company purchases and originates residential mortgage loans that are held for sale or securitization through its AmeriHome mortgage banking business channel. Loans HFS totaled $4.0 billion at September 30, 2026, an increase of $453 million, or 13.0%, from $3.5 billion at December 31, 2025. The increase was primarily driven by higher early buyout activity, partially offset by increased sales activity and unfavorable fair value changes from higher interest rates.

Previous wording

Loans classified as HFI are stated at the amount of unpaid principal, adjusted for net deferred fees and costs, premiums and discounts on acquired and purchased loans, and an ACL. Net deferred loan fees of $127 million and $120 million reduced the carrying value of loans as of June 30, 2026 and December 31, 2025, respectively. Net unamortized purchase premiums on acquired and purchased loans of $200 million and $186 million increased the carrying value of loans as of June 30, 2026 and December 31, 2025, respectively.

Current wording

Loans classified as HFI are stated at the amount of unpaid principal, adjusted for net deferred fees and costs, premiums and discounts on acquired and purchased loans, and an ACL. Net deferred loan fees of $128 million and $120 million reduced the carrying value of loans as of September 30, 2026 and December 31, 2025, respectively. Net unamortized purchase premiums on acquired and purchased loans of $202 million and $186 million increased the carrying value of loans as of September 30, 2026 and December 31, 2025, respectively.