# EDGAR Filing Document

**Accession Number:** 0000798941
**File Stem:** 0000798941-25-000050
**Filing Date:** 2025-11
**Character Count:** 788110
**Document Hash:** 84e3dea73252c910f2fd43b6ca82ba51
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000798941-25-000050.hdr.sgml**: 20251107

**ACCESSION NUMBER**: 0000798941-25-000050

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 122

**CONFORMED PERIOD OF REPORT**: 20250930

**FILED AS OF DATE**: 20251107

**DATE AS OF CHANGE**: 20251107

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** FIRST CITIZENS BANCSHARES INC /DE/
- **CENTRAL INDEX KEY:** 0000798941
- **STANDARD INDUSTRIAL CLASSIFICATION:** STATE COMMERCIAL BANKS [6022]
- **ORGANIZATION NAME:** 02 Finance
- **EIN:** 561528994
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-16715
- **FILM NUMBER:** 251460781

**BUSINESS ADDRESS:**
- **STREET 1:** 4300 SIX FORKS ROAD
- **CITY:** RALEIGH
- **STATE:** NC
- **ZIP:** 27609
- **BUSINESS PHONE:** 919 716 7000

**MAIL ADDRESS:**
- **STREET 1:** 4300 SIX FORKS ROAD
- **CITY:** RALEIGH
- **STATE:** NC
- **ZIP:** 27609

?xml version='1.0' encoding='ASCII'? fcnca-20250930

 **UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

____________________________________________________

**FORM 10-Q**

____________________________________________________

---

| | |
|:---|:---|
| ☒ | **Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934** |
| | **For the quarterly period ended September 30, 2025** |
| | **or** |
| ☐ | **Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934** |

---

**Commission File Number: 001-16715**

**First Citizens BancShares, Inc.**

**(Exact name of Registrant as specified in its charter)**

---

| | | | |
|:---|:---|:---|:---|
| **Delaware** | **Delaware** | **Delaware** | **56-1528994** |
| **(State or other jurisdiction of<br>incorporation or organization)** | **(State or other jurisdiction of<br>incorporation or organization)** | **(State or other jurisdiction of<br>incorporation or organization)** | **(I.R.S. Employer<br>Identification Number)** |
| **4300 Six Forks Road** | **Raleigh** | **North Carolina** | **27609** |
| **(Address of principal executive offices)** | **(Address of principal executive offices)** | **(Address of principal executive offices)** | **(Zip code)** |
|  |  | **(919)** | **716-7000** |
| **(Registrant's telephone number, including area code)** | **(Registrant's telephone number, including area code)** | **(Registrant's telephone number, including area code)** | **(Registrant's telephone number, including area code)** |

---

____________________________________________________

---

| | | |
|:---|:---|:---|
| **Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:** | **Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:** | **Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:** |
| **Title of each class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| Class A Common Stock, Par Value $1 | FCNCA | Nasdaq Global Select Market |
| Depositary Shares, Each Representing a 1/40th Interest in a Share of 5.375% Non-Cumulative Perpetual Preferred Stock, Series A | FCNCP | Nasdaq Global Select Market |
| 5.625% Non-Cumulative Perpetual Preferred Stock, Series C | FCNCO | Nasdaq Global Select Market |
| **Securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934:** | **Securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934:** | **Securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934:** |
| Class B Common Stock, Par Value $1 | Class B Common Stock, Par Value $1 | Class B Common Stock, Par Value $1 |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and 'emerging growth company' in Rule 12b-2 of the Exchange Act.

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Large accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | Emerging growth company | ☐ |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Class A Common Stock—11,430,367 shares

Class B Common Stock—1,005,185 shares

(Number of shares outstanding, by class, as of November 3, 2025)

------

---

| | | |
|:---|:---|:---|
| **CONTENTS** | **CONTENTS** | **CONTENTS** |
|  |  | Page |
| **PART I—FINANCIAL INFORMATION** | **PART I—FINANCIAL INFORMATION** |  |
| Item 1. | <u>[Financial Statements](#i42c9d633bd41410dbc2f7385cbee7cbc_16)</u> | <u>[4](#i42c9d633bd41410dbc2f7385cbee7cbc_16)</u> |
|  | <u>[Consolidated Balance Sheets (Unaudited)](#i42c9d633bd41410dbc2f7385cbee7cbc_25)</u> | <u>[4](#i42c9d633bd41410dbc2f7385cbee7cbc_25)</u> |
|  | <u>[Consolidated Statements of Income (Unaudited)](#i42c9d633bd41410dbc2f7385cbee7cbc_28)</u> | <u>[5](#i42c9d633bd41410dbc2f7385cbee7cbc_28)</u> |
|  | <u>[Consolidated Statements of Comprehensive Income (Unaudited)](#i42c9d633bd41410dbc2f7385cbee7cbc_31)</u> | <u>[6](#i42c9d633bd41410dbc2f7385cbee7cbc_31)</u> |
|  | <u>[Consolidated Statements of Changes in Stockholders' Equity (Unaudited)](#i42c9d633bd41410dbc2f7385cbee7cbc_34)</u> | <u>[7](#i42c9d633bd41410dbc2f7385cbee7cbc_34)</u> |
|  | <u>[Consolidated Statements of Cash Flows (Unaudited)](#i42c9d633bd41410dbc2f7385cbee7cbc_37)</u> | <u>[9](#i42c9d633bd41410dbc2f7385cbee7cbc_37)</u> |
|  | <u>[Notes to Unaudited Consolidated Financial Statements](#i42c9d633bd41410dbc2f7385cbee7cbc_40)</u> | <u>[11](#i42c9d633bd41410dbc2f7385cbee7cbc_40)</u> |
| Item 2. | <u>[Management's Discussion and Analysis of Financial Condition and Results of Operations](#i42c9d633bd41410dbc2f7385cbee7cbc_130)</u> | <u>[58](#i42c9d633bd41410dbc2f7385cbee7cbc_130)</u> |
| Item 3. | <u>[Quantitative and Qualitative Disclosures about Market Risk](#i42c9d633bd41410dbc2f7385cbee7cbc_265)</u> | <u>[112](#i42c9d633bd41410dbc2f7385cbee7cbc_265)</u> |
| Item 4. | <u>[Controls and Procedures](#i42c9d633bd41410dbc2f7385cbee7cbc_268)</u> | <u>[112](#i42c9d633bd41410dbc2f7385cbee7cbc_268)</u> |
| **PART II—OTHER INFORMATION** | **PART II—OTHER INFORMATION** |  |
| Item 1. | <u>[Legal Proceedings](#i42c9d633bd41410dbc2f7385cbee7cbc_283)</u> | <u>[113](#i42c9d633bd41410dbc2f7385cbee7cbc_283)</u> |
| Item 1A. | <u>[Risk Factors](#i42c9d633bd41410dbc2f7385cbee7cbc_286)</u> | <u>[113](#i42c9d633bd41410dbc2f7385cbee7cbc_286)</u> |
| Item 2. | <u>[Unregistered Sales of Equity Securities and Use of Proceeds](#i42c9d633bd41410dbc2f7385cbee7cbc_289)</u> | <u>[114](#i42c9d633bd41410dbc2f7385cbee7cbc_289)</u> |
| Item 5. | <u>[Other Information](#i42c9d633bd41410dbc2f7385cbee7cbc_295)</u> | <u>[114](#i42c9d633bd41410dbc2f7385cbee7cbc_295)</u> |
| Item 6. | <u>[Exhibits](#i42c9d633bd41410dbc2f7385cbee7cbc_298)</u> | <u>[115](#i42c9d633bd41410dbc2f7385cbee7cbc_298)</u> |
| <u>[Signatures](#i42c9d633bd41410dbc2f7385cbee7cbc_319)</u> | <u>[Signatures](#i42c9d633bd41410dbc2f7385cbee7cbc_319)</u> | <u>[116](#i42c9d633bd41410dbc2f7385cbee7cbc_319)</u> |

---

------

**GLOSSARY OF ABBREVIATIONS AND ACRONYMS** 

The following is a list of select abbreviations and acronyms used throughout this document. You may find it helpful to refer back to this table.

---

| | | | |
|:---|:---|:---|:---|
| **Acronym** | **Definition** | **Acronym** | **Definition** |
| ALLL | Allowance for Loan and Lease Losses | MSRs | Mortgage Servicing Rights |
| AOCI | Accumulated Other Comprehensive Income | NCCOB | North Carolina Office of the Commissioner of Banks |
| ASC | Accounting Standards Codification | NDFI | Nondepository Financial Institution |
| ASU | Accounting Standards Update | NII | Net Interest Income |
| BHC | Bank Holding Company | NII Sensitivity | Net Interest Income Sensitivity |
| bp or bps | Basis point(s); 1 bp = 0.01% | NIM | Net Interest Margin |
| CRA | Community Reinvestment Act | NPR | Notice of Proposed Rulemaking |
| CRE | Commercial Real Estate | OBBBA | One Big Beautiful Bill Act |
| DPA | Deferred Purchase Agreement | OREO | Other Real Estate Owned |
| DTAs | Deferred Tax Assets | PAA | Purchase Accounting Accretion or Amortization |
| ETR | Effective Income Tax Rate | PAM | Proportional Amortization Method |
| EVE Sensitivity | Economic Value of Equity Sensitivity | PCA | Prompt Corrective Action |
| FCB | First-Citizens Bank & Trust Company | PCD | Purchased Credit Deteriorated |
| FDIC | Federal Deposit Insurance Corporation | PD | Probability of Obligor Default |
| Federal Reserve | Board of Governors of the Federal Reserve System | PPNR | Pre-provision net revenue |
| FHLB | Federal Home Loan Bank | ROU | Right of Use |
| FOMC | Federal Open Market Committee | RWA | Risk-weighted assets |
| FRB | Federal Reserve Bank | SBA | Small Business Administration |
| GAAP | United States Generally Accepted Accounting Principles | SOFR | Secured Overnight Financing Rate |
| HPI | Home Price Index | SRP | Share Repurchase Program |
| HQLS | High-Quality Liquid Securities | SVB | Silicon Valley Bank |
| ISDA | International Swaps and Derivatives Association | SVBB | Silicon Valley Bridge Bank, N.A. |
| LGD | Loss Given Default | TMT | Technology Media and Telecommunications |
| LOCOM | Lower of Cost or Fair Value | UPB | Unpaid Principal Balance |
| MD&A | Management's Discussion and Analysis | VIE | Variable Interest Entities |

---

------

**PART I—FINANCIAL INFORMATION**

**Item 1. Financial Statements.**

**First Citizens BancShares, Inc. and Subsidiaries**

**Consolidated Balance Sheets (Unaudited)**

---

| | | |
|:---|:---|:---|
| *dollars in millions, except share data* | **September 30, 2025** | **December 31, 2024** |
| **Assets** |  |  |
| Cash and due from banks | $874 | $814 |
| Interest-earning deposits at banks | 24798 | 21364 |
| Securities purchased under agreements to resell | 83 | 158 |
| Investment in marketable equity securities (cost of $78 at September 30, 2025 and $79 at December 31, 2024) | 110 | 101 |
| Investment securities available for sale (cost of $35,187 at September 30, 2025 and $34,512 at December 31, 2024) | 34963 | 33750 |
| Investment securities held to maturity (fair value of $8,838 at September 30, 2025 and $8,702 at December 31, 2024) | 10051 | 10239 |
| Assets held for sale | 112 | 85 |
| Loans and leases | 144758 | 140221 |
| Allowance for loan and lease losses | (1652) | (1676) |
| &nbsp;&nbsp;Loans and leases, net of allowance for loan and lease losses | 143106 | 138545 |
| Operating lease equipment, net | 9446 | 9323 |
| Premises and equipment, net | 2283 | 2006 |
| Goodwill | 346 | 346 |
| Other intangible assets, net | 208 | 249 |
| Other assets | 7108 | 6740 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total assets** | $233488 | $223720 |
| **Liabilities** |  |  |
| Deposits: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Noninterest-bearing | $42752 | $38633 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest-bearing | 120438 | 116596 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total deposits | 163190 | 155229 |
| Credit balances of factoring clients | 1326 | 1016 |
| Borrowings: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Short-term borrowings | 423 | 367 |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term borrowings | 38252 | 36684 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total borrowings | 38675 | 37051 |
| Other liabilities | 8311 | 8196 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities** | 211502 | 201492 |
| **Stockholders' equity** |  |  |
| Preferred stock - $0.01 par value (20,000,000 shares authorized at September 30, 2025 and December 31, 2024)  | 881 | 881 |
| Common stock: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Class A - $1 par value (32,000,000 shares authorized at September 30, 2025 and December 31, 2024; 11,613,444 and 12,712,436 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively) | 12 | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;Class B - $1 par value (2,000,000 shares authorized and 1,005,185 shares issued and outstanding at September 30, 2025 and December 31, 2024) | 1 | 1 |
| Additional paid in capital | 270 | 2417 |
| Retained earnings | 20866 | 19361 |
| Accumulated other comprehensive loss | (44) | (445) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total stockholders' equity** | 21986 | 22228 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities and stockholders' equity** | $233488 | $223720 |

---

See accompanying Notes to the Unaudited Consolidated Financial Statements.

------

**First Citizens BancShares, Inc. and Subsidiaries**

**Consolidated Statements of Income (Unaudited)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
| *dollars in millions, except share and per share data* | **2025** | **2024** | **2025** | **2024** |
| **Interest income** |  |  |  |  |
| Interest and fees on loans | $2300 | $2430 | $6806 | $7206 |
| Interest on investment securities | 433 | 358 | 1266 | 970 |
| Interest on deposits at banks | 265 | 350 | 766 | 1176 |
| &nbsp;&nbsp;&nbsp;Total interest income | 2998 | 3138 | 8838 | 9352 |
| **Interest expense** |  |  |  |  |
| Deposits | 911 | 1004 | 2698 | 2907 |
| Borrowings | 353 | 338 | 1048 | 1011 |
| &nbsp;&nbsp;&nbsp;Total interest expense | 1264 | 1342 | 3746 | 3918 |
| Net interest income | 1734 | 1796 | 5092 | 5434 |
| Provision for credit losses | 191 | 117 | 460 | 276 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net interest income after provision for credit losses** | 1543 | 1679 | 4632 | 5158 |
| **Noninterest income** |  |  |  |  |
| Rental income on operating lease equipment | 273 | 262 | 815 | 776 |
| Lending-related fees | 67 | 67 | 202 | 189 |
| Deposit fees and service charges | 61 | 57 | 178 | 172 |
| Client investment fees | 58 | 55 | 163 | 159 |
| Wealth management services | 57 | 54 | 168 | 157 |
| International fees | 34 | 29 | 99 | 86 |
| Factoring commissions | 18 | 19 | 53 | 55 |
| Cardholder services, net | 39 | 42 | 121 | 122 |
| Merchant services, net | 12 | 12 | 39 | 36 |
| Insurance commissions | 13 | 14 | 41 | 42 |
| Realized gain on sale of investment securities, net |  | 4 |  | 4 |
| Fair value adjustment on marketable equity securities, net | 13 | 9 | 10 | 3 |
| Gain on sale of leasing equipment, net | 3 | 5 | 16 | 19 |
| Loss on extinguishment of debt |  |  |  | (2) |
| Other noninterest income | 51 | 21 | 107 | 98 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total noninterest income | 699 | 650 | 2012 | 1916 |
| **Noninterest expense** |  |  |  |  |
| Depreciation on operating lease equipment | 98 | 99 | 296 | 293 |
| Maintenance and other operating lease expenses | 67 | 59 | 180 | 164 |
| Personnel cost | 817 | 788 | 2445 | 2277 |
| Net occupancy expense | 58 | 62 | 177 | 182 |
| Equipment expense | 137 | 128 | 404 | 368 |
| Professional fees | 26 | 42 | 81 | 91 |
| Third-party processing fees | 67 | 55 | 193 | 173 |
| FDIC insurance expense | 38 | 31 | 114 | 105 |
| Marketing expense | 33 | 20 | 97 | 52 |
| Acquisition-related expenses | 28 | 46 | 108 | 148 |
| Intangible asset amortization | 13 | 15 | 41 | 47 |
| Other noninterest expense | 109 | 111 | 348 | 318 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total noninterest expense | 1491 | 1456 | 4484 | 4218 |
| Income before income taxes | 751 | 873 | 2160 | 2856 |
| Income tax expense | 183 | 234 | 534 | 779 |
| Net income | $568 | $639 | $1626 | $2077 |
| Preferred stock dividends | 14 | 15 | 43 | 46 |
| **Net income available to common stockholders** | $554 | $624 | $1583 | $2031 |
| **Earnings per common share** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic | $43.08 | $43.42 | $119.70 | $140.27 |
| &nbsp;&nbsp;&nbsp;Diluted | $43.08 | $43.42 | $119.70 | $140.26 |
| **Weighted average common shares outstanding** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic | 12849339 | 14375974 | 13217940 | 14480874 |
| &nbsp;&nbsp;&nbsp;Diluted | 12849339 | 14375974 | 13217940 | 14481919 |

---

See accompanying Notes to the Unaudited Consolidated Financial Statements.

------

**First Citizens BancShares, Inc. and Subsidiaries**

**Consolidated Statements of Comprehensive Income (Unaudited)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
| *dollars in millions* | **2025** | **2024** | **2025** | **2024** |
| Net income | $568 | $639 | $1626 | $2077 |
| **Other comprehensive income, net of tax** |  |  |  |  |
| Net unrealized gain on securities available for sale | 72 | 438 | 400 | 325 |
| Net change in unrealized loss on securities available for sale transferred to securities held to maturity |  | 1 |  | 1 |
| Net change in defined benefit pension items | (1) |  | (4) | (8) |
| Net unrealized (loss) gain on cash flow hedge derivatives | (1) | 12 | 5 | 14 |
| Other comprehensive income, net of tax | $70 | $451 | $401 | $332 |
| **Total comprehensive income** | $638 | $1090 | $2027 | $2409 |

---

See accompanying Notes to the Unaudited Consolidated Financial Statements.

------

**First Citizens BancShares, Inc. and Subsidiaries**

**Consolidated Statements of Changes in Stockholders' Equity (Unaudited)**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** |
| *dollars in millions, except per share data* | **Preferred Stock** | **Class A Common Stock** | **Class B Common Stock** | **Additional Paid in Capital** | **Retained Earnings** | **Accumulated Other Comprehensive (Loss) Income** | **Total Stockholders' Equity** |
| Balance at June 30, 2025 | $881 | $12 | $1 | $1179 | $20337 | $(114) | $22296 |
| Net income |  |  |  |  | 568 |  | 568 |
| Other comprehensive income, net of tax |  |  |  |  |  | 70 | 70 |
| Repurchased 457,350 shares of Class A common stock |  |  |  | (909) |  |  | (909) |
| Cash dividends declared ($1.95 per common share): |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Class A common stock |  |  |  |  | (23) |  | (23) |
| &nbsp;&nbsp;Class B common stock |  |  |  |  | (2) |  | (2) |
| Preferred stock dividends declared: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Series A |  |  |  |  | (5) |  | (5) |
| &nbsp;&nbsp;Series B |  |  |  |  | (7) |  | (7) |
| &nbsp;&nbsp;Series C |  |  |  |  | (2) |  | (2) |
| Balance at September 30, 2025 | $881 | $12 | $1 | $270 | $20866 | $(44) | $21986 |
| Balance at June 30, 2024 | $881 | $14 | $1 | $4099 | $18102 | $(610) | $22487 |
| Net income |  |  |  |  | 639 |  | 639 |
| Other comprehensive income, net of tax |  |  |  |  |  | 451 | 451 |
| Stock based compensation |  |  |  | (4) |  |  | (4) |
| Repurchased 353,058 shares of Class A common stock |  | (1) |  | (706) |  |  | (707) |
| Cash dividends declared ($1.64 per common share): |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Class A common stock |  |  |  |  | (21) |  | (21) |
| &nbsp;&nbsp;Class B common stock |  |  |  |  | (2) |  | (2) |
| Preferred stock dividends declared: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Series A |  |  |  |  | (5) |  | (5) |
| &nbsp;&nbsp;Series B |  |  |  |  | (8) |  | (8) |
| &nbsp;&nbsp;Series C |  |  |  |  | (2) |  | (2) |
| Balance at September 30, 2024 | $881 | $13 | $1 | $3389 | $18703 | $(159) | $22828 |

---

------

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Nine Months Ended** | **Nine Months Ended** | **Nine Months Ended** | **Nine Months Ended** | **Nine Months Ended** | **Nine Months Ended** | **Nine Months Ended** |
| *dollars in millions, except share data* | **Preferred Stock** | **Class A Common Stock** | **Class B Common Stock** | **Additional Paid in Capital** | **Retained Earnings** | **Accumulated Other Comprehensive (Loss) Income** | **Total Stockholders' Equity** |
| Balance at December 31, 2024 | $881 | $13 | $1 | $2417 | $19361 | $(445) | $22228 |
| Net income |  |  |  |  | 1626 |  | 1626 |
| Other comprehensive income, net of tax |  |  |  |  |  | 401 | 401 |
| Repurchased 1,098,992 shares of Class A common stock |  | (1) |  | (2147) |  |  | (2148) |
| Cash dividends declared ($5.85 per common share): |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Class A common stock |  |  |  |  | (72) |  | (72) |
| &nbsp;&nbsp;Class B common stock |  |  |  |  | (6) |  | (6) |
| Preferred stock dividends declared: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Series A |  |  |  |  | (14) |  | (14) |
| &nbsp;&nbsp;Series B |  |  |  |  | (21) |  | (21) |
| &nbsp;&nbsp;Series C |  |  |  |  | (8) |  | (8) |
| Balance at September 30, 2025 | $881 | $12 | $1 | $270 | $20866 | $(44) | $21986 |
| Balance at December 31, 2023 | $881 | $14 | $1 | $4108 | $16742 | $(491) | $21255 |
| Net income |  |  |  |  | 2077 |  | 2077 |
| Other comprehensive income, net of tax |  |  |  |  |  | 332 | 332 |
| Stock based compensation |  |  |  | (13) |  |  | (13) |
| Repurchased 353,058 shares of Class A common stock |  | (1) |  | (706) |  |  | (707) |
| Cash dividends declared ($4.92 per common share): |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Class A common stock |  |  |  |  | (65) |  | (65) |
| &nbsp;&nbsp;Class B common stock |  |  |  |  | (5) |  | (5) |
| Preferred stock dividends declared: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Series A |  |  |  |  | (14) |  | (14) |
| &nbsp;&nbsp;Series B |  |  |  |  | (24) |  | (24) |
| &nbsp;&nbsp;Series C |  |  |  |  | (8) |  | (8) |
| Balance at September 30, 2024 | $881 | $13 | $1 | $3389 | $18703 | $(159) | $22828 |

---

See accompanying Notes to the Unaudited Consolidated Financial Statements.

------

**First Citizens BancShares, Inc. and Subsidiaries**

**Consolidated Statements of Cash Flows (Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
| *dollars in millions* | **2025** | **2024** |
| **CASH FLOWS FROM OPERATING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;Net income | $1626 | $2077 |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net income to cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Provision for credit losses | 460 | 276 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred tax benefit | (104) | (127) |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation, amortization, and accretion, net | 284 | 36 |
| &nbsp;&nbsp;&nbsp;&nbsp;Realized gain on sale of investment securities, net |  | (4) |
| &nbsp;&nbsp;&nbsp;&nbsp;Fair value adjustment on marketable equity securities, net | (10) | (3) |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on sale of loans, net | (12) | (7) |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on sale of operating lease equipment, net | (16) | (19) |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on sale of premises and equipment, net |  | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on other real estate owned, net | (1) | (6) |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on extinguishment of debt |  | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Origination of loans held for sale | (1011) | (799) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sale of loans held for sale | 1137 | 867 |
| &nbsp;&nbsp;&nbsp;&nbsp;Impairment of premises and equipment | 5 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net change in other assets | (86) | (169) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net change in other liabilities | (345) | (245) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other operating activities | (54) | (11) |
| &nbsp;&nbsp;Net cash provided by operating activities | 1873 | 1869 |
| **CASH FLOWS FROM INVESTING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net (increase) decrease in interest-earning deposits at banks | (3434) | 7969 |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases of marketable equity securities |  | (6) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sales of investments in marketable equity securities |  | 15 |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases of investment securities available for sale | (7476) | (13339) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from maturities of investment securities available for sale | 5802 | 5036 |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sales of investment securities available for sale | 1196 | 695 |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases of investment securities held to maturity | (389) | (791) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from maturities of investment securities held to maturity | 598 | 401 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net decrease in securities purchased under agreements to resell | 75 | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net increase in loans | (4987) | (5606) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sales of loans | 220 | 244 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net increase in credit balances of factoring clients | 392 | 161 |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases of operating lease equipment | (522) | (793) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sales of operating lease equipment | 195 | 149 |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases of premises and equipment | (467) | (301) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sales of other real estate owned | 20 | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other investing activities | (463) | (279) |
| &nbsp;&nbsp;Net cash used in investing activities | (9240) | (6411) |
| **CASH FLOWS FROM FINANCING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net decrease in time deposits | (2178) | (2295) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net increase in demand and other interest-bearing deposits | 10312 | 8063 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net increase (decrease) in securities sold under agreements to repurchase | 56 | (94) |
| &nbsp;&nbsp;&nbsp;&nbsp;Repayment of long-term borrowings | (355) | (348) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of long-term borrowings | 1839 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Repurchase of Class A common stock | (2127) | (700) |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash dividends paid | (121) | (116) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other financing activities | 1 | (14) |
| &nbsp;&nbsp;Net cash provided by financing activities | 7427 | 4496 |
| Change in cash and due from banks | 60 | (46) |
| Cash and due from banks at beginning of period | 814 | 908 |
| Cash and due from banks at end of period | $874 | $862 |

---

------

---

| | | |
|:---|:---|:---|
| | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
| *dollars in millions* | **2025** | **2024** |
| **SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION** |  |  |
| &nbsp;&nbsp;&nbsp;Cash paid during the period for: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest | $3663 | $4005 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income taxes | 289 | 754 |
| &nbsp;&nbsp;&nbsp;Significant non-cash investing and financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Transfers of loans to other real estate | 55 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net settlement with FDIC for Purchase Money Note |  | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp;Transfer of assets from held for investment to held for sale | 401 | 329 |
| &nbsp;&nbsp;&nbsp;&nbsp;Transfer of assets from held for sale to held for investment | 28 | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commitments extended during the period on affordable housing investment credits | 454 | 360 |

---

See accompanying Notes to the Unaudited Consolidated Financial Statements.

------

**First Citizens BancShares, Inc. and Subsidiaries**

**Notes to Unaudited Consolidated Financial Statements**

**NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION**

**Nature of Operations**

First Citizens BancShares, Inc. (the "Parent Company" and, when including all of its subsidiaries on a consolidated basis, "we," "us," "our," "BancShares") is a financial holding company organized under the laws of Delaware that conducts operations through its banking subsidiary, First-Citizens Bank & Trust Company ("FCB"), which is headquartered in Raleigh, North Carolina. BancShares operates a network of branches and offices, predominantly located in the Southeast, Mid-Atlantic, Midwest and Western United States. BancShares provides various types of commercial and consumer banking services, including lending, leasing, and wealth management services. Deposit services include checking, savings, money market, and time deposit accounts.

**BASIS OF PRESENTATION** 

**Principles of Consolidation and Basis of Presentation**

These consolidated financial statements and notes thereto are presented in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations and cash flow activity required in accordance with accounting principles generally accepted in the United States of America ("GAAP"). In the opinion of management, all normal recurring adjustments necessary for a fair presentation of the consolidated financial position and consolidated results of operations have been made. The unaudited interim consolidated financial statements included in this Quarterly Report on Form 10-Q (this "Form 10-Q") should be read in conjunction with the Consolidated Financial Statements and Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Form 10-K"). Interim results are not necessarily indicative of results for a full year.

The consolidated financial statements of BancShares include the accounts of BancShares and its subsidiaries, certain partnership interests and variable interest entities ("VIEs") where BancShares is the primary beneficiary, if applicable. All significant intercompany accounts and transactions are eliminated upon consolidation. Assets held in agency or fiduciary capacity are not included in the consolidated financial statements. Refer to Note 8—Variable Interest Entities for additional information regarding VIEs.

**Reclassifications**

***Financial Statements***

In certain instances, amounts reported in the 2024 consolidated financial statements have been reclassified to conform to the current financial statement presentation. Such reclassifications had no effect on previously reported stockholders' equity or net income.

***Changes to the Composition of Reportable Segments***

We updated our segment reporting during the first quarter of 2025 (the "Segment Reporting Updates") as we transferred certain components from the Silicon Valley Bank ("SVB") Commercial and General Bank segments to the Commercial Bank segment and modified our segment expense allocation methodology. The Segment Reporting Updates did not result in the addition or removal of any of our existing segments at December 31, 2024, and the global fund banking and investor dependent loan portfolios, as well as a substantial portion of the cash flow dependent and innovation commercial and industrial ("innovation C&I") loans, remain in the SVB Commercial segment. Segment disclosures for 2024 periods included in this Form 10-Q were recast to conform with the Segment Reporting Updates summarized above. Refer to Note 17—Segment Information for additional information.

------

***2025 Loan Class Changes***

At December 31, 2024, our disclosures for loans and leases and the allowance for loan and lease losses ("ALLL") were aggregated into Commercial, Consumer, and SVB portfolios, each of which consisted of several loan classes as summarized below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Commercial portfolio consisted of the following loan classes: commercial construction, owner occupied commercial mortgage, non-owner occupied commercial mortgage, commercial and industrial, and leases.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Consumer portfolio consisted of the following loan classes: residential mortgage, revolving mortgage, consumer auto, and consumer other.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The SVB portfolio consisted of the following loan classes: global fund banking, investor dependent - early stage, investor dependent - growth stage, and cash flow dependent and innovation C&I.

For further descriptions of these loan classes, refer to Note 1—Significant Accounting Policies and Basis of Presentation in the Notes to the Consolidated Financial Statements included in our 2024 Form 10-K.

During the second quarter of 2025, the loan classes which were reported in the SVB portfolio in the 2024 Form 10-K were recast to the Commercial portfolio (the "2025 Loan Class Changes") as summarized below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Global fund banking remained a separate loan class, but is reported under the Commercial portfolio.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Investor dependent–early stage and investor dependent–growth stage were combined into a single investor dependent loan class, which is reported under the Commercial portfolio.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Cash flow dependent and innovation C&I was combined with the commercial and industrial loan class, which is reported under the Commercial portfolio.

Loan and lease and ALLL disclosures for all periods presented in this Form 10-Q were recast to reflect the 2025 Loan Class Changes. Refer to Note 4—Loans and Leases and Note 5—Allowance for Loan and Lease Losses.

The disclosures in Note 17—Segment Information were not recast as a result of the 2025 Loan Class Changes because the composition of reportable segments is separate and distinct from the identification of loan classes.

**Use of Estimates in the Preparation of Financial Statements**

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions based on available information. These estimates and assumptions impact the amounts reported in the consolidated financial statements and accompanying notes and the disclosures provided, and actual results could differ from those estimates. The significant estimate related to the determination of the ALLL is considered a critical accounting estimate.

**SIGNIFICANT ACCOUNTING POLICIES**

Significant accounting policies are described in the 2024 Form 10-K. There were no material changes to these policies during the nine months ended September 30, 2025.

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**NOTE 2 — BUSINESS COMBINATIONS**

**Pending Branch Acquisition**

On October 16, 2025, FCB announced that it had entered into an agreement to consummate the acquisition of 138 branches from BMO Bank N.A. ("BMO Bank") located throughout the Midwest, Great Plains and West regions of the U.S. (the "BMO Branch Acquisition"). In connection with the BMO Branch Acquisition, FCB expects to assume approximately $5.7 billion in deposit liabilities and acquire approximately $1.1 billion in loans. We expect the transaction to close in mid-2026, subject to customary closing terms and conditions and regulatory approvals.

**Completed Acquisition**

On March 27, 2023 (the "SVBB Acquisition Date"), FCB acquired substantially all loans and certain other assets and assumed all customer deposits and certain other liabilities of Silicon Valley Bridge Bank, N.A. ("SVBB") from the Federal Deposit Insurance Corporation (the "FDIC") pursuant to the terms of a purchase and assumption agreement (the "SVBB Purchase Agreement") by and among FCB, the FDIC, and the FDIC, as receiver of SVBB (the "SVBB Acquisition").

In connection with the SVBB Purchase Agreement, FCB entered into a commercial shared loss agreement with the FDIC (the "Shared-Loss Agreement"). On April 7, 2025, FCB and the FDIC entered into an agreement (the "Shared-Loss Termination Agreement") to terminate the Shared-Loss Agreement. As a result of entering into the Shared-Loss Termination Agreement, all rights and obligations of the parties under the Shared-Loss Agreement terminated as of the date of the Shared-Loss Termination Agreement, including FCB's reporting covenants and obligations related to FDIC Loss Sharing and FCB reimbursement (each as defined in Note 2—Business Combinations in our 2024 Form 10-K). There was no impact to our consolidated balance sheets or statements of income resulting from the Shared-Loss Termination Agreement because there was no loss indemnification asset or true-up liability associated with the Shared-Loss Agreement, primarily based on evaluation of historical loss experience and the credit quality of the Covered Assets (as defined in Note 2—Business Combinations in our 2024 Form 10-K).

In connection with the SVBB Acquisition, FCB issued a five-year $36.07 billion note payable to the FDIC, maturing March 27, 2028, which was amended and restated on November 20, 2023 (the "Purchase Money Note"). FCB and the FDIC, as lender and as collateral agent, also entered into an Advance Facility Agreement, dated as of the SVBB Acquisition Date, and effective as of November 20, 2023 (the "Advance Facility Agreement"), which provided total advances available through March 27, 2025 of up to $70 billion solely to provide liquidity to offset deposit withdrawal or runoff of former SVBB deposit accounts and to fund the unfunded commercial lending commitments acquired in the SVBB Acquisition. There were no amounts outstanding on the facility at the end of the draw period on March 27, 2025.

Refer to Note 2—Business Combinations in our 2024 Form 10-K for further discussion of the SVBB Acquisition, Purchase Money Note, and the Advance Facility Agreement.

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**NOTE 3 — INVESTMENT SECURITIES**

The following tables include the amortized cost and fair value of investment securities:

**Amortized Cost and Fair Value - Investment Securities** 

---

| | | | | |
|:---|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** |
|  | **Amortized Cost** | **Gross Unrealized Gains** | **Gross Unrealized Losses** | **Fair Value** |
| **Investment securities available for sale** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;U.S. Treasury | $13729 | $54 | $(2) | $13781 |
| &nbsp;&nbsp;&nbsp;&nbsp;Government agency | 53 |  | (1) | 52 |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential mortgage-backed securities | 17550 | 236 | (351) | 17435 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial mortgage-backed securities | 3582 | 27 | (181) | 3428 |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate bonds | 256 |  | (6) | 250 |
| &nbsp;&nbsp;&nbsp;&nbsp;Municipal bonds | 17 |  |  | 17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total investment securities available for sale | $35187 | $317 | $(541) | $34963 |
| **Investment in marketable equity securities** | $78 | $33 | $(1) | $110 |
| **Investment securities held to maturity** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;U.S. Treasury | $387 | $— | $(18) | $369 |
| &nbsp;&nbsp;&nbsp;&nbsp;Government agency | 1459 |  | (64) | 1395 |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential mortgage-backed securities | 4568 | 28 | (513) | 4083 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial mortgage-backed securities | 3358 |  | (625) | 2733 |
| &nbsp;&nbsp;&nbsp;&nbsp;Supranational securities | 277 |  | (21) | 256 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | 2 |  |  | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total investment securities held to maturity | $10051 | $28 | $(1241) | $8838 |
| **Total investment securities** | $45316 | $378 | $(1783) | $43911 |
|  | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Amortized Cost** | **Gross Unrealized Gains** | **Gross Unrealized Losses** | **Fair Value** |
| **Investment securities available for sale** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;U.S. Treasury | $13897 | $33 | $(27) | $13903 |
| &nbsp;&nbsp;&nbsp;&nbsp;Government agency | 79 |  | (2) | 77 |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential mortgage-backed securities | 16161 | 41 | (582) | 15620 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial mortgage-backed securities | 3869 | 7 | (210) | 3666 |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate bonds | 489 |  | (22) | 467 |
| &nbsp;&nbsp;&nbsp;&nbsp;Municipal bonds | 17 |  |  | 17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total investment securities available for sale | $34512 | $81 | $(843) | $33750 |
| **Investment in marketable equity securities** | $79 | $27 | $(5) | $101 |
| **Investment securities held to maturity** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;U.S. Treasury | $483 | $— | $(31) | $452 |
| &nbsp;&nbsp;&nbsp;&nbsp;Government agency | 1489 |  | (115) | 1374 |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential mortgage-backed securities | 4558 | 2 | (682) | 3878 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial mortgage-backed securities | 3407 |  | (678) | 2729 |
| &nbsp;&nbsp;&nbsp;&nbsp;Supranational securities | 300 |  | (33) | 267 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | 2 |  |  | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total investment securities held to maturity | $10239 | $2 | $(1539) | $8702 |
| **Total investment securities** | $44830 | $110 | $(2387) | $42553 |

---

U.S. Treasury investments include Treasury bills and Notes issued by the U.S. Treasury. Investments in government agency securities represent securities issued by the Small Business Administration ("SBA"), Federal Home Loan Bank ("FHLB") and other U.S. agencies. Investments in residential and commercial mortgage-backed securities represent securities issued by the Government National Mortgage Association, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation. Investments in corporate bonds represent positions in debt securities of other financial institutions. Municipal bonds are revenue bonds. Investments in marketable equity securities represent positions in common stock of publicly traded financial institutions. Investments in supranational securities represent securities issued by the Supranational Entities & Multilateral Development Banks. Other held to maturity investments include certificates of deposit with other financial institutions.

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BancShares initially held approximately 354,000 shares of Visa, Inc. ("Visa") Class B common stock ("Visa Class B common stock"). Effective January 24, 2024, all outstanding shares of Visa Class B common stock were redenominated as Visa Class B-1 common stock ("Visa Class B-1 common stock") pursuant to Visa's eighth amended and restated certificate of incorporation. BancShares currently holds approximately 354,000 shares of Visa Class B-1 common stock. Until the resolution of certain litigation, at which time the Visa Class B-1 common stock will convert to publicly traded Visa Class A common stock, or the potential exchange of Visa Class B-1 common stock for other marketable classes of Visa common stock, these shares are only transferable to other stockholders of Visa Class B-1 common stock or certain new denominations of Visa's former Class B common stock. As a result, there is limited transfer activity in private transactions between buyers and sellers. Given this limited trading activity and the continuing uncertainty regarding the likelihood, ultimate timing and eventual exchange of Visa Class B-1 common stock for shares of Visa Class A common stock or other marketable classes of Visa common stock, these shares are not considered to have a readily determinable fair value and have no carrying value. BancShares continues to monitor the trading activity in Visa Class B-1 common stock, the status of the resolution of certain litigation matters at Visa, and other potential exchange alternatives that would trigger the conversion of the Visa Class B-1 common stock into Visa Class A common stock or other marketable classes of Visa common stock.

Accrued interest receivable for available for sale and held to maturity debt securities was excluded from the estimate for credit losses. At September 30, 2025, accrued interest receivable for available for sale and held to maturity debt securities was $172 million and $19 million, respectively. At December 31, 2024, accrued interest receivable for available for sale and held to maturity debt securities was $177 million and $20 million, respectively. During the three and nine months ended September 30, 2025 and 2024, there was no accrued interest that was deemed uncollectible and written off against interest income.

A security is considered past due once it is 30 days contractually past due under the terms of the agreement. There were no securities past due as of September 30, 2025 or December 31, 2024.

The following table provides the amortized cost and fair value by contractual maturity. Expected maturities will differ from contractual maturities on certain securities because borrowers and issuers may have the right to call or prepay obligations with or without prepayment penalties. Residential and commercial mortgage-backed and government agency securities are stated separately as they are not due at a single maturity date.

**Maturities - Debt Securities** 

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| | | | | |
|:---|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **September 30, 2025** | **December 31, 2024** | **December 31, 2024** |
|  | **Amortized Cost** | **Fair Value** | **Amortized Cost** | **Fair Value** |
| **Investment securities available for sale** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Non-amortizing securities maturing in: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;One year or less | $9276 | $9295 | $5090 | $5086 |
| &nbsp;&nbsp;&nbsp;&nbsp;After one through five years | 4631 | 4662 | 8945 | 8949 |
| &nbsp;&nbsp;&nbsp;&nbsp;After five through 10 years | 78 | 74 | 346 | 330 |
| &nbsp;&nbsp;&nbsp;&nbsp;After 10 years | 17 | 17 | 22 | 22 |
| &nbsp;&nbsp;&nbsp;Government agency | 53 | 52 | 79 | 77 |
| &nbsp;&nbsp;&nbsp;Residential mortgage-backed securities | 17550 | 17435 | 16161 | 15620 |
| &nbsp;&nbsp;&nbsp;Commercial mortgage-backed securities | 3582 | 3428 | 3869 | 3666 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total investment securities available for sale** | $35187 | $34963 | $34512 | $33750 |
| **Investment securities held to maturity** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Non-amortizing securities maturing in: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;One year or less | $505 | $500 | $429 | $419 |
| &nbsp;&nbsp;&nbsp;&nbsp;After one through five years | 1492 | 1406 | 1299 | 1208 |
| &nbsp;&nbsp;&nbsp;&nbsp;After five through 10 years | 128 | 116 | 546 | 468 |
| &nbsp;&nbsp;&nbsp;Residential mortgage-backed securities | 4568 | 4083 | 4558 | 3878 |
| &nbsp;&nbsp;&nbsp;Commercial mortgage-backed securities | 3358 | 2733 | 3407 | 2729 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total investment securities held to maturity** | $10051 | $8838 | $10239 | $8702 |

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The following table presents interest and dividend income on investment securities:

**Interest and Dividends on Investment Securities**

---

| | | | | |
|:---|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Interest income - taxable investment securities <sup>(1)</sup> | $432 | $357 | $1263 | $967 |
| Interest income - nontaxable investment securities | 1 |  | 1 | 1 |
| Dividend income - marketable equity securities |  | 1 | 2 | 2 |
| Interest on investment securities | $433 | $358 | $1266 | $970 |

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<sup>(1)</sup> *Amount includes interest income on securities purchased under agreements to resell.*

The following table presents the gross realized gain and loss on sales of investment securities available for sale, and the net realized gain on sale of marketable equity securities:

**Realized Gain (Loss) on Sale of Investment Securities, Net**

---

| | | | | |
|:---|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Gross realized gain on sale of investment securities available for sale | $— | $— | $1 | $— |
| Gross realized loss on sale of investment securities available for sale |  |  | (2) |  |
| Net realized loss on sale of investment securities available for sale |  |  | (1) |  |
| Net realized gain on sale of marketable equity securities |  | 4 | 1 | 4 |
| Realized gain on sale of investment securities, net | $— | $4 | $— | $4 |

---

The following table provides information regarding investment securities available for sale with unrealized losses:

**Gross Unrealized Losses on Debt Securities Available For Sale** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** |
|  | **Less than 12 months** | **Less than 12 months** | **12 months or more** | **12 months or more** | **Total** | **Total** |
|  | **Fair Value** | **Unrealized Losses** | **Fair Value** | **Unrealized Losses** | **Fair Value** | **Unrealized Losses** |
| **Investment securities available for sale** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;U.S. Treasury | $501 | $(1) | $400 | $(1) | $901 | $(2) |
| &nbsp;&nbsp;&nbsp;&nbsp;Government agency |  |  | 52 | (1) | 52 | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential mortgage-backed securities | 403 | (1) | 3381 | (350) | 3784 | (351) |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial mortgage-backed securities | 96 |  | 1175 | (181) | 1271 | (181) |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate bonds | 1 |  | 212 | (6) | 213 | (6) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $1001 | $(2) | $5220 | $(539) | $6221 | $(541) |
|  | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Less than 12 months** | **Less than 12 months** | **12 months or more** | **12 months or more** | **Total** | **Total** |
|  | **Fair Value** | **Unrealized Losses** | **Fair Value** | **Unrealized Losses** | **Fair Value** | **Unrealized Losses** |
| **Investment securities available for sale** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;U.S. Treasury | $3791 | $(12) | $981 | $(15) | $4772 | $(27) |
| &nbsp;&nbsp;&nbsp;&nbsp;Government agency |  |  | 77 | (2) | 77 | (2) |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential mortgage-backed securities | 7470 | (61) | 3575 | (521) | 11045 | (582) |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial mortgage-backed securities | 1183 | (8) | 1342 | (202) | 2525 | (210) |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate bonds | 16 |  | 438 | (22) | 454 | (22) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $12460 | $(81) | $6413 | $(762) | $18873 | $(843) |

---

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As of September 30, 2025, there were 461 investment securities available for sale with continuous unrealized losses for more than 12 months, of which 427 were government sponsored enterprise-issued mortgage-backed securities, government agency securities, or U.S. Treasury securities and the remaining 34 were corporate bonds. BancShares has the ability and intent to retain these securities for a period of time sufficient to recover all unrealized losses. Given the consistently strong credit rating of the U.S. Treasury, and the long history of no credit losses on debt securities issued by government agencies and government sponsored entities, as of September 30, 2025, no allowance for credit loss was required. For corporate bonds, we analyzed the changes in interest rates relative to when the investment securities were purchased or acquired, and considered other factors including changes in credit ratings, delinquencies, and other macroeconomic factors. As a result of this analysis, we determined that no allowance for credit loss was required for investment securities available for sale as of September 30, 2025.

BancShares' portfolio of held to maturity debt securities consists of mortgage-backed securities issued by government agencies and government sponsored entities, U.S. Treasury notes, unsecured bonds issued by government agencies and government sponsored entities, and securities issued by the Supranational Entities & Multilateral Development Banks. Given the consistently strong credit rating of the U.S. Treasury and the Supranational Entities & Multilateral Development Banks, and the long history of no credit losses on debt securities issued by government agencies and government sponsored entities, no allowance for credit loss was required for debt securities held to maturity as of September 30, 2025.

There were no debt securities on nonaccrual status as of September 30, 2025 or December 31, 2024.

Investment securities having an aggregate carrying value of $6.18 billion at September 30, 2025, and $3.94 billion at December 31, 2024, were pledged as collateral to secure public funds on deposit, the Purchase Money Note, certain short-term borrowings, and for other purposes as required by law.

Certain investments held by BancShares are reported in other assets, including FHLB stock and nonmarketable securities without readily determinable fair values that are recorded at cost, and investments in qualified affordable housing projects, all of which are accounted for under the proportional amortization method (the "PAM").

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**NOTE 4 — LOANS AND LEASES**

Unless otherwise noted, loans held for sale are not included in the following tables. Leases in the following tables include finance leases, but exclude operating lease equipment.

**Loans by Class** 

---

| | | |
|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **December 31, 2024** |
| **Commercial** |  |  |
| &nbsp;&nbsp;Commercial construction | $5926 | $5109 |
| &nbsp;&nbsp;Owner occupied commercial mortgage | 17232 | 16842 |
| &nbsp;&nbsp;Non-owner occupied commercial mortgage | 15645 | 16194 |
| &nbsp;&nbsp;Commercial and industrial | 41172 | 40737 |
| &nbsp;&nbsp;Leases | 2066 | 2014 |
| &nbsp;&nbsp;Global fund banking | 31615 | 27904 |
| &nbsp;&nbsp;Investor dependent | 2772 | 3193 |
| &nbsp;&nbsp;&nbsp;Total commercial | 116428 | 111993 |
| **Consumer** |  |  |
| &nbsp;&nbsp;Residential mortgage | 23036 | 23152 |
| &nbsp;&nbsp;Revolving mortgage | 2794 | 2567 |
| &nbsp;&nbsp;Consumer auto | 1463 | 1523 |
| &nbsp;&nbsp;Consumer other | 1037 | 986 |
| &nbsp;&nbsp;&nbsp;Total consumer | 28330 | 28228 |
| **Total loans and leases** | $144758 | $140221 |

---

Refer to Note 1—Significant Accounting Policies and Basis of Presentation for discussion related to changes in loan classes.

At September 30, 2025 and December 31, 2024, accrued interest receivable on loans included in other assets was $637 million and $603 million, respectively, and was excluded from the estimate of credit losses.

The discount on acquired loans is accreted to interest income over the contractual life of the loan using the effective interest method. Discount accretion income was $71 million and $230 million for the three and nine months ended September 30, 2025, including $6 million and $17 million for unfunded commitments, respectively. Discount accretion income was $107 million and $415 million for the three and nine months ended September 30, 2024, including $16 million and $71 million for unfunded commitments, respectively.

The following table presents selected components of the amortized cost of loans, including the unamortized discount on acquired loans.

**Components of Amortized Cost** 

---

| | | |
|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **December 31, 2024** |
| **Deferred fees, including unamortized costs and unearned fees on non-PCD loans** | $(89) | $(91) |
| **Net unamortized discount on acquired loans** |  |  |
| &nbsp;&nbsp;&nbsp;Non-PCD | $1339 | $1504 |
| &nbsp;&nbsp;&nbsp;PCD | 44 | 94 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total net unamortized discount | $1383 | $1598 |

---

------

The aging and nonaccrual status of the outstanding loans and leases by class at September 30, 2025 and December 31, 2024 are provided in the tables below. Loans and leases less than 30 days past due are considered current, as various grace periods allow borrowers to make payments within a stated period after the due date and remain in compliance with the respective agreement.

**Loans and Leases - Delinquency and Nonaccrual Status** <sup>(1) (2)</sup>

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** |
|  | **Accruing Loans** | **Accruing Loans** | **Accruing Loans** | **Accruing Loans** | **Accruing Loans** | **Accruing Loans** |  |  |
|  | **30-59 Days<br>Past Due** | **60-89 Days<br>Past Due** | **90 Days or<br>Greater** | **Total<br>Past Due** | **Current** | **Total Accruing** | **Nonaccrual Loans** | **Total** |
| **Commercial** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Commercial construction | $8 | $20 | $19 | $47 | $5870 | $5917 | $9 | $5926 |
| &nbsp;&nbsp;Owner occupied commercial mortgage | 31 | 21 |  | 52 | 17022 | 17074 | 158 | 17232 |
| &nbsp;&nbsp;Non-owner occupied commercial mortgage | 36 | 36 | 142 | 214 | 15066 | 15280 | 365 | 15645 |
| &nbsp;&nbsp;Commercial and industrial | 253 | 53 | 40 | 346 | 40250 | 40596 | 576 | 41172 |
| &nbsp;&nbsp;Leases | 30 | 7 |  | 37 | 2004 | 2041 | 25 | 2066 |
| &nbsp;&nbsp;Global fund banking |  |  |  |  | 31615 | 31615 |  | 31615 |
| &nbsp;&nbsp;Investor dependent | 2 | 1 |  | 3 | 2708 | 2711 | 61 | 2772 |
| &nbsp;&nbsp;&nbsp;Total commercial | 360 | 138 | 201 | 699 | 114535 | 115234 | 1194 | 116428 |
| **Consumer** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Residential mortgage | 116 | 36 | 6 | 158 | 22708 | 22866 | 170 | 23036 |
| &nbsp;&nbsp;Revolving mortgage | 16 | 3 |  | 19 | 2742 | 2761 | 33 | 2794 |
| &nbsp;&nbsp;Consumer auto | 10 | 2 |  | 12 | 1443 | 1455 | 8 | 1463 |
| &nbsp;&nbsp;Consumer other | 4 | 3 | 2 | 9 | 1027 | 1036 | 1 | 1037 |
| &nbsp;&nbsp;&nbsp;Total consumer | 146 | 44 | 8 | 198 | 27920 | 28118 | 212 | 28330 |
| **Total loans and leases** | $506 | $182 | $209 | $897 | $142455 | $143352 | $1406 | $144758 |
|  | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Accruing Loans** | **Accruing Loans** | **Accruing Loans** | **Accruing Loans** | **Accruing Loans** | **Accruing Loans** |  |  |
|  | **30-59 Days<br>Past Due** | **60-89 Days<br>Past Due** | **90 Days or<br>Greater** | **Total<br>Past Due** | **Current** | **Total Accruing** | **Nonaccrual Loans** | **Total** |
| **Commercial** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Commercial construction | $21 | $1 | $1 | $23 | $5077 | $5100 | $9 | $5109 |
| &nbsp;&nbsp;Owner occupied commercial mortgage | 30 | 9 | 2 | 41 | 16739 | 16780 | 62 | 16842 |
| &nbsp;&nbsp;Non-owner occupied commercial mortgage | 43 | 27 | 78 | 148 | 15621 | 15769 | 425 | 16194 |
| &nbsp;&nbsp;Commercial and industrial | 170 | 40 | 16 | 226 | 40122 | 40348 | 389 | 40737 |
| &nbsp;&nbsp;Leases | 33 | 11 | 2 | 46 | 1937 | 1983 | 31 | 2014 |
| &nbsp;&nbsp;Global fund banking |  |  |  |  | 27904 | 27904 |  | 27904 |
| &nbsp;&nbsp;Investor dependent | 10 | 1 |  | 11 | 3095 | 3106 | 87 | 3193 |
| &nbsp;&nbsp;&nbsp;Total commercial | 307 | 89 | 99 | 495 | 110495 | 110990 | 1003 | 111993 |
| **Consumer** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Residential mortgage | 172 | 27 | 7 | 206 | 22798 | 23004 | 148 | 23152 |
| &nbsp;&nbsp;Revolving mortgage | 20 | 4 |  | 24 | 2519 | 2543 | 24 | 2567 |
| &nbsp;&nbsp;Consumer auto | 12 | 3 |  | 15 | 1500 | 1515 | 8 | 1523 |
| &nbsp;&nbsp;Consumer other | 5 | 3 | 3 | 11 | 974 | 985 | 1 | 986 |
| &nbsp;&nbsp;&nbsp;Total consumer | 209 | 37 | 10 | 256 | 27791 | 28047 | 181 | 28228 |
| **Total loans and leases** | $516 | $126 | $109 | $751 | $138286 | $139037 | $1184 | $140221 |

---

<sup>(1)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*Accrued interest that was reversed when the loan went to nonaccrual status was $14 million for the nine months ended September 30, 2025 and $14 million for the year ended December 31, 2024.*

<sup>(2)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*Nonaccrual loans for which there was no related ALLL totaled $411 million at September 30, 2025 and $303 million at December 31, 2024.*

Other real estate owned ("OREO") and repossessed assets were $98 million as of September 30, 2025 and $64 million as of December 31, 2024.

------

**Credit Quality Indicators**

Loans and leases are monitored for credit quality on a recurring basis. Commercial loans and leases and consumer loans have different credit quality indicators as a result of the unique characteristics of the loan classes being evaluated. The credit quality indicators for commercial loans and leases are developed through a review of individual borrowers on an ongoing basis. Commercial loans are evaluated periodically with more frequent evaluations done on criticized loans. The indicators as of the date presented are based on the most recent assessment performed and are defined below:

**Pass** – A pass rated asset is not adversely classified because it does not display any of the characteristics for adverse classification.

**Special mention** – A special mention asset has potential weaknesses which deserve management's close attention. If left uncorrected, such potential weaknesses may result in deterioration of the repayment prospects or collateral position at some future date. Special mention assets are not adversely classified and do not warrant adverse classification.

**Substandard** – A substandard asset is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Assets classified as substandard generally have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. These assets are characterized by the distinct possibility of loss if the deficiencies are not corrected.

**Doubtful** – An asset classified as doubtful has all the weaknesses inherent in an asset classified substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently existing facts, conditions and values.

**Loss** – Assets classified as loss are considered uncollectible and of such little value it is inappropriate to be carried as an asset. This classification is not necessarily equivalent to any potential for recovery or salvage value, but rather it is not appropriate to defer a full charge-off even though partial recovery may be affected in the future.

**Ungraded** – Ungraded loans represent loans not included in the individual credit grading process due to their relatively small balances or borrower type. The majority of ungraded loans at September 30, 2025 and December 31, 2024, relate to business credit cards. Business credit card loans are subject to automatic charge-off when they become 120 days past due in the same manner as unsecured consumer lines of credit.

The credit quality indicator for consumer loans is based on delinquency status of the borrower as of the date presented. As the borrower becomes more delinquent, the likelihood of loss increases. An exemption is applied to government guaranteed loans as the principal repayments are insured by the Federal Housing Administration and U.S. Department of Veterans Affairs and thus remain on accrual status regardless of delinquency status.

The following tables summarize the commercial loans disaggregated by year of origination and by risk rating. The consumer loan delinquency status by year of origination is also presented below. The tables reflect the amortized cost of the loans and include purchased credit deteriorated ("PCD") loans.

------

**Commercial Loans - Risk Classifications by Class** 

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** |
| **Risk Classification:** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | | **Revolving Converted to Term Loans** | |
| *dollars in millions* | **2025** | **2024** | **2023** | **2022** | **2021** | **2020 & Prior** | **Revolving** | **Revolving Converted to Term Loans** | **Total** |
| **Commercial construction** | **Commercial construction** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | $1488 | $1672 | $1453 | $590 | $84 | $79 | $362 | $— | $5728 |
| &nbsp;&nbsp;Special Mention | 7 | 4 | 56 |  |  |  |  |  | 67 |
| &nbsp;&nbsp;Substandard | 5 | 15 | 4 | 85 | 15 | 4 |  |  | 128 |
| &nbsp;&nbsp;Doubtful | 3 |  |  |  |  |  |  |  | 3 |
| &nbsp;&nbsp;Ungraded |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total commercial construction | 1503 | 1691 | 1513 | 675 | 99 | 83 | 362 |  | 5926 |
| **Owner occupied commercial mortgage** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | 1806 | 2703 | 2345 | 2463 | 2355 | 4253 | 215 | 28 | 16168 |
| &nbsp;&nbsp;Special Mention | 47 | 32 | 47 | 106 | 40 | 51 | 2 |  | 325 |
| &nbsp;&nbsp;Substandard | 39 | 59 | 115 | 187 | 94 | 221 | 9 | 1 | 725 |
| &nbsp;&nbsp;Doubtful |  | 4 | 10 |  |  |  |  |  | 14 |
| &nbsp;&nbsp;Ungraded |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total owner occupied commercial mortgage | 1892 | 2798 | 2517 | 2756 | 2489 | 4525 | 226 | 29 | 17232 |
| **Non-owner occupied commercial mortgage** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | 1977 | 2606 | 3235 | 2241 | 1375 | 2575 | 93 | 3 | 14105 |
| &nbsp;&nbsp;Special Mention | 128 | 53 | 114 | 51 | 1 | 24 |  |  | 371 |
| &nbsp;&nbsp;Substandard | 354 | 243 | 141 | 107 | 35 | 199 | 1 |  | 1080 |
| &nbsp;&nbsp;Doubtful | 42 | 21 |  | 15 |  | 11 |  |  | 89 |
| &nbsp;&nbsp;Ungraded |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total non-owner occupied commercial mortgage | 2501 | 2923 | 3490 | 2414 | 1411 | 2809 | 94 | 3 | 15645 |
| **Commercial and industrial** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | 9018 | 8274 | 4151 | 3307 | 1717 | 1803 | 9082 | 75 | 37427 |
| &nbsp;&nbsp;Special Mention | 188 | 234 | 105 | 122 | 193 | 47 | 116 |  | 1005 |
| &nbsp;&nbsp;Substandard | 410 | 207 | 387 | 454 | 316 | 58 | 502 | 4 | 2338 |
| &nbsp;&nbsp;Doubtful | 10 | 11 | 31 | 80 | 10 | 1 | 108 |  | 251 |
| &nbsp;&nbsp;Ungraded |  |  |  |  |  |  | 151 |  | 151 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total commercial and industrial | 9626 | 8726 | 4674 | 3963 | 2236 | 1909 | 9959 | 79 | 41172 |
| **Leases** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | 620 | 591 | 375 | 179 | 79 | 62 |  |  | 1906 |
| &nbsp;&nbsp;Special Mention | 14 | 16 | 13 | 20 | 2 |  |  |  | 65 |
| &nbsp;&nbsp;Substandard | 19 | 22 | 19 | 9 | 7 | 10 |  |  | 86 |
| &nbsp;&nbsp;Doubtful | 2 | 2 | 2 | 2 | 1 |  |  |  | 9 |
| &nbsp;&nbsp;Ungraded |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total leases | 655 | 631 | 409 | 210 | 89 | 72 |  |  | 2066 |
| **Global fund banking** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | 983 | 778 | 57 | 104 | 11 | 16 | 29516 | 148 | 31613 |
| &nbsp;&nbsp;Special Mention |  | 1 |  |  |  |  |  |  | 1 |
| &nbsp;&nbsp;Substandard |  |  |  |  |  |  | 1 |  | 1 |
| &nbsp;&nbsp;Doubtful |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Ungraded |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total global fund banking | 983 | 779 | 57 | 104 | 11 | 16 | 29517 | 148 | 31615 |
| **Investor dependent** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | 798 | 776 | 183 | 108 |  |  | 290 |  | 2155 |
| &nbsp;&nbsp;Special Mention | 1 | 48 | 7 | 5 |  |  | 1 |  | 62 |
| &nbsp;&nbsp;Substandard | 65 | 190 | 140 | 46 | 7 |  | 47 |  | 495 |
| &nbsp;&nbsp;Doubtful | 10 | 24 | 16 | 6 |  |  | 4 |  | 60 |
| &nbsp;&nbsp;Ungraded |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total investor dependent | 874 | 1038 | 346 | 165 | 7 |  | 342 |  | 2772 |
| **Total commercial** | $18034 | $18586 | $13006 | $10287 | $6342 | $9414 | $40500 | $259 | $116428 |

---

------

**Consumer Loans - Delinquency Status by Class** 

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** |
| **Days Past Due:** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | | **Revolving Converted to Term Loans** | |
| *dollars in millions* | **2025** | **2024** | **2023** | **2022** | **2021** | **2020 & Prior** | **Revolving** | **Revolving Converted to Term Loans** | **Total** |
| **Residential mortgage** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Current | $1558 | $2219 | $2671 | $4912 | $4815 | $6574 | $5 | $— | $22754 |
| &nbsp;&nbsp;30-59 days | 1 | 5 | 15 | 18 | 14 | 81 |  |  | 134 |
| &nbsp;&nbsp;60-89 days | 1 | 2 | 2 | 7 | 4 | 39 |  |  | 55 |
| &nbsp;&nbsp;90 days or greater |  | 1 | 5 | 8 | 8 | 71 |  |  | 93 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total residential mortgage | 1560 | 2227 | 2693 | 4945 | 4841 | 6765 | 5 |  | 23036 |
| **Revolving mortgage** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Current |  |  |  |  |  |  | 2629 | 125 | 2754 |
| &nbsp;&nbsp;30-59 days |  |  |  |  |  |  | 11 | 9 | 20 |
| &nbsp;&nbsp;60-89 days |  |  |  |  |  |  | 1 | 5 | 6 |
| &nbsp;&nbsp;90 days or greater |  |  |  |  |  |  | 3 | 11 | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total revolving mortgage |  |  |  |  |  |  | 2644 | 150 | 2794 |
| **Consumer auto** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Current | 422 | 454 | 248 | 183 | 94 | 45 |  |  | 1446 |
| &nbsp;&nbsp;30-59 days | 1 | 3 | 3 | 3 | 1 | 1 |  |  | 12 |
| &nbsp;&nbsp;60-89 days |  | 1 | 1 | 1 |  |  |  |  | 3 |
| &nbsp;&nbsp;90 days or greater |  | 1 | 1 |  |  |  |  |  | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total consumer auto | 423 | 459 | 253 | 187 | 95 | 46 |  |  | 1463 |
| **Consumer other** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Current | 89 | 112 | 92 | 55 | 18 | 8 | 655 |  | 1029 |
| &nbsp;&nbsp;30-59 days |  |  |  |  |  |  | 3 |  | 3 |
| &nbsp;&nbsp;60-89 days |  |  |  |  |  |  | 2 |  | 2 |
| &nbsp;&nbsp;90 days or greater |  |  |  |  |  |  | 3 |  | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total consumer other | 89 | 112 | 92 | 55 | 18 | 8 | 663 |  | 1037 |
| **Total consumer** | $2072 | $2798 | $3038 | $5187 | $4954 | $6819 | $3312 | $150 | $28330 |

---

------

The following tables represent current credit quality indicators by origination year as of December 31, 2024:

**Commercial Loans - Risk Classifications by Class** 

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
| **Risk Classification:** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | | **Revolving Converted to Term Loans** | |
| *dollars in millions* | **2024** | **2023** | **2022** | **2021** | **2020** | **2019 & Prior** | **Revolving** | **Revolving Converted to Term Loans** | **Total** |
| **Commercial construction** | **Commercial construction** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | $1095 | $1854 | $1276 | $287 | $152 | $52 | $148 | $— | $4864 |
| &nbsp;&nbsp;Special Mention |  | 80 | 35 |  | 7 | 24 |  |  | 146 |
| &nbsp;&nbsp;Substandard |  | 8 | 47 | 20 | 7 | 17 |  |  | 99 |
| &nbsp;&nbsp;Doubtful |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Ungraded |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total commercial construction | 1095 | 1942 | 1358 | 307 | 166 | 93 | 148 |  | 5109 |
| **Owner occupied commercial mortgage** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | 2721 | 2445 | 2747 | 2581 | 2199 | 2988 | 223 | 29 | 15933 |
| &nbsp;&nbsp;Special Mention | 22 | 46 | 70 | 58 | 32 | 61 | 9 |  | 298 |
| &nbsp;&nbsp;Substandard | 30 | 34 | 136 | 82 | 73 | 245 | 10 | 1 | 611 |
| &nbsp;&nbsp;Doubtful |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Ungraded |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total owner occupied commercial mortgage | 2773 | 2525 | 2953 | 2721 | 2304 | 3294 | 242 | 30 | 16842 |
| **Non-owner occupied commercial mortgage** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | 2879 | 3082 | 2744 | 2041 | 1598 | 2134 | 119 | 3 | 14600 |
| &nbsp;&nbsp;Special Mention |  | 66 | 293 | 43 | 4 | 86 |  |  | 492 |
| &nbsp;&nbsp;Substandard | 12 | 15 | 171 | 39 | 116 | 653 |  |  | 1006 |
| &nbsp;&nbsp;Doubtful |  |  |  |  | 20 | 76 |  |  | 96 |
| &nbsp;&nbsp;Ungraded |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total non-owner occupied commercial mortgage | 2891 | 3163 | 3208 | 2123 | 1738 | 2949 | 119 | 3 | 16194 |
| **Commercial and industrial** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | 11813 | 6295 | 4622 | 2389 | 1221 | 1408 | 9033 | 67 | 36848 |
| &nbsp;&nbsp;Special Mention | 145 | 236 | 255 | 302 | 29 | 69 | 203 |  | 1239 |
| &nbsp;&nbsp;Substandard | 155 | 347 | 614 | 332 | 195 | 207 | 454 | 4 | 2308 |
| &nbsp;&nbsp;Doubtful | 5 | 23 | 42 | 15 | 1 | 18 | 103 |  | 207 |
| &nbsp;&nbsp;Ungraded |  |  |  |  |  |  | 135 |  | 135 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total commercial and industrial | 12118 | 6901 | 5533 | 3038 | 1446 | 1702 | 9928 | 71 | 40737 |
| **Leases** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | 739 | 506 | 300 | 147 | 96 | 46 |  |  | 1834 |
| &nbsp;&nbsp;Special Mention | 13 | 17 | 29 | 5 | 4 |  |  |  | 68 |
| &nbsp;&nbsp;Substandard | 21 | 29 | 23 | 13 | 9 | 8 |  |  | 103 |
| &nbsp;&nbsp;Doubtful | 1 | 3 | 2 | 2 | 1 |  |  |  | 9 |
| &nbsp;&nbsp;Ungraded |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total leases | 774 | 555 | 354 | 167 | 110 | 54 |  |  | 2014 |
| **Global fund banking** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | 892 | 179 | 147 | 20 | 14 | 12 | 26588 | 36 | 27888 |
| &nbsp;&nbsp;Special Mention |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Substandard |  |  | 5 | 8 | 2 |  | 1 |  | 16 |
| &nbsp;&nbsp;Doubtful |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Ungraded |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total global fund banking | 892 | 179 | 152 | 28 | 16 | 12 | 26589 | 36 | 27904 |
| **Investor dependent** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | 1135 | 640 | 352 | 37 |  |  | 315 | 3 | 2482 |
| &nbsp;&nbsp;Special Mention | 17 | 28 | 6 |  |  |  | 26 |  | 77 |
| &nbsp;&nbsp;Substandard | 122 | 173 | 164 | 31 | 1 |  | 61 |  | 552 |
| &nbsp;&nbsp;Doubtful | 26 | 19 | 28 | 5 |  |  | 4 |  | 82 |
| &nbsp;&nbsp;Ungraded |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total investor dependent | 1300 | 860 | 550 | 73 | 1 |  | 406 | 3 | 3193 |
| **Total commercial** | $21843 | $16125 | $14108 | $8457 | $5781 | $8104 | $37432 | $143 | $111993 |

---

------

**Consumer Loans - Delinquency Status by Class** 

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
| **Days Past Due:** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | | **Revolving Converted to Term Loans** | |
| *dollars in millions* | **2024** | **2023** | **2022** | **2021** | **2020** | **2019 & Prior** | **Revolving** | **Revolving Converted to Term Loans** | **Total** |
| **Residential mortgage** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Current | $2178 | $2968 | $5264 | $5148 | $2913 | $4353 | $4 | $— | $22828 |
| &nbsp;&nbsp;30-59 days | 3 | 13 | 19 | 23 | 31 | 95 |  |  | 184 |
| &nbsp;&nbsp;60-89 days | 1 | 3 | 5 | 2 | 2 | 28 |  |  | 41 |
| &nbsp;&nbsp;90 days or greater |  | 4 | 6 | 7 | 9 | 73 |  |  | 99 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total residential mortgage | 2182 | 2988 | 5294 | 5180 | 2955 | 4549 | 4 |  | 23152 |
| **Revolving mortgage** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Current |  |  |  |  |  |  | 2420 | 108 | 2528 |
| &nbsp;&nbsp;30-59 days |  |  |  |  |  |  | 16 | 6 | 22 |
| &nbsp;&nbsp;60-89 days |  |  |  |  |  |  | 1 | 5 | 6 |
| &nbsp;&nbsp;90 days or greater |  |  |  |  |  |  | 3 | 8 | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total revolving mortgage |  |  |  |  |  |  | 2440 | 127 | 2567 |
| **Consumer auto** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Current | 617 | 358 | 277 | 155 | 68 | 27 |  |  | 1502 |
| &nbsp;&nbsp;30-59 days | 3 | 3 | 3 | 2 | 1 | 1 |  |  | 13 |
| &nbsp;&nbsp;60-89 days | 1 | 1 | 1 | 1 |  |  |  |  | 4 |
| &nbsp;&nbsp;90 days or greater | 1 | 1 | 1 | 1 |  |  |  |  | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total consumer auto | 622 | 363 | 282 | 159 | 69 | 28 |  |  | 1523 |
| **Consumer other** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Current | 147 | 144 | 99 | 30 | 6 | 18 | 531 |  | 975 |
| &nbsp;&nbsp;30-59 days | 1 |  |  |  |  | 1 | 3 |  | 5 |
| &nbsp;&nbsp;60-89 days |  |  | 1 |  |  |  | 2 |  | 3 |
| &nbsp;&nbsp;90 days or greater |  |  |  |  |  | 1 | 2 |  | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total consumer other | 148 | 144 | 100 | 30 | 6 | 20 | 538 |  | 986 |
| **Total consumer** | $2952 | $3495 | $5676 | $5369 | $3030 | $4597 | $2982 | $127 | $28228 |

---

------

**Gross Charge-offs**

Gross charge-off disclosures by origination year and loan class are summarized in the following tables:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** |
| | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | | **Revolving Converted to Term Loans** | |
| *dollars in millions* | **2025** | **2024** | **2023** | **2022** | **2021** | **2020 & Prior** | **Revolving** | **Revolving Converted to Term Loans** | **Total** |
| **Commercial** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Commercial construction | $— | $— | $— | $1 | $— | $— | $— | $— | $1 |
| &nbsp;&nbsp;Owner occupied commercial mortgage |  | 2 |  |  |  | 1 |  |  | 3 |
| &nbsp;&nbsp;Non-owner occupied commercial mortgage | 4 | 23 | 3 | 20 |  | 32 |  |  | 82 |
| &nbsp;&nbsp;Commercial and industrial | 28 | 20 | 51 | 44 | 9 | 3 | 191 | 1 | 347 |
| &nbsp;&nbsp;Leases | 2 | 3 | 3 | 3 | 1 | 3 |  |  | 15 |
| &nbsp;&nbsp;Investor dependent |  | 14 | 30 | 28 | 7 | 4 | 9 |  | 92 |
| &nbsp;&nbsp;&nbsp;Total commercial | 34 | 62 | 87 | 96 | 17 | 43 | 200 | 1 | 540 |
| **Consumer** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Residential mortgage |  |  |  |  |  | 6 |  |  | 6 |
| &nbsp;&nbsp;Consumer auto |  | 2 | 2 | 1 | 1 |  |  |  | 6 |
| &nbsp;&nbsp;Consumer other |  | 1 | 1 | 1 |  |  | 12 |  | 15 |
| &nbsp;&nbsp;&nbsp;Total consumer |  | 3 | 3 | 2 | 1 | 6 | 12 |  | 27 |
| **Total loans and leases** | $34 | $65 | $90 | $98 | $18 | $49 | $212 | $1 | $567 |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** |
| | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | **Term Loans by Origination Year** | | **Revolving Converted to Term Loans** | |
| *dollars in millions* | **2024** | **2023** | **2022** | **2021** | **2020** | **2019 & Prior** | **Revolving** | **Revolving Converted to Term Loans** | **Total** |
| **Commercial** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Owner occupied commercial mortgage | $— | $— | $— | $— | $— | $8 | $— | $— | $8 |
| &nbsp;&nbsp;Non-owner occupied commercial mortgage |  |  |  |  | 19 | 70 |  |  | 89 |
| &nbsp;&nbsp;Commercial and industrial | 8 | 35 | 65 | 15 | 4 | 10 | 50 | 1 | 188 |
| &nbsp;&nbsp;Leases | 1 | 4 | 4 | 4 | 2 | 2 |  |  | 17 |
| &nbsp;&nbsp;Investor dependent |  | 37 | 63 | 27 | 3 | 4 | 7 |  | 141 |
| &nbsp;&nbsp;&nbsp;Total commercial | 9 | 76 | 132 | 46 | 28 | 94 | 57 | 1 | 443 |
| **Consumer** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Residential mortgage |  |  |  |  |  | 1 |  |  | 1 |
| &nbsp;&nbsp;Consumer auto |  | 2 | 1 | 1 |  |  |  |  | 4 |
| &nbsp;&nbsp;Consumer other |  | 1 | 1 | 1 |  | 1 | 12 |  | 16 |
| &nbsp;&nbsp;&nbsp;Total consumer |  | 3 | 2 | 2 |  | 2 | 12 |  | 21 |
| **Total loans and leases** | $9 | $79 | $134 | $48 | $28 | $96 | $69 | $1 | $464 |

---

------

**Loan Modifications for Borrowers Experiencing Financial Difficulties**

As part of BancShares' ongoing credit risk management practices, BancShares attempts to work with borrowers when necessary to extend or modify loan terms to better align with the borrowers' current ability to repay. BancShares' modifications granted to debtors experiencing financial difficulties typically take the form of term extensions, interest rate reductions, payment delays, principal forgiveness, or a combination thereof. Modifications are made in accordance with internal policies and guidelines to conform to regulatory guidance.

The following tables present the amortized cost of loan modifications made to debtors experiencing financial difficulty, disaggregated by class and type of loan modification. The tables also provide financial effects by type of such loan modifications for the respective loan class. Loan modifications for principal forgiveness round to less than $1 million for all loan classes in all periods presented and are not presented in the following tables.

**Amortized Cost of Loans Modified during the three months ended September 30, 2025**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Term Extension** <sup>(1)</sup> | **Payment Delay** | **Interest Rate Reduction** | **Term Extension** <sup>(1)</sup> **and Interest Rate Reduction** | **Term Extension** <sup>(1)</sup> **and Payment Delay** | **Other Combinations** <sup>(2)</sup> | **Total** | **Percent of Total Loan Class** |
| **Commercial** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Commercial construction | $8 | $— | $— | $— | $7 | $— | $15 | 0.24% |
| &nbsp;&nbsp;Owner occupied commercial mortgage | 8 | 3 |  |  |  |  | 11 | 0.07 |
| &nbsp;&nbsp;Non-owner occupied commercial mortgage | 61 | 9 |  | 45 |  |  | 115 | 0.74 |
| &nbsp;&nbsp;Commercial and industrial | 233 | 48 |  | 14 | 4 | 1 | 300 | 0.73 |
| &nbsp;&nbsp;Investor dependent | 9 | 40 |  |  | 4 |  | 53 | 1.92 |
| Total commercial | 319 | 100 |  | 59 | 15 | 1 | 494 | 0.42 |
| **Consumer** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Residential mortgage | 7 |  | 1 |  | 2 |  | 10 | 0.04 |
| Total consumer | 7 |  | 1 |  | 2 |  | 10 | 0.04 |
| **Total loans and leases** | $326 | $100 | $1 | $59 | $17 | $1 | $504 | 0.35% |

---

<sup>(1)</sup> *Term extensions include modifications in which the balloon principal payment was deferred to a later date or the loan amortization period was extended.*

<sup>(2)</sup> *Consists of $1 million of commercial and industrial loans modified with a term extension, payment delay, and interest rate reduction.*

**Amortized Cost of Loans Modified during the three months ended September 30, 2024**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Term Extension** <sup>(1)</sup> | **Payment Delay** | **Interest Rate Reduction** | **Term Extension** <sup>(1)</sup> **and Interest Rate Reduction** | **Term Extension** <sup>(1)</sup> **and Payment Delay** | **Total** | **Percent of Total Loan Class** |
| **Commercial** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Owner occupied commercial mortgage | $15 | $1 | $— | $8 | $— | $24 | 0.15% |
| &nbsp;&nbsp;Non-owner occupied commercial mortgage | 30 | 6 |  |  |  | 36 | 0.22 |
| &nbsp;&nbsp;Commercial and industrial | 140 |  |  | 3 | 1 | 144 | 0.36 |
| &nbsp;&nbsp;Investor dependent | 6 | 34 |  |  | 8 | 48 | 1.37 |
| Total commercial | 191 | 41 |  | 11 | 9 | 252 | 0.23 |
| **Consumer** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Residential mortgage | 1 |  |  | 1 |  | 2 | 0.01 |
| &nbsp;&nbsp;Revolving mortgage | 1 |  |  |  |  | 1 | 0.05 |
| Total consumer | 2 |  |  | 1 |  | 3 | 0.01 |
| **Total loans and leases** | $193 | $41 | $— | $12 | $9 | $255 | 0.18% |

---

<sup>(1)</sup> *Term extensions include modifications in which the balloon principal payment was deferred to a later date or the loan amortization period was extended.*

------

**Financial Effects of Loan Modifications made during the three months ended September 30, 2025**

---

| | | | |
|:---|:---|:---|:---|
| *dollars in millions* | **Weighted Average Term Extension (in Months)** | **Weighted Average Interest Rate Reduction** | **Weighted Average Payment Delay (in Months)** |
| **Commercial** |  |  |  |
| &nbsp;&nbsp;Commercial construction | 8 | —% | 7 |
| &nbsp;&nbsp;Owner occupied commercial mortgage | 13 |  | 6 |
| &nbsp;&nbsp;Non-owner occupied commercial mortgage | 9 | 0.52 | 36 |
| &nbsp;&nbsp;Commercial and industrial | 15 | 1.05 | 12 |
| &nbsp;&nbsp;Leases | 60 |  |  |
| &nbsp;&nbsp;Investor dependent | 11 |  | 6 |
| Total commercial | 13 | 0.65 | 11 |
| **Consumer** |  |  |  |
| &nbsp;&nbsp;Residential mortgage | 21 | 1.52 | 8 |
| &nbsp;&nbsp;Revolving mortgage | 58 | 4.36 |  |
| &nbsp;&nbsp;Consumer auto | 18 |  |  |
| &nbsp;&nbsp;Consumer other | 60 | 11.41 |  |
| Total consumer | 24 | 3.01 | 8 |
| **Total loans and leases** | 13 | 0.71% | 11 |

---

**Financial Effects of Loan Modifications made during the three months ended September 30, 2024** 

---

| | | | |
|:---|:---|:---|:---|
| *dollars in millions* | **Weighted Average Term Extension (in Months)** | **Weighted Average Interest Rate Reduction** | **Weighted Average Payment Delay (in Months)** |
| **Commercial** |  |  |  |
| &nbsp;&nbsp;Commercial construction | 36 | 0.60% |  |
| &nbsp;&nbsp;Owner occupied commercial mortgage | 17 | 1.82 | 6 |
| &nbsp;&nbsp;Non-owner occupied commercial mortgage | 7 |  | 6 |
| &nbsp;&nbsp;Commercial and industrial | 15 | 2.61 | 6 |
| &nbsp;&nbsp;Leases | 11 |  |  |
| &nbsp;&nbsp;Investor dependent | 9 |  | 6 |
| Total commercial | 14 | 2.03 | 6 |
| **Consumer** |  |  |  |
| &nbsp;&nbsp;Residential mortgage | 47 | 2.07 | 11 |
| &nbsp;&nbsp;Revolving mortgage | 60 | 5.42 |  |
| &nbsp;&nbsp;Consumer auto | 31 |  |  |
| &nbsp;&nbsp;Consumer other | 60 | 10.54 |  |
| Total consumer | 52 | 3.29 | 11 |
| **Total loans and leases** | 14 | 2.19% | 6 |

---

*Note: The financial effects of loan modifications for certain loan classes reported in the tables above were not reported in the preceding tables as the total amortized cost of loans modified during the period for such loan classes rounded to less than $1 million.*

------

**Amortized Cost of Loans Modified during the nine months ended September 30, 2025** 

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Term Extension** <sup>(1)</sup> | **Payment Delay** | **Interest Rate Reduction** | **Term Extension** <sup>(1)</sup> **and Interest Rate Reduction** | **Term Extension** <sup>(1)</sup> **and Payment Delay** | **Other Combinations** <sup>(2)</sup> | **Total** | **Percent of Total Loan Class** |
| **Commercial** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Commercial construction | $8 | $— | $— | $— | $15 | $— | $23 | 0.38% |
| &nbsp;&nbsp;Owner occupied commercial mortgage | 11 | 5 |  | 29 | 22 |  | 67 | 0.39 |
| &nbsp;&nbsp;Non-owner occupied commercial mortgage | 120 | 9 |  | 109 | 23 |  | 261 | 1.67 |
| &nbsp;&nbsp;Commercial and industrial | 267 | 124 |  | 16 | 13 | 6 | 426 | 1.03 |
| &nbsp;&nbsp;Investor dependent | 15 | 59 |  |  | 10 |  | 84 | 3.04 |
| Total commercial | 421 | 197 |  | 154 | 83 | 6 | 861 | 0.74 |
| **Consumer** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Residential mortgage | 15 |  | 1 | 2 | 25 |  | 43 | 0.18 |
| &nbsp;&nbsp;Revolving mortgage | 1 |  |  | 1 |  |  | 2 | 0.07 |
| Total consumer | 16 |  | 1 | 3 | 25 |  | 45 | 0.16 |
| **Total loans and leases** | $437 | $197 | $1 | $157 | $108 | $6 | $906 | 0.63% |

---

<sup>(1)</sup> *Term extensions include modifications in which the balloon principal payment was deferred to a later date or the loan amortization period was extended.*

<sup>(2)</sup> *Consists of $6 million of commercial and industrial loans modified with a term extension, payment delay, and interest rate reduction.*

**Amortized Cost of Loans Modified during the nine months ended September 30, 2024**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Term Extension** <sup>(1)</sup> | **Payment Delay** | **Interest Rate Reduction** | **Term Extension** <sup>(1)</sup> **and Interest Rate Reduction** | **Term Extension** <sup>(1)</sup> **and Payment Delay** | **Other Combinations** <sup>(2)</sup> | **Total** | **Percent of Total Loan Class** |
| **Commercial** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Commercial construction | $3 | $— | $— | $— | $— | $— | $3 | 0.06% |
| &nbsp;&nbsp;Owner occupied commercial mortgage | 36 | 1 | 4 | 9 | 9 |  | 59 | 0.36 |
| &nbsp;&nbsp;Non-owner occupied commercial mortgage | 108 | 6 |  |  | 26 |  | 140 | 0.88 |
| &nbsp;&nbsp;Commercial and industrial | 191 | 91 | 31 | 12 | 1 |  | 326 | 0.81 |
| &nbsp;&nbsp;Investor dependent | 7 | 78 |  |  | 33 | 1 | 119 | 3.32 |
| Total commercial | 345 | 176 | 35 | 21 | 69 | 1 | 647 | 0.59 |
| **Consumer** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Residential mortgage | 7 |  |  | 1 |  |  | 8 | 0.04 |
| &nbsp;&nbsp;Revolving mortgage | 4 |  |  | 1 |  |  | 5 | 0.20 |
| Total consumer | 11 |  |  | 2 |  |  | 13 | 0.05 |
| **Total loans and leases** | $356 | $176 | $35 | $23 | $69 | $1 | $660 | 0.48% |

---

<sup>(1)</sup> *Term extensions include modifications in which the balloon principal payment was deferred to a later date or the loan amortization period was extended.*

<sup>(2)</sup> *Consists of $1 million of investor dependent loans modified with a term extension, interest rate reduction, and payment delay.*

------

**Financial Effects of Loan Modifications made during the nine months ended September 30, 2025**

---

| | | | |
|:---|:---|:---|:---|
| | **Weighted Average Term Extension (in Months)** | **Weighted Average Interest Rate Reduction** | **Weighted Average Payment Delay (in Months)** |
| **Commercial** | | | |
| &nbsp;&nbsp;Commercial construction | 7 | —% | 6 |
| &nbsp;&nbsp;Owner occupied commercial mortgage | 11 | 1.93 | 5 |
| &nbsp;&nbsp;Non-owner occupied commercial mortgage | 17 | 0.56 | 14 |
| &nbsp;&nbsp;Commercial and industrial | 14 | 1.31 | 12 |
| &nbsp;&nbsp;Leases | 60 |  |  |
| &nbsp;&nbsp;Investor dependent | 9 |  | 7 |
| Total commercial | 15 | 0.91 | 10 |
| **Consumer** |  |  |  |
| &nbsp;&nbsp;Residential mortgage | 14 | 1.21 | 6 |
| &nbsp;&nbsp;Revolving mortgage | 48 | 4.04 | 5 |
| &nbsp;&nbsp;Consumer auto | 19 |  |  |
| &nbsp;&nbsp;Consumer other | 60 | 9.93 |  |
| Total consumer | 16 | 2.39 | 6 |
| **Total loans and leases** | 15 | 0.95% | 10 |

---

**Financial Effects of Loan Modifications made during the nine months ended September 30, 2024** 

---

| | | | |
|:---|:---|:---|:---|
| | **Weighted Average Term Extension (in Months)** | **Weighted Average Interest Rate Reduction** | **Weighted Average Payment Delay (in Months)** |
| **Commercial** | | | |
| &nbsp;&nbsp;Commercial construction | 15 | 0.60% |  |
| &nbsp;&nbsp;Owner occupied commercial mortgage | 28 | 1.67 | 18 |
| &nbsp;&nbsp;Non-owner occupied commercial mortgage | 20 |  | 40 |
| &nbsp;&nbsp;Commercial and industrial | 15 | 0.71 | 12 |
| &nbsp;&nbsp;Leases | 11 |  | 6 |
| &nbsp;&nbsp;Investor dependent | 11 | 2.75 | 8 |
| Total commercial | 18 | 0.96 | 14 |
| **Consumer** |  |  |  |
| &nbsp;&nbsp;Residential mortgage | 70 | 2.09 | 11 |
| &nbsp;&nbsp;Revolving mortgage | 60 | 4.73 |  |
| &nbsp;&nbsp;Consumer auto | 29 | 0.26 |  |
| &nbsp;&nbsp;Consumer other | 57 | 9.65 |  |
| Total consumer | 66 | 3.41 | 11 |
| **Total loans and leases** | 19 | 1.07% | 14 |

---

*Note: The financial effects of loan modifications for certain loan classes reported in the tables above were not reported in the preceding tables as the total amortized cost of loans modified during the period for such loan classes rounded to less than $1 million.*

Borrowers experiencing financial difficulties are typically identified in our credit risk management process before loan modifications occur. An assessment of whether a borrower is experiencing financial difficulty is reassessed or performed on the date of a modification. Since the effect of most modifications made to borrowers experiencing financial difficulty is already included in the ALLL because of the measurement methodologies used to estimate the ALLL, a change to the ALLL is generally not recorded upon modification. Upon BancShares' determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged off.

At September 30, 2025, there were $113 million of loans modified in the twelve months ended September 30, 2025, which defaulted subsequent to modification.

------

The following tables present the amortized cost and performance of loans to borrowers experiencing financial difficulties for which the terms of the loan were modified during the referenced periods. The period of delinquency is based on the number of days the scheduled payment is contractually past due.

**Modified Loans Payment Status (twelve months ended September 30, 2025)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Current** | **30–59 Days Past Due** | **60–89 Days Past Due** | **90 Days or Greater Past Due** | **Total** |
| **Commercial** |  |  |  |  |  |
| &nbsp;&nbsp;Commercial construction | $22 | $1 | $— | $— | $23 |
| &nbsp;&nbsp;Owner occupied commercial mortgage | 74 | 1 |  | 9 | 84 |
| &nbsp;&nbsp;Non-owner occupied commercial mortgage | 241 | 4 | 1 | 60 | 306 |
| &nbsp;&nbsp;Commercial and industrial | 404 | 2 | 1 | 24 | 431 |
| &nbsp;&nbsp;Investor dependent | 90 |  |  | 1 | 91 |
| &nbsp;&nbsp;&nbsp;Total commercial | 831 | 8 | 2 | 94 | 935 |
| **Consumer** |  |  |  |  |  |
| &nbsp;&nbsp;Residential mortgage | 35 | 3 | 3 | 6 | 47 |
| &nbsp;&nbsp;Revolving mortgage | 7 |  |  |  | 7 |
| &nbsp;&nbsp;&nbsp;Total consumer | 42 | 3 | 3 | 6 | 54 |
| **Total loans and leases** | $873 | $11 | $5 | $100 | $989 |

---

**Modified Loans Payment Status (twelve months ended September 30, 2024)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Current** | **30–59 Days Past Due** | **60–89 Days Past Due** | **90 Days or Greater Past Due** | **Total** |
| **Commercial** |  |  |  |  |  |
| &nbsp;&nbsp;Commercial construction | $3 | $— | $— | $— | $3 |
| &nbsp;&nbsp;Owner occupied commercial mortgage | 50 |  | 9 | 2 | 61 |
| &nbsp;&nbsp;Non-owner occupied commercial mortgage | 156 | 1 |  | 16 | 173 |
| &nbsp;&nbsp;Commercial and industrial | 346 | 1 |  | 2 | 349 |
| &nbsp;&nbsp;Investor dependent | 127 |  |  | 1 | 128 |
| &nbsp;&nbsp;&nbsp;Total commercial | 682 | 2 | 9 | 21 | 714 |
| **Consumer** |  |  |  |  |  |
| &nbsp;&nbsp;Residential mortgage | 9 | 1 | 2 | 4 | 16 |
| &nbsp;&nbsp;Revolving mortgage | 6 |  |  |  | 6 |
| &nbsp;&nbsp;&nbsp;Total consumer | 15 | 1 | 2 | 4 | 22 |
| **Total loans and leases** | $697 | $3 | $11 | $25 | $736 |

---

At September 30, 2025, there were $17 million of commitments to lend additional funds to debtors experiencing financial difficulty for which the terms of the loan were modified during the nine months ended September 30, 2025. At December 31, 2024, there were $55 million of commitments to lend additional funds to debtors experiencing financial difficulty for which the terms of the loan were modified during the year ended December 31, 2024.

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**Loans Pledged** 

The following table provides information regarding loans pledged as collateral for borrowing capacity through the FHLB of Atlanta, the Federal Reserve Bank ("FRB") and FDIC.

**Loans Pledged** 

---

| | | |
|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **December 31, 2024** |
| **FHLB of Atlanta** |  |  |
| &nbsp;&nbsp;Lendable collateral value of pledged non-PCD loans | $19472 | $17873 |
| &nbsp;&nbsp;Less: advances |  |  |
| &nbsp;&nbsp;Less: letters of credit | 1450 | 1450 |
| &nbsp;&nbsp;Available borrowing capacity | $18022 | $16423 |
| Pledged non-PCD loans | $31945 | $30421 |
| **FRB** |  |  |
| &nbsp;&nbsp;Lendable collateral value of pledged non-PCD loans | $13328 | $5475 |
| &nbsp;&nbsp;Less: advances |  |  |
| &nbsp;&nbsp;Available borrowing capacity | $13328 | $5475 |
| Pledged non-PCD loans | $13804 | $6309 |
| **FDIC** |  |  |
| &nbsp;&nbsp;Lendable collateral value of pledged loans | $36228 | $41282 |
| &nbsp;&nbsp;Less: advances |  |  |
| &nbsp;&nbsp;Less: Purchase Money Note | 35991 | 35991 |
| &nbsp;&nbsp;Available borrowing capacity <sup>(1)</sup> | $— | $5291 |
| Pledged loans <sup>(1)</sup> | $34860 | $41040 |

---

<sup>(1)</sup> The draw period ended on March 27, 2025, therefore there is no available borrowing capacity at September 30, 2025. Loans remain pledged as collateral for the Purchase Money Note.

As a member of the FHLB, FCB can access financing based on an evaluation of its creditworthiness, statement of financial position, size and eligibility of collateral. FCB may at any time grant a security interest in, sell, convey or otherwise dispose of any of the assets used for collateral, provided that FCB is in compliance with the collateral maintenance requirement immediately following such disposition. There were no outstanding advances from the FHLB at September 30, 2025 or December 31, 2024.

Under borrowing arrangements with the FRB, BancShares has access to the FRB Discount Window on a secured basis. There were no outstanding borrowings with the FRB Discount Window at September 30, 2025 or December 31, 2024.

In connection with the SVBB Acquisition, FCB and the FDIC entered into financing agreements, including the five-year Purchase Money Note, and the Advance Facility Agreement, which allowed for advances through March 27, 2025. There were no amounts outstanding at the end of the draw period of the facility on March 27, 2025. Refer to Note 2—Business Combinations for further discussion of these agreements and Note 9—Borrowings for the outstanding carrying value of the Purchase Money Note.

------

**NOTE 5 — ALLOWANCE FOR LOAN AND LEASE LOSSES**

The ALLL is reported as a separate line item on the Consolidated Balance Sheets, while the reserve for off-balance sheet credit exposure is included in other liabilities. The provision or benefit for credit losses related to (i) loans and leases (ii) off-balance sheet credit exposure, and (iii) investment securities available for sale, if any, is reported in the Consolidated Statements of Income as provision or benefit for credit losses.

The ALLL activity for loans and leases is summarized in the following table:

**Allowance for Loan and Lease Losses** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** |
|  | **Commercial** | **Consumer** | **Total** | **Commercial** | **Consumer** | **Total** |
| Balance at beginning of period | $1512 | $160 | $1672 | $1547 | $153 | $1700 |
| Provision (benefit) for loan and lease losses | 238 | (24) | 214 | 123 |  | 123 |
| Charge-offs | (244) | (12) | (256) | (169) | (8) | (177) |
| Recoveries | 18 | 4 | 22 | 27 | 5 | 32 |
| Balance at end of period | $1524 | $128 | $1652 | $1528 | $150 | $1678 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** |
| | **Commercial** | **Consumer** | **Total** | **Commercial** | **Consumer** | **Total** |
| Balance at beginning of period | $1518 | $158 | $1676 | $1581 | $166 | $1747 |
| Provision (benefit) for loan and lease losses | 487 | (14) | 473 | 316 | (5) | 311 |
| Charge-offs | (540) | (27) | (567) | (443) | (21) | (464) |
| Recoveries | 59 | 11 | 70 | 74 | 10 | 84 |
| Balance at end of period | $1524 | $128 | $1652 | $1528 | $150 | $1678 |

---

The decrease of $20 million in the ALLL at September 30, 2025 compared to June 30, 2025 primarily reflects improvements in the economic outlook and other changes, including the elimination of reserves related to Hurricane Helene, partially offset by higher specific reserves for individually evaluated loans, and growth in global fund banking loans which have a lower loss rate relative to our other portfolios. Also, during the three months ended September 30, 2025, we updated our PD, LGD, and exposure at default methodology for certain portfolios which contributed to changes in the ALLL compared to prior periods.

The decrease of $24 million in the ALLL at September 30, 2025 compared to December 31, 2024 was also mainly due to the changes discussed above.

The following table presents the components of the provision for credit losses:

**Provision for Credit Losses**

---

| | | | | |
|:---|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Provision for loan and lease losses | $214 | $123 | $473 | $311 |
| Benefit for off-balance sheet credit exposure | (23) | (6) | (13) | (35) |
| Provision for credit losses | $191 | $117 | $460 | $276 |

---

------

**NOTE 6 — LEASES**

**Lessee**

BancShares' leases primarily include administrative offices and bank locations. Substantially all of our operating lease liabilities relate to United States real estate leases. Our finance lease liabilities relate to equipment leases, including the lease of certain ATMs. Our real estate leases have remaining lease terms of up to 32 years. Our lease terms may include options to extend or terminate the lease, and our operating leases have renewal terms that can extend from 1 to 25 years. The options are included in the lease term when it is determined that it is reasonably certain the option will be exercised.

The following table presents supplemental balance sheet information and remaining weighted average lease terms and discount rates:

**Supplemental Lease Information**

---

| | | | |
|:---|:---|:---|:---|
| *dollars in millions* | **Classification** | **September 30, 2025** | **December 31, 2024** |
| Lease assets: |  |  |  |
| &nbsp;&nbsp;Operating lease ROU assets | Other assets | $305 | $316 |
| &nbsp;&nbsp;Finance leases | Premises and equipment | 67 | 15 |
| Total lease assets |  | $372 | $331 |
| Lease liabilities: |  |  |  |
| &nbsp;&nbsp;Operating leases | Other liabilities | $342 | $357 |
| &nbsp;&nbsp;Finance leases | Other borrowings | 67 | 15 |
| Total lease liabilities |  | $409 | $372 |
| Weighted-average remaining lease terms: |  |  |  |
| &nbsp;&nbsp;Operating leases |  | 7.3 years | 7.4 years |
| &nbsp;&nbsp;Finance leases |  | 8.1 years | 11.7 years |
| Weighted-average discount rate: |  |  |  |
| &nbsp;&nbsp;Operating leases |  | 3.10% | 2.94% |
| &nbsp;&nbsp;Finance leases |  | 4.20 | 3.96 |

---

As of September 30, 2025, there were no leases that have not yet commenced that would have a material impact on BancShares' consolidated financial statements.

The following table presents components of lease cost:

**Components of Net Lease Cost**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *dollars in millions* |  | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
|  | **Classification** | **2025** | **2024** | **2025** | **2024** |
| Operating lease cost | Occupancy expense | $18 | $19 | $54 | $56 |
| Finance lease ROU asset amortization | Equipment expense | 3 |  | 6 | 1 |
| Interest on lease liabilities | Interest expense - other borrowings | 1 |  | 2 |  |
| Variable lease cost <sup>(1)</sup> | Occupancy expense | 4 | 7 | 16 | 22 |
| Sublease income | Occupancy expense | (1) | (1) | (4) | (4) |
| Net lease cost <sup>(1)</sup> |  | $25 | $25 | $74 | $75 |

---

<sup>(1)</sup> *Includes short-term lease cost.*

Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term.

For finance leases, the right of use ("ROU") asset is amortized straight-line over the lease term as equipment expense and interest on the lease liability is recognized separately.

Variable lease cost includes common area maintenance, property taxes, utilities, and other operating expenses related to leased premises recognized in the period in which the expense was incurred. Certain of our lease agreements also include rental payments adjusted periodically for inflation. While lease liabilities are not remeasured because of these changes, these adjustments are treated as variable lease costs and recognized in the period in which the expense is incurred.

Sublease income results from leasing excess building space that BancShares is no longer utilizing under operating leases, which have remaining lease terms of up to 11 years.

------

The following table presents supplemental cash flow information related to leases:

**Supplemental Cash Flow Information**

---

| | | |
|:---|:---|:---|
| *dollars in millions* | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
|  | **2025** | **2024** |
| Cash paid for amounts included in the measurement of lease liabilities: |  |  |
| &nbsp;&nbsp;Operating cash flows from operating leases | $58 | $57 |
| &nbsp;&nbsp;Operating cash flows from finance leases | 2 |  |
| &nbsp;&nbsp;Financing cash flows from finance leases | 5 | 1 |
| ROU assets obtained in exchange for new operating lease liabilities | 44 | 26 |
| ROU assets obtained in exchange for new finance lease liabilities | 55 |  |

---

**Lessor**

BancShares leases equipment to commercial end-users under operating lease and finance lease arrangements. The majority of operating lease equipment is long-lived rail equipment, which is typically leased several times over its life. We also lease technology and office equipment, and large and small industrial, medical, and transportation equipment under both operating leases and finance leases.

Our Rail operating leases typically do not include purchase options. Many of our finance leases, and other equipment operating leases, offer the lessee the option to purchase the equipment at fair market value or for a nominal fixed purchase option. Many of the leases that do not have a nominal purchase option include renewal provisions resulting in some leases continuing beyond the initial contractual term. Our leases typically do not include early termination options. Continued rent payments are due if leased equipment is not returned at the end of the lease.

The table that follows presents lease income related to BancShares' operating and finance leases:

**Lease Income**

---

| | | | | |
|:---|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Lease income – operating leases | $261 | $236 | $772 | $714 |
| Variable lease income – operating leases <sup>(1)</sup> | 12 | 26 | 43 | 62 |
| Rental income on operating leases | 273 | 262 | 815 | 776 |
| Interest income – sales type and direct financing leases | 44 | 44 | 131 | 131 |
| Variable lease income included in other noninterest income <sup>(2)</sup> | 14 | 15 | 44 | 46 |
| Interest income – leveraged leases | 1 | 1 | 3 | 3 |
| Total lease income | $332 | $322 | $993 | $956 |

---

<sup>(1) &nbsp;&nbsp;&nbsp;&nbsp;</sup>*Primarily includes per diem railcar operating lease rental income earned on a time or mileage usage basis.* 

<sup>(2)</sup> *Includes revenue related to insurance coverage on leased equipment and leased equipment property tax reimbursements due from customers.* 

**NOTE 7 — GOODWILL AND CORE DEPOSIT INTANGIBLES**

**Goodwill**

BancShares had goodwill of $346 million at September 30, 2025 and December 31, 2024. There was no goodwill impairment during the nine months ended September 30, 2025 or 2024. Goodwill relates to the General Bank reporting segment.

**Core Deposit Intangibles**

Core deposit intangibles represent the estimated fair value of core deposits and other customer relationships acquired. Core deposit intangibles are being amortized over their estimated useful lives. The following tables summarize the activity for core deposit intangibles:

**Core Deposit Intangibles**

---

| | |
|:---|:---|
| | **Nine Months Ended September 30,** |
| *dollars in millions* | **2025** |
| Balance at beginning of period, net of accumulated amortization | $249 |
| &nbsp;&nbsp;&nbsp;Less: amortization for the period | 41 |
| Balance at end of period, net of accumulated amortization | $208 |

---

------

The following table summarizes the accumulated amortization balance for core deposit intangibles:

**Core Deposit Intangible Accumulated Amortization**

---

| | | |
|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **December 31, 2024** |
| Gross balance | $501 | $501 |
| &nbsp;&nbsp;&nbsp;Less: accumulated amortization | 293 | 252 |
| Balance, net of accumulated amortization | $208 | $249 |

---

The following table summarizes the expected amortization expense as of September 30, 2025 in subsequent periods for core deposit intangibles:

**Core Deposit Intangible Expected Amortization**

---

| | |
|:---|:---|
| *dollars in millions* |  |
| &nbsp;&nbsp;Remainder 2025 | $13 |
| &nbsp;&nbsp;&nbsp;2026 | 46 |
| &nbsp;&nbsp;&nbsp;2027 | 39 |
| &nbsp;&nbsp;&nbsp;2028 | 34 |
| &nbsp;&nbsp;&nbsp;2029 | 30 |
| &nbsp;&nbsp;&nbsp;2030 | 28 |
| &nbsp;&nbsp;Thereafter | 18 |
| Balance, net of accumulated amortization | $208 |

---

**NOTE 8 — VARIABLE INTEREST ENTITIES**

**Unconsolidated VIEs**

Unconsolidated VIEs include limited partnership interests and joint ventures where BancShares' involvement is limited to an investor interest and BancShares does not have the power to direct the activities of the VIE that most significantly impact the VIE's economic performance or obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

The table below provides a summary of the assets and liabilities included on the Consolidated Balance Sheets associated with unconsolidated VIEs. The table also presents our maximum exposure to loss which consists of outstanding book basis and unfunded commitments for future investments, and represents potential losses that would be incurred under hypothetical circumstances, such that the value of BancShares' interests and any associated collateral declines to zero and assuming no recovery. BancShares believes the possibility is remote under this hypothetical scenario; accordingly, this disclosure is not an indication of expected loss.

**Unconsolidated VIEs Carrying Value**

---

| | | |
|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **December 31, 2024** |
| Affordable housing tax credit investments | $2631 | $2357 |
| Other tax credit equity investments | 41 | 2 |
| Total tax credit equity investments | $2672 | $2359 |
| Other unconsolidated investments | 159 | 157 |
| Total affordable housing tax credit and other unconsolidated investments (maximum loss exposure) <sup>(1)</sup> | $2831 | $2516 |
| Liabilities for commitments to fund tax credit investments <sup>(2)</sup> | $1295 | $1214 |

---

<sup>(1)</sup> *Included in other assets.* 

<sup>(2)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*Represents commitments to invest in qualified affordable housing investments and other investments qualifying for community reinvestment tax credits. These commitments are payable on demand and included in other liabilities.*

We have investments in qualified affordable housing projects, primarily to support our Community Reinvestment Act ("CRA") initiatives and obtain tax credits. These investments are accounted for using the PAM and provide tax benefits in the form of tax deductions from operating losses and tax credits. Under the PAM, the initial cost of the investment is amortized in proportion to the tax credits and other tax benefits received, and the net investment performance is recognized on the Consolidated Statements of Income as a component of income tax expense.

------

The table below summarizes the amortization of our affordable housing tax credit investments and the related tax credits and other tax benefits that are recognized in income tax expense on the Consolidated Statements of Income.

**Tax Credit Investments Recognized in Income Tax Expense**

---

| | | | | |
|:---|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Amortization of affordable housing tax credit investments <sup>(1)</sup>  | $63 | $58 | $197 | $176 |
| Tax credits from affordable housing tax credit investments | (66) | (58) | (201) | (173) |
| Other tax benefits from affordable housing tax credit investments | (15) | (8) | (38) | (29) |
| Net income tax benefit from affordable housing tax credit investments <sup>(2)</sup> | $(18) | $(8) | $(42) | $(26) |

---

<sup>(1)</sup> *Amortization is included in depreciation, amortization, and accretion, net as an adjustment to reconcile net income to net cash provided by operating activities on the Consolidated Statements of Cash Flows.* 

<sup>(2)</sup> *Net income tax benefit impact is included in net income in cash flows from operating activities on the Consolidated Statements of Cash Flows. Changes in income taxes payable are reported in the net change in other liabilities as an adjustment to reconcile net income to net cash provided by operating activities.* 

**NOTE 9 — BORROWINGS**

**Short-term Borrowings**

*Securities Sold under Agreements to Repurchase*

BancShares held $423 million and $367 million at September 30, 2025 and December 31, 2024, respectively, of securities sold under agreements to repurchase that have overnight contractual maturities and are collateralized by government agency securities. The weighted average interest rate for securities sold under agreements to repurchase was 0.47% and 0.59% at September 30, 2025 and December 31, 2024, respectively.

BancShares utilizes securities sold under agreements to repurchase to facilitate the needs for collateralization of commercial customers and secure wholesale funding needs. Repurchase agreements are transactions whereby BancShares offers to sell to a counterparty an undivided interest in an eligible security at an agreed upon purchase price, and which obligates BancShares to repurchase the security at an agreed upon date, repurchase price and interest rate. These agreements are recorded at the amount of cash received in connection with the transactions and are reflected as securities sold under customer repurchase agreements.

BancShares monitors collateral levels on a continuous basis and maintains records of each transaction specifically describing the applicable security and the counterparty's fractional interest in that security, and segregates the security from general assets in accordance with regulations governing custodial holdings of securities. The primary risk with repurchase agreements is market risk associated with the investments securing the transactions, as additional collateral may be required based on fair value changes of the underlying investments. Securities pledged as collateral under repurchase agreements are maintained with safekeeping agents. The carrying value of investment securities pledged as collateral under repurchase agreements was $500 million and $435 million at September 30, 2025 and December 31, 2024, respectively.

------

**Long-term Borrowings**

On September 5, 2025, the Parent Company issued and sold $600 million aggregate principal amount of its 5.600% Fixed Rate Reset Subordinated Notes due in 2035 in a public offering. On March 12, 2025, the Parent Company issued and sold $500 million aggregate principal amount of its 5.231% Fixed-to-Floating Rate Senior Notes due in 2031 and $750 million aggregate principal amount of its 6.254% Fixed-to-Fixed Rate Subordinated Notes due in 2040 in a public offering.

On June 15, 2025, the Parent Company redeemed all $350 million aggregate principal amount of its 3.375% Fixed-to-Floating Rate Subordinated Notes due in 2030.

The following table presents long-term borrowings, net of the respective unamortized purchase accounting adjustments and issuance costs:

**Long-term Borrowings**

---

| | | | |
|:---|:---|:---|:---|
| *dollars in millions* | **Maturity** | **September 30, 2025** | **December 31, 2024** |
| **Parent Company:** |  |  |  |
| &nbsp;&nbsp;**Senior:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Fixed-to-Floating Senior Notes at 5.231% <sup>(1)</sup> | &nbsp;&nbsp;March 2031 | $497 | $— |
| &nbsp;&nbsp;**Subordinated:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Fixed-to-Floating Subordinated Notes at 3.375% <sup>(2)</sup> | &nbsp;&nbsp;March 2030 |  | 350 |
| &nbsp;&nbsp;&nbsp;&nbsp;Fixed Rate Reset Subordinated Notes at 5.600% <sup>(3)</sup> | &nbsp;&nbsp;September 2035 | 597 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Fixed-to-Fixed Subordinated Notes at 6.254% <sup>(4)</sup> | &nbsp;&nbsp;March 2040 | 745 |  |
| **Subsidiaries:** |  |  |  |
| &nbsp;&nbsp;**Senior:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Fixed Senior Unsecured Notes at 6.000% | &nbsp;&nbsp;April 2036 | 58 | 58 |
| &nbsp;&nbsp;**Subordinated:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Fixed Subordinated Notes at 6.125% | &nbsp;&nbsp;March 2028 | 434 | 445 |
| &nbsp;&nbsp;**Secured:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase Money Note to FDIC fixed at 3.500% <sup>(5)</sup> | &nbsp;&nbsp;March 2028 | 35854 | 35816 |
| Capital lease obligations | &nbsp;&nbsp;Maturities through May 2057 | 67 | 15 |
| &nbsp;&nbsp;&nbsp;Total long-term borrowings |  | $38252 | $36684 |

---

<sup>(1)</sup> *The fixed rate period will end March 12, 2030, and the notes will thereafter bear a floating interest rate equal to a benchmark rate based on the Compounded Secured Overnight Financing Rate ("SOFR") Index Rate plus 141 basis points ("bps") per annum until the maturity date (or date of earlier redemption).*

<sup>(2)</sup> *The fixed rate period ended on March 15, 2025, and the notes converted to a floating interest rate equal to Three-Month Term SOFR plus 246.5 bps per annum. The notes included a callable feature and were redeemed on June 15, 2025.*

<sup>(3)</sup> *The interest rate will reset on September 5, 2030, and the notes will thereafter bear a fixed interest rate equal to the Five-year U.S. Treasury Rate as of the day falling two business days prior to the notes reset date plus 185 bps per annum until the maturity date (or date of earlier redemption).*

<sup>(4)</sup> *The interest rate will reset on March 12, 2035, and the notes will thereafter bear a fixed interest rate equal to the Five-year U.S. Treasury Rate as of the day falling two business days prior to the notes reset date plus 197 bps per annum until the maturity date (or date of earlier redemption).*

<sup>(5)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*Refer to Note 2—Business Combinations and Note 4—Loans and Leases.*

**Pledged Assets** 

Refer to the "Loans Pledged" section in Note 4—Loans and Leases for information on loans pledged as collateral to secure borrowings. Additionally, interest-earning deposits at banks included $212 million and $211 million at September 30, 2025 and December 31, 2024, respectively, that were required minimum deposits under the Purchase Money Note.

**NOTE 10 — DERIVATIVE FINANCIAL INSTRUMENTS**

Our derivatives designated as hedging instruments include interest rate swap contracts utilized to manage our interest rate exposure for items on our Consolidated Balance Sheets. This includes floating-rate loan portfolio cash flow hedges and fair value hedges of our fixed-rate borrowings and deposits.

Our derivatives not designated as hedging instruments mainly include interest rate and foreign exchange contracts that our customers utilized for their risk management needs. We typically manage our exposure to these customer derivatives by entering into offsetting or "back-to-back" interest rate and foreign exchange contracts with third-party dealers.

Derivative instruments that are cleared through certain central counterparty clearing houses are settled-to-market and reported net of collateral positions.

Refer to Note 11—Fair Value for further information on derivatives.

------

The following table presents notional amounts and fair values of derivative financial instruments:

**Notional Amount and Fair Value of Derivative Financial Instruments**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Notional Amount** | **Asset Fair Value** | **Liability Fair Value** | **Notional Amount** | **Asset Fair Value** | **Liability Fair Value** |
| **Derivatives designated as hedging instruments (Qualifying hedges)** |  |  |  |  |  |  |
| Fair Value Hedges |  |  |  |  |  |  |
| &nbsp;&nbsp;Interest rate contracts hedging time deposits | $134 | $— | $— | $334 | $— | $— |
| &nbsp;&nbsp;Interest rate contracts hedging long-term borrowings | 200 |  |  | 750 |  |  |
| Total fair value hedges <sup>(1) (2)</sup> | 334 |  |  | 1084 |  |  |
| Cash Flow Hedges |  |  |  |  |  |  |
| &nbsp;&nbsp;Interest rate contracts hedging loans <sup>(1) (2)</sup> | 2500 |  |  | 3500 | 1 |  |
| Total derivatives designated as hedging instruments | $2834 | $— | $— | $4584 | $1 | $— |
| **Derivatives not designated as hedging instruments (Non-qualifying hedges)** |  |  |  |  |  |  |
| Interest rate contracts <sup>(1) (2)</sup> | $28290 | $403 | $(383) | $26235 | $491 | $(516) |
| Foreign exchange contracts <sup>(3)</sup> | 7969 | 145 | (136) | 7843 | 152 | (108) |
| Other contracts <sup>(4)</sup> | 1497 | 22 | (1) | 1316 | 16 | (1) |
| Total derivatives not designated as hedging instruments | $37756 | $570 | $(520) | $35394 | $659 | $(625) |
| Gross derivatives fair values presented in the Consolidated Balance Sheets |  | $570 | $(520) |  | $660 | $(625) |
| Less: gross amounts offset in the Consolidated Balance Sheets |  |  |  |  |  |  |
| Net amount presented in other assets and other liabilities in the Consolidated Balance Sheets |  | $570 | $(520) |  | $660 | $(625) |

---

<sup>(1)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*Fair value balances include accrued interest.*

<sup>(2)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*BancShares accounts for swap contracts cleared by the Chicago Mercantile Exchange and LCH Clearnet as "settled-to-market." As a result, the derivative asset and liability fair values in the table above are presented net of the variation margin payments. Refer to the table below for more information.* 

<sup>(3)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*The foreign exchange contracts exclude foreign exchange spot contracts. The notional and net fair value amounts of these contracts were $566 million and $0 million, respectively, as of September 30, 2025, and $177 million and $0 million, respectively, as of December 31, 2024.*

<sup>(4)&nbsp;&nbsp;&nbsp;&nbsp;</sup> *Other derivative contracts not designated as hedging instruments include risk participation agreements and equity warrants.*

The following table presents the impact of variation margin netting (form of collateral payment when the underlying fair value changes) on derivative assets and liabilities:

**Variation Margin Payments**

---

| | | | | |
|:---|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **September 30, 2025** | **December 31, 2024** | **December 31, 2024** |
|  | **Asset Fair Value** | **Liability Fair Value** | **Asset Fair Value** | **Liability Fair Value** |
| **Derivatives designated as hedging instruments (Qualifying hedges)** |  |  |  |  |
| &nbsp;&nbsp;Gross fair value | $18 | $— | $15 | $— |
| &nbsp;&nbsp;Cleared trades, variation margin netting | (18) |  | (14) |  |
| Total derivatives designated as hedging instruments | $— | $— | $1 | $— |
| **Derivatives not designated as hedging instruments (Non-qualifying hedges)** |  |  |  |  |
| &nbsp;&nbsp;Gross fair value | $625 | $(563) | $742 | $(647) |
| &nbsp;&nbsp;Cleared trades, variation margin netting | (55) | 43 | (83) | 22 |
| Total derivatives not designated as hedging instruments | $570 | $(520) | $659 | $(625) |
| Gross derivatives fair values presented in the Consolidated Balance Sheets | $570 | $(520) | $660 | $(625) |
| Amounts subject to master netting agreements <sup>(1)</sup> | (116) | 116 | (48) | 48 |
| Cash collateral pledged (received) subject to master netting agreements <sup>(2)</sup> | (218) | 75 | (539) | 2 |
| Total net derivative fair value | $236 | $(329) | $73 | $(575) |

---

<sup>(1)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*BancShares' derivative transactions are governed by International Swaps and Derivatives Association ("ISDA") agreements that allow for net settlements of certain payments as well as offsetting of all contracts with a given counterparty in the event of bankruptcy or default of one of the two parties to the transaction. BancShares believes its ISDA agreements meet the definition of a master netting arrangement or similar agreement for purposes of the above disclosure.*

<sup>(2)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*In conjunction with the ISDA agreements described above, BancShares has entered into collateral arrangements with its counterparties, which provide for the exchange of cash depending on the change in the market valuation of the derivative contracts outstanding. Such collateral is available to be applied in settlement of the net balances upon an event of default of one of the counterparties. Collateral pledged or received is included in other assets or deposits, respectively.*

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**Fair Value Hedges**

The following table presents the impact of fair value hedges recorded in interest expense on the Consolidated Statements of Income:

**Recognized Gains (Losses) on Fair Value Hedges**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *dollars in millions* |  | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
|  | **Interest Expense** | **2025** | **2024** | **2025** | **2024** |
| Gain (loss) on hedging instruments - time deposits | Deposits | $— | $2 | $— | $1 |
| Gain (loss) on hedging instruments - borrowings | Borrowings |  | 4 |  | (2) |
| Gain (loss) on hedged item - time deposits | Deposits | 1 | (3) | 1 | (2) |
| Gain (loss) on hedged item - borrowings | Borrowings |  | (5) | 2 |  |
| Net gain on fair value hedges | Total interest expense | $1 | $(2) | $3 | $(3) |

---

The following table presents the carrying value of hedged items and associated cumulative hedging adjustment related to fair value hedges:

**Carrying Value of Hedged Items**

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| | | | |
|:---|:---|:---|:---|
| *dollars in millions* |  | **Cumulative Fair Value Hedging Adjustment Included in the Carrying Value of Hedged Items** | **Cumulative Fair Value Hedging Adjustment Included in the Carrying Value of Hedged Items** |
|  | **Carrying Value of Hedged Items** | **Currently Designated** | **No Longer Designated** |
| September 30, 2025 |  |  |  |
| Long-term borrowings | $217 | $— | $— |
| Deposits | 134 |  |  |
| December 31, 2024 |  |  |  |
| Long-term borrowings | 795 | 2 |  |
| Deposits | 335 | 1 |  |

---

**Cash Flow Hedges** 

The following table presents the pretax unrealized gain on hedging instruments in cash flow hedges, which are reported in other comprehensive income, and the pretax amount reclassified from accumulated other comprehensive income ("AOCI") to earnings:

**Unrealized Gain on Cash Flow Hedges** 

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| | | | | |
|:---|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Other comprehensive income on cash flow hedge derivatives before reclassifications | $(2) | $14 | $10 | $17 |
| Amounts reclassified from AOCI to earnings |  | 2 | (4) | 2 |
| Other comprehensive income on cash flow hedge derivatives | $(2) | $16 | $6 | $19 |

---

The following table presents other information for cash flow hedges:

**Other Information for Cash Flow Hedges**

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| | | |
|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **December 31, 2024** |
| Unrealized gain on cash flow hedge derivatives reported in AOCI, net of income taxes | $13 | $8 |
| Estimate to be reclassified from AOCI to earnings during the next 12 months, net of income taxes <sup>(1)</sup> | $7 | $7 |
| Maximum number of months over which forecasted cash flows are hedged | 22 | 24 |

---

<sup>(1)</sup> *Reclassified amounts could differ from amounts actually recognized due to factors such as changes in interest rates, hedge de-designations and the addition of other hedges.*

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**Non-Qualifying Hedges**

The following table presents gains on non-qualifying hedges recognized on the Consolidated Statements of Income:

**Gains (Losses) on Non-Qualifying Hedges**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *dollars in millions* |  | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
|  | **Amounts Recognized** | **2025** | **2024** | **2025** | **2024** |
| Interest rate contracts | Other noninterest income | $4 | $(5) | $10 | $6 |
| Foreign currency forward contracts <sup>(1)</sup> | Other noninterest income | 12 | (20) | (52) | 3 |
| Other contracts | Other noninterest income | 1 | 2 | 3 | 1 |
| Total non-qualifying hedges - income statement impact |  | $17 | $(23) | $(39) | $10 |

---

<sup>(1)</sup> *This is primarily related to economic hedges of foreign currency risks arising from loans and other assets denominated in foreign currency. There is an offsetting impact within noninterest income for the foreign exchange revaluation of the associated assets denominated in foreign currency.* 

**NOTE 11 — FAIR VALUE** 

**Fair Value Hierarchy**

BancShares measures certain financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP also establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels.

Assets and liabilities are recorded at fair value according to a fair value hierarchy comprised of three levels. The levels are based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. The level within the fair value hierarchy for an asset or liability is based on the lowest level of input significant to the fair value measurement with Level 1 inputs considered highest and Level 3 inputs considered lowest. A brief description of each input level follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 1 inputs are quoted prices in active markets for identical assets and liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 2 inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs other than quoted prices observable for the assets or liabilities and market corroborated inputs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 3 inputs are unobservable inputs for the asset or liability. These unobservable inputs and assumptions reflect the estimates market participants would use in pricing the asset or liability.

------

**Assets and Liabilities Measured at Fair Value - Recurring Basis**

The following table presents assets and liabilities measured at fair value on a recurring basis:

**Assets and Liabilities Measured at Fair Value - Recurring Basis**

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| | | | | |
|:---|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** |
|  | **Total** | **Level 1** | **Level 2** | **Level 3** |
| **Assets** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Investment securities available for sale |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;U.S. Treasury | $13781 | $— | $13781 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;Government agency | 52 |  | 52 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential mortgage-backed securities | 17435 |  | 17435 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial mortgage-backed securities | 3428 |  | 3428 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate bonds | 250 |  | 141 | 109 |
| &nbsp;&nbsp;&nbsp;&nbsp;Municipal bonds | 17 |  | 17 |  |
| &nbsp;&nbsp;Total investment securities available for sale | $34963 | $— | $34854 | $109 |
| &nbsp;&nbsp;&nbsp;Marketable equity securities | 110 | 46 | 64 |  |
| &nbsp;&nbsp;&nbsp;Loans held for sale | 80 |  | 80 |  |
| &nbsp;&nbsp;&nbsp;Loans | 22 |  | 22 |  |
| &nbsp;&nbsp;Derivative assets <sup>(1)</sup> |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total qualifying hedge assets | $— | $— | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest rate contracts — non-qualifying hedges | $403 | $— | $400 | $3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange contracts — non-qualifying hedges | 145 |  | 145 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other derivative contracts — non-qualifying hedges | 22 |  |  | 22 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total non-qualifying hedge assets | $570 | $— | $545 | $25 |
| &nbsp;&nbsp;Total derivative assets | $570 | $— | $545 | $25 |
| **Liabilities** |  |  |  |  |
| &nbsp;&nbsp;Derivative liabilities <sup>(1)</sup> |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest rate contracts — qualifying hedges | $— | $— | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest rate contracts — non-qualifying hedges | $383 | $— | $383 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange contracts — non-qualifying hedges | 136 |  | 136 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other derivative contracts — non-qualifying hedges | 1 |  |  | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total non-qualifying hedge liabilities | $520 | $— | $519 | $1 |
| &nbsp;&nbsp;Total derivative liabilities | $520 | $— | $519 | $1 |
| <sup>(1)</sup> *Derivative fair values include accrued interest.*  |  |  |  |  |

---

------

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| | | | | |
|:---|:---|:---|:---|:---|
| *dollars in millions* | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Total** | **Level 1** | **Level 2** | **Level 3** |
| **Assets** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Investment securities available for sale |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;U.S. Treasury | $13903 | $— | $13903 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;Government agency | 77 |  | 77 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential mortgage-backed securities | 15620 |  | 15620 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial mortgage-backed securities | 3666 |  | 3666 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate bonds | 467 |  | 299 | 168 |
| &nbsp;&nbsp;&nbsp;&nbsp;Municipal bonds | 17 |  | 17 |  |
| &nbsp;&nbsp;Total investment securities available for sale | $33750 | $— | $33582 | $168 |
| &nbsp;&nbsp;Marketable equity securities | 101 | 48 | 53 |  |
| &nbsp;&nbsp;Loans held for sale | 55 |  | 55 |  |
| &nbsp;&nbsp;Derivative assets <sup>(1)</sup> |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total qualifying hedge assets | $1 | $— | $1 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest rate contracts — non-qualifying hedges | $491 | $— | $490 | $1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange contracts — non-qualifying hedges | 152 |  | 152 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other derivative contracts — non-qualifying hedges | 16 |  |  | 16 |
| &nbsp;&nbsp;Total non-qualifying hedge assets | $659 | $— | $642 | $17 |
| &nbsp;&nbsp;Total derivative assets | $660 | $— | $643 | $17 |
| **Liabilities** |  |  |  |  |
| &nbsp;&nbsp;Derivative liabilities <sup>(1)</sup> |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest rate contracts — qualifying hedges | $— | $— | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest rate contracts — non-qualifying hedges | $516 | $— | $516 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange contracts — non-qualifying hedges | 108 |  | 108 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other derivative contracts — non-qualifying hedges | 1 |  |  | 1 |
| &nbsp;&nbsp;Total non-qualifying hedge liabilities | $625 | $— | $624 | $1 |
| &nbsp;&nbsp;Total derivative liabilities | $625 | $— | $624 | $1 |

---

<sup>(1) &nbsp;&nbsp;&nbsp;&nbsp;</sup>*Derivative fair values include accrued interest.* 

The methods and assumptions used to estimate the fair value of each class of financial instruments measured at fair value on a recurring basis are as follows:

*Investment securities available for sale*. The fair value of U.S. Treasury, government agency, mortgage-backed securities, municipal bonds, and a portion of the corporate bonds are generally estimated using a third-party pricing service. To obtain an understanding of the processes and methodologies used, management reviews correspondence from the third-party pricing service. Management also performs a price variance analysis process to corroborate the reasonableness of prices. The third-party provider evaluates securities based on comparable investments with trades and market data and will utilize pricing models which use a variety of inputs, such as benchmark yields, reported trades, issuer spreads, benchmark securities, bids and offers as needed. These securities are generally classified as Level 2. The remaining corporate bonds held are generally measured at fair value based on indicative bids from broker-dealers using inputs that are not directly observable. These securities are classified as Level 3.

*Marketable equity securities.* Equity securities are measured at fair value using observable closing prices. The valuation also considers the amount of market activity by examining trade volume. Equity securities are classified as Level 1 if they are traded in an active market and as Level 2 if the observable closing price is from a less than active market.

*Loans* and *Loans held for sale.* Certain residential real estate loans originated for sale to investors are carried at fair value based on quoted market prices for similar types of loans, which are considered Level 2 inputs. In instances when loans are not sold and subsequently transferred to portfolio, accounting at fair value is continued.

*Derivative Assets* and *Liabilities.* Derivatives were valued using models that incorporate inputs depending on the type of derivative. Other than the fair value of equity warrants and credit derivatives, which were estimated using Level 3 inputs, most derivative instruments were valued using Level 2 inputs based on observed pricing for similar assets and liabilities and model-based valuation techniques for which all significant assumptions are observable in the market. Refer to Note 10—Derivative Financial Instruments for notional amounts and fair values.

------

The following tables summarize information about significant unobservable inputs related to BancShares' categories of Level 3 financial assets and liabilities measured on a recurring basis:

**Quantitative Information About Level 3 Fair Value Measurements - Recurring Basis**

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| | | | | |
|:---|:---|:---|:---|:---|
| *dollars in millions* |  |  |  |  |
| **Financial Instrument** | **Estimated Fair Value** | **Estimated Fair Value** | **Valuation Technique** | **Significant Unobservable Inputs** |
|  | **September 30, 2025** | **December 31, 2024** |  |  |
| **Assets** |  |  |  |  |
| Corporate bonds | $109 | $168 | Indicative bid provided by broker | Multiple factors, including but not limited to, current operations, financial condition, cash flows, and recently executed financing transactions related to the issuer. |
| Interest rate & other derivative — non-qualifying hedges | $25 | $17 | Internal valuation model | Multiple factors, including but not limited to, private company valuation, illiquidity discount, and estimated life of the instrument. |
| **Liabilities** |  |  |  |  |
| Interest rate & other derivative — non-qualifying hedges | $1 | $1 | Internal valuation model | Not material |

---

The following table summarizes the changes in estimated fair value for all assets and liabilities measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3):

**Changes in Estimated Fair Value of Level 3 Financial Assets and Liabilities - Recurring Basis**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** |
|  | **Corporate Bonds** | **Other Derivative Assets — Non-Qualifying** | **Other Derivative Liabilities — Non-Qualifying** | **Corporate Bonds** | **Other Derivative Assets — Non-Qualifying** | **Other Derivative Liabilities — Non-Qualifying** |
| **Beginning balance** | $168 | $17 | $1 | $157 | $7 | $1 |
| Purchases |  | 6 |  |  | 7 |  |
| Changes in fair value included in earnings |  | 4 |  | (1) | 1 |  |
| Changes in fair value included in comprehensive income | 9 |  |  | 8 |  |  |
| Maturity and settlements | (68) | (2) |  |  |  |  |
| **Ending balance** | $109 | $25 | $1 | $164 | $15 | $1 |

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**Fair Value Option**

The following table summarizes the difference between the aggregate fair value and the unpaid principal balance ("UPB") for residential mortgage loans originated for sale measured at fair value:

**Aggregate Fair Value and UPB - Residential Mortgage Loans**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Fair Value** | **Unpaid Principal Balance** | **Difference** | **Fair Value** | **Unpaid Principal Balance** | **Difference** |
| Originated loans held for sale <sup>(1)</sup> | $102 | $102 | $— | $55 | $54 | $1 |

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<sup>(1)</sup> *Originated loans held for sale include loans held for sale and loans originated for sale but transferred to portfolio and held for investment.*

BancShares has elected the fair value option for residential mortgage loans originated for sale. This election reduces certain timing differences in the Consolidated Statements of Income and better aligns with the management of the portfolio from a business perspective. The changes in fair value that were recorded as a component of other noninterest income were insignificant for the three and nine months ended September 30, 2025 and 2024. Interest earned on originated loans held for sale is recorded within interest income on loans and leases in the Consolidated Statements of Income.

No originated loans held for sale were 90 or more days past due or on nonaccrual status as of September 30, 2025 or December 31, 2024.

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**Assets Measured at Estimated Fair Value on a Non-recurring Basis**

Certain assets or liabilities are required to be measured at estimated fair value on a non-recurring basis subsequent to initial recognition. Generally, these adjustments are the result of lower of cost or fair value ("LOCOM") or other impairment accounting. The following table presents carrying value of assets measured at estimated fair value on a non-recurring basis for which gains and losses have been recorded in the periods. The gains and losses reflect amounts recorded for the respective periods, regardless of whether the asset is still held at period end.

**Assets Measured at Fair Value - Non-recurring Basis** 

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Fair Value Measurements** | **Fair Value Measurements** | **Fair Value Measurements** | **Fair Value Measurements** |  |
|  | **Total** | **Level 1** | **Level 2** | **Level 3** | **Total Gains (Losses)** |
| **September 30, 2025** |  |  |  |  |  |
| Assets held for sale - loans | $2 | $— | $— | $2 | $(4) |
| Loans - collateral dependent loans | 181 |  |  | 181 | (141) |
| Other real estate owned | 76 |  |  | 76 | (1) |
| Total | $259 | $— | $— | $259 | $(146) |
| **December 31, 2024** |  |  |  |  |  |
| Assets held for sale - loans | $13 | $— | $— | $13 | $(7) |
| Loans - collateral dependent loans | 388 |  |  | 388 | (171) |
| Other real estate owned | 16 |  |  | 16 | 6 |
| Total | $417 | $— | $— | $417 | $(172) |

---

Certain other assets are adjusted to their fair value on a non-recurring basis, including certain loans, OREO, and goodwill, which are periodically tested for impairment. Most loans held for investment, deposits, and borrowings are not reported at fair value.

The methods and assumptions used to estimate the fair value of each class of financial instruments measured at fair value on a non-recurring basis are as follows:

*Assets held for sale - loans.* Loans held for investment subsequently transferred to held for sale are carried at the LOCOM. When available, the fair values for the transferred loans are based on quoted prices from the purchase commitments for the individual loans being transferred and are considered Level 1 inputs. The fair value of Level 2 assets was primarily estimated based on prices of recent trades of similar assets. For other loans held for sale, the fair value of Level 3 assets was primarily measured under the income approach using the discounted cash flow model based on Level 3 inputs including discount rate or the price of committed trades. Gains and losses are recorded in noninterest income.

*Loans - collateral dependent loans.* The population of Level 3 loans measured at fair value that are experiencing financial difficulty and measured on a non-recurring basis includes collateral-dependent loans evaluated individually. Collateral values are determined using appraisals or other third-party value estimates of the subject property discounted based on estimated selling costs, and adjustments for other external factors that may impact the marketability of the collateral. Gains and losses generally reflect the required net provision and charge-offs specific to the loans included in the population for the respective periods and are recorded in the provision for credit losses.

*Other real estate owned.* OREO is carried at LOCOM. OREO asset valuations are determined by using appraisals or other third-party value estimates of the subject property with discounts, generally between 7% and 10%, applied for estimated selling costs and other external factors that may impact the marketability of the property. At September 30, 2025 and December 31, 2024, the weighted average discount applied was 9.66% and 9.45%, respectively. Changes to the value of the assets between scheduled valuation dates are monitored through continued communication with brokers and monthly reviews by the asset manager assigned to each asset. If there are any significant changes in the market or the subject property, valuations are adjusted or new appraisals are ordered to ensure the reported values reflect the most current information.

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**Financial Instruments Fair Value**

The table below presents the carrying values and estimated fair values for financial instruments, excluding leases and certain other assets and liabilities for which these disclosures are not required.

**Carrying Values and Fair Values of Financial Assets and Liabilities**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** |
|  |  | **Estimated Fair Value** | **Estimated Fair Value** | **Estimated Fair Value** | **Estimated Fair Value** |
|  | **Carrying Value** | **Level 1** | **Level 2** | **Level 3** | **Total** |
| **Financial Assets** |  |  |  |  |  |
| Cash and due from banks | $874 | $874 | $— | $— | $874 |
| Interest-earning deposits at banks | 24798 | 24798 |  |  | 24798 |
| Securities purchased under agreements to resell | 83 |  | 83 |  | 83 |
| Investment in marketable equity securities | 110 | 46 | 64 |  | 110 |
| Investment securities available for sale | 34963 |  | 34854 | 109 | 34963 |
| Investment securities held to maturity | 10051 |  | 8838 |  | 8838 |
| Loans held for sale | 110 |  | 80 | 30 | 110 |
| Net loans | 141074 |  | 1618 | 140306 | 141924 |
| Accrued interest receivable | 945 |  | 945 |  | 945 |
| Federal Home Loan Bank stock | 20 |  | 20 |  | 20 |
| Mortgage servicing rights | 30 |  |  | 48 | 48 |
| Derivative assets - non-qualifying hedges | 570 |  | 545 | 25 | 570 |
| **Financial Liabilities** |  |  |  |  |  |
| Deposits with no stated maturity | 152116 |  | 152116 |  | 152116 |
| Time deposits | 11074 |  | 11058 |  | 11058 |
| Credit balances of factoring clients | 1326 |  |  | 1326 | 1326 |
| Securities sold under customer repurchase agreements | 423 |  | 423 |  | 423 |
| Long-term borrowings | 38185 |  | 38211 |  | 38211 |
| Accrued interest payable | 105 |  | 105 |  | 105 |
| Derivative liabilities - non-qualifying hedges | 520 |  | 519 | 1 | 520 |
|  | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  |  | **Estimated Fair Value** | **Estimated Fair Value** | **Estimated Fair Value** | **Estimated Fair Value** |
|  | **Carrying Value** | **Level 1** | **Level 2** | **Level 3** | **Total** |
| **Financial Assets** |  |  |  |  |  |
| Cash and due from banks | $814 | $814 | $— | $— | $814 |
| Interest-earning deposits at banks | 21364 | 21364 |  |  | 21364 |
| Securities purchased under agreements to resell | 158 |  | 158 |  | 158 |
| Investment in marketable equity securities | 101 | 48 | 53 |  | 101 |
| Investment securities available for sale | 33750 |  | 33582 | 168 | 33750 |
| Investment securities held to maturity | 10239 |  | 8702 |  | 8702 |
| Loans held for sale | 82 |  | 55 | 27 | 82 |
| Net loans | 136567 |  | 1463 | 133409 | 134872 |
| Accrued interest receivable | 902 |  | 902 |  | 902 |
| Federal Home Loan Bank stock | 20 |  | 20 |  | 20 |
| Mortgage servicing rights | 27 |  |  | 47 | 47 |
| Derivative assets - qualifying hedges | 1 |  | 1 |  | 1 |
| Derivative assets - non-qualifying hedges | 659 |  | 642 | 17 | 659 |
| **Financial Liabilities** |  |  |  |  |  |
| Deposits with no stated maturity | 141976 |  | 141976 |  | 141976 |
| Time deposits | 13253 |  | 13247 |  | 13247 |
| Credit balances of factoring clients | 1016 |  |  | 1016 | 1016 |
| Securities sold under customer repurchase agreements | 367 |  | 367 |  | 367 |
| Long-term borrowings | 36669 |  | 36220 |  | 36220 |
| Accrued interest payable | 134 |  | 134 |  | 134 |
| Derivative liabilities - non-qualifying hedges | 625 |  | 624 | 1 | 625 |

---

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The methods and assumptions used to estimate the fair value of each class of financial instruments not discussed elsewhere are as follows:

*Interest-earning Deposits at Banks.* The carrying value of interest-earning deposits at banks approximates its fair value due to its short-term nature and is classified on the fair value hierarchy as Level 1. The balances at September 30, 2025 and December 31, 2024 included $212 million and $211 million, respectively, as a required minimum deposit under the Purchase Money Note.

*Net loans.* The carrying value of net loans is net of the ALLL. Loans are generally valued by discounting expected cash flows using market inputs with adjustments based on cohort level assumptions for certain loan types as well as internally developed estimates at a business segment level. Due to the significance of the unobservable market inputs and assumptions, as well as the absence of a liquid secondary market for most loans, these loans are classified as Level 3. Certain loans are measured based on observable market prices sourced from external data providers and classified as Level 2. Nonaccrual loans are written down and reported at their estimated recovery value, which approximates their fair value, and classified as Level 3.

*Securities Purchased Under Agreements to Resell.* The fair value of securities purchased under agreements to resell equal the carrying value due to the short term nature, generally overnight, and therefore present an insignificant risk of change in fair value due to changes in market interest rate, and classified as Level 2.

*Investment securities held to maturity.* BancShares' portfolio of debt securities held to maturity consists of mortgage-backed securities issued by government agencies and government sponsored entities, U.S. Treasury notes, unsecured bonds issued by government agencies and government sponsored entities, and securities issued by the Supranational Entities & Multilateral Development Banks. We primarily use prices obtained from pricing services to determine the fair value of securities, which are Level 2 inputs.

*FHLB stock.* The carrying amount of FHLB stock is a reasonable estimate of fair value, as these securities are not readily marketable and are evaluated for impairment based on the ultimate recoverability of the par value. BancShares considers positive and negative evidence, including the profitability and asset quality of the issuer, dividend payment history and recent redemption experience, when determining the ultimate recoverability of the par value. BancShares investment in FHLB stock is ultimately recoverable at par. The inputs used in the fair value measurement for the FHLB stock are considered Level 2 inputs.

*Mortgage servicing rights.* The fair value of mortgage servicing rights ("MSRs") is determined using a pooling methodology. Similar loans are pooled together and a model which relies on discount rates, estimates of prepayment rates and the weighted average cost to service the loans is used to determine the fair value. The inputs used in the fair value measurement for MSRs are considered Level 3 inputs.

*Deposits.* The estimated fair value of deposits with no stated maturity, such as demand deposit accounts, money market accounts, and savings accounts was the amount payable on demand at the reporting date. The fair value of time deposits was estimated based on a discounted cash flow technique using Level 2 inputs appropriate to the contractual maturity.

*Credit balances of factoring clients.* The impact of the time value of money from the unobservable discount rate for credit balances of factoring clients is inconsequential due to the short term nature of these balances, therefore, the fair value approximated carrying value, and the credit balances are classified as Level 3.

*Short-term borrowed funds.* The fair value of short-term borrowed funds, which includes repurchase agreements, approximates carrying value and are classified as Level 2.

*Long-term borrowings.* For certain long-term senior and subordinated unsecured borrowings, the fair values are sourced from a third-party pricing service. The fair values of other long-term borrowings are determined by discounting future cash flows using current interest rates for similar financial instruments. The inputs used in the fair value measurement for FHLB borrowings, senior and subordinated debentures, and other borrowings are classified as Level 2.

For all other financial assets and financial liabilities, the carrying value is a reasonable estimate of the fair value as of September 30, 2025 and December 31, 2024. The carrying value and fair value for these assets and liabilities are equivalent because they are relatively short-term in nature and there is no interest rate or credit risk that would cause the fair value to differ from the carrying value. Cash and due from banks is classified as Level 1. Accrued interest receivable and accrued interest payable are classified as Level 2.

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**NOTE 12 — STOCKHOLDERS' EQUITY**

A roll forward of common stock activity is presented in the following table:

**Number of Shares of Common Stock**

---

| | | |
|:---|:---|:---|
| | **September 30, 2025** | **September 30, 2025** |
| | **Common Stock Outstanding** | **Common Stock Outstanding** |
| | **Class A** | **Class B** |
| Common stock - June 30, 2025 | 12070794 | 1005185 |
| Shares repurchased under authorized repurchase plan | (457350) |  |
| Common stock - September 30, 2025 | 11613444 | 1005185 |
| Common stock - December 31, 2024 | 12712436 | 1005185 |
| Shares purchased under authorized repurchase plan | (1098992) |  |
| Common stock - September 30, 2025 | 11613444 | 1005185 |

---

**Common Stock**

The Parent Company has Class A common stock and Class B common stock, each with a par value of $1. Class A common stockholders have one vote per share while Class B common stockholders have 16 votes per share.

**Non-Cumulative Perpetual Preferred Stock** 

The following table summarizes BancShares' non-cumulative perpetual preferred stock:

**Preferred Stock**

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions, except per share and par value data* | *dollars in millions, except per share and par value data* | *dollars in millions, except per share and par value data* | *dollars in millions, except per share and par value data* | *dollars in millions, except per share and par value data* | *dollars in millions, except per share and par value data* | *dollars in millions, except per share and par value data* | *dollars in millions, except per share and par value data* |
| **Preferred Stock** | **Issuance Date** | **Earliest Redemption Date** | **Par Value** | **Shares Authorized, Issued and Outstanding** | **Liquidation Preference Per Share** | **Total Liquidation Preference** | **Dividend** |
| Series A | March 12, 2020 | March 15, 2025 | $0.01 | 345000 | $1000 | $345 | 5.375% |
| Series B <sup>(1)</sup> | January 3, 2022 | January 4, 2027 | 0.01 | 325000 | 1000 | 325 | SOFR + 3.972% |
| Series C | January 3, 2022 | January 4, 2027 | 0.01 | 8000000 | 25 | 200 | 5.625% |

---

<sup>(1)</sup> *Upon conversion to SOFR in 2023, BancShares began paying a credit spread adjustment in addition to the stated dividend.*

Dividends on BancShares Series A, B, and C preferred stock (together, "BancShares Preferred Stock") will be paid when, as, and if declared by the Board of Directors of the Parent Company, or a duly authorized committee thereof, to the extent that the Parent Company has lawfully available funds to pay dividends. If declared, dividends with respect to the BancShares Preferred Stock will accrue and be payable quarterly in arrears on March 15, June 15, September 15, and December 15 of each year. Dividends on the BancShares Preferred Stock will not be cumulative. For further description of BancShares Preferred Stock, refer to Note 16—Stockholders' Equity in the Notes to the Consolidated Financial Statements included in the 2024 Form 10-K.

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**NOTE 13 — ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME** 

The following table details the components of AOCI:

**Components of Accumulated Other Comprehensive Loss**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Pretax** | **Income Taxes** | **Net of Income Taxes** | **Pretax** | **Income Taxes** | **Net of Income Taxes** |
| Unrealized loss on securities available for sale | $(224) | $40 | $(184) | $(762) | $178 | $(584) |
| Unrealized loss on securities available for sale transferred to held to maturity | (5) | 1 | (4) | (6) | 2 | (4) |
| Defined benefit pension items | 177 | (46) | 131 | 182 | (47) | 135 |
| Unrealized gain on cash flow hedge derivatives | 17 | (4) | 13 | 11 | (3) | 8 |
| Total accumulated other comprehensive loss | $(35) | $(9) | $(44) | $(575) | $130 | $(445) |

---

The following table details the changes in the components of AOCI, net of income taxes:

**Changes in Accumulated Other Comprehensive (Loss) Income by Component**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Unrealized loss on securities available for sale** | **Unrealized loss on securities available for sale transferred to held to maturity** | **Defined benefit pension items** | **Unrealized gain on cash flow hedge derivatives** | **Total accumulated other comprehensive loss** |
| **Balance as of December 31, 2024** | $(584) | $(4) | $135 | $8 | $(445) |
| AOCI activity before reclassifications | 400 |  | (4) | 8 | 404 |
| Amounts reclassified from AOCI to earnings |  |  |  | (3) | (3) |
| Other comprehensive income (loss) for the period | 400 |  | (4) | 5 | 401 |
| **Balance as of September 30, 2025** | $(184) | $(4) | $131 | $13 | $(44) |
| **Balance as of December 31, 2023** | $(577) | $(5) | $91 | $— | $(491) |
| AOCI activity before reclassifications | 325 |  | (8) | 12 | 329 |
| Amounts reclassified from AOCI to earnings |  | 1 |  | 2 | 3 |
| Other comprehensive loss (income) for the period | 325 | 1 | (8) | 14 | 332 |
| **Balance as of September 30, 2024** | $(252) | $(4) | $83 | $14 | $(159) |

---

------

**Other Comprehensive Income** 

The amounts included in the Consolidated Statements of Comprehensive Income are net of income taxes. The following table presents the pretax and after tax components of other comprehensive income:

**Other Comprehensive Income (Loss) by Component**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Three Months Ended September 30,** |  |
|  | **2025** | **2025** | **2025** | **2024** | **2024** | **2024** |  |
|  | **Pretax** | **Income Taxes** | **Net of Income Taxes** | **Pretax** | **Income Taxes** | **Net of Income Taxes** | **Income Statement Line Items** |
| Unrealized loss on securities available for sale: |  |  |  |  |  |  |  |
| Other comprehensive income on securities available for sale | $97 | $(25) | $72 | $594 | $(156) | $438 |  |
| Unrealized loss on securities available for sale transferred to held to maturity: |  |  |  |  |  |  |  |
| Amounts reclassified from AOCI to earnings | $1 | $(1) | $— | $1 | $— | $1 | Interest on investment securities |
| Defined benefit pension items: |  |  |  |  |  |  |  |
| Other comprehensive loss for defined benefit pension items | $(1) | $— | $(1) | $— | $— | $— |  |
| Unrealized gain on cash flow hedge derivatives: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;AOCI activity before reclassifications | $(2) | $1 | $(1) | $14 | $(4) | $10 |  |
| &nbsp;&nbsp;&nbsp;Amounts reclassified from AOCI to earnings |  |  |  | 2 |  | 2 | Interest and fees on loans |
| Other comprehensive (loss) income on cash flow hedge derivatives | $(2) | $1 | $(1) | $16 | $(4) | $12 |  |
| Total other comprehensive income | $95 | $(25) | $70 | $611 | $(160) | $451 |  |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |  |
|  | **2025** | **2025** | **2025** | **2024** | **2024** | **2024** |  |
|  | **Pretax** | **Income Taxes** | **Net of Income Taxes** | **Pretax** | **Income Taxes** | **Net of Income Taxes** | **Income Statement Line Items** |
| Unrealized loss on securities available for sale: |  |  |  |  |  |  |  |
| Other comprehensive income on securities available for sale | $538 | $(138) | $400 | $440 | $(115) | $325 |  |
| Unrealized loss on securities available for sale transferred to held to maturity: |  |  |  |  |  |  |  |
| Amounts reclassified from AOCI to earnings | $1 | $(1) | $— | $1 | $— | $1 | Interest on investment securities |
| Defined benefit pension items: |  |  |  |  |  |  |  |
| Other comprehensive loss for defined benefit pension items | $(5) | $1 | $(4) | $(10) | $2 | $(8) |  |
| Unrealized gain on cash flow hedge derivatives: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;AOCI activity before reclassifications | $10 | $(2) | $8 | $17 | $(5) | $12 |  |
| &nbsp;&nbsp;&nbsp;Amounts reclassified from AOCI to earnings | (4) | 1 | (3) | 2 |  | 2 | Interest and fees on loans |
| Other comprehensive income on cash flow hedge derivatives | $6 | $(1) | $5 | $19 | $(5) | $14 |  |
| Total other comprehensive income | $540 | $(139) | $401 | $450 | $(118) | $332 |  |

---

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**NOTE 14 — EARNINGS PER COMMON SHARE**

The following table sets forth the computation of the basic and diluted earnings per common share:

**Earnings per Common Share** 

---

| | | | | |
|:---|:---|:---|:---|:---|
| *dollars in millions, except per share data* | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Net income | $568 | $639 | $1626 | $2077 |
| Preferred stock dividends | 14 | 15 | 43 | 46 |
| Net income available to common stockholders | $554 | $624 | $1583 | $2031 |
| **Weighted average common shares outstanding** |  |  |  |  |
| &nbsp;&nbsp;Basic shares outstanding | 12849339 | 14375974 | 13217940 | 14480874 |
| &nbsp;&nbsp;Stock-based awards |  |  |  | 1045 |
| &nbsp;&nbsp;Diluted shares outstanding | 12849339 | 14375974 | 13217940 | 14481919 |
| **Earnings per common share** |  |  |  |  |
| &nbsp;&nbsp;Basic | $43.08 | $43.42 | $119.70 | $140.27 |
| &nbsp;&nbsp;Diluted | $43.08 | $43.42 | $119.70 | $140.26 |

---

**NOTE 15 — INCOME TAXES**

BancShares' global effective income tax rates ("ETRs") were 24.4% and 26.8% for the three months ended September 30, 2025 and 2024, respectively, and 24.7% and 27.3% for the nine months ended September 30, 2025 and 2024, respectively. The decrease in the ETR for the three and nine months ended September 30, 2025 compared to 2024 was primarily due to an increase in tax credits and a reduction in the state and local income tax rate.

The quarterly income tax expense is based on a projection of BancShares' annual ETR. This annual ETR is applied to the year-to-date consolidated pretax income to determine the interim provision for income taxes before discrete items. The ETR each period is also impacted by a number of factors, including the relative mix of domestic and international earnings, effects of changes in enacted tax laws, adjustments to the valuation allowances, and discrete items. The currently forecasted ETR may vary from the actual year-end 2025 ETR due to the changes in these factors.

On July 4, 2025, President Trump signed into law H.R. 1, referred to as the One Big Beautiful Bill Act ("OBBBA"). The OBBBA contains several provisions that impact corporate taxation. The enactment of the OBBBA did not have a material impact on the tax rate or results of operations.

**Uncertain Tax Benefits**

BancShares' recognizes tax benefits when it is more likely than not that the position will prevail, based solely on the technical merits under the tax law of the relevant jurisdiction. BancShares will recognize the tax benefit if the position meets this recognition threshold determined based on the largest amount of the benefit that is more than likely to be realized.

**Deferred Tax Assets and Valuation Adjustments**

BancShares' ability to recognize deferred tax assets ("DTAs") is evaluated on a quarterly basis to determine if there are any significant events that would affect our ability to utilize existing DTAs. If events are identified that affect our ability to utilize our DTAs, adjustments to the valuation allowance adjustments may be required.

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**NOTE 16 — EMPLOYEE BENEFIT PLANS**

BancShares sponsors non-contributory defined benefit pension plans for its qualifying employees. The service cost component of net periodic benefit cost is included in salaries and wages, while all other non-service cost components are included in other noninterest expense.

The components of net periodic benefit cost are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| Service cost | $2 | $2 | $6 | $7 |
| Interest cost | 16 | 15 | 48 | 45 |
| Expected return on assets | (24) | (23) | (71) | (69) |
| &nbsp;&nbsp;&nbsp;Net periodic benefit | $(6) | $(6) | $(17) | $(17) |

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**NOTE 17 — SEGMENT INFORMATION**

Effective January 1, 2025, we made changes to the composition of our reportable segments as further discussed in Note 1—Significant Accounting Policies and Basis of Presentation, and the segment disclosures below for 2024 were recast to conform with those segment composition changes.

BancShares' segments include the General Bank, the Commercial Bank, SVB Commercial, and Rail. All other financial information not included in the segments is reported in the Corporate section of the segment disclosures. We do not aggregate multiple operating segments into a reportable segment. Therefore, each of our operating segments are reportable segments.

Under our segment expense allocation methodology, allocated expenses increase noninterest expense of the applicable segment(s), with an offsetting decrease to Corporate noninterest expense. "All other noninterest expense" in the segment reporting tables below includes the effect of allocated expenses, resulting in a reduction to expense (or "Contra Expense") for Corporate.

**General Bank** 

The General Bank segment delivers products and services to consumer and small business clients through our extensive network of branches, various digital channels and a dedicated Private Bank. We offer a full suite of deposit products, loans (primarily residential mortgages and business and commercial loans), cash management, private banking and wealth management, payment services, and treasury services. We offer conforming and jumbo residential mortgage loans throughout the United States that are primarily originated through branches and retail referrals, employee referrals, internet leads, direct marketing and a correspondent lending channel, as well as through our private banking service. Private banking and wealth management offers a customized suite of products and services to individuals and institutional clients, as well as private equity and venture capital professionals and executive leaders of the innovation companies they support, and premium wine clients. The General Bank segment offers brokerage, investment advisory, private stock loans, other secured and unsecured lending products and vineyard development loans, as well as planning-based financial strategies, family office, financial planning, tax planning and trust services. The General Bank segment also includes a community association bank channel that supports deposit, cash management and lending to homeowner associations and property management companies.

Revenue is primarily generated from interest earned on loans. Noninterest income is primarily generated from fees for banking and advisory services, including lending-related fees, most of BancShares' income related to deposit fees and service charges, cardholder services, along with essentially all of the wealth management services income. We primarily originate loans by utilizing our branch network and industry referrals, as well as direct digital marketing efforts. We derive our SBA loans through a network of SBA originators. We periodically purchase loans on a whole-loan basis. We also invest in community development that supports the construction of affordable housing in our communities in line with our CRA initiatives.

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**Commercial Bank**

The Commercial Bank segment provides a range of lending, leasing, capital markets, asset management, and other financial and advisory services, primarily tailored to commercial and middle market companies in a wide range of industries, including energy, healthcare, technology media and telecommunications, asset-backed lending, capital finance, maritime, aerospace and defense, and sponsor finance. Loans offered are primarily senior secured loans collateralized by accounts receivable, inventory, machinery and equipment, transportation equipment, and/or intangibles, and are often used for working capital, plant expansion, acquisitions, or recapitalizations. These loans include revolving lines of credit and term loans and, depending on the nature of the collateral, may be referred to as collateral-backed loans, asset-based loans or cash flow loans. We provide senior secured loans to developers and other commercial real estate ("CRE") professionals. Additionally, we provide business loans and leases, including both capital and operating leases, through a highly automated credit approval, documentation and funding process.

We provide factoring, receivable management and secured financing to businesses that operate in several industries. These include apparel, textile, furniture, home furnishings, and consumer electronics. Factoring entails the assumption of credit risk with respect to trade accounts receivable arising from the sale of goods from our factoring clients to their customers that have been factored (i.e., sold or assigned to the factor). Our factoring clients, which are generally manufacturers or importers of goods, are the counterparties on factoring, financing or receivables purchasing agreements to sell trade receivables to us. Our factoring clients' customers, which are generally retailers, are the account debtors and obligors on trade accounts receivable that have been factored.

Revenue is primarily generated from interest and fees on loans. Noninterest income is mostly generated from rental income on operating lease equipment, lending-related fees, including most of BancShares' capital market fees, and other revenue from banking services. Rental income is generally influenced by the size of the operating lease portfolio. Noninterest income also includes all of the commissions earned on factoring-related activities. We derive most of our commercial lending business through direct marketing to borrowers, lessees, manufacturers, vendors, and distributors. We also utilize referrals as a source for commercial lending business. We may periodically buy participations or syndications of loans and lines of credit and purchase loans on a whole-loan basis.

Rental income and depreciation expense on operating lease equipment is related to small and large ticket equipment we own and lease to others. Operating lease equipment is subject to depreciation expense over the useful life of the small and large ticket equipment, which is generally 3-10 years.

**SVB Commercial**

The SVB Commercial segment offers products and services to commercial clients and investors across stages, sectors and regions in the innovation ecosystem, as well as private equity and venture capital firms. The SVB Commercial segment provides solutions to the financial needs of commercial clients. Loan products consist of capital call lines of credit, investor dependent loans, and commercial and industrial loans made primarily to technology, life science and healthcare companies.

Revenue is primarily generated from interest earned on loans. Noninterest income is mostly generated from fees, including essentially all of client investment fees and most of the international fees, and other revenue from lending-related activities and banking services.

Deposit products include business and analysis checking accounts, money market accounts, multi-currency accounts, bank accounts, sweep accounts, and positive pay services. Services are provided through online and mobile banking platforms as well as branch locations.

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**Rail** 

The Rail segment offers customized leasing and financing solutions on a fleet of railcars and locomotives to railroads and shippers throughout North America. Railcar types include covered hopper cars used to ship grain and agricultural products, plastic pellets, sand, and cement; tank cars for energy products and chemicals; gondolas for coal, steel coil and mill service products; open-top hopper cars for coal and aggregates; boxcars for paper and auto parts; and centerbeams and flat cars for lumber. Revenue is generated primarily from rental income on operating lease equipment, which is included in noninterest income, and to a lesser extent, gains on sale of leasing equipment. Rental income is generally influenced by the size of the operating lease portfolio, utilization of the railcars, re-pricing of equipment renewed upon lease maturities, and pricing on new leases. Re-pricing refers to the rental rate in the renewed equipment contract compared to the prior contract.

Operating lease equipment is subject to depreciation expense over the useful life of the rail equipment, which is generally longer in duration, 40-50 years. The Rail segment leases railcars, primarily pursuant to full-service lease contracts under which we, as lessor, are responsible for railcar maintenance and repair. Maintenance and other operating lease expenses relate to equipment ownership and leasing costs associated with the railcar portfolio and tend to be variable due to timing and the number of railcars coming on or off lease as well as asset condition.

**Corporate** 

All other financial information not included in the segments is reported in Corporate. Corporate contains BancShares' centralized treasury function, which manages the investment security portfolio, interest-earning deposits at banks and corporate/wholesale funding (e.g., borrowings, Direct Bank deposits and brokered deposits). Corporate deposits are primarily comprised of Direct Bank deposits.

Corporate includes interest income on investment securities and interest-earning deposits at banks; interest expense for borrowings, Direct Bank deposits, and brokered deposits; as well as funds transfer pricing allocations. Noninterest income includes gains or losses on sales of investment securities, fair value adjustments on marketable equity securities, and income from bank owned life insurance. Personnel cost in Corporate includes the personnel costs not allocated to the operating segments. Corporate includes acquisition-related expenses and certain items related to accounting for business combinations, such as gains on acquisitions, Day 2 Provision for Credit Losses and discount accretion income for certain acquired loans. Corporate also includes the offsetting impacts of Allocated Expenses as discussed above.

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**Segment Results and Select Period End Balances**

The following tables present the condensed income statements by segment and include the significant segment expenses and measure of segment profit or loss.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** |
|  | **General Bank** | **Commercial Bank** | **SVB Commercial** | **Rail** | **Corporate** <sup>(1)</sup> | **BancShares** <sup>(2)</sup> |
| Net interest income (expense) | $846 | $303 | $493 | $(55) | $147 | $1734 |
| Rental income on operating lease equipment |  | 54 |  | 219 |  | 273 |
| All other noninterest income | 166 | 101 | 135 | 2 | 22 | 426 |
| Total noninterest income | 166 | 155 | 135 | 221 | 22 | 699 |
| &nbsp;&nbsp;Total revenue | 1012 | 458 | 628 | 166 | 169 | 2433 |
| Depreciation on operating lease equipment |  | 43 |  | 55 |  | 98 |
| Maintenance and other operating lease expenses |  |  |  | 67 |  | 67 |
| Personnel cost | 213 | 74 | 106 | 6 | 418 | 817 |
| Acquisition-related expenses |  |  |  |  | 28 | 28 |
| All other noninterest expense <sup>(3)</sup> | 369 | 149 | 267 | 16 | (320) | 481 |
| Total noninterest expense | 582 | 266 | 373 | 144 | 126 | 1491 |
| Provision for credit losses | 1 | 168 | 22 |  |  | 191 |
| &nbsp;&nbsp;Income before income taxes | 429 | 24 | 233 | 22 | 43 | 751 |
| Income tax expense | 109 | 6 | 58 | 5 | 5 | 183 |
| Net income | $320 | $18 | $175 | $17 | $38 | $568 |
| **Select Period End Balances** |  |  |  |  |  |  |
| Loans and leases | $65225 | $38841 | $40629 | $63 | $— | $144758 |
| Operating lease equipment, net |  | 737 |  | 8709 |  | 9446 |
| Deposits | 74596 | 2978 | 39891 | 2 | 45723 | 163190 |
|  | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** |
|  | **General Bank** | **Commercial Bank** | **SVB Commercial** | **Rail** | **Corporate** <sup>(1)</sup> | **BancShares** <sup>(2)</sup> |
| Net interest income (expense) | $760 | $305 | $560 | $(48) | $219 | $1796 |
| Rental income on operating lease equipment |  | 57 |  | 205 |  | 262 |
| All other noninterest income | 149 | 79 | 137 | 2 | 21 | 388 |
| Total noninterest income | 149 | 136 | 137 | 207 | 21 | 650 |
| &nbsp;&nbsp;Total revenue | 909 | 441 | 697 | 159 | 240 | 2446 |
| Depreciation on operating lease equipment |  | 47 |  | 52 |  | 99 |
| Maintenance and other operating lease expenses |  |  |  | 59 |  | 59 |
| Personnel cost | 212 | 68 | 112 | 6 | 390 | 788 |
| Acquisition-related expenses |  |  |  |  | 46 | 46 |
| All other noninterest expense <sup>(3)</sup> | 341 | 150 | 272 | 14 | (313) | 464 |
| Total noninterest expense | 553 | 265 | 384 | 131 | 123 | 1456 |
| Provision for credit losses | 55 | 11 | 51 |  |  | 117 |
| &nbsp;&nbsp;Income before income taxes | 301 | 165 | 262 | 28 | 117 | 873 |
| Income tax expense | 99 | 41 | 75 | 8 | 11 | 234 |
| Net income | $202 | $124 | $187 | $20 | $106 | $639 |
| **Select Period End Balances** |  |  |  |  |  |  |
| Loans and leases | $64254 | $37281 | $37098 | $62 | $— | $138695 |
| Operating lease equipment, net |  | 767 |  | 8419 |  | 9186 |
| Deposits | 71898 | 3126 | 35844 | 14 | 40692 | 151574 |
| <sup>(1)</sup> *Corporate includes all other financial information that is not included in the reportable segments.* | <sup>(1)</sup> *Corporate includes all other financial information that is not included in the reportable segments.* | <sup>(1)</sup> *Corporate includes all other financial information that is not included in the reportable segments.* | <sup>(1)</sup> *Corporate includes all other financial information that is not included in the reportable segments.* | <sup>(1)</sup> *Corporate includes all other financial information that is not included in the reportable segments.* | <sup>(1)</sup> *Corporate includes all other financial information that is not included in the reportable segments.* | <sup>(1)</sup> *Corporate includes all other financial information that is not included in the reportable segments.* |
| <sup>(2)</sup> *In the segment reporting table above, there are no reconciling differences between BancShares and the aggregate of all reportable segments and Corporate.*  | <sup>(2)</sup> *In the segment reporting table above, there are no reconciling differences between BancShares and the aggregate of all reportable segments and Corporate.*  | <sup>(2)</sup> *In the segment reporting table above, there are no reconciling differences between BancShares and the aggregate of all reportable segments and Corporate.*  | <sup>(2)</sup> *In the segment reporting table above, there are no reconciling differences between BancShares and the aggregate of all reportable segments and Corporate.*  | <sup>(2)</sup> *In the segment reporting table above, there are no reconciling differences between BancShares and the aggregate of all reportable segments and Corporate.*  | <sup>(2)</sup> *In the segment reporting table above, there are no reconciling differences between BancShares and the aggregate of all reportable segments and Corporate.*  | <sup>(2)</sup> *In the segment reporting table above, there are no reconciling differences between BancShares and the aggregate of all reportable segments and Corporate.*  |
| <sup>(3)</sup> *All other noninterest expense represents "other segment items" under Accounting Standards Codification ("ASC") 280 and primarily includes Allocated Expenses, net occupancy expense, equipment expense, professional fees, third-party processing fees, FDIC insurance expense, marketing expense, and intangible amortization. All other noninterest expense is presented net of Allocated Expenses in the segment reporting table above, resulting in Contra Expense for Corporate as further discussed above.* | <sup>(3)</sup> *All other noninterest expense represents "other segment items" under Accounting Standards Codification ("ASC") 280 and primarily includes Allocated Expenses, net occupancy expense, equipment expense, professional fees, third-party processing fees, FDIC insurance expense, marketing expense, and intangible amortization. All other noninterest expense is presented net of Allocated Expenses in the segment reporting table above, resulting in Contra Expense for Corporate as further discussed above.* | <sup>(3)</sup> *All other noninterest expense represents "other segment items" under Accounting Standards Codification ("ASC") 280 and primarily includes Allocated Expenses, net occupancy expense, equipment expense, professional fees, third-party processing fees, FDIC insurance expense, marketing expense, and intangible amortization. All other noninterest expense is presented net of Allocated Expenses in the segment reporting table above, resulting in Contra Expense for Corporate as further discussed above.* | <sup>(3)</sup> *All other noninterest expense represents "other segment items" under Accounting Standards Codification ("ASC") 280 and primarily includes Allocated Expenses, net occupancy expense, equipment expense, professional fees, third-party processing fees, FDIC insurance expense, marketing expense, and intangible amortization. All other noninterest expense is presented net of Allocated Expenses in the segment reporting table above, resulting in Contra Expense for Corporate as further discussed above.* | <sup>(3)</sup> *All other noninterest expense represents "other segment items" under Accounting Standards Codification ("ASC") 280 and primarily includes Allocated Expenses, net occupancy expense, equipment expense, professional fees, third-party processing fees, FDIC insurance expense, marketing expense, and intangible amortization. All other noninterest expense is presented net of Allocated Expenses in the segment reporting table above, resulting in Contra Expense for Corporate as further discussed above.* | <sup>(3)</sup> *All other noninterest expense represents "other segment items" under Accounting Standards Codification ("ASC") 280 and primarily includes Allocated Expenses, net occupancy expense, equipment expense, professional fees, third-party processing fees, FDIC insurance expense, marketing expense, and intangible amortization. All other noninterest expense is presented net of Allocated Expenses in the segment reporting table above, resulting in Contra Expense for Corporate as further discussed above.* | <sup>(3)</sup> *All other noninterest expense represents "other segment items" under Accounting Standards Codification ("ASC") 280 and primarily includes Allocated Expenses, net occupancy expense, equipment expense, professional fees, third-party processing fees, FDIC insurance expense, marketing expense, and intangible amortization. All other noninterest expense is presented net of Allocated Expenses in the segment reporting table above, resulting in Contra Expense for Corporate as further discussed above.* |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** |
|  | **General Bank** | **Commercial Bank** | **SVB Commercial** | **Rail** | **Corporate** <sup>(1)</sup> | **BancShares** <sup>(2)</sup> |
| Net interest income (expense) | $2458 | $895 | $1476 | $(160) | $423 | $5092 |
| Rental income on operating lease equipment |  | 164 |  | 651 |  | 815 |
| All other noninterest income | 494 | 268 | 397 | 7 | 31 | 1197 |
| Total noninterest income | 494 | 432 | 397 | 658 | 31 | 2012 |
| &nbsp;&nbsp;Total revenue | 2952 | 1327 | 1873 | 498 | 454 | 7104 |
| Depreciation on operating lease equipment |  | 131 |  | 165 |  | 296 |
| Maintenance and other operating lease expenses |  |  |  | 180 |  | 180 |
| Personnel cost | 637 | 215 | 330 | 20 | 1243 | 2445 |
| Acquisition-related expenses |  |  |  |  | 108 | 108 |
| All other noninterest expense <sup>(3)</sup> | 1090 | 462 | 804 | 56 | (957) | 1455 |
| Total noninterest expense | 1727 | 808 | 1134 | 421 | 394 | 4484 |
| Provision for credit losses | 60 | 300 | 100 |  |  | 460 |
| &nbsp;&nbsp;Income before income taxes | 1165 | 219 | 639 | 77 | 60 | 2160 |
| Income tax expense (benefit) | 298 | 56 | 162 | 19 | (1) | 534 |
| Net income | $867 | $163 | $477 | $58 | $61 | $1626 |
|  | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** |
|  | **General Bank** | **Commercial Bank** | **SVB Commercial** | **Rail** | **Corporate** <sup>(1)</sup> | **BancShares** <sup>(2)</sup> |
| Net interest income (expense) | $2174 | $916 | $1636 | $(136) | $844 | $5434 |
| Rental income on operating lease equipment |  | 172 |  | 604 |  | 776 |
| All other noninterest income | 446 | 239 | 405 | 8 | 42 | 1140 |
| Total noninterest income | 446 | 411 | 405 | 612 | 42 | 1916 |
| &nbsp;&nbsp;Total revenue | 2620 | 1327 | 2041 | 476 | 886 | 7350 |
| Depreciation on operating lease equipment |  | 141 |  | 152 |  | 293 |
| Maintenance and other operating lease expenses |  |  |  | 164 |  | 164 |
| Personnel cost | 604 | 205 | 354 | 20 | 1094 | 2277 |
| Acquisition-related expenses |  |  |  |  | 148 | 148 |
| All other noninterest expense <sup>(3)</sup> | 978 | 425 | 765 | 43 | (875) | 1336 |
| Total noninterest expense | 1582 | 771 | 1119 | 379 | 367 | 4218 |
| Provision for credit losses | 113 | 70 | 93 |  |  | 276 |
| &nbsp;&nbsp;Income before income taxes | 925 | 486 | 829 | 97 | 519 | 2856 |
| Income tax expense | 270 | 127 | 235 | 27 | 120 | 779 |
| Net income | $655 | $359 | $594 | $70 | $399 | $2077 |
| <sup>(1)</sup> *Corporate includes all other financial information that is not included in the reportable segments.* | <sup>(1)</sup> *Corporate includes all other financial information that is not included in the reportable segments.* | <sup>(1)</sup> *Corporate includes all other financial information that is not included in the reportable segments.* | <sup>(1)</sup> *Corporate includes all other financial information that is not included in the reportable segments.* | <sup>(1)</sup> *Corporate includes all other financial information that is not included in the reportable segments.* | <sup>(1)</sup> *Corporate includes all other financial information that is not included in the reportable segments.* | <sup>(1)</sup> *Corporate includes all other financial information that is not included in the reportable segments.* |
| <sup>(2)</sup> *In the segment reporting table above, there are no reconciling differences between BancShares and the aggregate of all reportable segments and Corporate.*  | <sup>(2)</sup> *In the segment reporting table above, there are no reconciling differences between BancShares and the aggregate of all reportable segments and Corporate.*  | <sup>(2)</sup> *In the segment reporting table above, there are no reconciling differences between BancShares and the aggregate of all reportable segments and Corporate.*  | <sup>(2)</sup> *In the segment reporting table above, there are no reconciling differences between BancShares and the aggregate of all reportable segments and Corporate.*  | <sup>(2)</sup> *In the segment reporting table above, there are no reconciling differences between BancShares and the aggregate of all reportable segments and Corporate.*  | <sup>(2)</sup> *In the segment reporting table above, there are no reconciling differences between BancShares and the aggregate of all reportable segments and Corporate.*  | <sup>(2)</sup> *In the segment reporting table above, there are no reconciling differences between BancShares and the aggregate of all reportable segments and Corporate.*  |
| <sup>(3)</sup> *All other noninterest expense represents "other segment items" under ASC 280 and primarily includes Allocated Expenses, net occupancy expense, equipment expense, professional fees, third-party processing fees, FDIC insurance expense, marketing expense, and intangible amortization. All other noninterest expense is presented net of Allocated Expenses in the segment reporting table above, resulting in Contra Expense for Corporate as further discussed above.* | <sup>(3)</sup> *All other noninterest expense represents "other segment items" under ASC 280 and primarily includes Allocated Expenses, net occupancy expense, equipment expense, professional fees, third-party processing fees, FDIC insurance expense, marketing expense, and intangible amortization. All other noninterest expense is presented net of Allocated Expenses in the segment reporting table above, resulting in Contra Expense for Corporate as further discussed above.* | <sup>(3)</sup> *All other noninterest expense represents "other segment items" under ASC 280 and primarily includes Allocated Expenses, net occupancy expense, equipment expense, professional fees, third-party processing fees, FDIC insurance expense, marketing expense, and intangible amortization. All other noninterest expense is presented net of Allocated Expenses in the segment reporting table above, resulting in Contra Expense for Corporate as further discussed above.* | <sup>(3)</sup> *All other noninterest expense represents "other segment items" under ASC 280 and primarily includes Allocated Expenses, net occupancy expense, equipment expense, professional fees, third-party processing fees, FDIC insurance expense, marketing expense, and intangible amortization. All other noninterest expense is presented net of Allocated Expenses in the segment reporting table above, resulting in Contra Expense for Corporate as further discussed above.* | <sup>(3)</sup> *All other noninterest expense represents "other segment items" under ASC 280 and primarily includes Allocated Expenses, net occupancy expense, equipment expense, professional fees, third-party processing fees, FDIC insurance expense, marketing expense, and intangible amortization. All other noninterest expense is presented net of Allocated Expenses in the segment reporting table above, resulting in Contra Expense for Corporate as further discussed above.* | <sup>(3)</sup> *All other noninterest expense represents "other segment items" under ASC 280 and primarily includes Allocated Expenses, net occupancy expense, equipment expense, professional fees, third-party processing fees, FDIC insurance expense, marketing expense, and intangible amortization. All other noninterest expense is presented net of Allocated Expenses in the segment reporting table above, resulting in Contra Expense for Corporate as further discussed above.* | <sup>(3)</sup> *All other noninterest expense represents "other segment items" under ASC 280 and primarily includes Allocated Expenses, net occupancy expense, equipment expense, professional fees, third-party processing fees, FDIC insurance expense, marketing expense, and intangible amortization. All other noninterest expense is presented net of Allocated Expenses in the segment reporting table above, resulting in Contra Expense for Corporate as further discussed above.* |

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**NOTE 18 — COMMITMENTS AND CONTINGENCIES**

**Commitments**

To meet the financing needs of its customers, BancShares and its subsidiaries have financial instruments with off-balance sheet risk. These financial instruments involve elements of credit, interest rate or liquidity risk and include commitments to extend credit and standby letters of credit.

The accompanying table summarizes credit-related commitments and other purchase and funding commitments:

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| | | |
|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **December 31, 2024** |
| **Financing Commitments** |  |  |
| &nbsp;&nbsp;&nbsp;Financing assets (excluding leases) | $51935 | $53250 |
| **Letters of Credit** |  |  |
| &nbsp;&nbsp;&nbsp;Standby letters of credit | 2478 | 2188 |
| &nbsp;&nbsp;&nbsp;Other letters of credit | 158 | 103 |
| **Deferred Purchase Agreements** | 1870 | 1802 |
| **Purchase and Funding Commitments** <sup>(1)</sup> | 232 | 178 |

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<sup>(1)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*BancShares' purchase and funding commitments relate to the equipment leasing businesses' commitments to fund Rail's railcar manufacturer purchase and upgrade commitments.* 

**Financing Commitments**

Commitments to extend credit are legally binding agreements to lend to customers. These commitments generally have fixed expiration dates or other termination clauses and may require payment of fees. Established credit standards control the credit risk exposure associated with these commitments. In some cases, BancShares requires collateral be pledged to secure the commitment, including cash deposits, securities and other assets.

Financing commitments, referred to as net unfunded loan commitments or lines of credit, primarily reflect BancShares' agreements to lend to its customers, subject to the customers' compliance with contractual obligations. At September 30, 2025 and December 31, 2024, substantially all undrawn financing commitments were senior facilities. Financing commitments also include $340 million and $79 million at September 30, 2025 and December 31, 2024, respectively, related to off-balance sheet commitments to fund equity investments. Commitments to fund equity investments are contingent on events that have yet to occur and may be subject to change.

As financing commitments may not be fully drawn, may expire unused, may be reduced or canceled at the customer's request, and may require the customer to be in compliance with certain conditions, commitment amounts do not necessarily reflect actual future cash flow requirements.

The table above excludes uncommitted revolving credit facilities extended by Commercial Services to its clients for working capital purposes. In connection with these facilities, Commercial Services has the sole discretion throughout the duration of these facilities to determine the amount of credit that may be made available to its clients at any time and whether to honor any specific advance requests made by its clients under these credit facilities.

**Letters of Credit**

Standby letters of credit are commitments to pay the beneficiary thereof if drawn upon by the beneficiary upon satisfaction of the terms of the letter of credit. Those commitments are primarily issued to support public and private borrowing arrangements. To mitigate its risk, BancShares' credit policies govern the issuance of standby letters of credit. The credit risk related to the issuance of these letters of credit is essentially the same as in extending loans to clients and, therefore, these letters of credit are collateralized when necessary. These financial instruments generate fees and involve, to varying degrees, elements of credit risk in excess of amounts recognized in the Consolidated Balance Sheets.

**Deferred Purchase Agreements**

A deferred purchase agreement ("DPA") is provided in conjunction with factoring, whereby a client is provided with credit protection for trade receivables without purchasing the receivables. The trade receivables terms generally require payment in 90 days or less. If the client's customer is unable to pay an undisputed receivable solely as the result of credit risk, BancShares is then required to purchase the receivable from the client, less any borrowings for such client based on such defaulted receivable. The outstanding amount in the table above, less $241 million and $166 million at September 30, 2025 and December 31, 2024, respectively, of borrowings for such clients, is the maximum amount that BancShares would be required to pay under all DPAs. This maximum amount would only occur if all receivables subject to DPAs default in the manner described above, thereby requiring BancShares to purchase all such receivables from the DPA clients.

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The table above includes $1.83 billion and $1.74 billion of DPA exposures at September 30, 2025 and December 31, 2024, respectively, related to receivables on which BancShares has assumed the credit risk. The table also includes $37 million and $59 million available under DPA credit line agreements provided at September 30, 2025 and December 31, 2024, respectively. The DPA credit line agreements specify a contractually committed amount of DPA credit protection and are cancellable by us only after a notice period, which is typically 90 days or less.

**Litigation and Other Contingencies** 

The Parent Company and certain of its subsidiaries have been named as a defendant in legal actions arising from its normal business activities in which damages in various amounts are claimed. BancShares is also exposed to litigation risk relating to the prior business activities of banks from which assets were acquired and liabilities assumed.

BancShares is involved, and from time to time in the future may be involved, in a number of pending and threatened judicial, regulatory, and arbitration proceedings as well as proceedings, investigations, examinations and other actions brought or considered by governmental and self-regulatory agencies. These matters arise in connection with the ordinary conduct of BancShares' business. At any given time, BancShares may also be in the process of responding to subpoenas, requests for documents, data and testimony relating to such matters and engaging in discussions to resolve the matters (all of the foregoing collectively being referred to as "Litigation"). While most Litigation relates to individual claims, BancShares may be subject to putative class action claims and similar broader claims and indemnification obligations.

In light of the inherent difficulty of predicting the outcome of Litigation matters and indemnification obligations, particularly when such matters are in their early stages or where the claimants seek indeterminate damages, BancShares cannot state with confidence what the eventual outcome of the pending Litigation will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, fines, or penalties related to each pending matter will be, if any. In accordance with applicable accounting guidance, BancShares' establishes reserves for Litigation when those matters present loss contingencies as to which it is both probable that a loss will occur and the amount of such loss can reasonably be estimated. Based on currently available information, BancShares does not believe that the outcome of Litigation that is currently pending will have a material impact on BancShares' consolidated financial statements. The actual results of resolving such matters may be substantially higher than the amounts reserved.

For certain Litigation matters in which BancShares is involved, BancShares is able to estimate a range of reasonably possible losses in excess of established reserves and insurance. For other matters for which a loss is probable or reasonably possible, such an estimate cannot be determined. For litigation and other matters where losses are reasonably possible and estimable, management currently estimates an aggregate range of reasonably possible losses to be up to approximately $20 million in excess of any established reserves and any insurance we reasonably believe we will collect related to those matters. This estimate represents reasonably possible losses (in excess of established reserves and insurance) over the life of such Litigation, which may span a currently indeterminable number of years, and is based on information currently available as of September 30, 2025. The Litigation matters underlying the estimated range will change from time to time, and actual results may vary significantly from this estimate.

Those Litigation matters for which an estimate is not reasonably possible or as to which a loss does not appear to be reasonably possible, based on current information, are not included within this estimated range and, therefore, this estimated range does not represent BancShares' maximum loss exposure.

The foregoing statements about BancShares' Litigation are based on BancShares' judgments, assumptions, and estimates and are necessarily subjective and uncertain. In the event of unexpected future developments, it is possible that the ultimate resolution of these cases, matters, and proceedings, if unfavorable, may be material to BancShares' consolidated financial position in a particular period.

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

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

This MD&A is expected to provide our investors with a view of our financial condition and results of operations from our management's perspective. This MD&A should be read in conjunction with the unaudited consolidated financial statements and related notes presented within this Quarterly Report on Form 10-Q (this "Form 10-Q"), along with our consolidated financial statements and related MD&A of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Form 10-K"). Throughout this MD&A, references to a specific "Note" refer to Notes to the Unaudited Consolidated Financial Statements in Item 1. Financial Statements.

Intercompany accounts and transactions have been eliminated. Although certain amounts for prior years have been reclassified to conform with financial statement presentations for 2025, the reclassifications had no effect on stockholders' equity or net income as previously reported. Refer to Note 1—Significant Accounting Policies and Basis of Presentation.

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

**EXECUTIVE OVERVIEW**

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

BancShares provides financial services for a wide range of consumer and commercial clients. This includes retail and mortgage banking, wealth management, small and middle market banking, factoring and leasing. BancShares provides commercial factoring, receivables management and secured financing services to businesses (generally manufacturers or importers of goods) that operate in various industries, including apparel, textile, furniture, home furnishings and consumer electronics. BancShares also provides deposit, cash management and lending to homeowner associations and property management companies. BancShares also owns a fleet of railcars and locomotives that are leased to railroads and shippers.

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

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

Refer to Note 17—Segment Information for further information regarding the products and services we provide.

Refer to the 2024 Form 10-K for a discussion of our strategy.

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**Recent Events**

***Branch Acquisition***

On October 16, 2025, FCB announced that it had entered into an agreement to consummate the acquisition of 138 branches from BMO Bank N.A. ("BMO Bank") located throughout the Midwest, Great Plains and West regions of the U.S. (the "BMO Branch Acquisition"). In connection with the BMO Branch Acquisition, FCB expects to assume approximately $5.7 billion in deposit liabilities and acquire approximately $1.1 billion in loans. We expect the transaction to close in mid-2026, subject to customary closing terms and conditions and regulatory approvals.

***Debt Transactions***

On September 5, 2025, the Parent Company issued and sold $600 million aggregate principal amount of its 5.600% Fixed Rate Reset Subordinated Notes due in 2035 in a public offering (the "Current Quarter Debt Issuance"). On March 12, 2025, the Parent Company issued and sold $500 million aggregate principal amount of its 5.231% Fixed-to-Floating Rate Senior Notes due in 2031 and $750 million aggregate principal amount of its 6.254% Fixed-to-Fixed Rate Subordinated Notes due in 2040 in a public offering (together with the Current Quarter Debt Issuance, the "2025 Debt Issuances").

On June 15, 2025, the Parent Company executed a callable feature and redeemed all $350 million aggregate principal amount of its 3.375% Fixed-to-Floating Rate Subordinated Notes due in 2030 (the "Linked Quarter Debt Redemption").

***Share Repurchase Programs***

On July 25, 2025, BancShares announced that the Board of Directors (the "Board") authorized a new share repurchase program (the "2025 SRP"), which allows BancShares to repurchase shares of its Class A common stock in an aggregate amount up to $4.0 billion through December 31, 2026. Repurchases under the 2025 SRP commenced in September 2025 upon the completion of the $3.5 billion share repurchase program announced in July 2024 (the "2024 SRP"). The total capacity remaining under the 2025 SRP was $3.7 billion as of September 30, 2025 and $3.4 billion as of October 31, 2025.

During the third quarter of 2025, we repurchased 457,350 shares of our Class A common stock for approximately $900 million. Shares repurchased during the third quarter of 2025 represented 3.79% of Class A common shares and 3.50% of total Class A and Class B common shares outstanding at June 30, 2025. From inception of the 2024 SRP through September 30, 2025, we have repurchased 1,913,633 shares of our Class A common stock for approximately $3.79 billion, representing 14.15% of Class A common shares and 13.17% of total Class A and Class B common shares outstanding as of June 30, 2024. Subsequent to September 30, 2025, BancShares purchased an additional 183,077 shares of Class A common stock through October 31, 2025 under the 2025 SRP.

Refer to *Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds* for additional information regarding monthly repurchase activity during the third quarter of 2025.

***2025 Loan Class Changes***

During the second quarter of 2025, the loan classes which were reported in the Silicon Valley Bank ("SVB") portfolio in the 2024 Form 10-K were recast to the Commercial portfolio (the "2025 Loan Class Changes") as further discussed in Note 1—Significant Accounting Policies and Basis of Presentation. Loan and lease and allowance for loan and lease losses ("ALLL") disclosures for all periods presented in this Form 10-Q were recast to reflect the 2025 Loan Class Changes.

Loan disclosures in the "Results by Segment" section of this MD&A were not recast as a result of the 2025 Loan Class Changes because the composition of reportable segments is separate and distinct from the identification of loan classes.

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***Termination of the Shared-Loss Agreement with the FDIC***

On April 7, 2025, FCB and the FDIC entered into an agreement (the "Shared-Loss Termination Agreement") to terminate the Shared-Loss Agreement (as defined in Note 2—Business Combinations). As a result of entering into the Shared-Loss Termination Agreement, all rights and obligations of the parties under the Shared-Loss Agreement terminated as of the date of the Shared-Loss Termination Agreement, including FCB's reporting covenants and obligations related to FDIC Loss Sharing and FCB reimbursement (each as defined in Note 2—Business Combinations in our 2024 Form 10-K). The decision to enter into the Shared-Loss Termination Agreement was motivated, in part, by FCB's determination that the likelihood of reaching the $5 billion loss threshold during the five-year period covered by the Shared-Loss Agreement was remote. Additionally, the Shared-Loss Termination Agreement eliminated the reporting responsibilities associated with the Shared-Loss Agreement. There was no impact to our consolidated balance sheets or statements of income resulting from the Shared-Loss Termination Agreement because there was no loss indemnification asset or true-up liability associated with the Shared-Loss Agreement, primarily based on evaluation of historical loss experience and the credit quality of the Covered Assets (as defined in Note 2—Business Combinations in our 2024 Form 10-K).

The risk-based capital ratio impacts resulting from the Shared-Loss Termination Agreement are discussed in the "Capital" section of this MD&A.

***Changes to the Composition of Reportable Segments***

We updated our segment reporting during the first quarter of 2025 as further discussed in Note 1—Significant Accounting Policies and Basis of Presentation. We transferred certain components from the SVB Commercial and General Bank segments to the Commercial Bank segment and modified our segment expense allocation methodology. Segment disclosures for 2024 periods included in this Form 10-Q were recast to reflect the segment reporting updates. Refer to Note 17—Segment Information for descriptions of segment products and services and the "Results by Segment" section of this MD&A.

***Recent Economic, Industry and Regulatory Developments***

Entering 2025, the Federal Open Market Committee ("FOMC") had reduced the benchmark federal funds rate to a range between 4.25% - 4.50% and maintained this level until its September meeting. During its September meeting, the FOMC reduced the benchmark federal funds rate by a quarter-point, to a range between 4.00% - 4.25%. On October 29, the FOMC again lowered the benchmark federal funds rate by a quarter-point, to a range between 3.75% - 4.00%.

The Trump administration has imposed, modified and paused tariffs multiple times since the beginning of 2025. Actual and threatened changes to U.S. trade policies have resulted in some countries enacting retaliatory measures. The imposition of increased tariffs and trade restrictions has contributed to uncertainty and volatility in the global financial markets. The current tariff environment is dynamic, and we are closely monitoring both the impact and potential impact of such measures on our business, our customers and on overall economic conditions in the United States.

On July 4, 2025, President Trump signed into law H.R. 1, referred to as the One Big Beautiful Bill Act ("OBBBA"). The OBBBA contains several provisions that impact corporate taxation. The enactment of the OBBBA did not have a material impact on the tax rate or results of operations.

**Financial Performance Summary**

The following tables in this MD&A include financial data for the three months ended September 30, 2025 (the "current quarter"), June 30, 2025 (the "linked quarter") and September 30, 2024 (the "Prior Year Quarter"), along with the nine months ended September 30, 2025 ("current YTD"), and the nine months ended September 30, 2024 ("prior YTD"). In accordance with Item 303(c) of Regulation S-K, we focus our discussion of quarterly results of operations on changes compared to the linked quarter for the narrative discussion and analysis as we believe this provides investors and other users of our data with the most relevant information.

We focus the discussion of our financial position by comparing balances as of September 30, 2025 to December 31, 2024, however the tables also provide the linked quarter balances.

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**Table 1 Selected Financial Data**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *dollars in millions, except share data* | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Nine Months Ended** | **Nine Months Ended** |
|  | **September 30, 2025** | **June 30,<br>2025** | **September 30, 2024** | **September 30, 2025** | **September 30, 2024** |
| **Results of Operations:** |  |  |  |  |  |
| Interest income | $2998 | $2945 | $3138 | $8838 | $9352 |
| Interest expense | 1264 | 1250 | 1342 | 3746 | 3918 |
| Net interest income | 1734 | 1695 | 1796 | 5092 | 5434 |
| Provision for credit losses | 191 | 115 | 117 | 460 | 276 |
| &nbsp;&nbsp;Net interest income after provision for credit losses | 1543 | 1580 | 1679 | 4632 | 5158 |
| Noninterest income | 699 | 678 | 650 | 2012 | 1916 |
| Noninterest expense | 1491 | 1500 | 1456 | 4484 | 4218 |
| &nbsp;&nbsp;Income before income taxes | 751 | 758 | 873 | 2160 | 2856 |
| Income tax expense | 183 | 183 | 234 | 534 | 779 |
| &nbsp;&nbsp;Net income | 568 | 575 | 639 | 1626 | 2077 |
| Preferred stock dividends | 14 | 14 | 15 | 43 | 46 |
| Net income available to common stockholders | $554 | $561 | $624 | $1583 | $2031 |
| **Per Common Share Information:** |  |  |  |  |  |
| Weighted average common shares outstanding (diluted) | 12849339 | 13237226 | 14375974 | 13217940 | 14481919 |
| Diluted earnings per common share | $43.08 | $42.36 | $43.42 | $119.70 | $140.26 |
| **Key Performance Metrics:** |  |  |  |  |  |
| Return on average assets | 0.98% | 1.01% | 1.15% | 0.95% | 1.27% |
| Net interest margin <sup>(1)</sup> | 3.26 | 3.26 | 3.53 | 3.26 | 3.62 |
| Net interest margin, excluding purchase accounting accretion or amortization <sup>(1) (2)</sup> | 3.15 | 3.14 | 3.33 | 3.13 | 3.35 |
| **Select Average Balances:** |  |  |  |  |  |
| Investment securities | $44827 | $43935 | $38189 | $44110 | $35769 |
| Total loans and leases <sup>(3)</sup> | 142960 | 141952 | 139115 | 141940 | 136804 |
| Operating lease equipment, net | 9463 | 9419 | 9028 | 9412 | 8908 |
| Total assets | 230529 | 227552 | 220466 | 227862 | 218487 |
| Total deposits | 160624 | 157664 | 151472 | 158237 | 149817 |
| Total borrowings | 38258 | 38379 | 37448 | 38015 | 37502 |
| Total stockholders' equity | 22291 | 22488 | 22851 | 22411 | 22197 |
|  | **As of the Period Ending** | **As of the Period Ending** | **As of the Period Ending** | **As of the Period Ending** |  |
|  | **September 30, 2025** | **June 30,<br>2025** | **September 30, 2024** | **December 31, 2024** |  |
| **Select Ending Balances:** |  |  |  |  |  |
| Investment securities | $45124 | $43346 | $38663 | $44090 |  |
| Total loans and leases | 144758 | 141269 | 138695 | 140221 |  |
| Operating lease equipment, net | 9446 | 9466 | 9186 | 9323 |  |
| Total assets | 233488 | 229653 | 220567 | 223720 |  |
| Total deposits | 163190 | 159935 | 151574 | 155229 |  |
| Total borrowings | 38675 | 38112 | 37161 | 37051 |  |
| Total stockholders' equity | 21986 | 22296 | 22828 | 22228 |  |
| Loan to deposit ratio | 88.71% | 88.33% | 91.50% | 90.33% |  |
| Noninterest-bearing deposits to total deposits | 26.20 | 25.56 | 25.99 | 24.89 |  |
| **Capital Ratios:** |  |  |  |  |  |
| Total risk-based capital | 14.05% | 14.25% | 15.36% | 15.04% |  |
| Tier 1 risk-based capital | 12.15 | 12.63 | 13.78 | 13.53 |  |
| Common equity Tier 1 | 11.65 | 12.12 | 13.24 | 12.99 |  |
| Tier 1 leverage | 9.34 | 9.62 | 10.17 | 9.90 |  |
| **Select Asset Quality Metrics:** |  |  |  |  |  |
| Ratio of nonaccrual loans to total loans | 0.97% | 0.93% | 0.90% | 0.84% |  |
| Allowance for loan and lease losses to loans ratio | 1.14 | 1.18 | 1.21 | 1.20 |  |

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<sup>(1) &nbsp;&nbsp;&nbsp;&nbsp;</sup>*Calculated net of average credit balances of factoring clients to appropriately reflect the interest-earning portion of factoring receivables.* 

<sup>(2) &nbsp;&nbsp;&nbsp;&nbsp;</sup>*Net interest margin ("NIM"), excluding purchase accounting accretion or amortization ("PAA"), is a non-GAAP financial measure. Refer to the "NII, NIM, and Interest and Fees on Loans, Excluding PAA" discussion in the "Non-GAAP Financial Measurements" section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.* 

<sup>(3)</sup> *Average loan balances include loans held for sale and nonaccrual loans.*

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

***Third Quarter Income Statement Highlights***

• *Net income* for the current quarter was $568 million, a decrease of $7 million or 1% from $575 million for the linked quarter. Net income available to common stockholders for the current quarter was $554 million, a decrease of $7 million or 1% from $561 million for the linked quarter. Earnings per basic and diluted common share for the current quarter was $43.08, an increase from $42.36 for the linked quarter. The decrease in net income available to common stockholders was due to higher provision for credit losses, partially offset by increases in net interest income ("NII") and noninterest income, and lower noninterest expense as further discussed below.

*• NII* for the current quarter was $1.73 billion, an increase of $39 million or 2% from $1.70 billion for the linked quarter, largely due to increases in interest income on loans, investment securities and interest-earning deposits at banks, partially offset by an increase in interest expense on interest-bearing deposits. PAA for the current quarter was $61 million, a decrease of $5 million from $66 million for the linked quarter.

• *NIM* was 3.26% in both the current quarter and linked quarter as the decrease in yield on average interest-earning assets was offset by the decrease in rate paid on interest-bearing liabilities. NIM, excluding PAA<sup>(1)</sup> was 3.15% for the current quarter, an increase of 1 basis point ("bp") over the linked quarter.

• *Noninterest income* for the current quarter was $699 million, an increase of $21 million or 3% from $678 million for the linked quarter, largely due to an increase in other noninterest income of $9 million, mainly attributable to gains on the sale of other assets, as well as an increase of $6 million in client investment fees.

• *Noninterest expense* for the current quarter was $1.49 billion, a decrease of $9 million or 1% from $1.50 billion for the linked quarter, mainly due to decreases in other noninterest expense of $20 million and acquisition-related expenses of $10 million, partially offset by increases in maintenance and other operating lease expenses of $12 million, personnel cost of $7 million, and equipment expense of $6 million. The decrease of $20 million in other noninterest expense was mainly due to the linked quarter including $15 million resulting from a vendor dispute and an increase in litigation reserves.

• *Provision for credit losses* for the current quarter was $191 million, an increase of $76 million from $115 million for the linked quarter. The current quarter provision for credit losses included a provision for loan and lease losses of $214 million, partially offset by a benefit for off-balance sheet credit exposure of $23 million.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ The provision for loan and lease losses for the current quarter was $214 million compared to $111 million for the linked quarter. The $103 million increase in the provision for loan and lease losses was mainly attributable to an increase in net charge-offs of $115 million, as well as the impact of a $20 million reserve release in the current quarter, compared to an $8 million reserve release in the linked quarter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ The $115 million increase in net charge-offs was mainly due to an $82 million charge-off on a single supply chain finance client in the Commercial Bank segment. Changes in the ALLL are discussed in the "Provision for Credit Losses" section of this MD&A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ The benefit for off-balance sheet credit exposure for the current quarter was $23 million compared to a provision for the linked quarter of $4 million, resulting in a decrease in provision of $27 million, largely due to lower available balances.

*• Return on average assets* for the current quarter was 0.98%, a decrease of 3 bps from 1.01% for the linked quarter due to the items discussed above.

<sup>(1)</sup> *NIM, excluding PAA is a non-GAAP measure. Refer to the "NII, NIM, and Interest and Fees on Loans, Excluding PAA" discussion in the "Non-GAAP Financial Measurements" section of this MD&A for further discussion.*

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***Year-to-Date Income Statement Highlights***

*• Net income* for the current YTD was $1.63 billion, a decrease of $451 million or 22% from $2.08 billion for the prior YTD. Net income available to common stockholders for the current YTD was $1.58 billion, a decrease of 22% from $2.03 billion for the prior YTD. Earnings per diluted common share for the current YTD was $119.70, a decrease from $140.26 for the prior YTD. The decrease in net income available to common stockholders was due to lower NII, higher noninterest expense and higher provision for credit losses, partially offset by lower income tax expense and higher noninterest income as further discussed below.

*• NII* for the current YTD was $5.09 billion, a decrease of $342 million or 6% from $5.43 billion for the prior YTD. *NIM* for the current YTD was 3.26%, a decrease of 36 bps from 3.62% for the prior YTD. The decreases in NII and NIM were mainly due to lower yields on loans and interest-earning deposits at banks, a mix shift from interest-earning deposits at banks to investment securities, a higher average balance of interest-bearing deposits, and a higher average balance and rate paid for borrowings, partially offset by a decline in the rate paid on interest-bearing deposits and a higher average balance of loans.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ PAA for the current YTD was $202 million, a decrease of $197 million from $399 million for the prior YTD. NIM, excluding PAA,<sup>(1)</sup> for the current YTD was 3.13%, a decrease of 22 bps from 3.35% for the prior YTD.

• *Noninterest income* for the current YTD was $2.01 billion, an increase of $96 million from $1.92 billion for the prior YTD, mostly due to increases in rental income on operating lease equipment of $39 million, lending-related fees of $13 million, international fees of $13 million, and wealth management services of $11 million, other noninterest income of $9 million and a favorable change of $7 million in the fair value of marketable equity securities.

• *Noninterest expense* for the current YTD was $4.48 billion, an increase of $266 million or 6% from $4.22 billion for the prior YTD, mostly due to increases in personnel cost of $168 million, marketing expense of $45 million, equipment expense of $36 million, other noninterest expense of $30 million and third-party processing fees of $20 million, partially offset by a decrease in acquisition-related expenses of $40 million.

• *Provision for credit losses* for the current YTD was $460 million, an increase of $184 million from $276 million for the prior YTD. The current YTD provision for credit losses included a provision for loan and lease losses of $473 million, partially offset by a benefit for off-balance sheet credit exposure of $13 million.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ The provision for loan and lease losses for the current YTD was $473 million, an increase of $162 million from $311 million for the prior YTD, mainly attributable to an increase in net charge-offs of $117 million, which included a charge-off of $82 million for a single client as discussed above, and a $45 million decline in the ALLL reserve release for the current YTD. Changes in the ALLL are discussed in the "Provision for Credit Losses" section of this MD&A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ The benefit for off-balance sheet credit exposure for the current YTD was $13 million, compared to $35 million for the prior YTD. The decrease in the benefit of $22 million was mostly due to trends in the volume of unfunded commitments, partially offset by a modest shift in our weighting from the downside to baseline economic scenario in the linked quarter as further discussed in the "ALLL Methodology" section of this MD&A.

*• Income tax expense* for the current YTD was $534 million, a decrease of $245 million from $779 million for the prior YTD, primarily due to lower income before income taxes and a lower effective income tax rate ("ETR").

*• Return on average assets* for the current YTD was 0.95% compared to 1.27% for the prior YTD due to the decrease in net income explained above.

<sup>(1)</sup> *NIM, excluding PAA is a non-GAAP measure. Refer to the "NII, NIM, and Interest and Fees on Loans, Excluding PAA" discussion in the "Non-GAAP Financial Measurements" section of this MD&A for further discussion.*

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***Balance Sheet Highlights***

*• Loans and leases* at September 30, 2025 were $144.76 billion, an increase of $4.54 billion or 3% from $140.22 billion at December 31, 2024. Loan growth of $3.26 billion in the SVB Commercial segment was concentrated in Global Fund Banking, partially offset by a decline in Tech and Healthcare. Loan growth in the Commercial Bank segment of $943 million was mainly in our industry verticals, primarily TMT and Healthcare, as well as Equipment Finance and Working Capital Solutions, which includes our factoring business. Loan growth of $338 million in the General Bank segment was primarily in Wealth.

*• Investment securities* at September 30, 2025 were $45.12 billion, an increase of $1.03 billion or 2% from $44.09 billion at December 31, 2024, as the purchase of short duration available for sale U.S. treasury and agency mortgage-backed securities were partially offset by maturities and paydowns.

*• Deposits* at September 30, 2025 were $163.19 billion, an increase of $7.96 billion or 5% from $155.23 billion at December 31, 2024. As shown in Table 3 below, the increase from December 31, 2024 was mainly attributable to deposit growth in Corporate of $3.49 billion (which primarily includes the Direct Bank), the SVB Commercial segment of $3.37 billion, and the General Bank segment of $1.64 billion, partially offset by a decline of $524 million in the Commercial Bank segment. Noninterest-bearing deposits grew by $4.12 billion or 10.7% compared to December 31, 2024 and represented 26.2% of total deposits as of September 30, 2025, compared to 24.9% at December 31, 2024.

• *Borrowings* at September 30, 2025 were $38.68 billion, an increase of $1.62 billion or 4% from $37.05 billion at December 31, 2024, primarily due to the 2025 Debt Issuances with aggregate principal amounts totaling $1.85 billion, partially offset by the $350 million Linked Quarter Debt Redemption.

• The ALLL at September 30, 2025 was $1.65 billion, a decrease of $24 million from $1.68 billion at December 31, 2024, as discussed above in the "Year-to-Date Income Statement Highlights." The ALLL as a percentage of loans was 1.14% at September 30, 2025, a decrease of 6 bps from 1.20% at December 31, 2024.

*•* At September 30, 2025, BancShares remained well capitalized with a total risk-based capital ratio of 14.05%, a Tier 1 risk-based capital ratio of 12.15%, a common equity Tier 1 ("CET1") ratio of 11.65% and a Tier 1 leverage ratio of 9.34%.

**Funding, Liquidity and Capital Overview**

***Deposit Composition and Trends***

We fund our business primarily through deposits. Deposits represented approximately 81% of total funding at September 30, 2025. The following table summarizes the composition, average size and uninsured percentages of our deposits:

**Table 2 Select Deposit Data**

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| | | | |
|:---|:---|:---|:---|
| | **Deposits as of September 30, 2025** | **Deposits as of September 30, 2025** | **Deposits as of September 30, 2025** |
| | **Ending Balance (in millions)** | **Average Size (in thousands)** | **Uninsured %** |
| General Bank segment | $74596 | $37 | 36% |
| Commercial Bank segment | 2978 | 624 | 82 |
| SVB Commercial segment | 39891 | 562 | 68 |
| Corporate and Rail segment <sup>(1)</sup> | 45725 | 59 | 8 |
| Total | $163190 | 57 | 37 |

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<sup>(1)</sup> The average size is reflective of the Direct Bank deposits and excludes brokered deposits and rail.

The General Bank segment mainly includes deposits in our Branch Network, which deploys a relationship-based approach to deposit gathering. The Commercial Bank segment includes deposits of commercial customers, and the SVB Commercial segment includes deposits related to its commercial customer base. Deposits in Corporate mainly included $45.15 billion in our Direct Bank, with the remainder including brokered and other deposits.

As displayed in the table above, the average size of deposits varies across our business segments. The uninsured percentage is the percentage of uninsured deposits to total deposits at period end for the respective segments and Corporate. Total uninsured deposits were approximately $59.75 billion or 37% of total deposits at September 30, 2025 and $59.51 billion or 38% at December 31, 2024.

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**Table 3 Deposit Trends**

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| | | | |
|:---|:---|:---|:---|
| *dollars in millions* | **Deposit Balance** | **Deposit Balance** | **Deposit Balance** |
|  | **September 30, 2025** | **June 30,<br>2025** | **December 31,<br>2024** |
| General Bank segment | $74596 | $73499 | $72956 |
| Commercial Bank segment | 2978 | 2899 | 3502 |
| SVB Commercial segment | 39891 | 37798 | 36524 |
| Corporate and Rail segment | 45725 | 45739 | 42247 |
| Total deposits | $163190 | $159935 | $155229 |

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Deposit trends for the segments and Corporate at September 30, 2025 compared to December 31, 2024 are discussed below:

• Corporate deposit growth of $3.49 billion was mainly in the Direct Bank, which consists primarily of savings accounts.

• SVB Commercial segment deposits increased $3.37 billion, despite the strategic decision to move $2.4 billion in select cash sweep deposits to off-balance sheet client funds during the first quarter of 2025. Deposit growth was mainly in noninterest-bearing deposits.

• General Bank segment deposit growth of $1.64 billion was primarily in the Branch Network, largely in money market and noninterest-bearing deposits.

• Commercial Bank segment deposit decline of $524 million was mostly in noninterest-bearing deposits.

Refer to the "Results by Segment" for a discussion of deposits at September 30, 2025 compared to June 30, 2025.

***Liquidity Position***

We strive to maintain a strong liquidity position and our risk appetite for liquidity is low. At September 30, 2025, we had $61.92 billion in high-quality liquid assets consisting of $23.92 billion in cash and interest-earning deposits at banks (primarily held at the Federal Reserve Bank ("FRB")) and $38.01 billion in high-quality liquid securities ("HQLS"). HQLS are mainly comprised of U.S. agency mortgage-backed and U.S. Treasury investment securities. Additionally, we have unused borrowing capacity with the Federal Home Loan Bank ("FHLB") and FRB of $18.02 billion and $13.33 billion, respectively.

In connection with the SVBB Acquisition (as defined and described in Note 2—Business Combinations), FCB and the FDIC, as lender and as collateral agent, entered into the Advance Facility Agreement (as defined and described in Note 2—Business Combinations). The draw period under the Advance Facility Agreement ended March 27, 2025, as of which date, FCB had no outstanding amounts under the facility. Subsequently, we increased our borrowing capacity under agreements with the FRB through expansion of the eligible loan population to targeted loans historically not pledged to the FRB. Refer to the "Liquidity Risk" section of this MD&A for further discussion.

Also in connection with the SVBB Acquisition, FCB issued a five-year, 3.50% fixed rate Purchase Money Note (as defined in Note 2—Business Combinations), which had a carrying value of $35.85 billion at September 30, 2025. While scheduled principal payments are not required until maturity in March 2028, FCB may voluntarily prepay principal without a premium or penalty. We will continue to monitor the interest rate environment and assess whether any voluntary prepayments are prudent considering the fixed rate of 3.50%. Potential sources that could fund voluntary prepayments or the amount due at maturity include excess liquidity (primarily comprised of interest-earning deposits at banks and proceeds from maturities and paydowns of investment securities), FHLB advances, deposit growth, and issuance of unsecured debt or other borrowings. At the time of voluntary prepayment or maturity, the interest rates for the potential interest-bearing sources of repayment could be higher than the 3.50% rate.

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*Investment Securities Duration*

At September 30, 2025, our investment securities portfolio primarily consisted of debt securities available for sale and held to maturity as summarized below. We manage debt security market risk by monitoring the average duration of our investment securities portfolio. The duration of our investment securities was approximately 2.5 years at September 30, 2025. The investment securities available for sale portfolio had an average duration of 2.1 years and the held to maturity portfolio had an average duration of 4.2 years. Refer to the "Interest-earning Assets—Investment Securities" section of this MD&A and Note 3—Investment Securities for further information.

**Table 4 Investment Securities Summary**

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| | | | | |
|:---|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** |
|  | **Composition** <sup>(1)</sup> | **Amortized Cost** | **Fair Value** | **Fair Value to Amortized Cost** |
| Total investment securities available for sale | 79.6% | $35187 | $34963 | 99.4% |
| Total investment securities held to maturity | 20.1 | 10051 | 8838 | 87.9 |
| Investment in marketable equity securities | 0.3 | 78 | 110 | 141.5 |
| Total investment securities | 100% | $45316 | $43911 |  |
| <sup>(1)</sup> *Calculated as a percentage of the total fair value of investment securities.* | <sup>(1)</sup> *Calculated as a percentage of the total fair value of investment securities.* | <sup>(1)</sup> *Calculated as a percentage of the total fair value of investment securities.* | <sup>(1)</sup> *Calculated as a percentage of the total fair value of investment securities.* | <sup>(1)</sup> *Calculated as a percentage of the total fair value of investment securities.* |

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***Capital Position***

At September 30, 2025, all regulatory capital ratios for BancShares and FCB exceeded the Prompt Corrective Action ("PCA") well capitalized thresholds and Basel III requirements as further discussed in the "Capital" section of this MD&A.

**RESULTS OF OPERATIONS**

**Net Interest Income and Net Interest Margin** 

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

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

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

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

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

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

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**Table 5 Average Balances, Yields and Rates, NII, and NIM (Current Quarter to Linked Quarter)**

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| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Average Balance** | **Average Balance** | **Average Balance** | **Average Balance** | **Yield / Rate** | **Yield / Rate** | **Yield / Rate** | **Interest Income / Expense** | **Interest Income / Expense** | **Interest Income / Expense** | **Interest Income / Expense** | **Interest Income / Expense** |
|  | **Three Months Ended** | **Three Months Ended** | **Increase (Decrease)** | **Increase (Decrease)** | **Three Months Ended** | **Three Months Ended** |  | **Three Months Ended** | **Three Months Ended** |  | **Increase (Decrease) due to:** | **Increase (Decrease) due to:** |
|  | **Sep 30, 2025** | **Jun 30, 2025** | **Increase (Decrease)** | **Increase (Decrease)** | **Sep 30, 2025** | **Jun 30, 2025** | **Increase (decrease) bps** | **Sep 30, 2025** | **Jun 30, 2025** | **Increase (Decrease)** | **Volume**<sup>(1)</sup> | **Yield /Rate**<sup>(1)</sup> |
| Loans and leases <sup>(1) (2)</sup> | $141785 | $140699 | $1086 | 1% | 6.44% | 6.47% | (3) | $2300 | $2270 | $30 | $32 | $(2) |
| Investment securities | 44827 | 43935 | 892 | 2 | 3.83 | 3.79 | 4 | 430 | 416 | 14 | 10 | 4 |
| Securities purchased under agreements to resell | 284 | 237 | 47 | 20 | 4.32 | 4.34 | (2) | 3 | 3 |  |  |  |
| Interest-earning deposits at banks | 24146 | 23304 | 842 | 4 | 4.36 | 4.40 | (4) | 265 | 256 | 9 | 11 | (2) |
| Total interest-earning assets <sup>(2)</sup> | $211042 | $208175 | $2867 | 1 | 5.64 | 5.67 | (3) | $2998 | $2945 | $53 | $53 | $— |
| Noninterest-earning assets | 19487 | 19377 | 110 | 1 |  |  |  |  |  |  |  |  |
| Total assets | $230529 | $227552 | $2977 | 1 |  |  |  |  |  |  |  |  |
| Interest-bearing deposits |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Checking with interest | $23028 | $22929 | $99 | —% | 1.70% | 1.69% | 1 | $99 | $97 | $2 | $— | $2 |
| &nbsp;&nbsp;Money market | 39396 | 37980 | 1416 | 4 | 2.82 | 2.84 | (2) | 280 | 269 | 11 | 12 | (1) |
| &nbsp;&nbsp;Savings | 47005 | 46163 | 842 | 2 | 3.66 | 3.72 | (6) | 435 | 428 | 7 | 11 | (4) |
| &nbsp;&nbsp;Time deposits | 11146 | 11510 | (364) | (3) | 3.45 | 3.48 | (3) | 97 | 100 | (3) | (2) | (1) |
| Total interest-bearing deposits | 120575 | 118582 | 1993 | 2 | 3.00 | 3.02 | (2) | 911 | 894 | 17 | 21 | (4) |
| Borrowings: |  |  |  |  |  |  |  |  |  |  |  |  |
| Securities sold under customer repurchase agreements | 442 | 471 | (29) | (6) | 0.51 | 0.57 | (6) | 1 |  | 1 | 1 |  |
| &nbsp;&nbsp;Senior unsecured borrowings | 555 | 555 |  |  | 5.27 | 5.27 |  | 7 | 8 | (1) | (1) |  |
| &nbsp;&nbsp;Subordinated debt | 1350 | 1473 | (123) | (8) | 5.02 | 5.23 | (21) | 17 | 19 | (2) | (1) | (1) |
| &nbsp;&nbsp;Other borrowings | 35911 | 35880 | 31 |  | 3.66 | 3.66 |  | 328 | 329 | (1) |  | (1) |
| Long-term borrowings | 37816 | 37908 | (92) |  | 3.73 | 3.74 | (1) | 352 | 356 | (4) | (2) | (2) |
| Total borrowings | 38258 | 38379 | (121) |  | 3.70 | 3.71 | (1) | 353 | 356 | (3) | (1) | (2) |
| Total interest-bearing liabilities | $158833 | $156961 | $1872 | 1 | 3.16 | 3.19 | (3) | $1264 | $1250 | $14 | $20 | $(6) |
| Noninterest-bearing liabilities | $49405 | $48103 | $1302 | 3 |  |  |  |  |  |  |  |  |
| Stockholders' equity | 22291 | 22488 | (197) | (1) |  |  |  |  |  |  |  |  |
| Total liabilities and stockholders' equity | $230529 | $227552 | $2977 | 1 |  |  |  |  |  |  |  |  |
| Net interest spread <sup>(2)</sup> |  |  |  |  | 2.48% | 2.48% |  |  |  |  |  |  |
| Net interest margin and net interest income <sup>(2)</sup> |  |  |  |  | 3.26% | 3.26% |  | $1734 | $1695 | $39 |  |  |

---

<sup>(1) &nbsp;&nbsp;&nbsp;&nbsp;</sup>*Loans and leases include nonaccrual loans and loans held for sale. Interest income on loans and leases includes accretion income and loan fees.* 

<sup>(2)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*The average balances and yields for loans and leases are calculated net of average credit balances of factoring clients to appropriately reflect the interest-earning portion of factoring receivables.*

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***NII and NIM (Current Quarter Compared to Linked Quarter)***

The table above quantifies the increases or decreases for the current quarter compared to the linked quarter for NII and NIM, as well as average balances of interest-earning assets and interest-bearing liabilities, and the respective yields earned and rates paid. The main reasons for the increases and decreases are explained below:

*• NII* for the current quarter was $1.73 billion, an increase of $39 million or 2%, from $1.70 billion for the linked quarter. NII, excluding PAA,<sup>(1)</sup> was $1.67 billion for the current quarter, an increase of $44 million from $1.63 billion, for the linked quarter. The main reasons for the increases in NII and NII, excluding PAA,<sup>(1)</sup> are explained below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Interest and fees on loans for the current quarter was $2.30 billion, an increase of $30 million or 1%, from $2.27 billion for the linked quarter. The increase was mainly due to a higher day count and a higher average balance, partially offset by a modest decline in yield.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ Interest and fees on loans, excluding loan PAA,<sup>(1)</sup> were $2.23 billion for the current quarter, an increase of $34 million, from $2.20 billion for the linked quarter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ Loan PAA was $71 million for the current quarter, a decrease of $4 million, from $75 million for the linked quarter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Interest income on investment securities (including securities purchased under agreements to resell) for the current quarter was $433 million, an increase of $14 million or 4%, from $419 million for the linked quarter, due to increases in the average balance, yield and day count.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Interest income on interest-earning deposits at banks for the current quarter was $265 million, an increase of $9 million or 4%, from $256 million for the linked quarter, due to a higher average balance and a higher day count, partially offset by a slight decline in yield.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Interest expense on borrowings for the current quarter was $353 million, a decrease of $3 million or 1%, from $356 million for the linked quarter, due to a modest decline in the average balance and rate paid as the Linked Quarter Debt Redemption impacted the average balance and rate for the entire current quarter, partially offset by the Current Quarter Debt Issuance. We expect interest expense on borrowings to increase in the fourth quarter of 2025 as the Current Quarter Debt Issuance will impact the average balance and rate for the entire quarter. Refer to the "Recent Events" section of this MD&A for further discussion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Interest expense on interest-bearing deposits for the current quarter was $911 million, an increase of $17 million, from $894 million for the linked quarter, as the impacts of a higher average balance and a higher day count were partially offset by a lower rate paid.

• *NIM* was 3.26% in both the current quarter and linked quarter as the decrease in yield on average interest-earning assets was offset by the decrease in rate paid on interest-bearing liabilities. NIM, excluding PAA,<sup>(1)</sup> was 3.15% for the current quarter, an increase of 1 bps, from 3.14% for the linked quarter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ The yield on average interest-earning assets for the current quarter was 5.64%, a decrease of 3 bps, from 5.67% for the linked quarter, mainly due to a lower loan yield and a decline in loan PAA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ The rate paid on average interest-bearing liabilities for the current quarter was 3.16%, a decrease of 3 bps, from 3.19% for the linked quarter, primarily due to a lower rate paid on interest-bearing deposits, partially offset by the impact of a higher average balance of interest-bearing deposits.

Refer to the "Financial Performance Summary—Balance Sheet Highlights," "Interest-earning Assets," and "Interest-bearing Liabilities" sections of this MD&A for discussions of balance sheet trends that impact average interest-earning assets, average interest-bearing liabilities, and the related yields earned and rates paid.

<sup>(1)</sup> *Refer to the "NII, NIM, and Interest and Fees on Loans, Excluding PAA" discussion in the "Non-GAAP Financial Measurements" section of this MD&A for further information.*

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**Table 6 Average Balances, Yields and Rates, NII, and NIM (Current Quarter to Prior Year Quarter)**

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Average Balance** | **Average Balance** | **Average Balance** | **Average Balance** | **Yield / Rate** | **Yield / Rate** | **Yield / Rate** | **Interest Income / Expense** | **Interest Income / Expense** | **Interest Income / Expense** | **Interest Income / Expense** | **Interest Income / Expense** |
|  | **Three Months Ended** | **Three Months Ended** | **Increase (Decrease) from Prior Year Quarter** | **Increase (Decrease) from Prior Year Quarter** | **Three Months Ended** | **Three Months Ended** |  | **Three Months Ended** | **Three Months Ended** |  | **Increase (Decrease) due to:** | **Increase (Decrease) due to:** |
|  | **Sep 30, 2025** | **Sep 30, 2024** | **Increase (Decrease) from Prior Year Quarter** | **Increase (Decrease) from Prior Year Quarter** | **Sep 30, 2025** | **Sep 30, 2024** | **Increase (decrease) bps** | **Sep 30, 2025** | **Sep 30, 2024** | **Increase (Decrease)** | **Volume**<sup>(1)</sup> | **Yield /Rate**<sup>(1)</sup> |
| Loans and leases <sup>(1) (2)</sup> | $141785 | $137602 | $4183 | 3% | 6.44% | 7.03% | (59) | $2300 | $2430 | $(130) | $75 | $(205) |
| Investment securities | 44827 | 38189 | 6638 | 17 | 3.83 | 3.70 | 13 | 430 | 354 | 76 | 64 | 12 |
| Securities purchased under agreements to resell | 284 | 241 | 43 | 18 | 4.32 | 5.34 | (102) | 3 | 4 | (1) |  | (1) |
| Interest-earning deposits at banks | 24146 | 26167 | (2021) | (8) | 4.36 | 5.33 | (97) | 265 | 350 | (85) | (25) | (60) |
| Total interest-earning assets <sup>(2)</sup> | $211042 | $202199 | $8843 | 4 | 5.64 | 6.18 | (54) | $2998 | $3138 | $(140) | $114 | $(254) |
| Noninterest-earning assets | 19487 | 18267 | 1220 | 7 |  |  |  |  |  |  |  |  |
| Total assets | $230529 | $220466 | $10063 | 5 |  |  |  |  |  |  |  |  |
| Interest-bearing deposits |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Checking with interest | $23028 | $23946 | $(918) | (4)% | 1.70% | 2.23% | (53) | $99 | $134 | $(35) | $(5) | $(30) |
| &nbsp;&nbsp;Money market | 39396 | 34132 | 5264 | 15 | 2.82 | 3.24 | (42) | 280 | 278 | 2 | 40 | (38) |
| &nbsp;&nbsp;Savings | 47005 | 39939 | 7066 | 18 | 3.66 | 4.34 | (68) | 435 | 436 | (1) | 72 | (73) |
| &nbsp;&nbsp;Time deposits | 11146 | 14429 | (3283) | (23) | 3.45 | 4.29 | (84) | 97 | 156 | (59) | (32) | (27) |
| Total interest-bearing deposits | 120575 | 112446 | 8129 | 7 | 3.00 | 3.55 | (55) | 911 | 1004 | (93) | 75 | (168) |
| Borrowings: |  |  |  |  |  |  |  |  |  |  |  |  |
| Securities sold under customer repurchase agreements | 442 | 384 | 58 | 15 | 0.51 | 0.55 | (4) | 1 |  | 1 | 1 |  |
| &nbsp;&nbsp;Senior unsecured borrowings | 555 | 361 | 194 | 54 | 5.27 | 2.59 | 268 | 7 | 2 | 5 | 2 | 3 |
| &nbsp;&nbsp;Subordinated debt | 1350 | 900 | 450 | 50 | 5.02 | 3.34 | 168 | 17 | 8 | 9 | 4 | 5 |
| &nbsp;&nbsp;Other borrowings | 35911 | 35803 | 108 |  | 3.66 | 3.66 |  | 328 | 328 |  |  |  |
| Long-term borrowings | 37816 | 37064 | 752 | 2 | 3.73 | 3.64 | 9 | 352 | 338 | 14 | 6 | 8 |
| Total borrowings | 38258 | 37448 | 810 | 2 | 3.70 | 3.61 | 9 | 353 | 338 | 15 | 7 | 8 |
| Total interest-bearing liabilities | $158833 | $149894 | $8939 | 6 | 3.16 | 3.57 | (41) | $1264 | $1342 | $(78) | $82 | $(160) |
| Noninterest-bearing liabilities | $49405 | $47721 | $1684 | 4 |  |  |  |  |  |  |  |  |
| Stockholders' equity | 22291 | 22851 | (560) | (3) |  |  |  |  |  |  |  |  |
| Total liabilities and stockholders' equity | $230529 | $220466 | $10063 | 5 |  |  |  |  |  |  |  |  |
| Net interest spread <sup>(2)</sup> |  |  |  |  | 2.48% | 2.61% | (13) |  |  |  |  |  |
| Net interest margin and net interest income <sup>(2)</sup> |  |  |  |  | 3.26% | 3.53% | (27) | $1734 | $1796 | $(62) |  |  |

---

<sup>(1) &nbsp;&nbsp;&nbsp;&nbsp;</sup>*Loans and leases include nonaccrual loans and loans held for sale. Interest income on loans and leases includes accretion income and loan fees.* 

<sup>(2)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*The average balances and yields for loans and leases are calculated net of average credit balances of factoring clients to appropriately reflect the interest-earning portion of factoring receivables.*

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**Table 7 Average Balances, Yields and Rates, NII, and NIM (Current YTD to Prior Year YTD)**

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Average Balance** | **Average Balance** | **Average Balance** | **Average Balance** | **Yield / Rate** | **Yield / Rate** | **Yield / Rate** | **Interest Income / Expense** | **Interest Income / Expense** | **Interest Income / Expense** | **Interest Income / Expense** | **Interest Income / Expense** |
|  | **Nine Months Ended** | **Nine Months Ended** | **Increase (Decrease) from Prior Year Quarter** | **Increase (Decrease) from Prior Year Quarter** | **Nine Months Ended** | **Nine Months Ended** |  | **Nine Months Ended** | **Nine Months Ended** |  | **Increase (Decrease) due to:** | **Increase (Decrease) due to:** |
|  | **Sep 30, 2025** | **Sep 30, 2024** | **Increase (Decrease) from Prior Year Quarter** | **Increase (Decrease) from Prior Year Quarter** | **Sep 30, 2025** | **Sep 30, 2024** | **Increase (decrease) bps** | **Sep 30, 2025** | **Sep 30, 2024** | **Increase (Decrease)** | **Volume**<sup>(1)</sup> | **Yield /Rate**<sup>(1)</sup> |
| Loans and leases <sup>(1) (2)</sup> | $140668 | $135302 | $5366 | 4% | 6.46% | 7.11% | (65) | $6806 | $7206 | $(400) | $275 | $(675) |
| Investment securities | 44110 | 35769 | 8341 | 23 | 3.80 | 3.58 | 22 | 1257 | 960 | 297 | 235 | 62 |
| Securities purchased under agreements to resell | 268 | 240 | 28 | 12 | 4.34 | 5.37 | (103) | 9 | 10 | (1) | 1 | (2) |
| Interest-earning deposits at banks | 23386 | 29192 | (5806) | (20) | 4.38 | 5.38 | (100) | 766 | 1176 | (410) | (212) | (198) |
| Total interest-earning assets <sup>(2)</sup> | $208432 | $200503 | $7929 | 4 | 5.66 | 6.22 | (56) | $8838 | $9352 | $(514) | $299 | $(813) |
| Noninterest-earning assets | 19430 | 17984 | 1446 | 8 |  |  |  |  |  |  |  |  |
| Total assets | $227862 | $218487 | $9375 | 4 |  |  |  |  |  |  |  |  |
| Interest-bearing deposits |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Checking with interest | $23292 | $24112 | $(820) | (3)% | 1.72% | 2.22% | (50) | $300 | $401 | $(101) | $(13) | $(88) |
| &nbsp;&nbsp;Money market | 38055 | 32364 | 5691 | 18 | 2.83 | 3.14 | (31) | 806 | 760 | 46 | 125 | (79) |
| &nbsp;&nbsp;Savings | 45707 | 38290 | 7417 | 19 | 3.74 | 4.33 | (59) | 1280 | 1242 | 38 | 221 | (183) |
| &nbsp;&nbsp;Time deposits | 11752 | 15712 | (3960) | (25) | 3.55 | 4.28 | (73) | 312 | 504 | (192) | (115) | (77) |
| Total interest-bearing deposits | 118806 | 110478 | 8328 | 8 | 3.04 | 3.51 | (47) | 2698 | 2907 | (209) | 218 | (427) |
| Borrowings: |  |  |  |  |  |  |  |  |  |  |  |  |
| Securities sold under customer repurchase agreements | 447 | 398 | 49 | 12 | 0.53 | 0.49 | 4 | 2 | 1 | 1 | 1 |  |
| &nbsp;&nbsp;Senior unsecured borrowings | 428 | 371 | 57 | 16 | 5.20 | 2.53 | 267 | 17 | 7 | 10 | 1 | 9 |
| &nbsp;&nbsp;Subordinated debt | 1262 | 904 | 358 | 40 | 4.68 | 3.32 | 136 | 44 | 23 | 21 | 10 | 11 |
| &nbsp;&nbsp;Other borrowings | 35878 | 35829 | 49 |  | 3.66 | 3.65 | 1 | 985 | 980 | 5 | 1 | 4 |
| Long-term borrowings | 37568 | 37104 | 464 | 1 | 3.71 | 3.63 | 8 | 1046 | 1010 | 36 | 12 | 24 |
| Total borrowings | 38015 | 37502 | 513 | 1 | 3.67 | 3.59 | 8 | 1048 | 1011 | 37 | 13 | 24 |
| Total interest-bearing liabilities | $156821 | $147980 | $8841 | 6 | 3.19 | 3.53 | (34) | $3746 | $3918 | $(172) | $231 | $(403) |
| Noninterest-bearing liabilities | $48630 | $48310 | $320 | 1 |  |  |  |  |  |  |  |  |
| Stockholders' equity | 22411 | 22197 | 214 | 1 |  |  |  |  |  |  |  |  |
| Total liabilities and stockholders' equity | $227862 | $218487 | $9375 | 4 |  |  |  |  |  |  |  |  |
| Net interest spread <sup>(2)</sup> |  |  |  |  | 2.47% | 2.69% | (22) |  |  |  |  |  |
| Net interest margin and net interest income <sup>(2)</sup> |  |  |  |  | 3.26% | 3.62% | (36) | $5092 | $5434 | $(342) |  |  |

---

<sup>(1) &nbsp;&nbsp;&nbsp;&nbsp;</sup>*Loans and leases include nonaccrual loans and loans held for sale. Interest income on loans and leases includes accretion income and loan fees.* 

<sup>(2)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*The average balances and yields for loans and leases are calculated net of average credit balances of factoring clients to appropriately reflect the interest-earning portion of factoring receivables.*

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***NII and NIM (Current YTD Compared to Prior YTD)***

The table above quantifies the increases or decreases for the current YTD compared to the prior YTD for NII and NIM, as well as average balances of interest-earning assets and interest-bearing liabilities, and the respective yields earned and rates paid. The main reasons for the increases and decreases are explained below:

*•* NII for the current YTD was $5.09 billion, a decrease of $342 million or 6%, from $5.43 billion for the prior YTD. NII, excluding PAA,<sup>(1)</sup> was $4.89 billion for the current YTD, a decrease of $145 million, from $5.04 billion for the prior YTD. The main reasons for the decreases in NII and NII, excluding PAA,<sup>(1)</sup> are explained below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Interest income on interest-earning deposits at banks for the current YTD was $766 million, a decrease of $410 million or 35%, from $1.18 billion for the prior YTD, due to a lower average balance and a decline in the federal funds rate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Interest and fees on loans for the current YTD was $6.81 billion, a decrease of $400 million or 6%, from $7.21 billion for the prior YTD, mainly due to a lower yield and lower loan PAA, partially offset by the impact of a higher average balance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Interest and fees on loans, excluding loan PAA,<sup>(1)</sup> was $6.58 billion for the current YTD, a decrease of $215 million, from $6.79 billion for the prior YTD.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Loan PAA was $230 million in the current YTD, a decrease of $185 million, from $415 million for the prior YTD.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Interest expense on borrowings for the current YTD was $1.05 billion, an increase of $37 million or 4%, from $1.01 billion for the prior YTD, primarily due to a higher rate paid and a higher average, reflecting the 2025 Debt Issuances.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Interest income on investment securities (including securities purchased under agreements to resell) for the current YTD was $1.27 billion, an increase of $296 million or 31%, from $970 million for the prior YTD, mainly due to a higher average balance and a higher yield.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Interest expense on interest-bearing deposits for the current YTD was $2.70 billion, a decrease of $209 million or 7%, from $2.91 billion for the prior YTD, as a lower rate paid was partially offset by the impact of a higher average balance.

• *NIM* for the current YTD was 3.26%, a decrease of 36 bps, from 3.62% for the prior YTD. The decline in NIM was mainly due to the impacts of lower yields on loans and interest-earning deposits at banks, a mix shift from interest-earning deposits at banks to investment securities, a higher average balance of interest-bearing deposits, lower PAA, and a higher average balance and rate paid on borrowings, partially offset by the impacts of a decline in the rate paid on interest-bearing deposits and a higher average balance of loans. NIM, excluding PAA,<sup>(1)</sup> was 3.13% for the current YTD, a decrease of 22 bps, from 3.35% for the prior YTD.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ The yield on average interest-earning assets for the current YTD was 5.66%, a decrease of 56 bps, from 6.22% for the prior YTD, mainly due to a decline in yield on loans and interest-earning deposits at banks, as well as lower loan PAA, partially offset by a higher yield on investment securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ The rate paid on average interest-bearing liabilities for the current YTD was 3.19%, a decrease of 34 bps, from 3.53% for the prior YTD, primarily due to a lower rate paid on interest-bearing deposits, partially offset by the impacts of a higher average balance of interest-bearing deposits, and a higher average balance and rate paid for borrowings as a result of the 2025 Debt Issuances.

Refer to the "Financial Performance Summary—Balance Sheet Highlights," "Interest-earning Assets," and "Interest-bearing Liabilities" sections of this MD&A for discussions of balance sheet trends that impact average interest-earning assets, average interest-bearing liabilities, and the related yields and rates paid.

<sup>(1)</sup> *Refer to the "NII, NIM, and Interest and Fees on Loans, Excluding PAA" discussion in the "Non-GAAP Financial Measurements" section of this MD&A for further information.*

The following table shows the types of average interest-earning assets as a percentage of total average interest-earning assets.

**Table 8 Average Interest-earning Asset Mix**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Nine Months Ended** | **Nine Months Ended** |
|  | **September 30, 2025** | **June 30,<br>2025** | **September 30, 2024** | **September 30, 2025** | **September 30, 2024** |
| Loans and leases | 67% | 68% | 68% | 68% | 67% |
| Investment securities | 21 | 21 | 19 | 21 | 18 |
| Interest-earning deposits at banks | 12 | 11 | 13 | 11 | 15 |
| Total interest-earning assets | 100% | 100% | 100% | 100% | 100% |

---

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The following table shows the types of average interest-bearing liabilities as a percentage of total average interest-bearing liabilities.

**Table 9 Average Interest-bearing Liability Mix**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Nine Months Ended** | **Nine Months Ended** |
|  | **September 30, 2025** | **June 30,<br>2025** | **September 30, 2024** | **September 30, 2025** | **September 30, 2024** |
| Total interest-bearing deposits | 76% | 76% | 75% | 76% | 75% |
| Long-term borrowings | 24 | 24 | 25 | 24 | 25 |
| Total interest-bearing liabilities | 100% | 100% | 100% | 100% | 100% |

---

**Provision for Credit Losses**

**Table 10 Provision for Credit Losses**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Increase (Decrease) from Linked Quarter** | **Increase (Decrease) from Linked Quarter** | **Nine Months Ended** | **Nine Months Ended** | **Increase (Decrease)<br>Year to Date** | **Increase (Decrease)<br>Year to Date** |
|  | **September 30, 2025** | **June 30, 2025** | **September 30, 2024** | **Increase (Decrease) from Linked Quarter** | **Increase (Decrease) from Linked Quarter** | **September 30, 2025** | **September 30, 2024** | **Increase (Decrease)<br>Year to Date** | **Increase (Decrease)<br>Year to Date** |
| Provision for loan and lease losses | $214 | $111 | $123 | $103 | 94% | $473 | $311 | $162 | 52% |
| Provision (benefit) for off-balance sheet credit exposure | (23) | 4 | (6) | (27) | (614) | (13) | (35) | 22 | 63 |
| Provision for credit losses | $191 | $115 | $117 | $76 | 66% | $460 | $276 | $184 | 67% |

---

The provision for credit losses for the current quarter was $191 million, an increase of $76 million, from $115 million for the linked quarter. The current quarter provision for credit losses included a provision for loan and lease losses of $214 million, partially offset by a benefit for off-balance sheet credit exposure of $23 million.

• The provision for loan and lease losses for the current quarter was $214 million, an increase of $103 million, from $111 million for the linked quarter, mainly attributable to an increase in net charge-offs of $115 million, as well as the impact of a $20 million reserve release in the current quarter, compared to a $8 million reserve release in the linked quarter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ The $115 million increase in net charge-offs was mainly due to an $82 million charge-off on a single supply chain finance client in the Commercial Bank segment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ The decrease of $20 million in the ALLL at September 30, 2025, compared to June 30, 2025, primarily reflected improvements in the economic outlook and other changes, including the elimination of reserves related to Hurricane Helene, partially offset by higher specific reserves for individually evaluated loans, and growth in global fund banking loans which have a lower loss rate relative to our other portfolios.

• The benefit for off-balance sheet credit exposure for the current quarter was $23 million compared to a provision for the linked quarter of $4 million, resulting in a decrease in provision of $27 million, largely due to lower available balances.

The provision for credit losses for the current YTD was $460 million, an increase of $184 million, from $276 million for the prior YTD. The current YTD provision for credit losses included a provision for loan and lease losses of $473 million, partially offset by a benefit for off-balance sheet credit exposure of $13 million.

• The provision for loan and lease losses for the current YTD was $473 million, an increase of $162 million, from $311 million for the prior YTD, mainly attributable to an increase in net charge-offs of $117 million, which included a charge-off of $82 million for a single client as discussed above, and a decline in the ALLL reserve release in the current YTD of $45 million as a result of a $24 million reserve release in the current YTD compared to a $69 million reserve release in the prior YTD.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ The decrease of $24 million in the ALLL at September 30, 2025, compared to December 31, 2024, reflected the changes discussed above in the linked quarter comparison, and a modest shift in our weighting from the downside to baseline economic scenario in the linked quarter as further discussed in the "ALLL Methodology" section of this MD&A, partially offset by the impact of loan growth.

• The benefit for off-balance sheet credit exposure for the current YTD was $13 million, a decrease of $22 million, compared to $35 million for the prior YTD. The lower benefit of $22 million was mostly due to trends in the volume of unfunded commitments, partially offset by a modest shift in our weighting from the downside to baseline economic scenario in the linked quarter as further discussed in the "ALLL Methodology" section of this MD&A.

The ALLL and net charge-offs are further discussed in the "Risk Management—Credit Risk" section of this MD&A and in Note 5—Allowance for Loan and Lease Losses.

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**Noninterest Income**

The primary sources of noninterest income consist of rental income on operating lease equipment, lending-related fees, deposit fees and service charges, client investment fees, wealth management services, international fees, factoring commissions, cardholder and merchant services, and insurance commissions.

**Table 11 Noninterest Income**

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Increase (Decrease) from Linked Quarter** | **Increase (Decrease) from Linked Quarter** | **Nine Months Ended** | **Nine Months Ended** | **Increase (Decrease)<br>Year to Date** | **Increase (Decrease)<br>Year to Date** |
|  | **September 30, 2025** | **June 30, 2025** | **September 30, 2024** | **Increase (Decrease) from Linked Quarter** | **Increase (Decrease) from Linked Quarter** | **September 30, 2025** | **September 30, 2024** | **Increase (Decrease)<br>Year to Date** | **Increase (Decrease)<br>Year to Date** |
| Rental income on operating lease equipment | $273 | $272 | $262 | $1 | —% | $815 | $776 | $39 | 5% |
| Lending-related fees | 67 | 69 | 67 | (2) | (3) | 202 | 189 | 13 | 7 |
| Deposit fees and service charges | 61 | 59 | 57 | 2 | 3 | 178 | 172 | 6 | 4 |
| Client investment fees | 58 | 52 | 55 | 6 | 13 | 163 | 159 | 4 | 2 |
| Wealth management services | 57 | 55 | 54 | 2 | 3 | 168 | 157 | 11 | 7 |
| International fees | 34 | 33 | 29 | 1 | 4 | 99 | 86 | 13 | 15 |
| Factoring commissions | 18 | 18 | 19 |  |  | 53 | 55 | (2) | (3) |
| Cardholder services, net | 39 | 41 | 42 | (2) | (6) | 121 | 122 | (1) | (1) |
| Merchant services, net | 12 | 13 | 12 | (1) | (6) | 39 | 36 | 3 | 7 |
| Insurance commissions | 13 | 14 | 14 | (1) | (9) | 41 | 42 | (1) | (2) |
| Realized gain on sale of investment securities, net |  |  | 4 |  |  |  | 4 | (4) | (100) |
| Fair value adjustment on marketable equity securities, net | 13 | 2 | 9 | 11 | 470 | 10 | 3 | 7 | 264 |
| Gain on sale of leasing equipment, net | 3 | 8 | 5 | (5) | (65) | 16 | 19 | (3) | (15) |
| Loss on extinguishment of debt |  |  |  |  |  |  | (2) | 2 | 100 |
| Other noninterest income | 51 | 42 | 21 | 9 | 20 | 107 | 98 | 9 | 8 |
| Total noninterest income | $699 | $678 | $650 | $21 | 3% | $2012 | $1916 | $96 | 5% |

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Noninterest income for the current quarter was $699 million, an increase of $21 million or 3%, from $678 million for the linked quarter, primarily due to the following:

• The favorable change of $11 million in the fair value of marketable equity securities was due to higher market prices for the underlying securities.

• The increase in other noninterest income of $9 million was mainly attributable to gains on the sale of other assets.

• The increase of $6 million in client investment fees was mostly due to a higher average balance of client funds.

• The decrease of $5 million in gain on sale of leasing equipment was primarily the result of lower rail equipment sale margin, due to the railcar types sold.

Noninterest income for the current YTD was $2.01 billion, an increase of $96 million or 5%, from $1.92 billion for the prior YTD as further discussed below:

• The increase in rental income on operating lease equipment of $39 million was mainly the result of growth in the railcar portfolio.

• The increase in lending-related fees of $13 million was mostly in syndication fees.

• The increase in international fees of $13 million reflected higher volumes and commissions on foreign currency exchange transactions.

• The increase in wealth management services of $11 million was due to growth in assets under management.

• The increase in other noninterest income of $9 million was largely due a higher favorable change in the fair value of non-marketable equity securities and customer derivative positions, partially offset by a write-down of a held for sale asset in the current YTD.

• The favorable change of $7 million in the fair value of marketable equity securities was due to higher market prices for the underlying securities.

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**Noninterest Expense**

**Table 12 Noninterest Expenses**

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Increase (Decrease) from Linked Quarter** | **Increase (Decrease) from Linked Quarter** | **Nine Months Ended** | **Nine Months Ended** | **Increase (Decrease)<br>Year to Date** | **Increase (Decrease)<br>Year to Date** |
|  | **September 30, 2025** | **June 30, 2025** | **September 30, 2024** | **Increase (Decrease) from Linked Quarter** | **Increase (Decrease) from Linked Quarter** | **September 30, 2025** | **September 30, 2024** | **Increase (Decrease)<br>Year to Date** | **Increase (Decrease)<br>Year to Date** |
| Depreciation on operating lease equipment | $98 | $100 | $99 | $(2) | (1)% | $296 | $293 | $3 | 1% |
| Maintenance and other operating lease expenses | 67 | 55 | 59 | 12 | 20 | 180 | 164 | 16 | 10 |
| Personnel cost | 817 | 810 | 788 | 7 | 1 | 2445 | 2277 | 168 | 7 |
| Net occupancy expense | 58 | 61 | 62 | (3) | (6) | 177 | 182 | (5) | (3) |
| Equipment expense | 137 | 131 | 128 | 6 | 4 | 404 | 368 | 36 | 10 |
| Professional fees | 26 | 30 | 42 | (4) | (12) | 81 | 91 | (10) | (10) |
| Third-party processing fees | 67 | 63 | 55 | 4 | 6 | 193 | 173 | 20 | 12 |
| FDIC insurance expense | 38 | 38 | 31 |  |  | 114 | 105 | 9 | 8 |
| Marketing expense | 33 | 32 | 20 | 1 | 2 | 97 | 52 | 45 | 86 |
| Acquisition-related expenses | 28 | 38 | 46 | (10) | (27) | 108 | 148 | (40) | (27) |
| Intangible asset amortization | 13 | 13 | 15 |  |  | 41 | 47 | (6) | (14) |
| Other noninterest expense | 109 | 129 | 111 | (20) | (15) | 348 | 318 | 30 | 9 |
| Total noninterest expense | $1491 | $1500 | $1456 | $(9) | (1)% | $4484 | $4218 | $266 | 6% |

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Noninterest expense for the current quarter was $1.49 billion, a decrease of $9 million or 1%, from $1.50 billion for the linked quarter as further discussed below:

• The decrease in other noninterest expense of $20 million was mainly due to the linked quarter including accruals for $15 million resulting from a vendor dispute and an increase in litigation reserves.

• The decrease in acquisition-related expenses of $10 million is summarized in Table 13 below.

• The increase in maintenance and other operating lease expenses of $12 million is discussed in the "Results by Segment—Rail" section of this MD&A.

• The increase in personnel cost of $7 million was due to an additional payroll day and net staff additions partially offset by a decline in temporary contractor costs.

• The increase in equipment expense of $6 million was mainly due to higher software-related costs.

Noninterest expense for the current YTD was $4.48 billion, an increase of $266 million or 6%, from $4.22 billion for the prior YTD as further discussed below:

• The increase in personnel cost of $168 million was mainly due to net staff additions, annual merit increases, and promotions.

• The increase in marketing expense of $45 million was primarily due to marketing for Direct Bank deposits.

• The increase in equipment expense of $36 million was mostly due to higher software-related costs, including accelerated depreciation.

• The increase in other noninterest expense of $30 million was largely due to the linked quarter accruals of $15 million discussed above.

• The increase of $20 million in third-party processing fees was due to higher transaction volume and additional services.

• The increase of $16 million in maintenance and other operating lease expenses are discussed in the "Results by Segment—Rail" section of this MD&A.

• The decrease in acquisition-related expenses of $40 million is summarized in Table 13 below.

• The decrease of $10 million in professional fees was due to lower consulting services and legal fees.

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**Table 13 Acquisition-related Expenses**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Nine Months Ended** | **Nine Months Ended** |
|  | **September 30, 2025** | **June 30,<br>2025** | **September 30, 2024** | **September 30, 2025** | **September 30, 2024** |
| Personnel cost | $12 | $15 | $16 | $42 | $57 |
| Professional fees | 15 | 20 | 28 | 61 | 77 |
| Other acquisition-related expense | 1 | 3 | 2 | 5 | 14 |
| Total acquisition-related expense | $28 | $38 | $46 | $108 | $148 |

---

Acquisition-related personnel cost primarily includes severance and retention costs for employees associated with business combinations. These amounts are recognized over the requisite service period, if any.

Acquisition-related professional fees mainly include consulting, legal and accounting costs associated with business combinations and the related integration, optimization, and business process reengineering, including enhancements to technology. These amounts are expensed as incurred.

**Income Taxes**

**Table 14 Income Tax Data**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Nine Months Ended** | **Nine Months Ended** |
|  | **September 30, 2025** | **June 30,<br>2025** | **September 30, 2024** | **September 30, 2025** | **September 30, 2024** |
| Income before income taxes | $751 | $758 | $873 | $2160 | $2856 |
| Income tax expense | $183 | $183 | $234 | $534 | $779 |
| Effective income tax rate | 24.4% | 24.1% | 26.8% | 24.7% | 27.3% |

---

The ETR was 24.4% for the current quarter compared to 24.1% for the linked quarter. The modestly higher ETR for the current quarter was mostly due to the revaluation of the deferred tax liability as a result of a change in state law enacted in the linked quarter. The ETR was 24.7% for the current YTD compared to 27.3% for the prior YTD. The decrease for the current YTD ETR compared to the prior YTD was primarily due to increased tax credits and a reduction in the state and local income tax rate.

The ETR is impacted by a number of factors, including the relative mix of domestic and international earnings, effects of changes in enacted tax laws, adjustments to valuation allowances, and discrete items. The ETR in future periods may vary from the current quarter ETR due to changes in these factors.

BancShares monitors and evaluates the potential impact of current events on the estimates used to establish income tax expense and income tax liabilities. On a periodic basis, we evaluate our income tax positions based on current tax law and positions taken by various tax auditors within the jurisdictions where BancShares is required to file income tax returns, as well as potential or pending audits or assessments by tax auditors. Refer to Note 15—Income Taxes for additional information.

Refer to the "Executive Overview—Recent Events" for a brief discussion on tax reform legislation enacted on July 4, 2025.

**RESULTS BY SEGMENT**

We made changes to the composition of our reportable segments during the first quarter of 2025 as further discussed in Note 1—Significant Accounting Policies and Basis of Presentation and briefly summarized in the "Recent Events" section earlier in this MD&A. Segment disclosures for 2024 periods included in this Form 10-Q were recast to reflect the changes.

BancShares' segments include the General Bank, the Commercial Bank, SVB Commercial, and Rail. All other financial information not included in the segments is reported in the Corporate section of the segment disclosures. Under our segment expense allocation methodology, allocated expenses increase noninterest expense of the applicable segment(s), with an offsetting decrease to Corporate noninterest expense. "All other noninterest expense" in the segment reporting tables below includes the effect of allocated expenses, resulting in a reduction to expense (or "Contra Expense") for Corporate.

Refer to Note 17—Segment Information for descriptions of segment products and services.

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**General Bank**

**Table 15 General Bank: Financial Data**

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Increase (Decrease) from Linked Quarter** | **Increase (Decrease) from Linked Quarter** | **Nine Months Ended** | **Nine Months Ended** | **Increase (Decrease)<br>Year to Date** | **Increase (Decrease)<br>Year to Date** |
| **Earnings Summary** | **September 30, 2025** | **June 30, 2025** | **September 30, 2024** | **Increase (Decrease) from Linked Quarter** | **Increase (Decrease) from Linked Quarter** | **September 30, 2025** | **September 30, 2024** | **Increase (Decrease)<br>Year to Date** | **Increase (Decrease)<br>Year to Date** |
| Net interest income | $846 | $824 | $760 | $22 | 3% | $2458 | $2174 | $284 | 13% |
| Total noninterest income | 166 | 164 | 149 | 2 | 1 | 494 | 446 | 48 | 11 |
| &nbsp;&nbsp;Total revenue | 1012 | 988 | 909 | 24 | 2 | 2952 | 2620 | 332 | 13 |
| Personnel cost | 213 | 210 | 212 | 3 | 1 | 637 | 604 | 33 | 5 |
| All other noninterest expense | 369 | 370 | 341 | (1) |  | 1090 | 978 | 112 | 11 |
| &nbsp;&nbsp;Total noninterest expense | 582 | 580 | 553 | 2 |  | 1727 | 1582 | 145 | 9 |
| Provision for credit losses | 1 | 13 | 55 | (12) | (90) | 60 | 113 | (53) | (47) |
| &nbsp;&nbsp;Income before income taxes | 429 | 395 | 301 | 34 | 8 | 1165 | 925 | 240 | 26 |
| Income tax expense | 109 | 101 | 99 | 8 | 7 | 298 | 270 | 28 | 10 |
| Net income | $320 | $294 | $202 | $26 | 9 | $867 | $655 | $212 | 32 |
| Pre-provision net revenue ("PPNR") <sup>(1)</sup> | $430 | $408 | $356 | $22 | 5% | $1225 | $1038 | $187 | 18% |
| **Select Period End Balances** |  |  |  |  |  |  |  |  |  |
| Loans and leases | $65225 | $64987 | $64254 | $238 | —% | $65225 | $64254 | $971 | 2% |
| Deposits | 74596 | 73499 | 71898 | 1097 | 1 | 74596 | 71898 | 2698 | 4 |

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<sup>(1)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*PPNR is a non-GAAP measure. Refer to the "Non-GAAP Financial Measurements" section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.*

General Bank segment net income for the current quarter increased $26 million compared to the linked quarter, primarily due to higher NII and lower provision for credit losses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $22 million increase in NII was largely due to a lower rate paid on interest-bearing deposits, along with a higher loan yield, and the impact of loan growth.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $12 million decrease in provision for credit losses reflected a reserve release, largely in residential mortgage and credit card loans.

General Bank segment loans were $65.23 billion at September 30, 2025, an increase of $238 million compared to $64.99 billion at June 30, 2025, as growth was spread amongst various portfolios.

General Bank segment deposits were $74.60 billion at September 30, 2025, an increase of $1.10 billion compared to $73.50 billion at June 30, 2025, as growth was primarily concentrated in our Branch Network and Wealth. Deposit growth was in money market and noninterest-bearing checking, partially offset by lower time deposits.

General Bank segment net income for the current YTD increased $212 million compared to the prior YTD, primarily due to higher NII, lower provision for credit losses, and higher noninterest income, partially offset by increases in personnel cost and all other noninterest expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $284 million increase in NII was mainly due to a lower rate paid on interest-bearing deposits, as well as the impact of loan growth, partially offset by the impact of deposit growth.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $53 million decrease in provision for credit losses reflects the ALLL build during the prior YTD, the elimination of reserves related to Hurricane Helene in the current YTD, and the modest shift in our weighting from the downside to baseline economic scenario in the linked quarter as further discussed in the "ALLL Methodology" section of this MD&A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $48 million increase in total noninterest income was mostly due to increases in wealth management services, deposit fees and service charges, and cardholder services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $112 million increase in all other noninterest expense was spread amongst various accounts, including allocated expenses. Refer to the "Noninterest Expense" discussion in the "Results of Operations" section of this MD&A for further information regarding trends in consolidated noninterest expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $33 million increase in personnel cost was mainly due to annual merit increases and promotions.

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**Commercial Bank** 

**Table 16 Commercial Bank: Financial Data**

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Increase (Decrease) from Linked Quarter** | **Increase (Decrease) from Linked Quarter** | **Nine Months Ended** | **Nine Months Ended** | **Increase (Decrease)<br>Year to Date** | **Increase (Decrease)<br>Year to Date** |
| **Earnings Summary** | **September 30, 2025** | **June 30, 2025** | **September 30, 2024** | **Increase (Decrease) from Linked Quarter** | **Increase (Decrease) from Linked Quarter** | **September 30, 2025** | **September 30, 2024** | **Increase (Decrease)<br>Year to Date** | **Increase (Decrease)<br>Year to Date** |
| Net interest income | $303 | $299 | $305 | $4 | 1% | $895 | $916 | $(21) | (2)% |
| **Noninterest Income** |  |  |  |  |  |  |  |  |  |
| Rental income on operating lease equipment | 54 | 54 | 57 |  |  | 164 | 172 | (8) | (4) |
| &nbsp;&nbsp;Less: depreciation on operating lease equipment | 43 | 44 | 47 | (1) | (2) | 131 | 141 | (10) | (6) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net rental income on operating lease equipment <sup>(1)</sup> | 11 | 10 | 10 | 1 | 10 | 33 | 31 | 2 | 6 |
| All other noninterest income | 101 | 98 | 79 | 3 | 4 | 268 | 239 | 29 | 12 |
| &nbsp;&nbsp;Total noninterest income <sup>(2)</sup> | 155 | 152 | 136 | 3 | 3 | 432 | 411 | 21 | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Noninterest income, net of depreciation <sup>(1)</sup> | 112 | 108 | 89 | 4 | 4 | 301 | 270 | 31 | 11 |
| &nbsp;&nbsp;Total revenue | 458 | 451 | 441 | 7 | 2 | 1327 | 1327 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Revenue, net of depreciation <sup>(1)</sup> | 415 | 407 | 394 | 8 | 2 | 1196 | 1186 | 10 | 1 |
| **Noninterest Expense** |  |  |  |  |  |  |  |  |  |
| Personnel cost | 74 | 69 | 68 | 5 | 7 | 215 | 205 | 10 | 4 |
| All other noninterest expense | 149 | 154 | 150 | (5) | (4) | 462 | 425 | 37 | 9 |
| &nbsp;&nbsp;Total noninterest expense <sup>(3)</sup> | 266 | 267 | 265 | (1) | (1) | 808 | 771 | 37 | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Noninterest expense, net of depreciation <sup>(1)</sup> | 223 | 223 | 218 |  |  | 677 | 630 | 47 | 7 |
| Provision for credit losses | 168 | 47 | 11 | 121 | 257 | 300 | 70 | 230 | 330 |
| &nbsp;&nbsp;Income before income taxes | 24 | 137 | 165 | (113) | (82) | 219 | 486 | (267) | (55) |
| Income tax expense | 6 | 35 | 41 | (29) | (83) | 56 | 127 | (71) | (56) |
| Net income | $18 | $102 | $124 | $(84) | (82) | $163 | $359 | $(196) | (54) |
| PPNR <sup>(1)</sup> | $192 | $184 | $176 | $8 | 5% | $519 | $556 | $(37) | (7)% |
| **Select Period End Balances** |  |  |  |  |  |  |  |  |  |
| Loans and leases | $38841 | $38691 | $37281 | $150 | —% | $38841 | $37281 | $1560 | 4% |
| Operating lease equipment, net | 737 | 750 | 767 | (13) | (2) | 737 | 767 | (30) | (4) |
| Deposits | 2978 | 2899 | 3126 | 79 | 3 | 2978 | 3126 | (148) | (5) |

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<sup>(1)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*Net rental income on operating lease equipment; noninterest income, net of depreciation; revenue, net of depreciation; noninterest expense, net of depreciation; and PPNR are non-GAAP measures. Refer to the "Non-GAAP Financial Measurements" section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.* 

<sup>(2)</sup> *Total noninterest income includes rental income on operating lease equipment and all other noninterest income.* 

<sup>(3)</sup> *Total noninterest expense includes depreciation on operating lease equipment.* 

Commercial Bank segment net income for the current quarter decreased $84 million compared to the linked quarter, mostly due to a higher provision for credit losses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $121 million increase in provision for credit losses was mainly due to higher net charge-offs compared to the linked quarter, including an $82 million charge-off on a single supply chain finance client.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $29 million decrease in income tax expense reflected lower income before income taxes.

Commercial Bank segment loans were $38.84 billion at September 30, 2025, an increase of $150 million compared to $38.69 billion at June 30, 2025, primarily due to growth in the Working Capital Solutions portfolio, partially offset by a decline in Real Estate Finance.

Commercial Bank segment deposits were $2.98 billion at September 30, 2025, an increase of $79 million from $2.90 billion at June 30, 2025.

Commercial Bank segment net income for the current YTD decreased $196 million compared to the prior YTD, primarily due to a higher provision for credit losses, higher noninterest expense, and lower NII, partially offset by higher noninterest income and lower income tax expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $230 million increase in provision for credit losses was mainly due to higher net charge-offs in the current YTD, the impact of loan growth, and a higher reserve release in the prior YTD, partially offset by the modest shift in our

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weighting from the downside to baseline economic scenario in the linked quarter as further discussed in the "ALLL Methodology" section of this MD&A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $37 million increase in all other noninterest expense was spread amongst various accounts, including allocated expenses. Refer to the "Noninterest Expense" discussion in the "Results of Operations" section of this MD&A for further information regarding trends in consolidated noninterest expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $21 million decrease in NII was mostly due to a lower loan yield, partially offset by the impact of loan growth and lower deposit costs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $21 million increase in total noninterest income is largely due to lending fees, including capital markets fees, partially offset by lower rental income on operating lease equipment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $71 million decrease in income tax expense reflected lower income before income taxes.

**SVB Commercial**

**Table 17 SVB Commercial: Financial Data**

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Increase (Decrease) from Linked Quarter** | **Increase (Decrease) from Linked Quarter** | **Nine Months Ended** | **Nine Months Ended** | **Increase (Decrease)<br>Year to Date** | **Increase (Decrease)<br>Year to Date** |
| **Earnings Summary** | **September 30, 2025** | **June 30, 2025** | **September 30, 2024** | **Increase (Decrease) from Linked Quarter** | **Increase (Decrease) from Linked Quarter** | **September 30, 2025** | **September 30, 2024** | **Increase (Decrease)<br>Year to Date** | **Increase (Decrease)<br>Year to Date** |
| Net interest income | $493 | $490 | $560 | $3 | 1% | $1476 | $1636 | $(160) | (10)% |
| Total noninterest income | 135 | 130 | 137 | 5 | 3 | 397 | 405 | (8) | (2) |
| &nbsp;&nbsp;Total revenue | 628 | 620 | 697 | 8 | 1 | 1873 | 2041 | (168) | (8) |
| Personnel cost | 106 | 110 | 112 | (4) | (3) | 330 | 354 | (24) | (7) |
| All other noninterest expense | 267 | 272 | 272 | (5) | (2) | 804 | 765 | 39 | 5 |
| &nbsp;&nbsp;Total noninterest expense | 373 | 382 | 384 | (9) | (2) | 1134 | 1119 | 15 | 1 |
| Provision for credit losses | 22 | 55 | 51 | (33) | (62) | 100 | 93 | 7 | 7 |
| &nbsp;&nbsp;Income before income taxes | 233 | 183 | 262 | 50 | 28 | 639 | 829 | (190) | (23) |
| Income tax expense | 58 | 47 | 75 | 11 | 26 | 162 | 235 | (73) | (31) |
| Net income | $175 | $136 | $187 | $39 | 28% | $477 | $594 | $(117) | (20)% |
| PPNR <sup>(1)</sup> | $255 | $238 | $313 | $17 | 7% | $739 | $922 | $(183) | (20)% |
| **Select Period End Balances** |  |  |  |  |  |  |  |  |  |
| Loans and leases | $40629 | $37529 | $37098 | $3100 | 8% | $40629 | $37098 | $3531 | 10% |
| Deposits | 39891 | 37798 | 35844 | 2093 | 6 | 39891 | 35844 | 4047 | 11 |

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<sup>(1)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*PPNR is a non-GAAP measure. Refer to the "Non-GAAP Financial Measurements" section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.*

SVB Commercial segment net income for the current quarter increased $39 million compared to the linked quarter, mainly due to a lower provision for credit losses, higher noninterest income, and lower noninterest expense, partially offset by higher income tax expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $33 million decrease in provision for credit losses was largely due to a reserve release related to both off-balance sheet credit exposures and loans and leases, as well as lower specific reserves for individually evaluated investor dependent loans.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $5 million increase in total noninterest income was primarily in client investment fees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $5 million decrease in all other noninterest expense was spread amongst various accounts, including allocated expenses. Refer to the "Noninterest Expense" discussion in the "Results of Operations" section of this MD&A for further information regarding trends in consolidated noninterest expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $11 million increase in income tax expense reflected the increase in income before income taxes.

SVB Commercial segment loans were $40.63 billion at September 30, 2025, an increase of $3.10 billion compared to $37.53 billion at June 30, 2025, primarily related to growth in Global Fund Banking.

SVB Commercial segment deposits were $39.89 billion at September 30, 2025, an increase of $2.09 billion compared to $37.80 billion at June 30, 2025, mainly due to deposit growth in Global Fund Banking. Most of the growth was in noninterest-bearing checking accounts.

SVB Commercial segment net income for the current YTD decreased $117 million compared to the prior YTD, mainly due to lower NII, higher total noninterest expense, lower noninterest income, and higher provision for credit losses, partially offset by lower income tax expense.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $160 million decrease in NII was largely due to a lower loan yield, partially offset by a lower rate paid on interest-bearing deposits, as well as the impact of loan growth.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $39 million increase in all other noninterest expense was spread amongst various accounts, including allocated expenses. Refer to the "Noninterest Expense" discussion in the "Results of Operations" section of this MD&A for further information regarding trends in consolidated noninterest expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $8 million decrease in noninterest income was mainly in lending-related fees and cardholder services, partially offset by higher international fees, reflecting higher volumes and commissions on foreign currency exchange transactions, and client investment fees, due to a higher average balance of client funds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $7 million increase in provision for credit losses primarily reflected an increase in net charge-offs, partially offset by a modest shift in our weighting from the downside to baseline economic scenario in the linked quarter as further discussed in the "ALLL Methodology" section of this MD&A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $73 million decrease in income tax expense reflected the decrease in income before income taxes.

**Rail** 

**Table 18 Rail: Financial Data**

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Increase (Decrease) from Linked Quarter** | **Increase (Decrease) from Linked Quarter** | **Nine Months Ended** | **Nine Months Ended** | **Increase (Decrease)<br>Year to Date** | **Increase (Decrease)<br>Year to Date** |
| **Earnings Summary** | **September 30, 2025** | **June 30, 2025** | **September 30, 2024** | **Increase (Decrease) from Linked Quarter** | **Increase (Decrease) from Linked Quarter** | **September 30, 2025** | **September 30, 2024** | **Increase (Decrease)<br>Year to Date** | **Increase (Decrease)<br>Year to Date** |
| Net interest income (expense) | $(55) | $(53) | $(48) | $2 | 2% | $(160) | $(136) | $(24) | 18% |
| **Noninterest Income** |  |  |  |  |  |  |  |  |  |
| Rental income on operating lease equipment | 219 | 218 | 205 | 1 | 1 | 651 | 604 | 47 | 8 |
| &nbsp;&nbsp;Less: depreciation on operating lease equipment | 55 | 56 | 52 | (1) | 1 | 165 | 152 | 13 | 8 |
| &nbsp;&nbsp;Less: maintenance and other operating lease expenses | 67 | 55 | 59 | 12 | 20 | 180 | 164 | 16 | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net rental income on operating lease equipment <sup>(1)</sup> | 97 | 107 | 94 | (10) | (9) | 306 | 288 | 18 | 6 |
| All other noninterest income | 2 | 3 | 2 | (1) | (67) | 7 | 8 | (1) | (20) |
| &nbsp;&nbsp;Total noninterest income <sup>(2)</sup> | 221 | 221 | 207 |  |  | 658 | 612 | 46 | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;Noninterest income, net of depreciation and maintenance <sup>(1)</sup> | 99 | 110 | 96 | (11) | (10) | 313 | 296 | 17 | 6 |
| &nbsp;&nbsp;Total revenue | 166 | 168 | 159 | (2) | (1) | 498 | 476 | 22 | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Revenue, net of depreciation and maintenance <sup>(1)</sup> | 44 | 57 | 48 | (13) | (23) | 153 | 160 | (7) | (4) |
| **Noninterest Expense** |  |  |  |  |  |  |  |  |  |
| Personnel cost | 6 | 6 | 6 |  |  | 20 | 20 |  |  |
| All other noninterest expense | 16 | 26 | 14 | (10) | (42) | 56 | 43 | 13 | 28 |
| &nbsp;&nbsp;Total noninterest expense <sup>(3)</sup> | 144 | 143 | 131 | 1 | 1 | 421 | 379 | 42 | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;Noninterest expense, net of depreciation and maintenance <sup>(1)</sup> | 22 | 32 | 20 | (10) | (31) | 76 | 63 | 13 | 21 |
| Provision for credit losses |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Income before income taxes | 22 | 25 | 28 | (3) | (12) | 77 | 97 | (20) | (20) |
| Income tax expense | 5 | 6 | 8 | (1) | (13) | 19 | 27 | (8) | (27) |
| Net income | $17 | $19 | $20 | $(2) | (12)% | $58 | $70 | $(12) | (18)% |
| PPNR <sup>(1)</sup> | $22 | $25 | $28 | $(3) | (12)% | $77 | $97 | $(20) | (21)% |
| **Select Period End Balances** |  |  |  |  |  |  |  |  |  |
| Loans and leases | $63 | $62 | $62 | $1 | —% | $63 | $62 | $1 | —% |
| Operating lease equipment, net | 8709 | 8716 | 8419 | (7) |  | 8709 | 8419 | 290 | 3 |
| Deposits | 2 | 3 | 14 | (1) | (28) | 2 | 14 | (12) | (86) |

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<sup>(1)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*Net rental income on operating lease equipment; noninterest income, net of depreciation and maintenance; noninterest expense, net of depreciation and maintenance; revenue, net of depreciation and maintenance; and PPNR are non-GAAP measures. Refer to the "Non-GAAP Financial Measurements" section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.* 

<sup>(2)</sup> *Total noninterest income includes rental income on operating lease equipment and all other noninterest income.* 

<sup>(3)</sup> *Total noninterest expense includes depreciation on operating lease equipment.* 

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Rail segment net income for the current quarter decreased $2 million compared to the linked quarter, mostly due to higher maintenance and other operating lease expenses, partially offset by lower all other noninterest expense, largely due to the linked quarter including an accrual for the previously discussed vendor dispute.

Rail segment net income for the current YTD decreased $12 million compared to the prior YTD, mostly due to lower NII and higher total noninterest expense, partially offset by higher rental income on operating lease equipment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $24 million decrease in NII was primarily due to higher funding costs, reflective of the increase in operating lease equipment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*•* The $13 million increase in all other noninterest expense was primarily due to the previously mentioned vendor dispute.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Depreciation on operating lease equipment increased $13 million, reflective of growth in operating lease equipment, and maintenance and other operating lease expenses increased $16 million.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $47 million increase in rental income on operating lease equipment reflected higher rental income on portfolio growth and strong repricing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $8 million decrease in income tax expense reflected the decrease in income before income taxes.

*Railcar Portfolio*

Our fleet is diverse and the average re-pricing of equipment upon lease maturities was 118% of the average prior or expiring lease rate during the current quarter. Railcar utilization, including commitments to lease, was 96.8% at September 30, 2025, compared to 97.6% at December 31, 2024.

Rail segment customers include all of the U.S. and Canadian Class I railroads (i.e., railroads with annual revenues of approximately $500 million and greater) and other railroads, as well as manufacturers and commodity shippers. Our total operating lease fleet at September 30, 2025 consisted of approximately 127,600 railcars and locomotives.

The following tables reflect the proportion of railcars by type based on units and net investment, and rail operating lease equipment by obligor industry:

**Table 19 Operating Lease Railcar Portfolio by Type (units and net investment)**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **September 30, 2025** | **September 30, 2025** | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
| **Railcar Type** | **Total Owned <br>Fleet - % Total Units** | **Total Owned <br>Fleet - % Total<br>Net Investment** | **Total Owned <br>Fleet - % Total Units** | **Total Owned <br>Fleet - % Total<br>Net Investment** | **Total Owned <br>Fleet - % Total Units** | **Total Owned <br>Fleet - % Total<br>Net Investment** |
| Covered hoppers | 45% | 41% | 45% | 41% | 45% | 42% |
| Tank cars | 27 | 39 | 28 | 39 | 27 | 38 |
| Mill/ coil gondolas | 8 | 6 | 8 | 6 | 8 | 6 |
| Coal | 7 | 1 | 7 | 1 | 7 | 1 |
| Boxcars | 5 | 5 | 6 | 5 | 6 | 6 |
| Other | 8 | 8 | 6 | 8 | 7 | 7 |
| **Total** | 100% | 100% | 100% | 100% | 100% | 100% |

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**Table 20 Rail Operating Lease Equipment by Obligor Industry**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **September 30, 2025** | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
| Manufacturing | $3706 | 43% | $3659 | 42% | $3467 | 40% |
| Rail | 1975 | 23 | 2011 | 23 | 2003 | 23 |
| Wholesale | 1532 | 18 | 1550 | 18 | 1505 | 18 |
| Oil and gas extraction / services | 493 | 6 | 483 | 5 | 583 | 7 |
| Energy and utilities | 213 | 2 | 222 | 3 | 239 | 3 |
| Other | 791 | 8 | 791 | 9 | 776 | 9 |
| Total | $8710 | 100% | $8716 | 100% | $8573 | 100% |

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**Corporate** 

**Table 21 Corporate: Financial Data**

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Increase (Decrease) from Linked Quarter** | **Increase (Decrease) from Linked Quarter** | **Nine Months Ended** | **Nine Months Ended** | **Increase (Decrease)<br>Year to Date** | **Increase (Decrease)<br>Year to Date** |
| **Earnings Summary** | **September 30, 2025** | **June 30, 2025** | **September 30, 2024** | **Increase (Decrease) from Linked Quarter** | **Increase (Decrease) from Linked Quarter** | **September 30, 2025** | **September 30, 2024** | **Increase (Decrease)<br>Year to Date** | **Increase (Decrease)<br>Year to Date** |
| Net interest income | $147 | $135 | $219 | $12 | 9% | $423 | $844 | $(421) | (50)% |
| Total noninterest income | 22 | 11 | 21 | 11 | 117 | 31 | 42 | (11) | (26) |
| &nbsp;&nbsp;Total revenue | 169 | 146 | 240 | 23 | 17 | 454 | 886 | (432) | (49) |
| Personnel cost | 418 | 415 | 390 | 3 | 1 | 1243 | 1094 | 149 | 14 |
| Acquisition-related expenses | 28 | 38 | 46 | (10) | (27) | 108 | 148 | (40) | (27) |
| All other noninterest expense | (320) | (325) | (313) | 5 | 2 | (957) | (875) | (82) | 9 |
| &nbsp;&nbsp;Total noninterest expense | 126 | 128 | 123 | (2) |  | 394 | 367 | 27 | 8 |
| Provision for credit losses |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Income before income taxes | 43 | 18 | 117 | 25 | 146 | 60 | 519 | (459) | (88) |
| Income tax expense (benefit) | 5 | (6) | 11 | 11 | 176 | (1) | 120 | (121) | (101) |
| Net income | $38 | $24 | $106 | $14 | 60% | $61 | $399 | $(338) | (85)% |
| PPNR <sup>(1)</sup> | $43 | $18 | $117 | $25 | 145% | $60 | $519 | $(459) | (88)% |
| **Select Period End Balances** |  |  |  |  |  |  |  |  |  |
| Deposits | 45723 | 45736 | 40692 | (13) |  | 45723 | 40692 | 5031 | 12 |

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<sup>(1)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*PPNR is a non-GAAP measure. Refer to the "Non-GAAP Financial Measurements" section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.*

Corporate net income increased $14 million compared to the linked quarter, mainly due to higher NII and noninterest income, as well as lower acquisition-related costs, partially offset by higher income tax expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $12 million increase in NII reflected higher interest income on investment securities and interest-earning deposits at banks, partially offset by higher interest expense on deposits, and lower loan PAA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $11 million increase in noninterest income was largely due to favorable changes in the fair value of marketable equity securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $10 million decrease in acquisition-related expenses is presented in Table 13 in the "Noninterest Expense" section of this MD&A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $11 million increase in income tax expense reflected higher income before income taxes.

Corporate deposits were $45.72 billion at September 30, 2025, a decrease of $13 million compared to $45.74 billion at June 30, 2025, as a modest increase in Direct Bank deposits was offset by a decline in other deposits. Total deposits in Corporate primarily include $45.15 billion of Direct Bank deposits, with the remaining balance consisting of brokered and other deposits.

Corporate net income for the current YTD decreased $338 million compared to the prior YTD, primarily reflecting lower NII and higher personnel cost, partially offset by lower all other noninterest expense, acquisition-related expenses and income tax expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $421 million decrease in NII was mainly due to the impacts of a lower average balance of interest-earning deposits at banks, a higher average balance of interest-bearing deposits, and lower loan PAA, partially offset by the impacts of a higher average balance of investment securities and a lower rate paid on interest-bearing deposits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $149 million increase in personnel cost was mainly due to annual merit increases and promotions, as well as net staff additions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $82 million decrease in all other noninterest expense was spread amongst various accounts, including allocated expenses. Refer to the "Noninterest Expense" discussion in the "Results of Operations" section of this MD&A for further information regarding trends in consolidated noninterest expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $40 million decrease in acquisition-related expenses is presented in Table 13 in the "Noninterest Expense" section of this MD&A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The $121 million decrease in income tax expense reflected lower income before income taxes.

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**BALANCE SHEET ANALYSIS**

The following discussion provides additional information about the major components of our balance sheet. Information regarding our ALLL is included in the "Risk Management—Credit Risk—ALLL Methodology" section of this MD&A and in Note 5—Allowance for Loan and Lease Losses. Information regarding our capital and regulatory capital is included in the "Capital" section of this MD&A.

**Interest-earning Assets**

Interest-earning assets include interest-earning deposits at banks, securities purchased under agreements to resell, investment securities, loans held for sale, and loans and leases, all of which reflect varying interest rates based on the risk level and repricing characteristics of the underlying asset. Higher-risk investments typically carry a higher interest rate, but could expose us to higher levels of market and/or credit risk. We strive to maintain a high level of interest-earning assets relative to total assets.

***Interest-earning Deposits at Banks***

Interest-earning deposits at banks are primarily comprised of interest-earning deposits at the FRB. Interest-earning deposits at banks as of September 30, 2025 totaled $24.80 billion, an increase of $3.43 billion or 16% from $21.36 billion at December 31, 2024. The increase from December 31, 2024 reflected deposit growth and net increases in debt, partially offset by the impacts of Class A common share repurchases, loan growth, and net purchases of investment securities.

***Securities Purchased Under Agreements to Resell***

Securities purchased under agreements to resell at September 30, 2025 totaled $83 million, a decrease of $75 million from $158 million at December 31, 2024.

***Investment Securities***

The primary objective of the investment portfolio is to generate incremental income by deploying excess funds into securities that have minimal liquidity risk and low to moderate interest rate risk and credit risk. Other objectives include acting as a stable source of liquidity, serving as a tool for asset and liability management and maintaining an interest rate risk profile compatible with our objectives. Additionally, purchases of equities and corporate bonds in other financial institutions have been made under a long-term earnings optimization strategy. Changes in the total balance of our investment securities portfolio result from trends in balance sheet funding and market performance. Generally, when inflows arising from deposit and treasury services products exceed loan and lease demand, we invest excess funds into the securities portfolio or into interest-earning deposits at banks. Conversely, when loan demand exceeds growth in deposits and short-term borrowings, we allow interest-earning deposits at banks to decline and use proceeds from maturing securities and prepayments to fund loan growth. Refer to Note 3—Investment Securities and "Funding, Liquidity and Capital Overview" in the "Executive Overview" section of this MD&A for additional disclosures regarding investment securities.

The carrying value of investment securities at September 30, 2025 totaled $45.12 billion, an increase of $1.03 billion or 2% from $44.09 billion at December 31, 2024. The increase from December 31, 2024 resulted from purchases of $7.87 billion, which were primarily U.S agency residential mortgage-backed and short-duration U.S. Treasury investment securities partially offset by maturities, sales, and payments of $7.60 billion, and non-cash items, such as fair value changes for investment securities available for sale and marketable equity securities, along with amortization and accretion.

Our portfolio of investment securities available for sale consists of mortgage-backed securities issued by government agencies and government sponsored entities, U.S. Treasury securities, corporate bonds, and municipal bonds. Investment securities available for sale are reported at fair value and unrealized gains and losses are included as a component of accumulated other comprehensive income ("AOCI"), net of deferred taxes. As of September 30, 2025, investment securities available for sale had a net pretax unrealized loss of $224 million, compared to $762 million as of December 31, 2024, primarily reflecting changes in interest rates and maturities. The fair value of investment securities is impacted by interest rates, credit spreads, market volatility and liquidity conditions. The fair value of the investment securities portfolio generally increases when interest rates decrease or when credit spreads tighten. Given the consistently strong credit rating of the U.S. Treasury, and the long history of no credit losses on debt securities issued by government agencies and government sponsored entities, no allowance for credit loss was required as of September 30, 2025. For corporate bonds, we analyzed the changes in interest rates relative to when the investment securities were purchased or acquired, and considered other factors including changes in credit ratings, delinquencies, and other macroeconomic factors. We determined no allowance for credit loss was required as of September 30, 2025.

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Our portfolio of investment securities held to maturity consists of similar mortgage-backed securities, U.S. Treasury securities and government agency securities described above, as well as securities issued by the Supranational Entities & Multilateral Development Banks and FDIC guaranteed certificates of deposit with other financial institutions. Given the consistently strong credit rating of the U.S. Treasury and the Supranational Entities & Multilateral Development Banks, and the long history of no credit losses on debt securities issued by government agencies and government sponsored entities, we determined that no allowance for credit loss was required for investment securities held to maturity at September 30, 2025.

The following table presents the investment securities portfolio, segregated by major category:

**Table 22 Investment Securities**

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **June 30, 2025** | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Amortized Cost** | **Fair Value** | **Composition** <sup>(1)</sup> | **Amortized Cost** | **Fair**<br>**Value** | **Composition** <sup>(1)</sup> | **Amortized Cost** | **Fair Value** | **Composition** <sup>(1)</sup> |
| **Investment securities available for sale:** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. Treasury | $13729 | $13781 | 31.4% | $12125 | $12170 | 29.0% | $13897 | $13903 | 32.7% |
| &nbsp;&nbsp;&nbsp;Government agency | 53 | 52 | 0.1 | 62 | 60 | 0.1 | 79 | 77 | 0.2 |
| &nbsp;&nbsp;&nbsp;Residential mortgage-backed securities | 17550 | 17435 | 39.7 | 17118 | 16924 | 40.3 | 16161 | 15620 | 36.7 |
| &nbsp;&nbsp;&nbsp;Commercial mortgage-backed securities | 3582 | 3428 | 7.8 | 3695 | 3536 | 8.4 | 3869 | 3666 | 8.6 |
| &nbsp;&nbsp;&nbsp;Corporate bonds | 256 | 250 | 0.6 | 364 | 353 | 0.8 | 489 | 467 | 1.1 |
| &nbsp;&nbsp;&nbsp;Municipal bonds | 17 | 17 |  | 17 | 17 |  | 17 | 17 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total investment securities available for sale | $35187 | $34963 | 79.6% | $33381 | $33060 | 78.6% | $34512 | $33750 | 79.3% |
| **Investment in marketable equity securities** | $78 | $110 | 0.3% | $78 | $97 | 0.2% | $79 | $101 | 0.2% |
| **Investment securities held to maturity:** |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. Treasury | $387 | $369 | 0.8% | $486 | $465 | 1.1% | $483 | $452 | 1.1% |
| &nbsp;&nbsp;&nbsp;Government agency | 1459 | 1395 | 3.2 | 1493 | 1415 | 3.4 | 1489 | 1374 | 3.2 |
| &nbsp;&nbsp;&nbsp;Residential mortgage-backed securities | 4568 | 4083 | 9.3 | 4548 | 4002 | 9.5 | 4558 | 3878 | 9.1 |
| &nbsp;&nbsp;&nbsp;Commercial mortgage-backed securities | 3358 | 2733 | 6.2 | 3359 | 2726 | 6.5 | 3407 | 2729 | 6.5 |
| &nbsp;&nbsp;&nbsp;Supranational securities | 277 | 256 | 0.6 | 302 | 279 | 0.7 | 300 | 267 | 0.6 |
| &nbsp;&nbsp;&nbsp;Other | 2 | 2 |  | 1 | 1 |  | 2 | 2 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total investment securities held to maturity | $10051 | $8838 | 20.1% | $10189 | $8888 | 21.2% | $10239 | $8702 | 20.5% |
| Total investment securities | $45316 | $43911 | 100.0% | $43648 | $42045 | 100.0% | $44830 | $42553 | 100.0% |
| <sup>(1)</sup> *Calculated as a percentage of the total fair value of investment securities.* | <sup>(1)</sup> *Calculated as a percentage of the total fair value of investment securities.* | <sup>(1)</sup> *Calculated as a percentage of the total fair value of investment securities.* | <sup>(1)</sup> *Calculated as a percentage of the total fair value of investment securities.* | <sup>(1)</sup> *Calculated as a percentage of the total fair value of investment securities.* | <sup>(1)</sup> *Calculated as a percentage of the total fair value of investment securities.* | <sup>(1)</sup> *Calculated as a percentage of the total fair value of investment securities.* | <sup>(1)</sup> *Calculated as a percentage of the total fair value of investment securities.* | <sup>(1)</sup> *Calculated as a percentage of the total fair value of investment securities.* | <sup>(1)</sup> *Calculated as a percentage of the total fair value of investment securities.* |

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The following table presents the weighted average yields for investment securities available for sale and held to maturity at September 30, 2025, segregated by major category with ranges of contractual maturities. The weighted average yields represent the yields of the underlying securities as of the specified date, September 30, 2025, within the specified maturity range. The weighted average yield on the portfolio was calculated using security-level annualized yields based on book yield to maturity and takes into account amortization of premiums and accretion of discounts. The total weighted average yields for investment securities available for sale and held to maturity are based on the underlying weighted average amortized cost.

**Table 23 Weighted Average Yield on Investment Securities**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** |
| | **Within One Year** | **One to Five Years** | **Five to 10 Years** | **After 10 Years** | **Total** |
| **Investment securities available for sale:** | | | | | |
| &nbsp;&nbsp;U.S. Treasury | 4.32% | 4.22% | —% | —% | 4.29% |
| &nbsp;&nbsp;Government agency |  | 3.97 |  |  | 3.97 |
| &nbsp;&nbsp;Residential mortgage-backed securities <sup>(1)</sup> |  | 4.25 | 4.38 | 4.11 | 4.19 |
| &nbsp;&nbsp;Commercial mortgage-backed securities <sup>(1)</sup> | 4.15 | 4.63 | 5.30 | 2.85 | 3.96 |
| &nbsp;&nbsp;Corporate bonds | 5.96 | 8.20 | 6.21 |  | 7.58 |
| &nbsp;&nbsp;Municipal bonds |  |  |  | 6.86 | 6.86 |
| Total investment securities available for sale | 4.31% | 4.44% | 4.43% | 4.00% | 4.23% |
| **Investment securities held to maturity:** |  |  |  |  |  |
| &nbsp;&nbsp;U.S. Treasury | —% | 1.43% | —% | —% | 1.43% |
| &nbsp;&nbsp;Government agency | 1.32 | 1.62 | 1.94 |  | 1.55 |
| &nbsp;&nbsp;Residential mortgage-backed securities <sup>(1)</sup> |  |  | 1.03 | 2.81 | 2.66 |
| &nbsp;&nbsp;Commercial mortgage-backed securities <sup>(1)</sup> |  | 1.84 | 4.65 | 2.49 | 2.49 |
| &nbsp;&nbsp;Supranational securities | 1.24 | 1.64 |  |  | 1.59 |
| &nbsp;&nbsp;Other | 3.55 |  |  |  | 3.55 |
| Total investment securities held to maturity | 1.32% | 1.58% | 1.40% | 2.67% | 2.37% |

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<sup>(1)</sup> *Residential mortgage-backed and commercial mortgage-backed securities, which are not due at a single maturity date, have been included in maturity groupings based on the contractual maturity at September 30, 2025. The expected life will differ from contractual maturities because borrowers have the right to prepay the underlying loans.*

***Assets Held for Sale***

Assets held for sale at September 30, 2025 were $112 million, an increase of $27 million or 32% from $85 million at December 31, 2024. The composition of assets held for sale is included in the following table:

**Table 24 Assets Held for Sale**

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | | | | **Increase (Decrease) from:** | **Increase (Decrease) from:** | **Increase (Decrease) from:** | **Increase (Decrease) from:** |
| *dollars in millions* | **September 30, 2025** | **June 30, 2025** | **December 31, 2024** | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
| Loans and leases: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Commercial <sup>(1)</sup> | $30 | $40 | $27 | $(10) | (25)% | $3 | 11% |
| &nbsp;&nbsp;&nbsp;Consumer | 80 | 83 | 55 | (3) | (4)% | 25 | 46% |
| Loans and leases | 110 | 123 | 82 | (13) | (11)% | 28 | 34% |
| Operating lease equipment | 2 | 2 | 3 |  | —% | (1) | (20)% |
| Total assets held for sale | $112 | $125 | $85 | $(13) | (11)% | $27 | 32% |

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<sup>(1)</sup> *There were no nonaccrual loans held for sale at September 30, 2025 and December 31, 2024, and $22 million as of June 30, 2025.* 

***Loans and Leases***

The loan and lease disclosures for 2024 periods presented in this Form 10-Q were recast to reflect the 2025 Loan Class Changes summarized in the "Recent Events" section of this MD&A and further discussed in Note 1—Significant Accounting Policies and Basis of Presentation.

Loans and leases at September 30, 2025 were $144.76 billion, an increase of $4.54 billion or 3% from $140.22 billion at December 31, 2024. Loan growth of $3.26 billion in the SVB Commercial segment was concentrated in Global Fund Banking, partially offset by a decline in Tech and Healthcare. Loan growth in the Commercial Bank segment of $943 million was mainly in our industry verticals, primarily TMT and Healthcare. Loan growth of $338 million in the General Bank segment was primarily in the Wealth portfolio.

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The unamortized discount related to acquired loans was $1.38 billion at September 30, 2025, a decrease of $215 million from $1.60 billion at December 31, 2024.

Refer to Note 4—Loans and Leases for further information.

The following table presents loans and leases by loan segment and loan class, and the respective proportion to total loans:

**Table 25 Loans and Leases**

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **September 30, 2025** | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** | **Balance Increase (Decrease) from:** | **Balance Increase (Decrease) from:** | **Balance Increase (Decrease) from:** | **Balance Increase (Decrease) from:** |
|  | **Balance** | **% to Total Loans** | **Balance** | **% to Total Loans** | **Balance** | **% to Total Loans** | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
| &nbsp;&nbsp;&nbsp;Commercial: |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial construction | $5926 | 4% | $5714 | 4% | $5109 | 4% | $212 | 4% | $817 | 16% |
| &nbsp;&nbsp;&nbsp;&nbsp;Owner occupied commercial mortgage | 17232 | 12 | 17053 | 12 | 16842 | 12 | 179 | 1 | 390 | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-owner occupied commercial mortgage | 15645 | 11 | 16100 | 11 | 16194 | 12 | (455) | (3) | (549) | (3) |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial and industrial | 41172 | 28 | 40658 | 30 | 40737 | 28 | 514 | 1 | 435 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Leases | 2066 | 1 | 2028 | 1 | 2014 | 1 | 38 | 2 | 52 | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Global fund banking | 31615 | 22 | 28677 | 20 | 27904 | 20 | 2938 | 10 | 3711 | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;Investor dependent | 2772 | 2 | 2777 | 2 | 3193 | 3 | (5) |  | (421) | (13) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total commercial | $116428 | 80% | $113007 | 80% | $111993 | 80% | $3421 | 3% | $4435 | 4% |
| &nbsp;&nbsp;&nbsp;Consumer: |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential mortgage | $23036 | 16% | $23059 | 16% | $23152 | 16% | $(23) | —% | $(116) | (1)% |
| &nbsp;&nbsp;&nbsp;&nbsp;Revolving mortgage | 2794 | 2 | 2736 | 2 | 2567 | 2 | 58 | 2 | 227 | 9 |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer auto | 1463 | 1 | 1490 | 1 | 1523 | 1 | (27) | (2) | (60) | (4) |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer other | 1037 | 1 | 977 | 1 | 986 | 1 | 60 | 6 | 51 | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total consumer | $28330 | 20% | $28262 | 20% | $28228 | 20% | $68 | —% | $102 | —% |
| Total loans and leases | $144758 | 100% | $141269 | 100% | $140221 | 100% | $3489 | 2% | $4537 | 3% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allowance for loan and lease losses | (1652) |  | (1672) |  | (1676) |  |  |  |  |  |
| **Net loans and leases** | $143106 |  | $139597 |  | $138545 |  |  |  |  |  |

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**Operating Lease Equipment, Net**

Our operating lease portfolio mostly relates to the Rail segment, with the remainder included in the Commercial Bank segment as summarized in the following table. Refer to the "Results by Segment" section of this MD&A for further details on the operating lease equipment portfolio in Rail.

**Table 26 Operating Lease Equipment, Net**

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* |  |  |  | **Increase (Decrease) from:** | **Increase (Decrease) from:** | **Increase (Decrease) from:** | **Increase (Decrease) from:** |
|  | **September 30, 2025** | **June 30, 2025** | **December 31, 2024** | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
| Railcars and locomotives | $8709 | $8716 | $8573 | $(7) | —% | $136 | 2% |
| Other equipment | 737 | 750 | 750 | (13) | (2) | (13) | (2) |
| Total <sup>(1)</sup> | $9446 | $9466 | $9323 | $(20) | —% | $123 | 1% |

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<sup>(1)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*Includes off-lease rail equipment of $223 million at September 30, 2025, $242 million at June 30, 2025, and $219 million at December 31, 2024.*

**Interest-bearing Liabilities**

Interest-bearing liabilities include interest-bearing deposits, securities sold under agreements to repurchase, and borrowings. Interest-bearing liabilities at September 30, 2025 totaled $159.11 billion, an increase of $5.47 billion or 4% from $153.65 billion at December 31, 2024. The increase from December 31, 2024 was mainly due to deposit growth, as well as the 2025 Debt Issuances, partially offset by the Linked Quarter Debt Redemption as further discussed below.

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***Deposits***

Total deposits at September 30, 2025 were $163.19 billion, an increase of $7.96 billion or 5% from $155.23 billion at December 31, 2024.

Deposit changes within our business segments compared to December 31, 2024 are discussed in the "Executive Overview—Funding, Liquidity and Capital Overview" section of this MD&A and changes from the linked quarter are discussed in the "Results by Segment" section of this MD&A.

The following table summarizes the types of deposits:

**Table 27 Deposits** 

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* |  |  |  | **Increase (Decrease) from:** | **Increase (Decrease) from:** | **Increase (Decrease) from:** | **Increase (Decrease) from:** |
|  | **September 30, 2025** | **June 30, 2025** | **December 31, 2024** | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
| Noninterest-bearing demand | $42752 | $40879 | $38633 | $1873 | 5% | $4119 | 11% |
| Checking with interest | 23731 | 23283 | 25343 | 448 | 2 | (1612) | (6) |
| Money market | 38718 | 37654 | 35722 | 1064 | 3 | 2996 | 8 |
| Savings | 46915 | 46877 | 42278 | 38 |  | 4637 | 11 |
| Time | 11074 | 11242 | 13253 | (168) | (2) | (2179) | (16) |
| Interest-bearing deposits | 120438 | 119056 | 116596 | 1382 | 1 | 3842 | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total deposits | $163190 | $159935 | $155229 | $3255 | 2% | $7961 | 5% |
| Noninterest-bearing deposits to total deposits | 26.2% | 25.6% | 24.9% |  |  |  |  |

---

We strive to maintain a strong liquidity position, and therefore, deposit retention remains a key business objective. We believe traditional bank deposit products remain an attractive option for many customers. As economic conditions change, we recognize that our liquidity position could be adversely affected if bank deposits are withdrawn. Our ability to fund future loan growth is significantly dependent on our success in retaining existing deposits and generating new deposits at a reasonable cost.

*Deposit Concentrations* 

BancShares operates a network of branches and offices, predominantly located in the Southeast, Mid-Atlantic, Midwest and Western United States, providing a broad range of financial services to individuals, businesses and professionals. Based on branch location, our top state deposit concentrations as of September 30, 2025 were in North Carolina, South Carolina, and California, which represented approximately 25.0%, 7.5%, and 7.0%, respectively, of total deposits.

The Direct Bank had $45.15 billion or 27.7% of our total deposits as of September 30, 2025. The Direct Bank deposits mainly consist of savings deposit accounts.

SVB Commercial segment deposits as of September 30, 2025 were $39.89 billion or 24.4% of total deposits and are primarily concentrated in online banking. Deposits in the SVB Commercial segment include large dollar accounts with private equity and venture capital clients, primarily in the technology, life science and healthcare industries.

Deposit accounts with balances in excess of $50 million totaled approximately $6.20 billion as of September 30, 2025, compared to approximately $8.01 billion as of December 31, 2024.

Brokered deposits, included in time deposits in the preceding table, are a source of deposit funding but remain an immaterial amount of total deposits at less than 1% as of September 30, 2025 and December 31, 2024.

*Uninsured Deposits*

The amount of uninsured deposits is estimated consistent with the methodologies and assumptions utilized in providing information to the FDIC and Federal Reserve. We estimate total uninsured deposits were $59.75 billion, which represented approximately 36.6% of total deposits at September 30, 2025, compared to $59.51 billion or 38.3% of total deposits at December 31, 2024.

Refer to the "Executive Overview—Funding, Liquidity and Capital Overview" and "Results by Segment" sections of this MD&A for further discussion of deposit composition, uninsured deposits, and recent deposit trends.

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The following table provides the expected maturity of time deposits with balances in excess of $250,000 as of September 30, 2025:

**Table 28 Maturities of Time Deposits In Excess of $250,000** 

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| | |
|:---|:---|
| *dollars in millions* | **September 30, 2025** |
| **Time deposits maturing in:** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Three months or less | $483 |
| &nbsp;&nbsp;&nbsp;&nbsp;Over three months through six months | 467 |
| &nbsp;&nbsp;&nbsp;&nbsp;Over six months through 12 months | 321 |
| &nbsp;&nbsp;&nbsp;&nbsp;More than 12 months | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $1285 |

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***Borrowings***

Total borrowings at September 30, 2025 were $38.68 billion, an increase of $1.62 billion or 4% from $37.05 billion at December 31, 2024. The increase from December 31, 2024 primarily related to the 2025 Debt Issuances (refer to the table below), partially offset by the Linked Quarter Debt Redemption.

The following table presents borrowings, net of the respective unamortized purchase accounting adjustments and issuance costs:

**Table 29 Borrowings**

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* |  |  |  | **Increase (Decrease) from:** | **Increase (Decrease) from:** | **Increase (Decrease) from:** | **Increase (Decrease) from:** |
|  | **September 30, 2025** | **June 30, 2025** | **December 31, 2024** | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
| Securities sold under agreements to repurchase | $423 | $471 | $367 | $(48) | (10)% | $56 | 15% |
| Federal Deposit Insurance Corporation |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;3.500% fixed rate note due March 2028 <sup>(1)</sup> | 35854 | 35841 | 35816 | 13 |  | 38 |  |
| Senior Unsecured Borrowings |  |  |  |  |  |  |  |
| &nbsp;&nbsp;5.231% fixed-to-floating rate notes due March 2031 <sup>(2)</sup> | 497 | 497 |  |  |  | 497 | 100 |
| &nbsp;&nbsp;&nbsp;&nbsp;6.000% fixed rate notes due April 2036 | 58 | 58 | 58 |  |  |  |  |
| Subordinated debt |  |  |  |  |  |  |  |
| &nbsp;&nbsp;6.125% fixed rate notes due March 2028 | 434 | 437 | 445 | (3) | (1) | (11) | (2) |
| &nbsp;&nbsp;3.375% fixed-to-floating rate notes due March 2030 <sup>(3)</sup> |  |  | 350 |  |  | (350) | (100) |
| &nbsp;&nbsp;5.600% fixed rate reset notes due September 5, 2035 <sup>(4)</sup> | 597 |  |  | 597 | 100 | 597 | 100 |
| &nbsp;&nbsp;6.254% fixed-to-fixed rate notes due March 2040 <sup>(5)</sup> | 745 | 745 |  |  |  | 745 | 100 |
| Capital lease obligations | 67 | 63 | 15 | 4 | 6 | 52 | 347 |
| Total borrowings | $38675 | $38112 | $37051 | $563 | 2% | $1624 | 4% |

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<sup>(1)</sup> *Issued in connection with the SVBB Acquisition and secured by collateral. Refer to Note 2—Business Combinations and Note 4—Loans and Leases. The unamortized discount related to this borrowing was $137 million, $150 million, and $176 million at September 30, 2025, June 30, 2025, and December 31, 2024, respectively.* 

<sup>(2)</sup> *The fixed rate period will end on March 12, 2030, and the notes will thereafter bear a floating interest rate equal to a benchmark rate based on the Compounded Secured Overnight Financing Rate ("SOFR") Index Rate plus 141 bps per annum until the maturity date (or date of earlier redemption).*

<sup>(3)</sup> *The fixed rate period ended on March 15, 2025, and the notes converted to a floating interest rate equal to Three-Month Term SOFR plus 246.5 bps per annum. The notes included a callable feature and were redeemed on June 15, 2025.*

<sup>(4)</sup> *The interest rate will reset on September 5, 2030, and the notes will thereafter bear a fixed interest rate equal to the Five-year U.S. Treasury Rate as of the day falling two business days prior to the notes reset date plus 185 bps per annum until the maturity date (or date of earlier redemption).*

<sup>(5)</sup> *The interest rate will reset on March 12, 2035, and the notes will thereafter bear a fixed interest rate equal to the Five-year U.S. Treasury Rate as of the day falling two business days prior to the notes reset date plus 197 bps per annum until the maturity date (or date of earlier redemption).*

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The following summarizes the 2025 Debt Issuances:

**Table 30 Parent Company Notes Issued**

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| | | |
|:---|:---|:---|
| **Issuance Date** | **Amount** | **Description** |
| September 5, 2025 | $600 Million | $600 million aggregate principal amount of subordinated fixed rate reset notes with a maturity date of September 5, 2035. Interest is payable semi-annually in arrears on March 5 and September 5 of each year, beginning on March 5, 2026, and ending on the maturity date (or date of earlier redemption), at a fixed rate of 5.6000% per annum. The interest rate will reset on September 5, 2030 and the notes will thereafter bear a fixed interest rate equal to the Five-year U.S. Treasury Rate as of the day falling two business days prior to the notes reset date plus 185 bps per annum until the maturity date (or date of earlier redemption). |
| March 12, 2025 | $500 Million | $500 million aggregate principal amount of senior fixed-to-floating rate notes with a maturity date of March 12, 2031. Interest is payable semi-annually in arrears on March 12 and September 12 of each year, beginning on September 12, 2025, and ending on March 12, 2030 (or date of earlier redemption), at a fixed rate of 5.231% per annum. The fixed rate period will end on March 12, 2030, and the notes will thereafter bear a floating interest rate equal to a benchmark rate based on the Compounded SOFR plus 141 bps per annum until the maturity date (or date of earlier redemption). During the floating rate period, interest on the notes will be payable quarterly in arrears on June 12, 2030, September 12, 2030, December 12, 2030, and on the maturity date (or date of earlier redemption). |
| March 12, 2025 | $750 Million | $750 million aggregate principal amount of subordinated fixed-to-fixed rate notes with a maturity date of March 12, 2040. Interest is payable semi-annually in arrears on March 12 and September 12 of each year and on the maturity date (or date of earlier redemption), commencing on September 12, 2025, at a fixed rate of 6.254% per annum. The interest rate will reset on March 12, 2035, and the notes will thereafter bear a fixed interest rate equal to the Five-year U.S. Treasury Rate as of the day falling two business days prior to the notes reset date plus 197 bps per annum until the maturity date (or date of earlier redemption). |

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We continually monitor our capital needs and market conditions in an effort to diversify our borrowing base and capital mix when appropriate. Additionally, we continue to monitor the status of the notice of proposed rulemaking ("NPR") issued by the federal banking agencies discussing, among other items, the proposed requirement to maintain a certain level of long-term debt that would be available to absorb losses in the event of failure as further discussed in the "Regulatory Considerations" section in Item 1. Business of the 2024 Form 10-K.

Refer to the "Liquidity Risk" section of this MD&A and Note 9—Borrowings for further information regarding liquidity and borrowings.

**Other Assets and Liabilities&nbsp;&nbsp;&nbsp;&nbsp;**

The following table includes the components of other assets:

**Table 31 Other Assets**

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* |  |  |  | **Increase (Decrease) from:** | **Increase (Decrease) from:** | **Increase (Decrease) from:** | **Increase (Decrease) from:** |
|  | **September 30, 2025** | **June 30, 2025** | **December 31, 2024** | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
| Affordable housing tax credit and other unconsolidated investments <sup>(1)</sup> | $2831 | $2592 | $2516 | $239 | 9% | $315 | 13% |
| Accrued interest receivable | 945 | 902 | 902 | 43 | 5 | 43 | 5 |
| Fair value of derivative financial instruments | 570 | 626 | 660 | (56) | (9) | (90) | (14) |
| Pension and other retirement plan assets | 670 | 671 | 658 | (1) |  | 12 | 2 |
| Right of use assets for operating leases, net | 305 | 318 | 316 | (13) | (4) | (11) | (4) |
| Income tax receivable | 494 | 500 | 505 | (6) | (1) | (11) | (2) |
| Counterparty receivables | 142 | 164 | 69 | (22) | (14) | 73 | 105 |
| Bank-owned life insurance | 108 | 107 | 106 | 1 | 1 | 2 | 2 |
| Nonmarketable equity securities | 160 | 140 | 127 | 20 | 14 | 33 | 26 |
| Other real estate owned | 95 | 97 | 56 | (2) | (2) | 39 | 71 |
| Mortgage servicing rights | 30 | 29 | 27 | 1 | 5 | 3 | 12 |
| Federal Home Loan Bank stock | 20 | 19 | 20 | 1 | 4 |  |  |
| Other | 738 | 899 | 778 | (161) | (18) | (40) | (5) |
| Total other assets | $7108 | $7064 | $6740 | $44 | 1% | $368 | 6% |

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<sup>(1)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*Refer to Note 8—Variable Interest Entities for additional information.*

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The following table includes the components of other liabilities:

**Table 32 Other Liabilities**

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* |  |  |  | **Increase (Decrease) from:** | **Increase (Decrease) from:** | **Increase (Decrease) from:** | **Increase (Decrease) from:** |
|  | **September 30, 2025** | **June 30, 2025** | **December 31, 2024** | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
| Deferred taxes | $3580 | $3560 | $3534 | $20 | 1% | $46 | 1% |
| Commitments to fund tax credit investments | 1295 | 1163 | 1214 | 132 | 11 | 81 | 7 |
| Accrued personnel cost <sup>(1)</sup> | 825 | 697 | 1024 | 128 | 18 | (199) | (19) |
| Fair value of derivative financial instruments | 520 | 631 | 625 | (111) | (18) | (105) | (17) |
| Lease liabilities | 341 | 356 | 357 | (15) | (4) | (16) | (4) |
| Reserve for off-balance sheet credit exposure | 265 | 288 | 278 | (23) | (8) | (13) | (5) |
| Accrued interest payable | 105 | 120 | 134 | (15) | (13) | (29) | (22) |
| Accounts payable and other | 1380 | 1418 | 1030 | (38) | (3) | 350 | 34 |
| Total other liabilities | $8311 | $8233 | $8196 | $78 | 1% | $115 | 1% |

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<sup>(1)</sup> *Includes accruals for annual incentive compensation which is typically paid during the first quarter. Additionally, accrued personnel cost can fluctuate based on timing of the payroll cycle.* 

 

A reserve for off-balance sheet credit exposure is established for unfunded commitments and is included in other liabilities. BancShares estimates the expected funding amounts and applies its probability of obligor default ("PD") and loss given default ("LGD") models to those expected funding amounts to estimate the reserve. The reserve for off-balance sheet credit exposure was $265 million at September 30, 2025, a decrease of $13 million compared to $278 million at December 31, 2024 and of $23 million compared to $288 million at June 30, 2025. Refer to the "Provision for Credit Losses" section of this MD&A for further discussion. Refer to Note 18—Commitments and Contingencies for information relating to off-balance sheet commitments.

**RISK MANAGEMENT**

Risk is inherent in any business. BancShares has defined a moderate risk appetite and a balanced approach to risk taking with a philosophy that does not preclude higher risk business activities commensurate with acceptable returns while meeting regulatory objectives. Through the comprehensive Risk Management Framework and Risk Appetite Framework and Statement, senior management has primary responsibility for day-to-day management of the risks we face with accountability of and support from all associates. Senior management applies various strategies to reduce the risks to which BancShares may be exposed, with effective challenge by independent risk management and oversight by management committees. The Board strives to ensure that risk management is a part of our business culture and that our policies and procedures to identify, assess, respond, and monitor risk are part of the decision-making process. The Board's role in risk oversight is an integral part of our overall Risk Management Framework and Risk Appetite Framework. The Board administers its risk oversight function primarily through its Risk Committee.

The Risk Committee structure is designed to allow for information flow, effective challenge and timely escalation of risk-related issues. The Risk Committee monitors adherence to our Risk Management Framework and Risk Appetite Framework and Statement and provides quarterly updates to the Board on risk management. Our Chief Risk Officer also provides regular reports to the Risk Committee and the Board. Management and independent risk functions make regular reports to the Risk Committee on key risk areas, including credit, market, capital, liquidity, operational, compliance, strategic, and reputational risks. The Risk Committee also reviews reports of examination by and communications from regulatory agencies, the results of internal and third-party testing and qualitative and quantitative assessments related to risk management, and any other matters within the scope of the Risk Committee's oversight responsibilities. The Risk Committee monitors management's response to certain risk-related regulatory and audit issues. In addition, the Risk Committee may coordinate with the Audit Committee, Technology Committee and the Compensation, Nominations and Governance Committee for the review of financial statements and related risks, technology and cybersecurity risk, compensation risk management, and other areas of responsibility.

In combination with other risk management and monitoring practices, enterprise-wide stress testing activities are conducted within a defined framework. Stress tests are performed for various risks to ensure the financial institution can support continued operations during stressed periods.

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BancShares monitors and stress tests its capital and liquidity consistent with the safety and soundness expectations of the federal regulators. Refer to the "Regulatory Considerations" section of Item 1. Business included in the 2024 Form 10-K for further discussion.

BancShares has been assessing the emerging impacts of recent and potential U.S. and international tariffs and other retaliatory actions and has continued monitoring the international tensions that could impact the economy and exacerbate headwinds of elevated market volatility, global supply chain disruptions, and recessionary pressures. BancShares also continues to assess operational risks such as those associated with potential cyberattacks for FCB and third parties upon whom it relies. Assessments have not identified material impacts to date, but those assessments will remain ongoing as the conditions continue to exist and develop. BancShares is also assessing the potential risk of an economic slowdown or recession that could create increased credit and market risk having downstream impacts on earnings, capital, and/or liquidity. While economic data continues to be mixed, baseline economic forecasts reflect a decline in commercial real estate ("CRE") property values due to current interest rate levels that impacted the ALLL forecasts. Key indicators will continue to be monitored, and impacts assessed as part of our ongoing risk management framework.

**Credit Risk**

Credit risk is the risk of not collecting payments pursuant to the contractual terms of loans, leases and certain investment securities. Loans and leases we originate are underwritten in accordance with our credit policies and procedures and are subject to periodic ongoing reviews. Acquired loans, regardless of whether purchased credit deteriorated ("PCD") or Non-PCD, are recorded at fair value as of the acquisition date and are subject to periodic reviews to identify any further credit deterioration. Our independent credit review function conducts risk reviews and analyses of both originated and acquired loans to ensure compliance with credit policies and to monitor asset quality trends and borrower financial strength. These reviews include portfolio analysis by geographic location, industry, collateral type, and product. We strive to identify potential problem loans as early as possible, to record charge-offs as appropriate and to maintain an appropriate ALLL that accounts for expected losses over the life of the loan and lease portfolios.

*Commercial Lending and Leasing*

BancShares employs a credit ratings system where each commercial loan is assigned a PD, LGD, and/or overall credit rating using scorecards developed to rate each type of transaction incorporating assessments of both quantitative and qualitative factors. When commercial loans and leases are graded during underwriting, or when updated periodically thereafter, a model is run to generate a preliminary risk rating. These models incorporate both internal and external historical default and loss data, as well as other borrower and loan characteristics, to assign a risk rating. The preliminary risk rating assigned by the model can be adjusted as a result of borrower specific facts and circumstances that, in management's judgment, warrant a modification of the modeled risk rating to arrive at the final approved risk ratings.

*Consumer Lending*

Consumer lending begins with an evaluation of a consumer borrower's credit profile against published standards. Credit decisions are made after analyzing quantitative and qualitative factors to assess the borrower's ability to repay the loan, and secondary sources of repayment, such as collateral value.

Consumer products use traditional and measurable standards to document and assess the creditworthiness of a loan applicant. Credit standards follow industry standard documentation requirements. Performance is largely evaluated based on an acceptable pay history along with a quarterly assessment which incorporates current market conditions. Loans may also be monitored during quarterly reviews of the borrower's refreshed credit score. When warranted, an additional review of the loan-to-value of the underlying collateral may be conducted.

***ALLL Methodology***

Our ALLL methodology is discussed further in the 2024 Form 10-K, in the section entitled "Critical Accounting Estimates" of the MD&A and Note 1—Significant Accounting Policies and Basis of Presentation.

The loan and ALLL disclosures for the 2024 periods presented in this Form 10-Q were recast to reflect the 2025 Loan Class Changes summarized in the "Recent Events" section of this MD&A and further discussed in Note 1—Significant Accounting Policies and Basis of Presentation.

Our ALLL estimate as of September 30, 2025 included extensive reviews of the changes in credit risk associated with the uncertainties around macroeconomic forecasts. These loss estimates consider industry risk and the actual net losses incurred during prior periods of economic stress as well as recent credit trends.

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*Macroeconomic Forecasts Utilized in the Estimate of the ALLL*

While management utilizes its best judgment and information available, the ultimate adequacy of our ALLL is dependent upon a variety of factors beyond our control which are inherently difficult to predict, the most significant being the macroeconomic scenario forecasts that determine the economic variables, including the U.S. unemployment rate, U.S. real gross domestic product ("GDP"), home price index ("HPI"), and CRE price index utilized in the ALLL models. These economic variables are based on macroeconomic scenario forecasts with a forecast horizon that covers the reasonable and supportable period. Due to the inherent uncertainty in the macroeconomic forecasts, BancShares utilizes baseline, upside, and downside macroeconomic scenarios and weights the scenarios based on review of variable forecasts for each scenario and comparison to expectations.

The potential impacts of new trade, tariff and other economic policies in the United States were more prevalently reflected in the baseline macroeconomic scenario, which resulted in a modest shift in our weighting from the downside to baseline economic scenario in the linked quarter. The scenario weighting in the current quarter was unchanged from the linked quarter.

At September 30, 2025, ALLL estimates ranged from approximately $1.41 billion, when weighing the upside scenario 100%, to approximately $2.07 billion when weighting the downside scenario 100%. BancShares management determined that an ALLL of $1.65 billion was appropriate as of September 30, 2025.

The following table presents the U.S. unemployment rate, U.S. real GDP, HPI, and CRE price index based on the weighted-average scenario forecasts used in determining the ALLL at September 30, 2025 and December 31, 2024. The projected trends in the macroeconomic variables below may fluctuate depending on the underlying scenarios and our scenario weighting assumptions utilized for the applicable period.

**Table 33 Select Variables in ALLL Weighted-average Scenarios**

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| | | | |
|:---|:---|:---|:---|
| | **Assumptions as of September 30, 2025** | **Assumptions as of September 30, 2025** | **Assumptions as of September 30, 2025** |
| | **2025** | **2026** | **2027** |
| U.S. unemployment rate <sup>(1)</sup> | 4.5% | 5.4% | 5.4% |
| U.S. real GDP <sup>(2)</sup> | 1.3% | 1.0% | 1.6% |
| HPI <sup>(2)</sup> | 0.7% | (1.7)% | 2.6% |
| CRE price index <sup>(2)</sup> | (1.0)% | (3.5)% | (0.6)% |
|  | **Assumptions as of December 31, 2024** | **Assumptions as of December 31, 2024** | **Assumptions as of December 31, 2024** |
|  | **2025** | **2026** | **2027** |
| U.S. unemployment rate <sup>(1)</sup> | 5.0% | 5.1% | 4.7% |
| U.S. real GDP <sup>(2)</sup> | 1.4% | 1.7% | 2.3% |
| HPI <sup>(2)</sup> | (1.3)% | 2.0% | 2.8% |
| CRE price index <sup>(2)</sup> | (3.6)% | 0.4% | 8.8% |

---

<sup>(1)</sup> Represents the projected quarterly average U.S. unemployment rate for the years ending December 31, 2025, 2026 and 2027.

<sup>(2)</sup> Represents the projected year-over-year percent changes.

*Qualitative Component of the ALLL*

ALLL model outputs may be adjusted through a qualitative assessment to reflect trends that may not be adequately reflected within the models, which could include economic conditions, uncertainty in macroeconomic forecasts, credit quality, risk to specific industry concentrations, and any significant policy and underwriting changes. These qualitative adjustments are also used to accommodate for the imprecision of certain assumptions and uncertainties inherent in the model calculations.

------

***ALLL and Net Charge-offs***

The ALLL and net charge-offs are summarized below.

**Table 34 ALLL for Loans and Leases**

---

| | | | |
|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** |
|  | **Commercial** | **Consumer** | **Total** |
| **Balance at beginning of period** | $1512 | $160 | $1672 |
| Provision (benefit) for loan and lease losses | 238 | (24) | 214 |
| Charge-offs | (244) | (12) | (256) |
| Recoveries | 18 | 4 | 22 |
| **Balance at end of period** | $1524 | $128 | $1652 |
| Net charge-off ratio |  |  | 0.65% |
| Net charge-offs | $226 | $8 | $234 |
| Average loans |  |  | $142857 |
| Percent of loans in each category to total loans | 80% | 20% | 100% |
|  | **Three Months Ended June 30, 2025** | **Three Months Ended June 30, 2025** | **Three Months Ended June 30, 2025** |
|  | **Commercial** | **Consumer** | **Total** |
| **Balance at beginning of period** | $1517 | $163 | $1680 |
| Provision for loan and lease losses | 111 |  | 111 |
| Charge-offs | (137) | (7) | (144) |
| Recoveries | 21 | 4 | 25 |
| **Balance at end of period** | $1512 | $160 | $1672 |
| Net charge-off ratio |  |  | 0.33% |
| Net charge-offs | $116 | $3 | $119 |
| Average loans |  |  | $141791 |
| Percent of loans in each category to total loans | 80% | 20% | 100% |
|  | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** |
|  | **Commercial** | **Consumer** | **Total** |
| **Balance at beginning of period** | $1547 | $153 | $1700 |
| Provision for loan and lease losses | 123 |  | 123 |
| Charge-offs | (169) | (8) | (177) |
| Recoveries | 27 | 5 | 32 |
| **Balance at end of period** | $1528 | $150 | $1678 |
| Net charge-off ratio |  |  | 0.42% |
| Net charge-offs | $142 | $3 | $145 |
| Average loans |  |  | $139014 |
| Percent of loans in each category to total loans | 79% | 21% | 100% |

---

The ALLL at September 30, 2025 was $1.65 billion, representing a decrease of $20 million compared to June 30, 2025. The decrease was driven by improvements in the economic outlook and other changes, including the elimination of reserves related to Hurricane Helene, partially offset by higher specific reserves for individually evaluated loans, and growth in global fund banking loans which have a lower loss rate relative to our other portfolios.

Net charge-offs for the current quarter were $234 million, an increase of $115 million from $119 million for the linked quarter. The increase was mainly due to an $82 million charge-off on a single supply chain finance client in the Commercial Bank segment.

------

**Table 35 ALLL for Loans and Leases**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** |
|  | **Commercial** | **Consumer** | **Total** | **Commercial** | **Consumer** | **Total** |
| **Balance at beginning of period** | $1518 | $158 | $1676 | $1581 | $166 | $1747 |
| Provision (benefit) for loan and lease losses | 487 | (14) | 473 | 316 | (5) | 311 |
| Charge-offs | (540) | (27) | (567) | (443) | (21) | (464) |
| Recoveries | 59 | 11 | 70 | 74 | 10 | 84 |
| **Balance at end of period** | $1524 | $128 | $1652 | $1528 | $150 | $1678 |
| Net charge-off ratio |  |  | 0.47% |  |  | 0.37% |
| Net charge-offs | $481 | $16 | $497 | $369 | $11 | $380 |
| Average loans |  |  | $141818 |  |  | $136723 |
| Percent of loans in each category to total loans | 80% | 20% | 100% | 79% | 21% | 100% |

---

The ALLL at September 30, 2025 was $1.65 billion, representing a decrease of $24 million from December 31, 2024, mainly due to the changes discussed above, and a modest shift in our weighting from the downside to baseline economic scenario in the linked quarter as further discussed in the "ALLL Methodology" section of this MD&A, partially offset by the impact of loan growth.

Net charge-offs for the current YTD were $497 million, an increase of $117 million from $380 million for the prior YTD. The higher net charge-offs within commercial loans were mainly due to the commercial and industrial loan class, which included the previously discussed charge-off on a single supply chain finance client, partially offset by lower net charge-offs in the investor dependent loan class.

**Table 36 ALLL Ratios**

---

| | | | |
|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **June 30, 2025** | **December 31, 2024** |
| &nbsp;&nbsp;&nbsp;ALLL | $1652 | $1672 | $1676 |
| &nbsp;&nbsp;&nbsp;Total loans and leases | $144758 | $141269 | $140221 |
| &nbsp;&nbsp;ALLL to total loans and leases | 1.14% | 1.18% | 1.20% |
| Commercial loans and leases: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;ALLL - commercial | $1524 | $1512 | $1518 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial loans and leases | $116428 | $113007 | $111993 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial ALLL to commercial loans and leases | 1.31% | 1.34% | 1.35% |
| Consumer loans: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;ALLL - consumer | $128 | $160 | $158 |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer loans | $28330 | $28262 | $28228 |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer ALLL to consumer loans | 0.45% | 0.56% | 0.56% |

---

The ALLL as a percentage of total loans and leases at September 30, 2025 was 1.14%, compared to 1.18% at June 30, 2025 and 1.20% at December 31, 2024. The trends in the ALLL are discussed above.

------

**Table 37 ALLL by Loan Class**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **September 30, 2025** | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
|  | **ALLL** | **ALLL as a Percentage of Loans** | **ALLL** | **ALLL as a Percentage of Loans** | **ALLL** | **ALLL as a Percentage of Loans** |
| **Commercial** |  |  |  |  |  |  |
| &nbsp;&nbsp;Commercial construction | $75 | 1.27% | $67 | 1.17% | $53 | 1.03% |
| &nbsp;&nbsp;Owner occupied commercial mortgage | 52 | 0.30 | 53 | 0.31 | 51 | 0.30 |
| &nbsp;&nbsp;Non-owner occupied commercial mortgage | 333 | 2.13 | 318 | 1.98 | 340 | 2.10 |
| &nbsp;&nbsp;Commercial and industrial | 768 | 1.87 | 781 | 1.92 | 768 | 1.88 |
| &nbsp;&nbsp;Leases | 34 | 1.65 | 36 | 1.75 | 36 | 1.80 |
| &nbsp;&nbsp;Global fund banking | 61 | 0.19 | 80 | 0.28 | 75 | 0.27 |
| &nbsp;&nbsp;Investor dependent | 201 | 7.24 | 177 | 6.37 | 195 | 6.10 |
| &nbsp;&nbsp;&nbsp;Total commercial | 1524 | 1.31 | 1512 | 1.34 | 1518 | 1.35 |
| **Consumer** |  |  |  |  |  |  |
| &nbsp;&nbsp;Residential mortgage | 69 | 0.30 | 89 | 0.39 | 85 | 0.37 |
| &nbsp;&nbsp;Revolving mortgage | 22 | 0.78 | 19 | 0.70 | 21 | 0.83 |
| &nbsp;&nbsp;Consumer auto | 10 | 0.66 | 9 | 0.63 | 5 | 0.35 |
| &nbsp;&nbsp;Consumer other | 27 | 2.54 | 43 | 4.32 | 47 | 4.75 |
| &nbsp;&nbsp;&nbsp;Total consumer | 128 | 0.45 | 160 | 0.56 | 158 | 0.56 |
| **Total ALLL** | $1652 | 1.14% | $1672 | 1.18% | $1676 | 1.20% |

---

The ALLL may vary significantly from period to period due to changes in economic conditions, economic forecasts and the composition and credit quality of the loan and lease portfolio, and the related impacts on the ALLL models. We continuously monitor and update our ALLL estimation methodology, as appropriate. During the current quarter, we updated our PD, LGD, and exposure at default methodology for the global fund banking, investor dependent, residential mortgage, and consumer other portfolios, which contributed to the changes in the ALLL compared to the linked quarter for those portfolios.

***Credit Metrics***

*Nonperforming Assets*

Nonperforming assets include nonaccrual loans and leases, other real estate owned ("OREO") and repossessed assets. Accounting policies related to nonperforming assets are discussed in Note 1—Significant Accounting Policies and Basis of Presentation in the 2024 Form 10-K.

**Table 38 Non-Performing Assets**

---

| | | | |
|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **June 30, 2025** | **December 31, 2024** |
| Nonaccrual loans: |  |  |  |
| &nbsp;&nbsp;&nbsp;Commercial loans | $1194 | $1107 | $1003 |
| &nbsp;&nbsp;&nbsp;Consumer loans | 212 | 212 | 181 |
| Total nonaccrual loans | 1406 | 1319 | 1184 |
| Other real estate owned and repossessed assets | 98 | 103 | 64 |
| Total nonperforming assets | $1504 | $1422 | $1248 |
| Past due loans: |  |  |  |
| &nbsp;&nbsp;Commercial loans | $699 | $515 | $495 |
| &nbsp;&nbsp;Consumer loans | 198 | 213 | 256 |
| Total past due loans | $897 | $728 | $751 |
| Total loans, leases, other real estate owned, and repossessed assets | $144856 | $141372 | $140285 |
| ALLL to total loans and leases | 1.14% | 1.18% | 1.20% |
| Ratio of total nonperforming assets to total loans, leases, other real estate owned and repossessed assets | 1.04 | 1.01 | 0.89 |
| Ratio of nonaccrual loans and leases to total loans and leases | 0.97 | 0.93 | 0.84 |
| Ratio of ALLL to nonaccrual loans and leases | 117.41 | 126.75 | 141.58 |

---

Nonaccrual loans and leases at September 30, 2025 were $1.41 billion, representing increases of $222 million and $87 million compared to December 31, 2024 and June 30, 2025, respectively, mainly due to a small number of larger balance individually evaluated commercial loans.

------

OREO and repossessed assets were $98 million at September 30, 2025 compared to $64 million at December 31, 2024 and $103 million at June 30, 2025. The increase of $34 million compared to December 31, 2024 mainly reflects additional foreclosed CRE properties.

*Delinquencies*

Accruing loans 30 days or more past due were 0.62% of total loans at September 30, 2025, compared to 0.54% at December 31, 2024, and 0.52% at June 30, 2025. Delinquency status by loan class is presented in Note 4—Loans and Leases.

*CRE Portfolio*

Our CRE portfolio is diversified across various property types. The following table provides an overview of the property type exposures within our CRE portfolio:

**Table 39 Commercial Real Estate Portfolio** <sup>(1)</sup>

---

| | | | | |
|:---|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **September 30, 2025** | **June 30, 2025** | **June 30, 2025** |
|  | **Balance** | **% to Total<br>Loans and Leases** | **Balance** | **% to Total<br>Loans and Leases** |
| Multi-Family | $5116 | 3.53% | $5151 | 3.65% |
| Medical Office | 3872 | 2.67 | 3829 | 2.71 |
| Industrial/Warehouse | 3568 | 2.47 | 3697 | 2.62 |
| General Office | 2123 | 1.47 | 2218 | 1.57 |
| Retail | 1764 | 1.22 | 1714 | 1.21 |
| Healthcare | 1186 | 0.82 | 1330 | 0.94 |
| Hotel/Motel | 867 | 0.60 | 867 | 0.61 |
| Other | 4907 | 3.39 | 4733 | 3.35 |
| Total | $23404 | 16.17% | $23539 | 16.66% |

---

<sup>(1)</sup> *The definition of CRE in this table is aligned with the Federal Reserve and FDIC guidance on CRE and includes the following: construction loans, loans where the primary repayment is from third party rental income, and loans not secured by real estate but for the purpose of real estate. This table excludes the owner occupied commercial mortgage loan class.*

Evolving macroeconomic and social conditions (including the shift to more hybrid work arrangements) may result in changes for General Office demand moving forward. Our General Office portfolio has experienced more negative credit quality trends relative to our other CRE portfolios. Select metrics for our General Office portfolio are summarized in the following table:

**Table 40 Select General Office Loan Metrics**

---

| | | | |
|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **June 30, 2025** | **December 31, 2024** |
| % of total loans and leases | 1.47% | 1.57% | 1.77% |
| % of CRE loans | 9.07% | 9.42% | 10.81% |
| Average loan balance | $2 | $2 | $2 |
| Net charge-offs (YTD annualized %) | 4.06% | 4.09% | 3.95% |
| Delinquencies as a % of General Office loans | 9.09% | 6.59% | 10.92% |
| Non-performing loans as a % of General Office loans | 11.27% | 9.03% | 12.10% |
| ALLL ratio | 4.80% | 4.59% | 4.59% |

---

*Loans to Nondepository Financial Institutions ("NDFIs")*

As of September 30, 2025, loans to NDFIs were approximately $33.59 billion, comprised of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Approximately $31.25 billion of loans to NDFIs was included in global fund banking loans, mainly consisting of capital call lines of approximately $28.64 billion, the repayment of which is dependent on the payment of capital calls by the underlying limited partner investors in funds managed by certain private equity and venture capital firms. The credit quality is strong for capital call lines based on the structural protection provided by the funds and the underlying investors. Global fund banking loans have a lower loss rate relative to our other loan portfolios. As of September 30, 2025, the ALLL was 0.19% of global fund banking loans, compared to 1.14% of total loans.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Substantially all of the $2.34 billion remainder of loans to NDFIs was included in commercial and industrial loans. As of September 30, 2025, the ALLL was 1.87% of commercial and industrial loans, compared to 1.14% of total loans.

------

***Concentration Risk***

We strive to minimize the risks associated with large concentrations within specific geographic areas, collateral types or industries. Despite our focus on diversification, several characteristics of our loan portfolio subject us to risk, such as our concentrations of real estate secured loans, revolving mortgage loans and healthcare-related loans. Additionally, commercial loans may be concentrated in loans with large balances and loans in certain industries and customer groups, including private equity and venture capital.

Loan concentration data regarding our commercial and consumer loan portfolios is summarized below.

*Commercial Loan Concentrations*

Current quarter changes to loan classes are discussed above under "Recent Events—2025 Loan Class Changes" and in Note 1—Significant Accounting Policies and Basis of Presentation. Concentration disclosures for the linked quarter and at December 31, 2024 included in this Form 10-Q were recast to reflect the 2025 Loan Class Changes.

<u>Geographic Concentrations</u> 

The following table summarizes state concentrations of 5.0% or greater of our loans. Data is based on obligor location.

**Table 41 Commercial Loans and Leases - Geography**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **September 30, 2025** | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
| State |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;California | $25718 | 22.1% | $25874 | 22.9% | $24491 | 21.9% |
| &nbsp;&nbsp;&nbsp;New York | 11796 | 10.1 | 10470 | 9.3 | 10202 | 9.1 |
| &nbsp;&nbsp;&nbsp;North Carolina | 10986 | 9.4 | 11051 | 9.8 | 10985 | 9.8 |
| &nbsp;&nbsp;&nbsp;Texas | 8659 | 7.4 | 8620 | 7.6 | 8459 | 7.6 |
| &nbsp;&nbsp;&nbsp;Massachusetts | 7788 | 6.7 | 7880 | 7.0 | 7259 | 6.5 |
| &nbsp;&nbsp;&nbsp;Florida | 5911 | 5.1 | 5629 | 5.0 | 5845 | 5.2 |
| &nbsp;&nbsp;&nbsp;All other states | 42685 | 36.7 | 40519 | 35.8 | 42217 | 37.6 |
| Total U.S. | $113543 | 97.5% | $110043 | 97.4% | $109458 | 97.7% |
| Total International | 2885 | 2.5 | 2964 | 2.6 | 2535 | 2.3 |
| Total | $116428 | 100.0% | $113007 | 100.0% | $111993 | 100.0% |

---

<u>Industry Concentrations</u>

The following table represents loans by industry of obligor:

**Table 42 Commercial Loans and Leases - Industry**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **September 30, 2025** | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
| Finance and Insurance | $34662 | 29.8% | $31902 | 28.3% | $31162 | 27.8% |
| Real Estate | 18173 | 15.6 | 18348 | 16.2 | 17898 | 16.0 |
| Healthcare | 11041 | 9.5 | 11083 | 9.8 | 11053 | 9.9 |
| Information | 9641 | 8.3 | 9490 | 8.4 | 9569 | 8.5 |
| Business Services | 9383 | 8.1 | 9217 | 8.2 | 9089 | 8.1 |
| Transportation, Communication, Gas, Utilities | 7682 | 6.6 | 7909 | 7.0 | 8175 | 7.3 |
| Manufacturing | 7138 | 6.1 | 6998 | 6.2 | 7160 | 6.4 |
| Retail | 4461 | 3.8 | 4120 | 3.6 | 4141 | 3.7 |
| Service Industries | 4231 | 3.6 | 4192 | 3.7 | 4124 | 3.7 |
| Wholesale | 3592 | 3.1 | 3481 | 3.1 | 3437 | 3.1 |
| Other | 6424 | 5.5 | 6267 | 5.5 | 6185 | 5.5 |
| Total | $116428 | 100.0% | $113007 | 100.0% | $111993 | 100.0% |

---

------

The following table provides a summary of commercial loans by size and class. The breakout below is based on total client balances (individually or in the aggregate) as of September 30, 2025:

**Table 43 Commercial Loans by Size and Class**

---

| | | | | |
|:---|:---|:---|:---|:---|
| *dollars in millions* | **Less Than $10 Million** | **$10 to < $30 Million** | **> $30 Million** | **Total Commercial Loans** |
| Commercial construction | $1221 | $1683 | $3022 | $5926 |
| Owner occupied commercial mortgage | 14596 | 2037 | 599 | 17232 |
| Non-owner occupied commercial mortgage | 6399 | 4923 | 4323 | 15645 |
| Commercial and industrial | 14983 | 12430 | 13759 | 41172 |
| Leases | 1633 | 281 | 152 | 2066 |
| Global fund banking | 1455 | 2976 | 27184 | 31615 |
| Investor dependent | 1721 | 775 | 276 | 2772 |
| Total | $42008 | $25105 | $49315 | $116428 |

---

*Consumer Loan Concentrations*

Loan concentrations may exist when multiple borrowers could be similarly impacted by economic or other conditions. The following table summarizes state concentrations greater than 5.0% of consumer loans based on customer address:

**Table 44 Consumer Loans - Geography**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **September 30, 2025** | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
| State |  |  |  |  |  |  |
| &nbsp;&nbsp;California | $8324 | 29.4% | $8335 | 29.5% | $8655 | 30.7% |
| &nbsp;&nbsp;North Carolina | 7164 | 25.3 | 7067 | 25.0 | 6923 | 24.5 |
| &nbsp;&nbsp;South Carolina | 3708 | 13.1 | 3660 | 12.9 | 3607 | 12.8 |
| &nbsp;&nbsp;Massachusetts | 1621 | 5.7 | 1644 | 5.8 | 1692 | 6.0 |
| &nbsp;&nbsp;Other states | 7513 | 26.5 | 7556 | 26.8 | 7351 | 26.0 |
| Total | $28330 | 100.0% | $28262 | 100.0% | $28228 | 100.0% |

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**Market Risk**

***Interest rate risk management*** 

BancShares is exposed to the risk that changes in market conditions may affect interest rates and negatively impact earnings. The risk arises from the nature of BancShares' business activities, the composition of BancShares' balance sheet, and changes in the level or shape of the yield curve. BancShares manages this inherent risk strategically based on prescribed guidelines and approved limits.

Interest rate risk can arise from many of BancShares' business activities, such as lending, leasing, investing, deposit taking, derivatives, and funding activities. We evaluate and monitor interest rate risk primarily through two metrics.

• *Net Interest Income Sensitivity* ("NII Sensitivity") measures the net impact of hypothetical changes in interest rates on forecasted NII; and

• *Economic Value of Equity* ("EVE") *Sensitivity* ("EVE Sensitivity") measures the net impact of these hypothetical changes on the value of equity by assessing the economic value of assets, liabilities and off-balance sheet instruments.

BancShares uses a holistic process to measure and monitor both short term and long term risks, which includes, but is not limited to, gradual and immediate parallel rate shocks, changes in the shape of the yield curve, and changes in the relationship of various yield curves. NII Sensitivity generally focuses on shorter term earnings risk, while EVE Sensitivity assesses the longer-term risk of the existing balance sheet.

Our exposure to NII Sensitivity is guided by the Risk Appetite Framework and Statement and a range of risk metrics, and BancShares may utilize tools across the balance sheet to adjust its interest rate risk exposures, including through business line actions and actions within the investment, funding and derivative portfolios.

------

The composition of our interest rate sensitive assets and liabilities generally results in a net asset-sensitive position for NII Sensitivity, whereby our assets will reprice faster than our liabilities. A component of our interest rate risk management strategy is the use of derivative instruments to manage fluctuations in earnings caused by changes in market interest rates. Interest rate swaps are the primary type of derivative instrument that we use as part of our interest rate risk management strategy. These derivatives hedge interest income variability of floating rate loans indexed to SOFR, as well as fair value changes of fixed rate time deposits and long-term debt. Refer to Note 10—Derivative Financial Instruments for further information on our derivative portfolio.

Our funding sources consist primarily of deposits, and we also support our funding needs through wholesale funding sources (including unsecured and secured borrowings).

The deposit rates we offer are influenced by market conditions and competitive factors. Market rates are the key factors of deposit costs, and we continue to optimize deposit costs by improving our deposit mix. Changes in interest rates, expected funding needs, as well as actions by competitors, can affect our deposit taking activities and deposit pricing. We believe our targeted non-maturity deposit customer retention is strong and we remain focused on optimizing our mix of deposits. We regularly assess the effect of deposit rate changes on our balances and seek to achieve optimal alignment between assets and liabilities.

The following table summarizes the results of 12-month NII Sensitivity simulations produced by our asset/liability management system. These simulations assume static balance sheet replacement with like products and implied forward market rates, and also incorporate additional internal models and assumptions, which we may update periodically, including rate dependent prepayment for certain loans and securities and repricing of interest-bearing non-maturity deposits. The below simulations assume an immediate 100 and 200 bps parallel increase and decrease from current interest rates.

**Table 45 Net Interest Income Sensitivity Simulation Analysis** 

---

| | | | |
|:---|:---|:---|:---|
| | **Estimated (Decrease) Increase in NII** | **Estimated (Decrease) Increase in NII** | **Estimated (Decrease) Increase in NII** |
|<br>**Change in interest rate (bps)** | **September 30, 2025** | **June 30, 2025** | **December 31, 2024** |
| -200 | (13.2)% | (12.4)% | (10.6)% |
| -100 | (6.9) | (6.6) | (6.1) |
| +100 | 8.1 | 7.8 | 6.9 |
| +200 | 16.0 | 15.2 | 11.1 |

---

NII Sensitivity metrics at September 30, 2025, compared to December 31, 2024, were primarily affected by cash increase from deposit growth, debt issuances and investment runoff, as well as impacts from changes in forward rate curve expectations.

As of September 30, 2025, BancShares continues to have an asset sensitive interest rate risk profile and the potential exposure to forecasted earnings was largely due to the composition of the balance sheet (primarily due to floating rate commercial loans and cash), as well as estimates of modest future deposit betas. Approximately 64% of our loans have floating contractual reference rates, indexed primarily to SOFR and the U.S. prime rate. Deposit betas are currently modeled to have a portfolio average of approximately 30%-40% over the twelve-month forecast horizon, including 45%-55% for interest-bearing non-maturity deposits. Deposit beta is the portion of a change in the federal funds rate that is passed on to the deposit rate. Actual deposit betas may be different than modeled, depending on various factors, including liquidity requirements, deposit mix and competitive pressures. Impacts to NII Sensitivity may change due to actual results differing from modeled expectations.

As noted above, EVE Sensitivity supplements NII simulations as it estimates risk exposures beyond a twelve-month horizon. EVE Sensitivity measures the change in the EVE due to changes in assets, liabilities, and off-balance sheet instruments in response to a change in interest rates. EVE Sensitivity was calculated by estimating the change in the net present value of assets, liabilities, and off-balance sheet items under various rate movements, including utilizing a dynamic rate level dependent modeling approach for our deposit attrition assumption. In addition to interest rate changes, other key assumptions used in our EVE Sensitivity simulations include asset prepayments, as well as balance attrition and pricing of non-maturity deposits.

------

The below simulations assume an immediate 100 and 200 bps parallel increase and decrease from current interest rates and the estimated impact on our EVE profile based on our current modeling approach:

**Table 46 Economic Value of Equity Modeling Analysis**

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| | | | |
|:---|:---|:---|:---|
| | **Estimated Increase (Decrease) in EVE** | **Estimated Increase (Decrease) in EVE** | **Estimated Increase (Decrease) in EVE** |
|<br>**Change in interest rate (bps)** | **September 30, 2025** | **June 30, 2025** | **December 31, 2024** |
| -200 | 5.6% | 2.0% | 5.4% |
| -100 | 3.7 | 2.0 | 3.1 |
| +100 | (3.7) | (2.2) | (3.2) |
| +200 | (6.5) | (4.0) | (7.0) |

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In addition to the above reported sensitivities, a wide variety of potential interest rate scenarios are simulated within our asset/liability management system. Scenarios that impact balance sheet composition or the sensitivity to key assumptions are also evaluated.

We use results of our various interest rate risk analyses to formulate and implement asset and liability management strategies, in coordination with the Asset and Liability Committee, to achieve the desired risk profile, while managing our objectives for market risk and other strategic objectives. Specifically, we may manage our interest rate risk position through certain pricing strategies and product design for loans and deposits, our investment portfolio, funding portfolio, or by using derivatives to mitigate earnings volatility.

The above sensitivities provide an estimate of our interest rate sensitivity; however, they do not account for potential changes in credit quality, size, mix, or changes in the competition for business in the industries we serve. They also do not account for other business developments and other actions. Accordingly, we can give no assurance that actual results would not differ materially from the estimated outcomes of our simulations.

***Loan Maturity and Loan Interest Rate Sensitivity***

The following table provides loan maturity distribution information:

**Table 47 Loan Maturity Distribution**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **At September 30 2025, Maturing** | **At September 30 2025, Maturing** | **At September 30 2025, Maturing** | **At September 30 2025, Maturing** | **At September 30 2025, Maturing** |
|  | **Within<br>One Year** | **One to Five<br>Years** | **Five to 15<br>Years** | **After 15 Years** | **Total** |
| **Commercial** |  |  |  |  |  |
| &nbsp;&nbsp;Commercial construction | $1394 | $3759 | $730 | $43 | $5926 |
| &nbsp;&nbsp;Owner occupied commercial mortgage | 1831 | 8484 | 6477 | 440 | 17232 |
| &nbsp;&nbsp;Non-owner occupied commercial mortgage | 3223 | 9750 | 1892 | 780 | 15645 |
| &nbsp;&nbsp;Commercial and industrial | 11106 | 24283 | 4781 | 1002 | 41172 |
| &nbsp;&nbsp;Leases | 641 | 1349 | 76 |  | 2066 |
| &nbsp;&nbsp;Global fund banking | 29044 | 2148 | 423 |  | 31615 |
| &nbsp;&nbsp;Investor dependent | 1164 | 1608 |  |  | 2772 |
| &nbsp;&nbsp;&nbsp;Total commercial | 48403 | 51381 | 14379 | 2265 | 116428 |
| **Consumer** |  |  |  |  |  |
| &nbsp;&nbsp;Residential mortgage | 687 | 2865 | 7736 | 11748 | 23036 |
| &nbsp;&nbsp;Revolving mortgage | 51 | 187 | 1049 | 1507 | 2794 |
| &nbsp;&nbsp;Consumer auto | 330 | 984 | 149 |  | 1463 |
| &nbsp;&nbsp;Consumer other | 323 | 565 | 144 | 5 | 1037 |
| &nbsp;&nbsp;&nbsp;Total consumer | 1391 | 4601 | 9078 | 13260 | 28330 |
| **Total loans and leases** | $49794 | $55982 | $23457 | $15525 | $144758 |

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As noted above, approximately 64% of our total loans have floating contractual reference rates, indexed primarily to SOFR and the U.S. prime rate. The following table provides information regarding fixed and variable interest rate loans and leases maturing one year or after, as of September 30, 2025:

**Table 48 Fixed and Variable Interest Rate Loans**

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| | | |
|:---|:---|:---|
| *dollars in millions* | **Loans Maturing One Year or After with** | **Loans Maturing One Year or After with** |
|  | **Fixed Interest Rates** | **Variable Interest Rates** |
| **Commercial** |  |  |
| &nbsp;&nbsp;Commercial construction | $1403 | $3129 |
| &nbsp;&nbsp;Owner occupied commercial mortgage | 13484 | 1917 |
| &nbsp;&nbsp;Non-owner occupied commercial mortgage | 6198 | 6224 |
| &nbsp;&nbsp;Commercial and industrial | 9925 | 20141 |
| &nbsp;&nbsp;Leases | 1419 | 6 |
| &nbsp;&nbsp;Global fund banking | 1 | 2570 |
| &nbsp;&nbsp;Investor dependent | 5 | 1603 |
| &nbsp;&nbsp;&nbsp;Total commercial | 32435 | 35590 |
| **Consumer** |  |  |
| &nbsp;&nbsp;Residential mortgage | 8584 | 13765 |
| &nbsp;&nbsp;Revolving mortgage | 29 | 2714 |
| &nbsp;&nbsp;Consumer auto | 1133 |  |
| &nbsp;&nbsp;Consumer other | 253 | 461 |
| &nbsp;&nbsp;&nbsp;Total consumer | 9999 | 16940 |
| **Total loans and leases** | $42434 | $52530 |

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**Liquidity Risk**

Our liquidity risk management and monitoring process is designed to ensure the availability of adequate cash and collateral resources and funding capacity to meet our obligations. Our overall liquidity management strategy is intended to ensure appropriate liquidity to meet expected and contingent funding needs under both normal and stressed environments. Consistent with this strategy, we maintain sufficient amounts of available cash and HQLS. Additional sources of liquidity include committed credit facilities, repurchase agreements, brokered certificates of deposit issuances, unsecured debt issuances, and cash collections generated by portfolio asset sales to third parties.

We utilize measurement tools to assess and monitor the level and adequacy of our liquidity position, liquidity conditions and trends. We measure and forecast liquidity and liquidity risks under different hypothetical scenarios and across different horizons. We use a liquidity stress testing framework to better understand the range of potential risks and their impacts to which BancShares is exposed. Stress test results inform our business strategy, risk appetite, levels of liquid assets, and contingency funding plans. Also included among our liquidity measurement tools are key risk indicators that assist in identifying potential liquidity risk and stress events.

BancShares maintains a framework to establish liquidity risk tolerances, monitoring, and breach escalation protocol to alert management of potential funding and liquidity risks and to initiate mitigating actions as appropriate. Further, BancShares maintains a contingent funding plan, which details protocols and potential actions to be taken under liquidity stress conditions.

Liquidity includes available cash and HQLS. At September 30, 2025 we had $61.92 billion of high-quality liquid assets (26.5% of total assets) and $31.35 billion of contingent liquidity sources available. Some of the more significant changes from December 31, 2024 included higher available cash level, due in part from deposit growth, maturing investment securities, and funds received in connection with the 2025 Debt Issuances. Also, we increased our borrowing capacity under agreements with the FRB through expansion of the eligible loan population to targeted loans historically not pledged to the FRB. As noted below, the draw period under the Advance Facility Agreement with the FDIC ended March 27, 2025, as of which date, FCB had no outstanding amounts under the facility.

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**Table 49 Liquidity**

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| | | | |
|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **June 30, 2025** | **December 31, 2024** |
| Available cash | $23917 | $25332 | $20545 |
| High-quality liquid securities <sup>(1)</sup> | 38007 | 38284 | 38794 |
| High-quality liquid assets | $61924 | $63616 | $59339 |
| Current Capacity <sup>(2)</sup> of Credit Facilities: |  |  |  |
| &nbsp;&nbsp;FHLB facility <sup>(3)</sup> | $18022 | $17852 | $16423 |
| &nbsp;&nbsp;FRB facility | 13328 | 10561 | 5475 |
| &nbsp;&nbsp;FDIC facility <sup>(4)</sup> |  |  | 5291 |
| &nbsp;&nbsp;Line of credit |  | 100 | 100 |
| Total contingent sources | $31350 | $28513 | $27289 |
| Total liquid assets and contingent sources | $93274 | $92129 | $86628 |
| Total uninsured deposits | $59746 | $57805 | $59510 |
| Coverage ratio of total liquid assets and contingent sources to uninsured deposits | 156% | 159% | 146% |

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<sup>(1)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*Consists of readily marketable, unpledged securities, as well as securities pledged but not drawn against at the FHLB and available for sale, and generally is comprised of U.S. Treasury and U.S. agency investment securities held outright or via reverse repurchase agreements.*

<sup>(2)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*Current capacity is based on the amount of collateral pledged and available for use at September 30, 2025, June 30, 2025 and December 31, 2024.*

<sup>(3)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*Refer to Table 50 for additional details.*

<sup>(4)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*The Advance Facility Agreement with the FDIC was obtained in connection with SVBB Acquisition and the draw period ended on March 27, 2025.*

We fund our operations through deposits and borrowings. Our primary source of liquidity is derived from our various deposit channels, including our Branch Network and Direct Bank. Total deposits at September 30, 2025 were $163.19 billion, an increase of $7.96 billion or 5% from $155.23 billion at December 31, 2024.

We use borrowings to diversify the funding of our business operations. In addition to the Purchase Money Note and FHLB advances, borrowings also include senior unsecured notes, securities sold under customer repurchase agreements, and subordinated notes. Total borrowings at September 30, 2025 were $38.68 billion, an increase of $1.62 billion or 4% from $37.05 billion at December 31, 2024. The increase is primarily due to the 2025 Debt Issuances with aggregate principal amounts totaling $1.85 billion and partially offset by the Linked Quarter Debt Redemption with aggregate principal amounts totaling $350 million, as detailed in the "Interest-bearing Liabilities—Borrowings" section of this MD&A. We continually monitor our capital needs and market conditions in an effort to diversify our borrowing base and capital mix when appropriate.

***FHLB Capacity***

A source of available funds is advances from the FHLB of Atlanta. We may pledge assets for secured borrowing transactions, which include borrowings from the FHLB and/or FRB, or for other purposes as required or permitted by law. The debt issued in conjunction with these transactions is collateralized by certain discrete receivables, securities, loans, leases and/or underlying equipment. Certain related cash balances are restricted.

**Table 50 FHLB Balances**

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| | | | |
|:---|:---|:---|:---|
| *dollars in millions* | **September 30, 2025** | **June 30, 2025** | **December 31, 2024** |
| Total borrowing capacity | $19472 | $18552 | $17873 |
| Less: |  |  |  |
| &nbsp;&nbsp;&nbsp;Advances |  |  |  |
| &nbsp;&nbsp;Letters of credit <sup>(1)</sup> | 1450 | 700 | 1450 |
| Available capacity | $18022 | $17852 | $16423 |
| Pledged Non-PCD loans | $31945 | $30835 | $30421 |

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<sup>(1)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*Letters of credit were established with the FHLB to collateralize public funds. One of the letters of credit expired during the linked quarter and was replaced during the current quarter.*

***FRB Capacity***

Under borrowing arrangements with the FRB, FCB has access to $13.33 billion on a secured basis. We pledged additional loan collateral and increased our borrowing capacity under agreements with the FRB. Loans pledged are disclosed in Note 4—Loans and Leases. There were no outstanding borrowings with the FRB Discount Window at September 30, 2025, June 30, 2025 and December 31, 2024.

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***FDIC Credit Facility***

FCB and the FDIC entered into the Advance Facility Agreement, dated as of March 27, 2023, and effective as of November 20, 2023, providing total advances available through March 27, 2025 of up to $70 billion solely to provide liquidity to offset deposit withdrawal or runoff of former SVBB deposit accounts and to fund the unfunded commercial lending commitments acquired in the SVBB Acquisition. There were no amounts outstanding at the end of the draw period on March 27, 2025.

Refer to Note 2—Business Combinations for further discussion.

***Contractual Obligations and Commitments***

The following table includes significant contractual obligations and commitments as of September 30, 2025, representing required and potential cash outflows, including impacts from purchase accounting adjustments and deferred fees. Refer to Note 18—Commitments and Contingencies for additional information regarding commitments. Financing commitments, letters of credit and deferred purchase commitments are presented at contractual amounts and do not necessarily reflect future cash outflows, as many are expected to expire unused or partially used.

**Table 51 Contractual Obligations and Commitments**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** |
|  | **Less than 1 year** | **1-3 years** | **4-5 years** | **Thereafter** | **Total** |
| Contractual obligations: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Time deposits | $10820 | $204 | $50 | $— | $11074 |
| &nbsp;&nbsp;&nbsp;Short-term borrowings | 423 |  |  |  | 423 |
| &nbsp;&nbsp;Long-term borrowings <sup>(1) (2)</sup> | (40) | 36325 | (2) | 1969 | 38252 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total contractual obligations | $11203 | $36529 | $48 | $1969 | $49749 |
| Commitments: |  |  |  |  |  |
| &nbsp;&nbsp;Financing commitments | $25857 | $5798 | $9050 | $11230 | $51935 |
| &nbsp;&nbsp;Letters of credit | 1840 | 335 | 266 | 195 | 2636 |
| &nbsp;&nbsp;&nbsp;Deferred purchase agreements | 1870 |  |  |  | 1870 |
| &nbsp;&nbsp;&nbsp;Purchase and funding commitments | 232 |  |  |  | 232 |
| &nbsp;&nbsp;Affordable housing partnerships <sup>(1)</sup> | 565 | 624 | 55 | 51 | 1295 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total commitments | $30364 | $6757 | $9371 | $11476 | $57968 |

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<sup>(1)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*Long-term borrowings are presented net of purchase accounting adjustments of $97 million. On-balance sheet commitments for affordable housing partnerships are included in other liabilities and presented net of a purchase accounting adjustment of $17 million.*

<sup>(2)&nbsp;&nbsp;&nbsp;&nbsp;</sup>*Balance in parenthesis represents the estimated amortization of the purchase accounting adjustment and deferred costs in excess of any principal balance.*

*Long-term Borrowings*

As displayed above in Table 51, we do not have any significant long-term debt obligations due until the Purchase Money Note matures. While scheduled principal payments are not required until maturity in March 2028, FCB may voluntarily prepay principal without a premium or penalty. We will continue to monitor the interest rate environment and assess whether any voluntary prepayments are prudent considering the fixed rate of 3.50%. Potential sources that could fund voluntary prepayments or the amount due at maturity include excess liquidity (primarily comprised of interest-earning deposits at banks and proceeds from maturities and paydowns of investment securities), FHLB advances, deposit growth, and issuance of unsecured debt or other borrowings. At the time of voluntary prepayment or maturity, the interest rates for the potential interest-bearing sources of repayment could be higher than the 3.50% rate.

Refer to the respective "Deposits" and "Borrowings" discussions in the "Interest-bearing Liabilities" section of this MD&A for further details. The Purchase Money Note is discussed further in Note 2—Business Combinations.

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**Counterparty Risk**

We enter into interest rate and foreign exchange derivatives as part of our overall risk management practices and also on behalf of our clients. We establish risk metrics and evaluate and manage the counterparty risk associated with these derivative instruments in accordance with the comprehensive Risk Management Framework and Risk Appetite Framework and Statement.

Counterparty credit exposure or counterparty risk is a primary risk of derivative instruments, relating to the ability of a counterparty to perform its financial obligations under the derivative contract. We seek to control credit risk of derivative agreements through counterparty credit approvals, pre-established exposure limits and monitoring procedures, which are integrated with our cash and issuer related credit processes.

Derivative agreements for BancShares' risk management purposes and for the hedging of client transactions are primarily executed with investment grade financial institutions, with others cleared through certain central party clearing houses. Credit exposure is mitigated via the exchange of collateral between the counterparties covering mark-to-market valuations. Client related derivative transactions, which are primarily related to lending activities, are incorporated into our loan underwriting and reporting processes.

**Asset Risk**

Asset risk is a form of price risk that is a primary risk of our leasing businesses. This relates to the risk to earning capital arising from changes in the value of owned leasing equipment. Asset risk in our leasing business is evaluated and managed in the divisions and overseen by risk management processes. In our asset-based lending business, we also use residual value guarantees to mitigate or partially mitigate exposure to end of lease residual value exposure on certain of our finance leases. Our business process consists of: (1) setting residual values at transaction inception, (2) systematic periodic residual value reviews, and (3) monitoring levels of residual realizations. Residual realizations, by business and product, are reviewed as part of the quarterly financial and asset quality review. Reviews for impairment are performed at least annually.

In combination with other risk management and monitoring practices, asset risk is monitored through reviews of the equipment markets, including utilization rates and traffic flows; the evaluation of supply and demand dynamics; the impact of new technologies; and changes in regulatory requirements on different types of equipment. At a high level, demand for equipment is correlated with GDP growth trends for the markets the equipment serves, as well as the more immediate conditions of those markets. Cyclicality in the economy and shifts in trade flows due to specific events represent risks to the earnings that can be realized by these businesses. In the Rail segment, BancShares seeks to mitigate these risks by maintaining a relatively young fleet of assets, which can bolster attractive lease and utilization rates.

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**CAPITAL**

Capital requirements applicable to BancShares are discussed in the "Regulatory Considerations" section in Item 1. Business of the 2024 Form 10-K, including a discussion of an NPR issued on July 27, 2023 by the federal banking agencies regarding enhanced capital requirements. We will continue to monitor the status of the NPR.

BancShares' total consolidated assets are between $100 billion and $250 billion, and, as such, BancShares is required to comply with certain enhanced prudential standards applicable to Category IV banking organizations, subject to the applicable transition periods. Additionally, an NPR released by federal banking agencies on August 29, 2023, could change the long-term debt requirements for banks with total consolidated assets of $100 billion or more. If this NPR is finalized as proposed, we expect we would need to issue additional long-term debt to satisfy the requirements. For further discussion, refer to the section entitled "Regulatory Considerations—Enhanced Prudential Standards—Proposed Long-Term Debt & Clean Holding Company Requirements" in Item 1. Business of the 2024 Form 10-K.

BancShares maintains a comprehensive capital adequacy process. BancShares establishes internal capital risk limits and warning thresholds, which utilize Risk-Based and Leverage-Based Capital calculations, internal and external early warning indicators, its capital planning process, and stress testing to evaluate BancShares' capital adequacy for multiple types of risk in both normal and stressed environments. The capital management framework requires contingency plans be defined and may be employed at management's discretion.

*Common and Preferred Stock Dividends*

During the first three quarters of 2025, we paid quarterly dividends of $1.95 per share on the Class A common stock and Class B common stock. In October 2025, the Board declared a quarterly dividend on the Class A common stock and Class B common stock of $2.10 per common share. The dividends are payable on December 15, 2025 to stockholders of record as of November 28, 2025.

During the first three quarters of 2025, we paid quarterly dividends on our Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock as disclosed in Note 12—Stockholders' Equity. In October 2025, the Board declared dividends on our Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock in accordance with their terms. The dividends are payable on December 15, 2025.

*Capital Composition and Ratios*

As discussed earlier in the "Recent Events" section of this MD&A, the Board authorized the 2024 SRP and the new 2025 SRP that permitted repurchases upon completion of the 2024 SRP. During the current quarter and current YTD, we repurchased 457,350 and 1,098,992 shares, respectively. Repurchases under the 2025 SRP commenced in September 2025 upon the completion of the 2024 SRP in August 2025. Refer to the "Recent Events" section above for more information and *Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds* for our monthly repurchase activity during the current quarter.

The following table details the change in outstanding Class A common stock through September 30, 2025. Refer to Note 12—Stockholders' Equity for additional information.

**Table 52 Changes in Shares of Class A Common Stock Outstanding**

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| | | |
|:---|:---|:---|
| | **Three Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** |
| Class A common stock shares outstanding at beginning of period | 12070794 | 12712436 |
| Shares repurchased under authorized repurchase plan | (457350) | (1098992) |
| Class A common stock shares outstanding at end of period | 11613444 | 11613444 |

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We also had 1,005,185 Class B common stock outstanding at September 30, 2025 and December 31, 2024.

We are committed to effectively managing our capital to protect our depositors, creditors and stockholders. We continually monitor the capital levels and ratios for BancShares and FCB to ensure they exceed the minimum requirements imposed by regulatory authorities and to ensure they are appropriate given growth projections, risk profile and potential changes in the regulatory or external environment. Failure to meet certain capital requirements may result in actions by regulatory agencies that could have a material impact on our operations or consolidated financial statements.

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In accordance with GAAP, the unrealized gains and losses on certain assets and liabilities, net of deferred taxes, are included in accumulated other comprehensive loss within stockholders' equity. These amounts are excluded from the calculation of our regulatory capital ratios under current regulatory guidelines.

**Table 53 Analysis of Capital Adequacy**

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Basel III Requirements** | **PCA Well Capitalized Thresholds** | **September 30, 2025** | **September 30, 2025** | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Basel III Requirements** | **PCA Well Capitalized Thresholds** | **Amount** | **Ratio** | **Amount** | **Ratio** | **Amount** | **Ratio** | **Adjusted Ratio** <sup>(1)</sup> |
| **BancShares** |  |  |  |  |  |  |  |  |  |
| Risk-based capital ratios |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total risk-based capital | 10.50% | 10.00% | $24901 | 14.05% | $24713 | 14.25% | $24610 | 15.04% | 14.27% |
| &nbsp;&nbsp;&nbsp;&nbsp;Tier 1 risk-based capital | 8.50 | 8.00 | 21524 | 12.15 | 21896 | 12.63 | 22137 | 13.53 | 12.84 |
| &nbsp;&nbsp;&nbsp;&nbsp;Common equity Tier 1 | 7.00 | 6.50 | 20643 | 11.65 | 21015 | 12.12 | 21256 | 12.99 | 12.33 |
| Tier 1 leverage ratio | 4.00 | 5.00 | 21524 | 9.34 | 21896 | 9.62 | 22137 | 9.90 | n/a <sup>(2)</sup> |
| **FCB** |  |  |  |  |  |  |  |  |  |
| Risk-based capital ratios |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total risk-based capital | 10.50% | 10.00% | $23912 | 13.51% | $24361 | 14.06% | $23975 | 14.66% | 13.91% |
| &nbsp;&nbsp;&nbsp;&nbsp;Tier 1 risk-based capital | 8.50 | 8.00 | 21876 | 12.36 | 22289 | 12.87 | 21852 | 13.37 | 12.68 |
| &nbsp;&nbsp;&nbsp;&nbsp;Common equity Tier 1 | 7.00 | 6.50 | 21876 | 12.36 | 22289 | 12.87 | 21852 | 13.37 | 12.68 |
| Tier 1 leverage ratio | 4.00 | 5.00 | 21876 | 9.51 | 22289 | 9.81 | 21852 | 9.78 | n/a <sup>(2)</sup> |

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<sup>(1)</sup> *Adjusted capital ratios exclude the impact of the FDIC Shared-Loss Agreement and are considered non-GAAP measures. Refer to the "Non-GAAP Financial Measurements" section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.*

<sup>(2)</sup> *The adjusted tier 1 leverage ratio is not applicable because the FDIC Shared-Loss Agreement did not impact the tier 1 leverage ratio.*

As of September 30, 2025, BancShares and FCB had risk-based capital ratio conservation buffers of 6.05% and 5.51%, respectively, which are in excess of the Basel III conservation buffer of 2.50%. As of December 31, 2024, BancShares and FCB's risk-based capital ratio conservation buffers were 7.04% and 6.66%, respectively. The capital ratio conservation buffers represent the excess of the regulatory capital ratios as of September 30, 2025 and December 31, 2024 over the Basel III minimum for the applicable ratio. Additional Tier 1 capital for BancShares includes perpetual preferred stock.

Additional Tier 2 capital for BancShares and FCB primarily consists of qualifying ALLL and qualifying subordinated debt.

*Dividend Restrictions*

Dividends paid from FCB to the Parent Company are the primary source of funds available to the Parent Company for payment of dividends to its stockholders. The Board of Directors of FCB may approve distributions, including dividends, as it deems appropriate, subject to the requirements of the FDIC and the General Statutes of North Carolina, provided that the distributions do not reduce the regulatory capital ratios below the applicable requirements. FCB could have paid additional dividends to the Parent Company in the amount of $6.21 billion while continuing to meet the requirements for well capitalized banks at September 30, 2025. Dividends declared by FCB and paid to the Parent Company amounted to $1.68 billion for the nine months ended September 30, 2025. Payment of dividends is made at the discretion of FCB's Board of Directors and may be contingent upon satisfactory earnings as well as projected capital needs.

*Termination of the Shared-Loss Agreement with the FDIC*

The risk-based capital ratios of FCB and BancShares for periods in which the Shared-Loss Agreement (as defined in Note 2—Business Combinations) was effective were calculated using favorable risk-weighted assets ("RWA") assumptions permissible for Covered Assets (as defined in Note 2—Business Combinations in our 2024 Form 10-K). FCB and the FDIC entered into the Shared-Loss Termination Agreement on April 7, 2025 (the "Shared-Loss Termination Date") as further discussed in the "Recent Events" section of this MD&A. FCB and BancShares are not permitted after the Shared-Loss Termination Date to apply the favorable RWA assumptions to assets that were previously Covered Assets under the Shared-Loss Agreement. The table above includes risk-based capital ratios as of December 31, 2024, both including and excluding the impact of the Shared-Loss Agreement to illustrate the approximated decreases in the risk-based capital ratios as a result of entering into the Shared-Loss Termination Agreement. Refer to the "Non-GAAP Financial Measurements" section of this MD&A for further discussion.

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**CRITICAL ACCOUNTING ESTIMATES** 

The accounting and reporting policies of BancShares are described in Note 1—Significant Accounting Policies and Basis of Presentation in the 2024 Form 10-K.

The ALLL is considered a critical accounting estimate. For more information regarding the ALLL, refer to the "Credit Risk— ALLL Methodology" section of this MD&A and Note 5—Allowance for Loan and Lease Losses.

**RECENT ACCOUNTING PRONOUNCEMENTS**

The following Accounting Standards Updates ("ASUs") were issued by the Financial Accounting Standards Board but are not yet effective for BancShares:

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| | | |
|:---|:---|:---|
| **Standard** | **Summary of Guidance** | **Effect on BancShares' Financial Statements** |
| ASU 2023-09—Income Taxes (Topic 740): Improvements to Income Tax Disclosures <br>Issued December 2023 | This ASU enhances income tax disclosure requirements primarily by requiring disclosure of specific categories in the rate reconciliation table and disaggregation of income taxes paid by jurisdiction. | Effective for BancShares beginning with our financial statements for the year ending December 31, 2025. BancShares expects to apply the requirements retrospectively. Implementation of this disclosure-only ASU is not expected to have a material impact on our financial statements. |
| ASU 2024-03—Income Statement—Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses<br>Issued November 2024 | This ASU enhances expense disclosures primarily by requiring footnote disaggregation of specified expenses in a tabular format. The ASU does not change the requirements for the presentation of expenses on the face of the income statement. | Effective for BancShares beginning with our financial statements for the year ending December 31, 2027. Early adoption is permitted. The guidance may be applied prospectively or retrospectively.<br>We are currently evaluating the impact of this ASU on our footnote disclosures. |
| ASU 2025-05—Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets Issued July 2025 | This ASU provides an optional practical expedient which permits an entity to assume current conditions as of the balance sheet date do not change for the remaining life of current accounts receivable and current contract assets. | Effective for BancShares for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual periods. Early adoption is permitted. If elected, the optional practical expedient is applied prospectively.<br>We are currently evaluating the impact of this ASU on our financial statements and footnote disclosures. |
| ASU 2025-06—Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software Issued September 2025 | This ASU amends certain aspects of the accounting for and disclosure of internal-use software costs. This ASU also includes improvements to the operability of the guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods, including methods that entities may use to develop software in the future. The ASU also clarifies the criteria that must be met for entities to begin capitalizing software costs. | Effective for BancShares for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The guidance may be applied using either a prospective, retrospective, or modified transition approach.<br>We are currently evaluating the impact of this ASU on our financial statements and footnote disclosures. |

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**NON-GAAP FINANCIAL MEASUREMENTS**

BancShares provides certain non-GAAP information in reporting its financial results to give investors additional data to evaluate its operations. A non-GAAP financial measure is a numerical measure of a company's historical or future financial performance or financial position that may either exclude or include amounts, or is adjusted in some way to the effect of including or excluding amounts, as compared to the most directly comparable measure calculated and presented in accordance with GAAP financial statements. BancShares' management believes that non-GAAP financial measures, when reviewed in conjunction with GAAP financial information, can provide transparency about, or an alternate means of assessing, its operating results and financial position to its investors, analysts and management. These non-GAAP measures should be considered in addition to, and not superior to or a substitute for, GAAP measures presented in BancShares' consolidated financial statements and other publicly filed reports. In addition, our non-GAAP measures may be different from or inconsistent with non-GAAP financial measures used by other institutions.

Whenever we refer to a non-GAAP financial measure we will generally define and present the most directly comparable financial measure calculated and presented in accordance with GAAP, along with a reconciliation between the GAAP financial measure and the non-GAAP financial measure. We describe each of these measures below and explain why we believe the measure to be useful.

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**PPNR**

PPNR is a non-GAAP measure of profit or loss calculated as net income plus the provision for credit losses and income tax expense (benefit). PPNR is a measure of segment profit or loss that is meaningful because it enables management and external users of financial statements to assess income before income taxes excluding the provision for credit losses, which can be more volatile when economic conditions are more dynamic.

The following table provides a reconciliation of net income, the comparable GAAP measure, to PPNR:

**Table 54 PPNR**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** |
|  | **General Bank** | **Commercial Bank** | **SVB Commercial** | **Rail** | **Corporate** | **Total BancShares** |
| Net income (GAAP) | $320 | $18 | $175 | $17 | $38 | $568 |
| &nbsp;&nbsp;Plus: provision for credit losses | 1 | 168 | 22 |  |  | 191 |
| &nbsp;&nbsp;Plus: income tax expense (benefit) | 109 | 6 | 58 | 5 | 5 | 183 |
| PPNR (non-GAAP) | $430 | $192 | $255 | $22 | $43 | $942 |
|  | **Three Months Ended June 30, 2025** | **Three Months Ended June 30, 2025** | **Three Months Ended June 30, 2025** | **Three Months Ended June 30, 2025** | **Three Months Ended June 30, 2025** | **Three Months Ended June 30, 2025** |
|  | **General Bank** | **Commercial Bank** | **SVB Commercial** | **Rail** | **Corporate** | **Total BancShares** |
| Net income (GAAP) | $294 | $102 | $136 | $19 | $24 | $575 |
| &nbsp;&nbsp;Plus: provision for credit losses | 13 | 47 | 55 |  |  | 115 |
| &nbsp;&nbsp;Plus: income tax expense (benefit) | 101 | 35 | 47 | 6 | (6) | 183 |
| PPNR (non-GAAP) | $408 | $184 | $238 | $25 | $18 | $873 |
|  | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** |
|  | **General Bank** | **Commercial Bank** | **SVB Commercial** | **Rail** | **Corporate** | **Total BancShares** |
| Net income (GAAP) | $202 | $124 | $187 | $20 | $106 | $639 |
| &nbsp;&nbsp;Plus: provision for credit losses | 55 | 11 | 51 |  |  | 117 |
| &nbsp;&nbsp;Plus: income tax expense | 99 | 41 | 75 | 8 | 11 | 234 |
| PPNR (non-GAAP) | $356 | $176 | $313 | $28 | $117 | $990 |
|  | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** |
|  | **General Bank** | **Commercial Bank** | **SVB Commercial** | **Rail** | **Corporate** | **Total BancShares** |
| Net income (GAAP) | $867 | $163 | $477 | $58 | $61 | $1626 |
| &nbsp;&nbsp;Plus: provision for credit losses | 60 | 300 | 100 |  |  | 460 |
| &nbsp;&nbsp;Plus: income tax expense (benefit) | 298 | 56 | 162 | 19 | (1) | 534 |
| PPNR (non-GAAP) | $1225 | $519 | $739 | $77 | $60 | $2620 |
|  | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** |
|  | **General Bank** | **Commercial Bank** | **SVB Commercial** | **Rail** | **Corporate** | **Total BancShares** |
| Net income (GAAP) | $655 | $359 | $594 | $70 | $399 | $2077 |
| &nbsp;&nbsp;Plus: provision for credit losses | 113 | 70 | 93 |  |  | 276 |
| &nbsp;&nbsp;Plus: income tax expense | 270 | 127 | 235 | 27 | 120 | 779 |
| PPNR (non-GAAP) | $1038 | $556 | $922 | $97 | $519 | $3132 |

---

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**Net Rental Income on Operating Lease Equipment for Commercial Bank and Rail Segments**

Net rental income on operating lease equipment is a non-GAAP measure calculated as rental income on operating lease equipment less depreciation on operating lease equipment, as well as maintenance and other operating lease expenses, if any. Presentation of net rental income for the Commercial Bank and Rail segments also results in the noninterest income, noninterest expense, and revenue subtotals being presented net of depreciation and maintenance. These measures are meaningful because they enable management to monitor the performance and profitability of operating leases after deducting direct expenses.

The following tables reconcile the most comparable GAAP measures to the non-GAAP measures for the Commercial Bank and Rail segments.

**Table 55 Commercial Bank Segment**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* |  | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Nine Months Ended** | **Nine Months Ended** |
|  |  | **September 30, 2025** | **June 30, 2025** | **September 30, 2024** | **September 30, 2025** | **September 30, 2024** |
| Rental income on operating leases (GAAP) |  | $54 | $54 | $57 | $164 | $172 |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: depreciation on operating lease equipment | a | 43 | 44 | 47 | 131 | 141 |
| Net rental income on operating lease equipment (non-GAAP) |  | $11 | $10 | $10 | $33 | $31 |
| Total noninterest income (GAAP) | b | $155 | $152 | $136 | $432 | $411 |
| Noninterest income, net of depreciation (non-GAAP) | b-a | 112 | 108 | 89 | 301 | 270 |
| Total revenue (GAAP) | c | 458 | 451 | 441 | 1327 | 1327 |
| Revenue, net of depreciation (non-GAAP) | c-a | 415 | 407 | 394 | 1196 | 1186 |
| Total noninterest expense (GAAP) | d | 266 | 267 | 265 | 808 | 771 |
| Noninterest expense, net of depreciation (non-GAAP) | d-a | 223 | 223 | 218 | 677 | 630 |

---

Rail segment net income, rental income on operating lease equipment and net rental income on operating lease equipment are utilized to measure profitability. Net rental income on operating lease equipment is calculated as rental income on operating lease equipment reduced by depreciation, maintenance and other operating lease expenses. Due to the nature of our portfolio, which is essentially all operating lease equipment, certain financial measures commonly used by banks, such as NII, are not as meaningful for this segment. NII is not used because it includes the impact of debt costs funding our operating lease assets but excludes the associated net rental income.

**Table 56 Rail Segment**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* |  | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Nine Months Ended** | **Nine Months Ended** |
|  |  | **September 30, 2025** | **June 30, 2025** | **September 30, 2024** | **September 30, 2025** | **September 30, 2024** |
| Rental income on operating leases (GAAP) |  | $219 | $218 | $205 | $651 | $604 |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: depreciation on operating lease equipment | a | 55 | 56 | 52 | 165 | 152 |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: maintenance and other operating lease expenses | b | 67 | 55 | 59 | 180 | 164 |
| Net rental income on operating lease equipment (non-GAAP) |  | $97 | $107 | $94 | $306 | $288 |
| Total noninterest income (GAAP) | c | $221 | $221 | $207 | $658 | $612 |
| Noninterest income, net of depreciation and maintenance (non-GAAP) | c-a-b | 99 | 110 | 96 | 313 | 296 |
| Total revenue (GAAP) | d | 166 | 168 | 159 | 498 | 476 |
| Revenue, net of depreciation and maintenance (non-GAAP) | d-a-b | 44 | 57 | 48 | 153 | 160 |
| Total noninterest expense (GAAP) | e | 144 | 143 | 131 | 421 | 379 |
| Noninterest expense, net of depreciation and maintenance (non-GAAP) | e-a-b | 22 | 32 | 20 | 76 | 63 |

---

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**NII, NIM, and Interest and Fees on Loans, Excluding PAA**

NII and NIM, excluding PAA, and interest and fees on loans, excluding loan PAA are meaningful metrics as they allow management to analyze NII, NIM and loan interest income trends more directly related to the rates of the underlying interest-earning assets and interest-bearing liabilities. Loan PAA is primarily related to the loan discount in the SVBB Acquisition. Other PAA is primarily related to the discount on the Purchase Money Note and the premium on deposits assumed in the merger with CIT Group Inc.

The following table reconciles NII to NII, excluding PAA, NIM to NIM, excluding PAA, and interest and fees on loans to interest and fees on loans, excluding loan PAA:

**Table 57 NII, NIM, and Interest and Fees on Loans, Excluding PAA**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *dollars in millions* |  | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Nine Months Ended** | **Nine Months Ended** |
|  |  | **September 30, 2025** | **June 30, 2025** | **September 30, 2024** | **September 30, 2025** | **September 30, 2024** |
| NII (GAAP) | a | $1734 | $1695 | $1796 | $5092 | $5434 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loan PAA | b | 71 | 75 | 107 | 230 | 415 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other PAA | c | (10) | (9) | (6) | (28) | (16) |
| PAA | d = (b+c) | 61 | 66 | 101 | 202 | 399 |
| NII, excluding PAA (non-GAAP) | e = (a-d) | $1673 | $1629 | $1695 | $4890 | $5035 |
| Annualized NII | f = a annualized | $6878 | $6800 | $7147 | $6808 | $7259 |
| Annualized NII, excluding PAA | g = e annualized | 6637 | 6533 | 6746 | 6537 | 6726 |
| Average interest-earning assets | h | $211042 | $208175 | $202199 | $208432 | $200503 |
| NIM (GAAP) | f/h | 3.26% | 3.26% | 3.53% | 3.26% | 3.62% |
| NIM, excluding PAA (non-GAAP) | g/h | 3.15 | 3.14 | 3.33 | 3.13 | 3.35 |
| Interest and fees on loans (GAAP) |  | $2300 | $2270 | $2430 | $6806 | $7206 |
| &nbsp;&nbsp;Less: loan PAA | b | 71 | 75 | 107 | 230 | 415 |
| Interest and fees on loans, excluding loan PAA (non-GAAP) |  | $2229 | $2195 | $2323 | $6576 | $6791 |

---

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**Adjusted Risk-Based Capital Ratios**

FCB and the FDIC entered into the Shared-Loss Termination Agreement on April 7, 2025, after which time FCB and BancShares were no longer permitted to apply favorable RWA assumptions to the Covered Assets under the Shared-Loss Agreement. Adjusted risk-based capital ratios exclude the favorable impact of the Shared-Loss Agreement and are meaningful metrics as these ratios are expected to decrease in future periods.

The following table reconciles the Shared-Loss Agreement impact to the total risk-based, CET1 and tier 1 capital ratios of BancShares and FCB:

**Table 58 Adjusted Risk-Based Capital Ratios**

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| | | | |
|:---|:---|:---|:---|
| | | **December 31, 2024** | **December 31, 2024** |
| | | **BancShares** | **FCB** |
| Risk-weighted assets (GAAP) | a | $163615 | $163493 |
| &nbsp;&nbsp;Plus: impact of FDIC Shared-Loss Agreement |  | 8813 | 8813 |
| Adjusted risk-weighted assets (non-GAAP) | b | $172428 | $172306 |
| **Total Risk-Based Capital Ratio** |  |  |  |
| Total risk-based capital | c | $24610 | $23975 |
| Total risk-based capital ratio (GAAP) | c/a | 15.04% | 14.66% |
| &nbsp;&nbsp;Less: impact of FDIC Shared-Loss Agreement |  | 0.77 | 0.75 |
| Adjusted total risk-based capital ratio (non-GAAP) | c/b | 14.27% | 13.91% |
| **CET1 Capital Ratio** |  |  |  |
| CET1 capital | d | $21256 | $21852 |
| CET1 capital ratio (GAAP) | d/a | 12.99% | 13.37% |
| &nbsp;&nbsp;Less: impact of FDIC Shared-Loss Agreement |  | 0.66 | 0.69 |
| Adjusted CET1 capital ratio (non-GAAP) | d/b | 12.33% | 12.68% |
| **Tier 1 Risk-Based Capital Ratio** |  |  |  |
| Tier 1 risk-based capital | e | $22137 | $21852 |
| Tier 1 risk-based capital ratio (GAAP) | e/a | 13.53% | 13.37% |
| &nbsp;&nbsp;Less: impact of FDIC Shared-Loss Agreement |  | 0.69 | 0.69 |
| Adjusted tier 1 risk-based capital ratio (non-GAAP) | e/b | 12.84% | 12.68% |

---

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**Forward-Looking Statements** 

Statements in this Quarterly Report on Form 10-Q contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the financial condition, results of operations, business plans, asset quality, future performance, and other strategic goals of BancShares. Words such as "anticipates," "believes," "estimates," "expects," "predicts," "forecasts," "intends," "plans," "projects," "targets," "designed," "could," "may," "should," "will," "potential," "continue," "aims," "strives" or other similar words and expressions are intended to identify these forward-looking statements. These forward-looking statements are based on BancShares' current expectations and assumptions regarding BancShares' business, the economy, and other future conditions.

Because forward-looking statements relate to future results and occurrences, they are subject to inherent risks, uncertainties, changes in circumstances and other factors that are difficult to predict. Many possible events or factors could affect BancShares' future financial results and performance and could cause actual results, performance or achievements of BancShares to differ materially from any anticipated results expressed or implied by such forward-looking statements. Such risks and uncertainties include, among others, general competitive, economic (including the imposition of tariffs or trade barriers on trading partners), political (including impacts of the U.S. government shutdown), geopolitical (including conflicts in Ukraine and the Middle East), natural disasters and market conditions, including changes in competitive pressures among financial institutions and the impacts related to or resulting from previous bank failures, the risks and impacts of future bank failures and other volatility in the banking industry, public perceptions of our business practices, including our deposit pricing and acquisition activity, the financial success or changing conditions or strategies of BancShares' vendors or customers, including changes in demand for deposits, loans and other financial services, fluctuations in interest rates, changes in the quality or composition of BancShares' loan or investment portfolio, actions of government regulators, including interest rate decisions by the Federal Reserve, changes to estimates of future costs and benefits of actions taken by BancShares, BancShares' ability to maintain adequate sources of funding and liquidity, the potential impact of decisions by the Federal Reserve on BancShares' capital plans, adverse developments with respect to U.S. or global economic conditions, including significant turbulence in the capital or financial markets, the impact of any sustained or elevated inflationary environment, the impact of any cyberattack, information or security breach, the impact of implementation and compliance with current or proposed laws, regulations and regulatory interpretations, including potential increased regulatory requirements, limitations, and costs, such as FDIC special assessments, increases to FDIC deposit insurance premiums and the proposed interagency rule on regulatory capital, along with the risk that such laws, regulations and regulatory interpretations may change, the availability of capital and personnel, and the risks associated with BancShares' previously completed acquisition transactions, the pending BMO Branch Acquisition, or any future transactions.

BancShares' 2025 SRP allows BancShares to repurchase shares of its Class A common stock through 2026. BancShares is not obligated under the 2025 SRP to repurchase any minimum or particular number of shares, and repurchases may be suspended or discontinued at any time (subject to the terms of any Rule 10b5-1 plan in effect) without prior notice. The authorization to repurchase Class A common stock pursuant to the 2025 SRP will be utilized at management's discretion. The actual timing and amount of Class A common stock that may be repurchased under the plan will depend on a number of factors, including the terms of any Rule 10b5-1 plan then in effect, price, general business and market conditions, regulatory requirements, and alternative investment opportunities or capital needs.

Except to the extent required by applicable laws or regulations, BancShares disclaims any obligation to update forward-looking statements or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments. Additional factors which could affect the forward-looking statements can be found in the 2024 Form 10-K and BancShares' other filings with the Securities and Exchange Commission.

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**Item 3. Quantitative and Qualitative Disclosures about Market Risk.**

Market risk is the potential economic loss resulting from changes in market prices and interest rates. This risk can either result in diminished current fair values of financial instruments or reduced NII in future periods. Changes in fair value that result from movement in market rates cannot be predicted with any degree of certainty. Therefore, the impact that future changes in market rates will have on the fair values of financial instruments is uncertain.

The information required by this Item 3. Quantitative and Qualitative Disclosures about Market Risk is set forth in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations within the "Risk Management" section and in Item 1. Financial Statements within Note 10—Derivative Financial Instruments and Note 11—Fair Value of this Form 10-Q.

**Item 4. Controls and Procedures.** 

**EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES**

Under the supervision of and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that we are able to record, process, summarize and report in a timely manner the information required to be disclosed in the reports we file under the Exchange Act.

**CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING**

We review our internal controls over financial reporting on an ongoing basis and make changes intended to ensure the quality of our financial reporting. There were no changes in our internal control over financial reporting during the third quarter of 2025 that have materially affected, or are reasonably likely to materially affect, BancShares' internal control over financial reporting.

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 **PART II—OTHER INFORMATION**

**Item 1. Legal Proceedings.**

The Parent Company and certain of its subsidiaries are named as defendants in various legal actions arising from our normal business activities in which damages in various amounts were claimed. Although the amount of any ultimate liability with respect to those matters cannot be determined, in the opinion of management, no legal actions currently exist that would be material to BancShares' consolidated financial statements. Additional information relating to legal proceedings is set forth in Note 18—Commitments and Contingencies of the Notes to Consolidated Financial Statements contained in Item 1. Financial Statements.

**Item 1A. Risk Factors.**

Except for the updated risk factor set forth below, there have been no material changes in the risk factors during 2025 from those reported in our 2024 Form 10-K. For a discussion of the risks and uncertainties that management believes are material to an investment in us, refer to *Part I, Item 1A. Risk Factors*, of our 2024 Form 10-K, and *Forward-Looking Statements* of this Form 10-Q.

*Changes in domestic and foreign trade policies, including the imposition of tariffs and retaliatory tariffs, and other factors beyond our control may adversely impact our business, financial condition, and results of operations.* 

The U.S. government recently announced changes to its trade policies, including increasing tariffs on imports, in some cases significantly, and potentially renegotiating or terminating existing trade agreements. The current tariff environment is dynamic and uncertain, as the U.S. government has announced widespread tariff reform, with the effectiveness delayed in many cases. Changes to tariffs and other trade restrictions can be announced at any time with little or no notice. We cannot predict with certainty the future trade policy of the United States or other countries. Additionally, potential tariffs or other U.S. trade policy measures have triggered retaliatory actions by other countries such as China. Increased tariffs and trade restrictions may cause the prices of our customers' products to increase, which could reduce demand for such products, or reduce our customers' margins, and adversely impact their revenues, financial results, and ability to service debt. This, in turn, could adversely impact our financial condition and results of operations. Tariffs or other trade restrictions may lead to continuing uncertainty and volatility in U.S. and global financial markets and economic conditions. Disruptions and volatility in the financial markets may lead to adverse changes in the availability, terms and cost of capital, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects.

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**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.**

(c) The following table summarizes our monthly Class A common stock repurchase activity during the three months ended September 30, 2025. Subsequent to September 30, 2025, BancShares purchased an additional 183,077 shares of Class A common stock through October 31, 2025 under the 2025 SRP.

**Table 59 Issuer Purchases of Class A Common Stock**

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| | | | | |
|:---|:---|:---|:---|:---|
| *dollars in millions, except per share data* | **Total Number of Class A Shares Purchased** | **Average Price Paid per Share** | **Total Number of Shares Repurchased as Part of Publicly Announced Plan** | **Approximate Dollar Value of Shares that May Yet be Purchased Under Plan** |
| Repurchases from July 1 - 31, 2025 | 147365 | $2094.63 | 147365 | $302 |
| Repurchases from August 1 - 31, 2025 <sup>(1)</sup> | 157722 | 1916.88 | 157722 | 4000 |
| Repurchases from September 1 - 30, 2025 | 152263 | 1898.02 | 152263 | 3711 |
| Total | 457350 | $1967.87 | 457350 | $3711 |

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<sup>(1)</sup> *Represents the final repurchases completed under the 2024 SRP.*

On July 25, 2024, BancShares announced that the Board authorized the 2024 SRP, which allowed BancShares to repurchase shares of its Class A common stock in an aggregate amount up to $3.5 billion through December 31, 2025. The remaining authorized amount was utilized for share repurchases during the third quarter of 2025 until the 2024 SRP was completed at the end of August 2025.

On July 25, 2025, BancShares announced that the Board authorized the new 2025 SRP, which allows BancShares to repurchase shares of its Class A common stock in an aggregate amount up to $4.0 billion. Repurchases under the 2025 SRP commenced in September 2025 upon completion of the 2024 SRP at the end of August 2025 and may be made through December 31, 2026.

Under the authorized 2025 SRP, shares of BancShares' Class A common stock may be purchased from time to time on the open market or in privately negotiated transactions, including through a Rule 10b5-1 plan, but the Board's action does not obligate BancShares to repurchase any minimum or particular number of shares, and repurchases may be suspended or discontinued at any time (subject to the terms of any Rule 10b5-1 plan in effect) without prior notice.

**Item 5. Other Information.**

(c) Director and Officer 10b5-1 Trading Arrangements

During the third quarter of 2025, none of BancShares' directors or officers adopted or terminated any "Rule 10b5-1 trading arrangement" or any "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408 of Regulation S-K.

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**Item 6. Exhibits.**

**EXHIBIT INDEX**

---

| | |
|:---|:---|
| 4.1 | Instruments defining the rights of holders of long-term debt will be furnished to the SEC upon request. |
| 4.2 | <u>[Amendment No. 1 to Custodial and Paying Agency Agreement, dated July 18, 2025, by and among First-Citizens Bank & Trust Company, individually and as custodian and debtor, U.S. Bank](fcnca_ex42xamendmentno1toc.htm)[Trust Company, National Association, as paying agent, and the Federal Deposit Insurance Corporation, as receiver for Silicon Valley Bridge Bank, National Association, as notes designee and as collateral agent](fcnca_ex42xamendmentno1toc.htm)[.](fcnca_ex42xamendmentno1toc.htm)[(filed herewith)](fcnca_ex42xamendmentno1toc.htm)</u> |
| 31.1 | <u>[Certification of Chief Executive Officer (filed herewith)](fcnca_exx311x3q2025ceocert.htm)</u> |
| 31.2 | <u>[Certification of Chief Financial Officer (filed herewith)](fcnca_exx312x3q2025cfocert.htm)</u> |
| 32.1 | <u>[Certification of Chief Executive Officer (filed herewith)](fcnca_exx321x3q2025ceocert.htm)</u> |
| 32.2 | <u>[Certification of Chief Financial Officer (filed herewith)](fcnca_exx322x3q2025cfocert.htm)</u> |
| \*101.INS | Inline XBRL Instance Document (filed herewith) |
| \*101.SCH | Inline XBRL Taxonomy Extension Schema (filed herewith) |
| \*101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase (filed herewith) |
| \*101.LAB | Inline XBRL Taxonomy Extension Label Linkbase (filed herewith) |
| \*101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase (filed herewith) |
| \*101.DEF | Inline XBRL Taxonomy Definition Linkbase (filed herewith) |
| \*104 | Cover Page Interactive Data File (embedded within the Inline XBRL document filed as Exhibit 101) |
| \* | Interactive data files are furnished but not filed for purposes of Sections 11 and 12 of the Securities Act of 1933, as amended, and Section 18 of the Securities Exchange Act of 1934, as amended. |

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**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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| | | | |
|:---|:---|:---|:---|
| Date: | November 7, 2025 |  | First Citizens BancShares, Inc. |
|  |  |  | (Registrant) |
|  |  | By: | /s/ Craig L. Nix |
|  |  |  | Craig L. Nix |
|  |  |  | Chief Financial Officer |

---

## Exhibit 4.2

**Exhibit 4.2**

EXECUTION VERSION

**AMENDMENT NO. 1<br>TO CUSTODIAL AND PAYING AGENCY AGREEMENT**

Amendment No. 1 to Custodial and Paying Agency Agreement, dated as of July 18, 2025 (this "<u>Amendment</u>"), among (i) First-Citizens Bank & Trust Company, a North Carolina state-chartered bank (the "<u>Company</u>"); (ii) the Company, as Custodian (in such capacity, the "<u>Custodian</u>"); (iii) U.S. Bank Trust Company, National Association, as Paying Agent (the "<u>Paying Agent</u>"); (iv) the Company, as a Debtor (in such capacity, the "<u>Debtor</u>"); (v) the Federal Deposit Insurance Corporation (the "<u>FDIC</u>"), as receiver for Silicon Valley Bridge Bank, National Association (the "<u>Failed Bank</u>") (in such capacity, the "<u>Receiver</u>"), as Notes Designee (in such capacity, the "<u>Notes Designee</u>"); and (vi) the Receiver, as Collateral Agent (in such capacity, the "<u>Collateral Agent</u>").

<u>RECITALS</u>

The Company, the Custodian, the Paying Agent, the Debtor, the Notes Designee and the Collateral Agent are parties to that certain Custodial and Paying Agency Agreement, dated as of March 27, 2023 (as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof, the "<u>Existing Custodial and Paying Agency Agreement</u>"; and as further amended by this Amendment, the "<u>Custodial and Paying Agency Agreement</u>"). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Existing Custodial and Paying Agency Agreement.

The parties hereto have agreed, subject to the terms and conditions of this Amendment, that the Existing Custodial and Paying Agency Agreement be amended, effective as of the date hereof (the "<u>Effective Date</u>"), to reflect certain agreed upon revisions to the terms of the Existing Custodial and Paying Agency Agreement.

Accordingly, the parties hereto hereby agree, in consideration of the mutual promises and mutual obligations set forth herein, that the Existing Custodial and Paying Agency Agreement is hereby amended as follows:

SECTION 1.&nbsp;&nbsp;&nbsp;&nbsp;<u>Amendment to the Existing Custodial and Paying Agency Agreement</u>. Effective as of the Effective Date, the Existing Custodial and Paying Agency Agreement is hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: <u>double-underlined text</u>) as set forth in <u>Exhibit A</u> hereto. The parties hereto further acknowledge and agree that <u>Exhibit A</u> constitutes the Custodial and Paying Agency Agreement as amended and modified by the terms set forth herein.

SECTION 2.&nbsp;&nbsp;&nbsp;&nbsp;<u>Conditions Precedent</u>. This Amendment shall become effective as of the Effective Date, subject to the satisfaction of the following conditions precedent:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Delivered Documents</u>. On the date hereof, the Notes Designee, the Collateral Agent, the Paying Agent and the Company shall have received the following documents, each of which shall be satisfactory to such Persons in form and substance:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;this Amendment, duly executed and delivered by the parties hereto; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;such other documents as the parties hereto may reasonably request.

SECTION 3.&nbsp;&nbsp;&nbsp;&nbsp;<u>Representations, Warranties and Covenant</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1&nbsp;&nbsp;&nbsp;&nbsp;Each of the Company, the Custodian and the Debtor hereby represents and warrants to the Notes Designee and the Collateral Agent that its representations and warranties contained in Section 10.1 of the Custodial and Paying Agency Agreement are true and correct in all material respects as of the date hereof, except to the extent such representations relate to a date prior to the date hereof, in which case the representations and warranties are true and correct in all material respects as of such date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Each of the Company and the Debtor hereby represents and warrants to the Notes Designee and the Collateral Agent that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.&nbsp;&nbsp;&nbsp;&nbsp;it (x) is duly organized, validly existing, and in good standing under the laws of its chartering authority and has full power and authority to own and operate its properties and to conduct its business as now conducted by it, and (y) has full power and authority to execute and deliver this Amendment and to perform its obligations under this Amendment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.&nbsp;&nbsp;&nbsp;&nbsp;it has taken all necessary corporate and (or other applicable governance) action to authorize the execution, delivery, and performance of this Amendment and the performance of the transactions contemplated by this Amendment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.&nbsp;&nbsp;&nbsp;&nbsp;this Amendment has been duly executed and delivered by it and when this Amendment has been duly authorized, executed and delivered by the other parties hereto, this Amendment will constitute its legal, valid and binding obligation, enforceable in accordance with its terms;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv.&nbsp;&nbsp;&nbsp;&nbsp;no governmental authority or other third-party consents (including approvals, licenses, registrations, or declarations) are required in connection with the execution, delivery, or performance by it of this Amendment, other than the consents that have been duly obtained and are in full force and effect;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v.&nbsp;&nbsp;&nbsp;&nbsp;neither it nor any of its Subsidiaries is in violation of any statute, regulation, order, decision, judgment, or decree of, or any restriction imposed by, the United States of America, any state, municipality, or other political subdivision or any agency of any of the foregoing, or any court of other tribunal having jurisdiction over it or any of its Subsidiaries or any assets of that Person, or any foreign government or agency thereof having that jurisdiction, with respect to the conduct of the business of it or of any of its Subsidiaries, or the ownership of the properties of it or any of its Subsidiaries, that, either individually or in the aggregate with all other violations, would materially and adversely affect its business, operations or condition (financial or otherwise) or its ability to perform, satisfy or observe any obligation or condition under this Amendment;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vi.&nbsp;&nbsp;&nbsp;&nbsp;neither the execution and delivery nor the performance by it of this Amendment will result in any violation by it of, or be in conflict with, any provision of any applicable law or regulation, or any order, writ or decree of any court or governmental authority; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vii.&nbsp;&nbsp;&nbsp;&nbsp;no Event of Default or Borrowing Base Shortfall exists either immediately before or immediately after giving effect to the execution and delivery of this Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Each of the Company and the Debtor hereby covenants to the Notes Designee and the Collateral Agent that each of the applicable Additional Collateral Procedures will be satisfied in connection with any pledge of Additional Collateral referred to in this Amendment and the Custodial and Paying Agency Agreement.

SECTION 4.&nbsp;&nbsp;&nbsp;&nbsp;<u>Limited Effect</u>. Except as expressly amended and modified by this Amendment, the Existing Custodial and Paying Agency Agreement shall continue to be, and shall remain, in full force and effect in accordance with its terms.

SECTION 5.&nbsp;&nbsp;&nbsp;&nbsp;<u>Direction</u>. The Paying Agent is hereby directed to execute this Amendment and acknowledges and agrees that the Paying Agent will be fully protected in relying upon the foregoing direction.

SECTION 6.&nbsp;&nbsp;&nbsp;&nbsp;<u>Severability</u>. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

SECTION 7.&nbsp;&nbsp;&nbsp;&nbsp;<u>Counterparts</u>. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute but one and the same agreement. This Amendment and any amendments hereto, to the extent signed and delivered by facsimile or other electronic means, shall be treated in all manner and respects as an original agreement and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. No signatory to this Amendment shall raise the use of a facsimile machine or other electronic means to deliver a signature or the fact that any signature or agreement was transmitted or communicated through the use of a facsimile machine or other electronic means as a defense to the formation or enforceability of a contract and each such Person forever waives any such defense.

SECTION 8.&nbsp;&nbsp;&nbsp;&nbsp;**<u>GOVERNING LAW</u>. EACH PARTY TO THIS AMENDMENT AGREES AND ELECTS THAT, IN ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, THIS AMENDMENT IS TO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCLUDING ANY CONFLICT OF LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS AMENDMENT TO THE LAW OF ANOTHER JURISDICTION, AND EACH PARTY TO THIS AMENDMENT UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT EITHER (1) THE LAWS OF ANY OTHER JURISDICTION GOVERN THIS AMENDMENT OR (2) THE PROVISIONS OF THIS SECTION 7 DO NOT APPLY TO ANY OTHER PA FINANCING TRANSACTION DOCUMENT. NOTHING IN THIS** 

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**AMENDMENT SHALL REQUIRE ANY UNLAWFUL ACTION OR INACTION BY ANY PARTY TO THIS AMENDMENT.**

SECTION 9.&nbsp;&nbsp;&nbsp;&nbsp;**<u>WAIVER OF JURY TRIAL; JURISDICTION, VENUE AND SERVICE</u>. EACH PARTY TO THIS AMENDMENT AGREES THAT SECTION 19.2 AND SECTION 19.3 OF THE CUSTODIAL AND PAYING AGENCY AGREEMENT ARE INCORPORATED BY REFERENCE INTO THIS AMENDMENT, *MUTATIS MUTANDIS*, AS IF THEY WERE RESTATED IN FULL, WITH EACH REFERENCE TO "THIS AGREEMENT" IN SUCH SECTIONS OF THE CUSTODIAL AND PAYING AGENCY AGREEMENT BEING DEEMED A REFERENCE TO THIS AMENDMENT.**

SECTION 10.&nbsp;&nbsp;&nbsp;&nbsp;<u>Costs and Expenses</u>. The Company agrees to pay or reimburse the Notes Designee, the Paying Agent, the Securities Intermediary and the Collateral Agent for all reasonable costs and expenses (including Attorney Costs) incurred in connection with the preparation, negotiation and execution of this Amendment and the Securities Account Control Agreement, dated as of July 18, 2025, among the Company, the Collateral Agent and U.S. Bank National Association as securities intermediary (whether or not the transactions contemplated hereby or thereby are consummated). All amounts due under this Section 10 shall be payable on demand.

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the undersigned have caused this Amendment to be duly executed as of the date first above written.

**<u>Debtor, the Company and the Custodian</u>**

**FIRST-CITIZENS BANK & TRUST COMPANY**

**By:** <u>/s/ Tom Eklund&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>

Name: Tom Eklund

Title: Executive Vice President,

Treasurer and Assistant Secretary

Signature Page to Amendment No. 1 to Custodial and Paying Agency Agreement

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**<u>Notes Designee</u>**

**FEDERAL DEPOSIT INSURANCE CORPORATION**, as Receiver for Silicon Valley Bridge Bank, National Association, as Notes Designee

By: <u>/s/ Brock Walker&nbsp;&nbsp;&nbsp;&nbsp;</u>

Name: Brock Walker

Title: Assistant Director

**<u>Collateral Agent</u>**

**FEDERAL DEPOSIT INSURANCE CORPORATION**, as Receiver for Silicon Valley Bridge Bank, National Association, as Collateral Agent

By: <u>/s/ Brock Walker&nbsp;&nbsp;&nbsp;&nbsp;</u>

Name: Brock Walker

Title: Assistant Director

Signature Page to Amendment No. 1 to Custodial and Paying Agency Agreement

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**<u>Paying Agent</u>**

**U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Paying Agent**

By: <u>/s/ Allison Lancaster-Poole&nbsp;&nbsp;&nbsp;&nbsp;</u>

Name: Allison Lancaster-Poole

Title: Vice President

Signature Page to Amendment No. 1 to Custodial and Paying Agency Agreement

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Exhibit A

CUSTODIAL AND PAYING AGENCY AGREEMENT

(See attached)

Exhibit A

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EXECUTION VERSION

<u>[CONFORMED THROUGH AMENDMENT NO. 1]</u>

**CUSTODIAL AND PAYING AGENCY AGREEMENT**

by and among

**FIRST-CITIZENS BANK & TRUST COMPANY,**

as Company, Custodian and a Debtor,

**FEDERAL DEPOSIT INSURANCE CORPORATION,**

as Receiver for Silicon Valley Bridge Bank, National Association, as Notes Designee,

**U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,** 

as Paying Agent

and

**FEDERAL DEPOSIT INSURANCE CORPORATION,**

as Receiver for Silicon Valley Bridge Bank, National Association, as Collateral Agent,

**Dated as of March 27, 2023**

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**TABLE OF CONTENTS**

**ARTICLE I** DEFINITIONS AND CONSTRUCTION.................................................................. 2

Section 1.1 Definitions............................................................................................................ 2

Section 1.2 Rules of Construction........................................................................................... 2

**ARTICLE II PAYING AGENT AND WITHHOLDING ON PURCHASE MONEY NOTE** 3

Section 2.1 Appointment of Paying Agent.............................................................................. 3

Section 2.2 Delivery of Documentation.................................................................................. 3

Section 2.3 Duties.................................................................................................................... 4

Section 2.4 Withholding.......................................................................................................... 4

Section 2.5 Forms of Purchase Money Notes......................................................................... 4

Section 2.6 Authorized Amount; Stated Maturity; Denominations........................................ 5

Section 2.7 Execution, Delivery and Dating........................................................................... 6

Section 2.8 Registration, Registration of Transfer and Exchange........................................... 7

Section 2.9 Mutilated, Defaced, Destroyed, Lost or Stolen Purchase Money Notes or

Facility Notes....................................................................................................... 9

Section 2.10 Payments with Respect to the Purchase Money Notes or Facility Notes........... 10

Section 2.11 Mandatory Exchange; Cooperation with Receiver Note Dispositions................10

Section 2.12 Persons Deemed Owners................................................................................ 14<u>15</u>

Section 2.13 Cancellation........................................................................................................ 15

Section 2.14 DTC Eligibility................................................................................................... 15

Section 2.15 Interest Rate Determinations.............................................................................. 15

**ARTICLE III ACCOUNTS**..........................................................................................................15

Section 3.1 Collection Account..............................................................................................15

Section 3.2 Distribution Account...........................................................................................16

Section 3.3 Funding of Voluntary Prepayments.................................................................... 17

Section 3.4 Funding of Certain Payment Obligations....................................................... 17<u>18</u>

Section 3.5 Purchase Price Adjustment..................................................................................18

Section 3.6 Account Bank Provisions............................................................................... 18<u>19</u>

<u>Section 3.7</u> <u>Custodial Account.</u>............................................................................................. <u>19</u>

<u>Section 3.8</u> <u>Valuation of Eligible US Treasury Securities in the Custodial Account.</u>.......... <u>20</u>

**ARTICLE IV ADDITIONAL PROVISIONS RELATED TO THE ACCOUNTS**............ 19<u>21</u>

Section 4.1 Investment of Funds in Debtor Accounts....................................................... 19<u>21</u>

Section 4.2 Interest............................................................................................................ 20<u>22</u>

Section 4.3 Payment Procedures....................................................................................... 20<u>22</u>

**ARTICLE V DISTRIBUTIONS**............................................................................................. 20<u>22</u>

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Section 5.1 Priority of Payments....................................................................................... 20<u>22</u>

**ARTICLE VI CUSTODIAL DOCUMENTS**......................................................................... 22<u>24</u>

Section 6.1 Delivery of Custodial Documents.................................................................. 22<u>24</u>

Section 6.2 Examination of Custodian Files; Copies........................................................ 26<u>28</u>

Section 6.3 Shipment of Custodial Documents................................................................. 26<u>28</u>

Section 6.4 Delivery of Non-Original Signatures............................................................. 26<u>28</u>

**ARTICLE VII CUSTODIAN**.................................................................................................. 27<u>29</u>

Section 7.1 Appointment of the Custodian....................................................................... 27<u>29</u>

Section 7.2 Obligations of the Custodian.......................................................................... 27<u>29</u>

**ARTICLE VIII FEES AND EXPENSES**............................................................................... 29<u>31</u>

Section 8.1 Fees and Expenses.......................................................................................... 29<u>31</u>

**ARTICLE IX REMOVAL OR RESIGNATION**.................................................................. 30<u>32</u>

Section 9.1 Removal or Resignation of the Custodian or the Paying Agent..................... 30<u>32</u>

**ARTICLE X REPRESENTATIONS, WARRANTIES AND COVENANTS**.................... 31<u>33</u>

Section 10.1 Representations, Warranties and Covenants.................................................. 31<u>33</u>

Section 10.2 Insurance........................................................................................................ 32<u>34</u>

**ARTICLE XI REPORTS**........................................................................................................ 32<u>34</u>

Section 11.1 Paying Agent Report...................................................................................... 32<u>34</u>

Section 11.2 Additional Reports......................................................................................... 33<u>35</u>

Section 11.3 Debtor Distribution Date Accounting............................................................ 33<u>35</u>

Section 11.4 Distribution Date Instructions........................................................................ 34<u>36</u>

Section 11.5 Books and Records......................................................................................... 34<u>36</u>

**ARTICLE XII NO ADVERSE INTERESTS**........................................................................ 35<u>37</u>

Section 12.1 No Adverse Interests...................................................................................... 35<u>37</u>

**ARTICLE XIII LIABILITY AND INDEMNIFICATION**.................................................. 35<u>37</u>

Section 13.1 Liability; Indemnification.............................................................................. 35<u>37</u>

**ARTICLE XIV CUSTODIAN AND PAYING AGENT**....................................................... 36<u>38</u>

Section 14.1 Reliance of Custodian and Paying Agent....................................................... 36<u>38</u>

**ARTICLE XV TAXES**............................................................................................................. 41<u>42</u>

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Section 15.1 Tax Reports.................................................................................................... 41<u>42</u>

Section 15.2 Stamp and Other Similar Taxes..................................................................... 41<u>42</u>

**ARTICLE XVI TERM**............................................................................................................ 41<u>43</u>

Section 16.1 Term............................................................................................................... 41<u>43</u>

**ARTICLE XVII AUTHORIZED REPRESENTATIVES**.................................................... 41<u>43</u>

Section 17.1 Authorized Representatives............................................................................ 41<u>43</u>

**ARTICLE XVIII NOTICES**................................................................................................... 41<u>43</u>

Section 18.1 Notices............................................................................................................ 41<u>43</u>

**ARTICLE XIX MISCELLANEOUS**..................................................................................... 43<u>45</u>

Section 19.1 Governing Law............................................................................................... 43<u>45</u>

Section 19.2 Waiver of Jury Trial....................................................................................... 43<u>45</u>

Section 19.3 Jurisdiction; Venue and Service..................................................................... 43<u>45</u>

Section 19.4 Counterparts................................................................................................... 45<u>47</u>

Section 19.5 Severability..................................................................................................... 45<u>47</u>

Section 19.6 Compliance With Law................................................................................... 46<u>47</u>

Section 19.7 Entire Agreement........................................................................................... 46<u>48</u>

Section 19.8 Assignment; Binding Effect........................................................................... 46<u>48</u>

Section 19.9 Rights Cumulative.......................................................................................... 46<u>48</u>

Section 19.10 Amendments.................................................................................................. 46<u>48</u>

Section 19.11 Headings......................................................................................................... 47<u>48</u>

Section 19.12 Effect of Joinder Agreement.......................................................................... 47<u>48</u>

<u>Section 19.13</u> <u>Termination of Shared-Loss Agreement.</u>........................................................... <u>49</u>

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<u>Schedules and Exhibits</u>

<u>Schedule 1</u>&nbsp;&nbsp;&nbsp;&nbsp;Certain Definitions Used in One or More of the PA Financing Transaction Documents

<u>Schedule 2</u>&nbsp;&nbsp;&nbsp;&nbsp;Account Numbers

<u>Exhibit A</u>&nbsp;&nbsp;&nbsp;&nbsp;[Reserved]

<u>Exhibit B-1</u>&nbsp;&nbsp;&nbsp;&nbsp;Form of Non-Global Certificated Note

<u>Exhibit B-2</u>&nbsp;&nbsp;&nbsp;&nbsp;Form of Global Note

<u>Exhibit C</u>&nbsp;&nbsp;&nbsp;&nbsp;[Reserved]

<u>Exhibit D</u>&nbsp;&nbsp;&nbsp;&nbsp;[Reserved]

<u>Exhibit E</u>&nbsp;&nbsp;&nbsp;&nbsp;Form of Collateral Certificate

<u>Exhibit F</u>&nbsp;&nbsp;&nbsp;&nbsp;Review Procedures

<u>Exhibit G</u>&nbsp;&nbsp;&nbsp;&nbsp;Form of Supplemental Delivery Certificate

<u>Exhibit H</u>&nbsp;&nbsp;&nbsp;&nbsp;Request for Release and Receipt of Custodial Documents

<u>Exhibit I</u>&nbsp;&nbsp;&nbsp;&nbsp;Request for Release and Receipt of Debt Agreements

<u>Exhibit J</u>&nbsp;&nbsp;&nbsp;&nbsp;Fees and Expenses of Custodian and Paying Agent

<u>Exhibit K</u>&nbsp;&nbsp;&nbsp;&nbsp;Paying Agent Report

<u>Exhibit L</u>&nbsp;&nbsp;&nbsp;&nbsp;Form of Lost Instrument Affidavit

<u>Exhibit M</u>&nbsp;&nbsp;&nbsp;&nbsp;Authorized Representatives

<u>Exhibit N</u>&nbsp;&nbsp;&nbsp;&nbsp;Form of Account Control Agreement

<u>Exhibit O</u>&nbsp;&nbsp;&nbsp;&nbsp;[Reserved]<u>Form of Transfer Certificate</u> 

<u>Exhibit P</u>&nbsp;&nbsp;&nbsp;&nbsp;[Reserved]

<u>Exhibit Q</u>&nbsp;&nbsp;&nbsp;&nbsp;Form of Distribution Date Report

<u>Exhibit R</u>&nbsp;&nbsp;&nbsp;&nbsp;Form of Trial Balance Report

<u>Exhibit S</u>&nbsp;&nbsp;&nbsp;&nbsp;BIC Requirements

<u>Exhibit T</u>&nbsp;&nbsp;&nbsp;&nbsp;Minimum Deposit Provisions

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**CUSTODIAL AND PAYING AGENCY AGREEMENT**

THIS CUSTODIAL AND PAYING AGENCY AGREEMENT (as the same may be amended, modified or supplemented in accordance with the terms hereof, this "**<u>Agreement</u>**") is made and entered into as of March 27, 2023 (the "**<u>Closing Date</u>**"), by and among: (i) First-Citizens Bank & Trust Company, a North Carolina state-chartered bank (the "**<u>Company</u>**"); (ii) the Company, as Custodian (in such capacity, the "**<u>Custodian</u>**"); (iii) U.S. Bank Trust Company, National Association, as Paying Agent (the "**<u>Paying Agent</u>**"); (iv) each of the other entities (if any) listed on the signature pages hereof under the caption "Debtor", or that becomes a party hereto as a "Debtor" pursuant to <u>Section 7.12</u> of the Security Agreement (as such term is defined below) (together with the Company, collectively, "**<u>Debtors</u>**"); (v) the Federal Deposit Insurance Corporation (the "**<u>FDIC</u>**"), as receiver for Silicon Valley Bridge Bank, National Association (the "**<u>Failed Bank</u>**") (in such capacity, the "**<u>Receiver</u>**"), as Notes Designee (as such term is defined below); and (vi) the Receiver, as Collateral Agent (as such term is defined below).

RECITALS

WHEREAS, (i) pursuant to the Purchase and Assumption Agreement, the Company has purchased certain assets and assumed certain deposit and other liabilities of the Failed Bank, (ii) in connection therewith, the Receiver has provided certain purchase money and other continuing secured financing and (iii) the Receiver is willing to provide and to continue to provide such financing, but only on the terms and subject to the conditions set forth herein and in the other PA Financing Transaction Documents; and

WHEREAS, the Failed Bank previously owned the Loans; and

WHEREAS, pursuant to the Security Agreement, the Debtors have pledged the Loans and other collateral to the Collateral Agent for the benefit of the Note Holders and the Lender, and the Security Agreement requires the Debtors to retain a document custodian (which may be the Company subject to the conditions set forth herein), meeting the requirements set forth herein and in the Security Agreement, to take possession of the Custodial Documents in accordance with the terms and conditions hereof; and

WHEREAS, the Company is required to open and maintain in its name at one of the Paying Agent's branches certain accounts into which amounts will be deposited and proceeds will be distributed as provided herein, and to appoint the Custodian and the Paying Agent to perform the services contemplated by this Agreement commencing on the Document Effective Date; and

WHEREAS, the Company, the Lender, and the Collateral Agent are entering into the Advance Facility Agreement;

WHEREAS, the Facility Loans made pursuant to the Advance Facility Agreement are and shall be subordinate in right of payment to the Purchase Money Note to the extent provided herein;

WHEREAS, in connection with the ongoing settlement process under the Purchase and Assumption Agreement, the Initial Purchase Money Note is being exchanged for and replaced by the Amended and Restated Initial Purchase Money Note; and

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WHEREAS, the parties hereto wish to enter into this Agreement to, among other purposes, govern the allocation of the proceeds to be distributed from each account established pursuant to this Agreement and the performance of certain tasks by the Company.

NOW, THEREFORE, in consideration of the foregoing and the mutual promises and agreements contained herein, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

**ARTICLE I**<br>DEFINITIONS AND CONSTRUCTION

Section 1.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Definitions</u>. Except where otherwise indicated, capitalized terms used but not defined in this Agreement have the meanings provided in, or by reference in, <u>Schedule 1</u> hereto.

Section 1.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Rules of Construction</u>. This Agreement shall be construed and interpreted in accordance with the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;References to "Affiliates" include only other Persons that from time to time constitute "Affiliates" of such specified Person, and do not include, at any particular time, other Persons that may have been, but at such time have ceased to be, "Affiliates" of such specified Person, except to the extent that any such reference specifically provides otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Except where the context otherwise requires, terms used in this Agreement without definition that are defined in the NY UCC have the meanings given to them in the NY UCC (such meanings to be equally applicable to both the singular and plural forms of the terms defined).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;References to "the Debtors" are to the Debtors, jointly and severally.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;The term "or" is not exclusive.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;A reference to a law includes any amendment, modification or replacement to such law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;References to any document, instrument or agreement (i) shall be deemed to include all appendices, exhibits, schedules and other attachments thereto and all documents, instruments or agreements issued or executed in replacement thereof and (ii) shall mean such document, instrument or agreement, or replacement thereto, as amended, modified and supplemented from time to time in accordance with its terms (and, to the extent applicable, in accordance with the terms of the Security Agreement).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;Unless otherwise specified, the words "hereof," "herein" and "hereunder" and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;The words "include" and "including" and words of similar import are not limiting, and shall be construed to be followed by the words "without limitation," whether or not they are in fact followed by such words.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;The word "during" when used with respect to a period of time shall be construed to mean commencing at the beginning of such period and continuing until the end of such period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;Unless the context otherwise requires, singular nouns and pronouns when used herein shall be deemed to include the plural and vice versa and impersonal pronouns shall be deemed to include the personal pronoun of the appropriate gender.

**ARTICLE II**<br>**PAYING AGENT AND WITHHOLDING ON PURCHASE MONEY NOTE**

Section 2.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Appointment of Paying Agent.</u>

Subject to the terms and conditions of this Agreement, the Paying Agent hereby agrees to perform the duties of Paying Agent specifically set forth hereunder.

Section 2.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Delivery of Documentation.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;On or prior to the Document Effective Date, executed counterparts of the Security Agreement, the Advance Facility Agreement and the Account Control Agreement (the "**<u>Debt Agreements</u>**") have been delivered to the Paying Agent, and the Paying Agent acknowledges receipt thereof. The Company agrees to deliver to the Paying Agent, promptly upon execution and delivery thereof, each instrument amending or modifying any agreement previously delivered to the Paying Agent. Copies of the Amended and Restated Initial Purchase Money Note, the Facility Note, and the Purchase and Assumption Agreement have also been delivered to the Paying Agent by the Company, and the Paying Agent acknowledges receipt thereof. At its option and at any time and upon written notice to the Paying Agent, the Receiver may elect to deposit the Purchase Money Note(s) with the Paying Agent, whereupon such Purchase Money Note(s) shall be deemed to constitute "Debt Agreements."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent shall retain the Debt Agreements in its possession and custody at all times during the term hereof unless any one of the following events has occurred:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;If the Paying Agent has resigned or has been removed in accordance with the provisions of <u>Section 9.1</u>, the Paying Agent shall deliver the Debt Agreements to the successor Paying Agent in accordance with <u>Section 9.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;If the Paying Agent has received a Request for Release and Receipt of Debt Agreements in the form attached hereto as <u>Exhibit I</u> from an Authorized Representative of the Collateral Agent (with respect to the Security Agreement or the Account Control Agreement) or the Notes Designee (with respect to a Purchase Money Note), the Paying Agent shall deliver the requested Debt Agreements to the Collateral Agent or the Notes Designee, as applicable, in accordance with the instructions provided in such notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent shall transfer any Purchase Money Note(s) and surrender any Purchase Money Note(s) only in accordance with the written direction of the Note Holder or Note Holders of such Purchase Money Note(s) in whose name such Purchase Money

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Note(s) are registered; provided that the Paying Agent is hereby directed by each Note Holder of a Purchase Money Note to surrender such Purchase Money Note called for prepayment pursuant hereto (to the extent of the aggregate principal amount of such Purchase Money Note so redeemed), and to surrender such Purchase Money Note to the Issuer on the Maturity Date. The Paying Agent's duty with respect to any Debt Agreements in its physical possession shall be limited to the exercise of reasonable care by the Paying Agent with respect to such Debt Agreements in its physical possession. For the avoidance of doubt, notwithstanding that the Paying Agent may have physical possession of any Purchase Money Note with respect to which it is acting in its capacity as Paying Agent, such Purchase Money Note shall nonetheless be the property solely of the Note Holder of such Purchase Money Note.

Section 2.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Duties</u>. The Paying Agent shall have no duties other than those specifically set forth or provided for in this Agreement and each PA Financing Transaction Document to which it is a party, and no implied covenants or obligations of the Paying Agent shall be read into this Agreement or any PA Financing Transaction Document or any related agreement. The Paying Agent shall have no obligation to inquire whether any request, instruction, certificate, direction, receipt, demand, consent, resolution, statement, instrument, opinion, report, notice, document, communication, statement or calculation is in conformity with the terms of the agreement pursuant to which it is given. If, however, any remittance or communication received by the Paying Agent appears manifestly erroneous or irregular, the Paying Agent shall endeavor to make prompt inquiry to the Person originating such remittance or communication in order to determine whether a clerical error or inadvertent mistake has occurred.

Section 2.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Withholding</u>. If the Paying Agent is required by any taxing authority to withhold from amounts otherwise payable to any Note Holder or Lender any tax that is legally owed in connection therewith, the Paying Agent is hereby authorized to withhold the amount of any such tax and shall timely pay over such amount to the relevant taxing authority. The Paying Agent shall provide evidence of such payment to the Collateral Agent, the Receiver and any Lender, as applicable, within thirty (30) days after the date of such payment (or, if evidence is not available within thirty (30) days, as soon as possible thereafter). The amount of any such tax shall reduce the amount otherwise payable to such Note Holder or such Lender, unless such Note Holder or such Lender is entitled to receive Withholding Tax Gross-Up Payments. Except as otherwise provided in this Agreement, in no event shall the Paying Agent be responsible or liable for any taxes, penalties or interest owed or paid to any taxing authority.

Section 2.5&nbsp;&nbsp;&nbsp;&nbsp;<u>Forms of Purchase Money Notes</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Forms Generally</u>. The form of the Purchase Money Notes shall be as set forth in the applicable portion of <u>Exhibit B</u> hereto. The Purchase Money Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Any Purchase Money Note issued after the Document Effective Date shall be issued upon registration of transfer of, in exchange for, or in lieu of the Amended and Restated Initial Purchase Money Note and shall initially be issued in the form of one or more certificated notes in definitive, fully registered form without interest coupons substantially in the form of <u>Exhibit B-1</u> attached hereto (each, a "**<u>Non-Global Certificated Note</u>**"), which shall be registered in the name of the owner or nominee thereof, duly executed by the Company as herein provided. If the Notes Designee elects to have

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the Purchase Money Notes made DTC Eligible, then upon the Purchase Money Notes being made DTC Eligible, the outstanding Purchase Money Notes shall be exchanged for one or more global notes (having, in the aggregate, a face principal amount equal to the aggregate Original Amount of the Purchase Money Notes, as specified in, and subject to, <u>Section 2.7(d)</u>) in definitive, fully registered form without interest coupons substantially in the form of <u>Exhibit B-2</u> attached hereto (collectively, the "**<u>Global Notes</u>**"), which (I) shall be registered in the name of the Depository for such Global Note or Global Notes or the nominee of such Depository and (II) shall be held by the Paying Agent as custodian for the Depository unless the Depository instructs otherwise. The issuance of any Global Notes hereunder shall be subject to an amendment of this Custodial and Paying Agency Agreement satisfactory to the Paying Agent in order to facilitate the issuance, exchange, transfer, prepayment and any other action required to be taken in connection with the Global Notes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>OID Legend</u>. To the extent required by <u>Sections 1272</u>, <u>1273</u> and <u>1275</u> of the Code, and any regulations issued regarding such sections, each Purchase Money Note treated as issued at a discount to its stated redemption price at maturity for federal income tax purposes shall bear a legend in substantially the following form:

FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, THIS PURCHASE MONEY NOTE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT. YOU MAY CONTACT THE COMPANY AT __________________________________, ATTENTION: ______________, AND THE COMPANY WILL PROVIDE YOU WITH THE ISSUE PRICE AND THE YIELD TO MATURITY OF THIS PURCHASE MONEY NOTE.

Section 2.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Authorized Amount; Stated Maturity; Denominations.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The aggregate face amount of Purchase Money Notes that may be executed and delivered under the Purchase and Assumption Agreement and/or this Agreement is limited to Thirty-Six Billion Seventy-One Million Eight Hundred Sixteen Thousand One Hundred Seventeen and 12/100 United States Dollars (U.S. $36,071,816,117.12) (the "**<u>Stated Note Amount</u>**") except for Purchase Money Notes executed and delivered upon registration of transfer of, in exchange for, or in lieu of other Purchase Money Notes pursuant to <u>Section 2.5(a)</u>, <u>2.8</u>, <u>2.9</u> or <u>2.11</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Purchase Money Notes shall be issuable in minimum denominations of U.S.$250,000 and integral multiples of U.S.$10,000 in excess thereof (each such denomination, an "**<u>Authorized Denomination</u>**"), provided that, anything in this Agreement to the contrary notwithstanding, (i) the sole Global Note (if applicable), or, if at any time there is more than one Global Note, one of such Global Notes, may be in a denomination that is in excess of U.S.$250,000 but is not an Authorized Denomination, and (ii) one Purchase Money Note issued upon any transfer, exchange or replacement of another Purchase Money Note issued in a denomination that is in excess of U.S.$250,000 but is not an Authorized Denomination (including upon any division of a Purchase Money Note (issued in a denomination that is in excess of U.S.$250,000 but is not an Authorized Denomination) into two or more Purchase Money Notes) also may be issued in a denomination that is in excess of U.S.$250,000 but is not an Authorized Denomination. For all purposes hereof (but without limitation of the first sentence of <u>Section</u> 

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<u>2.7(d)</u>), references to the "denomination" of a Purchase Money Note (including references to "Authorized Denomination") shall refer to the Original Amount of a Purchase Money Note, i.e., disregarding any repayment of the principal of the Purchase Money Notes after the Document Effective Date.

Section 2.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Execution, Delivery and Dating.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The Purchase Money Notes shall be executed on behalf of the Company by one of the Authorized Representatives of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;A Purchase Money Note bearing the manual, electronic or facsimile signature of an individual who was an Authorized Representative of the Company when such Purchase Money Note was executed shall bind the Company, notwithstanding the fact that such individual later ceases to be an Authorized Representative.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Each Purchase Money Note executed and delivered by the Company on the Closing Date or thereafter shall be dated the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Purchase Money Notes issued upon transfer, exchange or replacement of other Purchase Money Notes shall be issued in Authorized Denominations (subject to the proviso to the first sentence of <u>Section 2.6(b)</u>) reflecting the Original Amount of the Purchase Money Notes so transferred, exchanged or replaced, and shall be dated the Closing Date, but shall represent only the actual current outstanding principal amount of, and the same rights with respect to the payment of interest as, the Purchase Money Notes so transferred, exchanged or replaced. In the event that any Purchase Money Note is divided into more than one Purchase Money Note in accordance with this Article II, the Original Amount of such Purchase Money Note shall be proportionately divided among the Purchase Money Notes delivered in exchange therefor and (subject to the preceding sentence) shall be deemed to be the Original Amount of such subsequently issued Purchase Money Notes. If any Purchase Money Note is in the custody of the Paying Agent, the Paying Agent shall, upon any payment in respect of the principal amount thereof, endorse such Purchase Money Note on <u>Schedule A</u> thereto to reflect such payment. In any event, the Paying Agent shall complete <u>Schedule A</u> of each Purchase Money Note issued upon transfer, exchange or replacement of any other Purchase Money Note(s) to set forth the amount of all payments of the Original Amount previously made on the old Purchase Money Note (or portion thereof) or Purchase Money Notes (or portions thereof) with respect to which such new Purchase Money Note is issued and the date to which interest on such old Purchase Money Note(s) has been paid.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Prior to the exchange of all outstanding Non-Global Certificated Notes for the Global Note(s) pursuant to <u>Section 2.5</u>, and after any exchange of the Global Notes for Non-Global Certificated Notes pursuant to <u>Section 2.11(a),</u> Purchase Money Notes issued upon transfer, exchange or replacement of other Purchase Money Notes shall be in the form of Non-Global Certificated Notes. After the exchange of all outstanding Non-Global Certificated Notes for the Global Note(s) pursuant to <u>Section 2.5</u> and prior to any exchange of the Global Notes for Non-Global Certificated Notes pursuant to <u>Section 2.11(a),</u> no Non-Global Certificated Notes shall be issued. Except pursuant to <u>Section 2.11(a),</u> Global Notes may only be exchanged for other Global Notes.

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Section 2.8&nbsp;&nbsp;&nbsp;&nbsp;<u>Registration, Registration of Transfer and Exchange.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The Company shall cause to be kept a register (the "**<u>Notes Register</u>**") in which, subject to such reasonable regulations as it may prescribe with the consent of the Notes Designee, the Company shall provide for the registration, and the registration of transfers, of Purchase Money Notes and Facility Notes. The Paying Agent is hereby initially appointed "**<u>Notes Registrar</u>**" for the purpose of maintaining the Notes Register and registering Purchase Money Notes and Facility Notes and transfers of such Purchase Money Notes and Facility Notes as herein provided. On or prior to the Document Effective Date the Company shall provide the Paying Agent with all requested information applicable to the Note Holder of the Purchase Money Note and of the Lenders holding Facility Notes for purposes of creating the initial Notes Register. To the extent the Company receives any request for transfer or exchange of any Purchase Money Notes and Facility Loans or Facility Notes or otherwise effects any transfer or exchange of Purchase Money Notes and Facility Notes, it shall promptly provide notice thereof to the Notes Registrar along with any other information reasonably necessary for the Notes Registrar to update the Notes Register. Neither the Notes Registrar nor the Paying Agent shall have any responsibility with respect to any transfer or exchange of any Purchase Money Notes and Facility Notes of which it has no actual knowledge. To the extent any Facility Notes are issued to evidence any Facility Loans, the Company shall provide copies thereof to the Paying Agent. The Company shall provide to the Paying Agent a copy of each Facility Loan Notice, together with a Facility Loan Certificate (each as defined in the Advance Facility Agreement), and the Paying Agent shall be entitled to conclusively rely upon such information in updating the Notes Register (and shall be entitled to assume without inquiry that such Facility Loan was funded by the Lenders). Upon any resignation or removal of the Notes Registrar, the Company shall promptly appoint a successor. The Paying Agent shall not be responsible or liable for any erroneous payments made in reliance upon information provided to it in connection with creating or updating the Notes Register. The Notes Registrar shall not be required to reflect any Facility Loans that are not evidenced by Facility Notes in the Notes Register.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;If a Person other than the Paying Agent is appointed by the Company as Notes Registrar, the Company will give the Paying Agent prompt notice of the appointment of a new Notes Registrar and of the location to which the Paying Agent is to deliver the Notes Register, and of any change in location thereafter, and the Paying Agent shall have the right to inspect the Notes Register at all reasonable times and to obtain copies thereof. The Paying Agent shall rely upon a certificate executed on behalf of the Notes Registrar by an officer thereof as to the names and addresses of the Note Holders and Lenders and the principal or face amounts and numbers of such Purchase Money Notes and Facility Notes. Upon written request at any time, the Notes Registrar promptly shall provide to the Company, the Notes Designee or the Collateral Agent a current list of Note Holders and Lenders as reflected in the Notes Register.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Subject to this <u>Section 2.8</u>, upon surrender of any Purchase Money Note or Facility Note to the Notes Registrar for registration of transfer, as the case may be, the Notes Registrar shall prepare and the Company shall execute and deliver, in the name of the designated transferee or transferees, one or more new Purchase Money Notes or Facility Notes, as the case may be, of any Authorized Denomination (subject to the proviso to the first sentence of <u>Section 2.6(b)</u>) and of like terms and a like aggregate Original Amount (in the case of the Purchase Money Notes) or outstanding principal amount (in the case of any Facility Notes). The Company shall furnish a copy of the executed Purchase Money Notes or Facility Notes, as the

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case may be, to the Notes Registrar.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;At the option of a Note Holder or Lender, a Purchase Money Note or Facility Note may be exchanged for Purchase Money Notes or Facility Notes of like terms, in any Authorized Denominations (subject to the proviso to the first sentence of <u>Section 2.6(b)</u>) and of like aggregate Original Amount (in the case of the Purchase Money Notes) or outstanding principal amount (in the case of the Facility Notes) upon surrender of the Purchase Money Note or Facility Note, as applicable, to be exchanged. Whenever any Purchase Money Note or Facility Note is surrendered to the Notes Registrar for exchange, the Notes Registrar shall prepare, and the Company shall execute and deliver, the Purchase Money Notes or Facility Notes (if requested by the applicable Lender), as applicable, that the Note Holder or Lender making the exchange is entitled to receive and shall deliver a copy of such executed Purchase Money Notes or Facility Notes, as applicable, to the Notes Registrar.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;All Purchase Money Notes and Facility Notes issued upon any registration of transfer or exchange of such Purchase Money Notes and Facility Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Agreement, as the Purchase Money Notes or Facility Notes, as applicable, surrendered upon such registration of transfer or exchange.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;Every Purchase Money Note and Facility Note presented or surrendered for registration of transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Notes Registrar duly executed by the Note Holder or Lender thereof or its attorney duly authorized in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;Neither the Company nor the Note Holder will be charged a service charge in connection with the registration of transfer or exchange of Purchase Money Notes or Facility Notes, but the Paying Agent may require the Company to pay a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;Agent Members shall have no rights under this Agreement with respect to any Global Note held on their behalf by the Paying Agent, as custodian for the Depository, and the Depository may be treated by the Company, the Paying Agent, and any agent of the Company or the Paying Agent as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Paying Agent, or any agent of the Company or the Paying Agent from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices governing the exercise of the rights of a beneficial interest in any Global Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent (including in its capacity as the Notes Registrar) shall have no obligation to any Participating Holders or to any Participants, including without limitation making any payments to any Participating Holders or to any Participants, effecting any transfers or exchanges thereof, or otherwise reflecting in the Notes Register any information relating to any Participating Holders or to any Participants.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding anything contained herein to the contrary, neither the Paying Agent nor the Notes Registrar shall be responsible for ascertaining whether any transfer complies with the registration provisions of or any exemptions from the Securities Act, applicable state securities Laws or the applicable Laws of any other jurisdiction, ERISA, the Code or the Investment Company Act of 1940, as amended.

Section 2.9&nbsp;&nbsp;&nbsp;&nbsp;<u>Mutilated, Defaced, Destroyed, Lost or Stolen Purchase Money Notes or Facility Notes.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;If (i) any mutilated or defaced Purchase Money Note or Facility Note is surrendered to the Paying Agent, or if there shall be delivered to the Company and the Paying Agent evidence to their reasonable satisfaction of the destruction, loss or theft of any Purchase Money Note or Facility Note, and (ii) there is delivered to the Company and the Paying Agent such security or indemnity as may be required by them to save each of them and any agent of any of them harmless, then, in the absence of notice to the Company or the Paying Agent that such Purchase Money Note or Facility Note has been acquired by a bona fide purchaser, the Company shall execute and deliver, in lieu of any such mutilated, defaced, destroyed, lost or stolen Purchase Money Note or Facility Note, a new Purchase Money Note or Facility Note, of like tenor (including the same date of issuance) and equal principal or face amount registered in the same manner, dated the date of its authentication, bearing interest from the date to which interest has been paid on the mutilated, defaced, destroyed, lost or stolen Purchase Money Note or Facility Note and bearing a number not contemporaneously outstanding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;If, after delivery of such new Purchase Money Note or Facility Note, a bona fide purchaser of the predecessor Purchase Money Note or Facility Note presents for payment, transfer or exchange such predecessor Purchase Money Note or Facility Note, the Company, the Notes Registrar and the Paying Agent shall be entitled to recover such new Purchase Money Note or Facility Note from the Person to whom it was delivered or any Person taking therefrom, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Company and the Paying Agent in connection therewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;In case any such mutilated, defaced, destroyed, lost or stolen Purchase Money Note or Facility Note has become due and payable, the Company may in its discretion, instead of issuing a new Purchase Money Note or Facility Note, pay such Purchase Money Note or Facility Note without requiring surrender thereof except that any mutilated Purchase Money Note or Facility Note shall be surrendered.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Upon the issuance of any new Purchase Money Note or Facility Note under this <u>Section 2.9</u>, the Company may require the payment by the Note Holder or Lender thereof of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Paying Agent) connected therewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Every new Purchase Money Note or Facility Note issued pursuant to this <u>Section 2.9</u> in lieu of any mutilated, defaced, destroyed, lost or stolen Purchase Money Note or Facility Note shall constitute an original additional contractual obligation of the Company, and such new Purchase Money Note or Facility Note shall be entitled, subject to <u>Section 2.9(b),</u> to all the

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benefits of this Agreement equally and proportionately with any and all other Purchase Money Notes or Facility Notes duly issued hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;The provisions of this <u>Section 2.9</u> are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, defaced, destroyed, lost or stolen Purchase Money Notes or Facility Notes.

Section 2.10&nbsp;&nbsp;&nbsp;&nbsp;<u>Payments with Respect to the Purchase Money Notes or Facility Notes.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;All reductions in the principal amount of a Purchase Money Note or Facility Note (or one or more predecessor Purchase Money Notes or Facility Notes) effected by prepayments of principal shall be binding upon all future Note Holders of such Purchase Money Note or Lenders of such Facility Note and of any Purchase Money Note or Facility Note issued upon the registration of transfer thereof, in exchange therefor, or in lieu thereof, whether or not such payment is noted on such Purchase Money Note or Facility Note. Subject to the foregoing, each Purchase Money Note or Facility Note delivered under this Agreement and upon registration of transfer of, in exchange for, or in lieu of any other Purchase Money Note or Facility Note shall carry the rights of unpaid principal that were carried by such other Purchase Money Note or Facility Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Payments in respect of interest and principal of, and any Withholding Tax Gross-Up Payment in respect of, any Purchase Money Note shall be made by or on behalf of the Company, in Dollars, to the Depository or its nominee with respect to a Global Note and to the Note Holder or its designee with respect to a Non-Global Certificated Note, by wire transfer, as directed by the Note Holder, in immediately available funds to a Dollar account maintained by the Depository or its nominee with respect to a Global Note, and to the Note Holder or its designee with respect to a Non-Global Certificated Note; <u>provided</u> that (i) in the case of a Non-Global Certificated Note, the Note Holder thereof shall have provided written wiring instructions to the Paying Agent on or before the related Record Date; and (ii) if appropriate instructions for any such wire transfer are not received at least 15 Business Days prior to the relevant Distribution Date or Maturity Date (or, in the case of any distribution pursuant to <u>Section 3.5</u>, the distribution date therefor as specified in <u>Section 3.5</u>), as the case may be, then such payment shall be made by check drawn on a U.S. bank mailed to the address of the Note Holder specified in the Notes Register. All notices and communications to be given to the Note Holders and all payments to be made to Note Holders in respect of the Purchase Money Notes shall be given or made only to or upon the order of the registered Note Holders. Neither the Company nor the Paying Agent shall have any responsibility or liability for any aspects of the records maintained by any of the Agent Members relating to or for payments made thereby on account of beneficial interests in a Global Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;From time to time, upon the written request of any Note Holder, any Lender or the Notes Designee, the Paying Agent shall provide such Note Holder, such Lender or the Notes Designee, as applicable, with a statement of the aggregate amount of principal payments that have been made with respect to the Purchase Money Notes or Facility Notes, as applicable, (in absolute terms and per $1,000 Original Amount) and the last date through which all accrued and unpaid interest on the Purchase Money Notes or Facility Notes, as applicable, was paid.

Section 2.11&nbsp;&nbsp;&nbsp;&nbsp;<u>Mandatory Exchange; Cooperation with Receiver Note Dispositions.</u> (a) (a) A Global Note deposited with the Depository shall be exchanged for one or more Non-

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Global Certificated Notes issued to the beneficial owners thereof (i) if either (x) the Depository notifies the Company that it is unwilling or unable to continue as depository for such Global Note or (y) at any time the Depository ceases to be a Clearing Agency registered under the Exchange Act and a successor depository is not appointed by the Company within 90 days after such notice or (ii) upon a request to such effect by the Notes Designee while an Event of Default is continuing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Any Global Note that is exchanged for a Non-Global Certificated Note pursuant to this <u>Section 2.11</u> shall be surrendered by the Depository to the Paying Agent to be so transferred, in whole or from time to time in part, without charge, and the Company shall execute, and the Paying Agent shall deliver, upon such transfer of each portion of such Global Note, an equal aggregate Original Amount of Non-Global Certificated Notes in Authorized Denominations (subject to the proviso to the first sentence of <u>Section 2.6(b)</u>).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Subject to the provisions of subsection (b) of this <u>Section 2.11</u>, the Note Holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Note Holder is entitled to take under this Agreement or the Purchase Money Notes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;In the event of the occurrence of an event specified in <u>Section 2.11(a),</u> the Company shall promptly make available to the Paying Agent a reasonable supply of Non-Global Certificated Notes in definitive, fully registered form without interest coupons. The Company shall execute, and the Paying Agent shall deliver, in exchange for the Global Note or Global Notes, as the case may be, the same Original Amount of Non-Global Certificated Notes of Authorized Denominations (subject to the proviso to the first sentence of <u>Section 2.6(b)</u>).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Subject to compliance with applicable Law, and notwithstanding anything to the contrary in any other Section of this Agreement or in any other PA Financing Transaction Document:

The Receiver may directly or indirectly assign, sell, transfer, participate, pledge, syndicate, securitize or otherwise hypothecate any Purchase Money Note (each such action by the Receiver, a "**<u>Receiver Note Disposition</u>**" and such disposed Purchase Money Notes, the "**<u>Disposed Purchase Money Notes</u>**"), together with all or a portion of its rights and obligations under this Agreement and any other PA Financing Transaction Document, including all or a portion of the indebtedness evidenced thereby, and including any replacement notes described in clause (ii) below (such disposed rights and obligations, the "**<u>Disposed Obligations</u>**").

The Receiver may not propose or effect more than two (2) Receiver Note Dispositions, unless

&nbsp;&nbsp;&nbsp;&nbsp;(X)&nbsp;&nbsp;&nbsp;&nbsp;an Event of Default has occurred and is continuing or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Y)&nbsp;&nbsp;&nbsp;&nbsp;the Company consents (such consent, if the Receiver agrees to pay any related reasonable out-of-pocket costs of the Company, not to be unreasonably withheld, delayed or conditioned).

Upon the consummation of a Receiver Note Disposition, and solely to the extent of such Receiver Note Disposition, the Receiver shall be deemed released from any further liability or obligations under this Agreement with respect to the Disposed Purchase Money Notes and the

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Disposed Obligations.

For a period not to exceed 90 consecutive days in respect of any permitted Receiver Note Disposition, the Company shall, and shall cause each other Debtor, at its or their own expense, to use commercially reasonable efforts to engage such counsel and other third parties and otherwise cooperate with and assist the Receiver, on a time-of-the-essence basis, in any actual or proposed Receiver Note Disposition, as may be requested by the Receiver from time to time, including, without limitation, by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;providing information and documentation required by securities disclosure and registration laws and as would otherwise customarily be provided in connection with the issuance or sale of debt by the Company, or in connection with a securitization of debt of the Company, including providing to the Notes Designee for inclusion in any securitization offering document such publicly available information regarding the Company, its financial condition and any additional information reasonably requested by the Notes Designee, and to deliver to the Notes Designee any similar nonpublic, unaudited financial information, or as is otherwise reasonably requested by the Notes Designee and which the Company is capable of providing without unreasonable effort or expense, and to indemnify the Notes Designee and its affiliates for material misstatements or omissions contained in such information; *provided*, that the Company will not be required to make any disclosure that would violate Law or the Company's obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;consenting to such assignments of, or amendments or modifications to the PA Financing Transaction Documents as the Receiver may specify (subject to securing any required consent thereto of the Notes Designee) in order to effect or facilitate, or otherwise in connection with, such Receiver Note Disposition, including, without limitation,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(I)&nbsp;&nbsp;&nbsp;&nbsp;assignments to any issuing entity or any trustee for an issuing entity in connection with a securitization of the Purchase Money Notes, provided that any such trustee shall either (A)(i) have or have a direct or indirect parent that has a combined capital and surplus of at least fifty million U.S. dollars ($50,000,000) and (ii) satisfy the eligibility criteria for a trustee under Sections 310(a)(1) and (2) of the Trust Indenture Act (it being understood and agreed that nothing in this Agreement shall require any such securitization to be subject to or qualified under the Trust Indenture Act) or (B) be an Approved Trustee, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(II)&nbsp;&nbsp;&nbsp;&nbsp;amendments or modifications

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;&nbsp;&nbsp;&nbsp;providing for, facilitating or otherwise appropriately reflecting the division of the Purchase Money Note into multiple promissory notes having the same aggregate principal amount, and the registration of transfers of such multiple promissory notes, and different owners of such promissory notes, or causing the Purchase Money Note to

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be DTC Eligible, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y)&nbsp;&nbsp;&nbsp;&nbsp;relating to compliance with securities laws;

<u>provided</u> that, without the consent of the Company, no such amendment or modification will:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)&nbsp;&nbsp;&nbsp;&nbsp;increase the aggregate principal amount of, or the interest rate on, the Purchase Money Notes,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)&nbsp;&nbsp;&nbsp;&nbsp;accelerate the date on which any obligation of the Company under the PA Financing Transaction Documents is scheduled or otherwise required to be paid, including without limitation by imposing additional mandatory repayments of principal (howsoever denominated) or by reducing the amount of principal otherwise permitted to be outstanding at any time,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)&nbsp;&nbsp;&nbsp;&nbsp;impose additional conditions to the voluntary prepayment of any obligation of the Company under the PA Financing Transaction Documents,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D)&nbsp;&nbsp;&nbsp;&nbsp;include additional Defaults, Events of Default, covenants, or representations the inaccuracy of which (material or otherwise) would constitute a Default,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E)&nbsp;&nbsp;&nbsp;&nbsp;require additional obligors, collateral or other credit support,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(F)&nbsp;&nbsp;&nbsp;&nbsp;otherwise increase in any material respect the financial obligations or covenants of the Company under the PA Financing Transaction Documents (unless, with respect to this clause (F), the Company is indemnified against or otherwise compensated for, such increased financial obligations or covenants in a manner reasonably satisfactory to the Company), or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(G)&nbsp;&nbsp;&nbsp;&nbsp;otherwise result in the terms of the amended or modified PA Financing Transaction Documents, taken as a whole, being materially less favorable to the Company than the terms of the PA Financing Transaction Documents as in effect immediately prior to such amendment or modification, taken as a whole;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;without limiting the generality of (and subject to) clause (ii) above, entering into an indenture or a fiscal and paying agent agreement, and other agreements, with respect to the Purchase Money Note (or the multiple promissory notes replacing the Purchase Money Note as described in clause (ii)) or any Receiver Note Disposition; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;providing opinions of counsel (which counsel shall be independent, outside counsel of the Company), certificates and other closing documents of the nature provided in connection with the execution and delivery of the relevant PA Financing Transaction Documents, or as are customarily delivered and reasonably determined by the Receiver to be necessary in connection with any securitization of assets such as the Purchase Money Note, in form and substance satisfactory to the Receiver.

Without limitation of the foregoing, at the option of the Receiver as the initial Note Holder (and whether or not in the context of a Receiver Note Disposition), the relevant PA Financing Transaction Documents shall be amended to provide for (i) the Purchase Money Note to be issued in registered form, (ii) the Company to keep a register in which the Company shall provide for the registration, and the registration of transfers, of the Purchase Money Note, and for the appointment by the Company of an agent (which may be the Paying Agent) for the purpose of registering the Purchase Money Note and transfers thereof, all at the Company's expense, (iii) the Purchase Money Note to be made DTC Eligible, and (iv) matters related to the foregoing. In connection with any amendment of the Purchase Money Note to reflect the foregoing, the Company will execute and deliver (and, if relevant, cause to be duly authenticated) new Purchase Money Notes reflecting such modifications thereto (in exchange for the then-outstanding Purchase Money Notes).

Without limiting the generality of clause (ii)(II)(F) above with respect to the Company's financial obligations, the Receiver shall (or shall cause the remaining parties to the PA Financing Transaction Documents to) reimburse the Company (including any expenses of the Paying Agent and Notes Registrar) for all reasonable out-of-pocket costs, fees and expenses incurred by the Company in cooperating and assisting at the Receiver's request with any Receiver Note Disposition, including without limitation any restructuring, amendment, upfront, arranger, syndication, commitment and similar fees payable either in connection with the negotiation or consummation of a Receiver Note Disposition or pursuant to the PA Financing Transaction Documents as amended or modified. Notwithstanding the foregoing, the Company shall not be entitled to reimbursement of (i) the fees and expenses of counsel or (ii) customary administrative agency, paying agency, custodial, trustee and similar fees if the aggregate amount thereof, when compared on a quarterly or other equitable basis, is equal to or less than the aggregate amount of such fees payable pursuant to the PA Financing Transaction Documents as in effect immediately prior to such Receiver Note Disposition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;At the request of the Note Holder at any time (whether or not in connection with any proposed sale or transfer of the Purchase Money Note), the Company shall, at its own expense, use commercially reasonable efforts to, as promptly as practicable after such request of the Note Holder, make the Purchase Money Note DTC Eligible (which efforts shall include making any amendments to, or exchanges of, the relevant PA Financing Transaction Documents requested by the Note Holder and necessary in connection with effecting or facilitating such DTC Eligibility, executing any Letter of Representations and other documentation required by the DTC in connection with effecting such DTC Eligibility and securing CUSIP and ISIN numbers for the Purchase Money Note). From and after the date on which the Purchase Money Notes have been made DTC Eligible, the Company will use commercially reasonable efforts to

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maintain the Purchase Money Notes as DTC Eligible unless otherwise agreed by the Note Holder.

Section 2.12&nbsp;&nbsp;&nbsp;&nbsp;<u>Persons Deemed Owners</u>. The Company, the Paying Agent and any agent of the Company or the Paying Agent shall treat the Person in whose name any Purchase Money Note is registered on the Notes Register on the applicable Record Date as the owner of such Purchase Money Note for the purpose of receiving payments of principal of, interest on, or other distributions with respect to such Purchase Money Note and on any other date for all other purposes whatsoever (whether or not such payments are overdue), and neither the Company, nor the Paying Agent, nor any agent of the Company or the Paying Agent shall be affected by notice to the contrary.

Section 2.13&nbsp;&nbsp;&nbsp;&nbsp;<u>Cancellation</u>. All Purchase Money Notes surrendered for payment, registration or transfer or exchange, or deemed lost or stolen, shall, if surrendered to any Person other than the Paying Agent, be delivered to the Paying Agent, shall be promptly canceled by it and may not be reissued or resold. No Purchase Money Notes shall be issued in lieu of or in exchange for any Purchase Money Notes canceled as provided in this <u>Section 2.13</u>, except as expressly permitted by this Agreement. All cancelled Purchase Money Notes held by the Paying Agent shall be destroyed or held by the Paying Agent in accordance with its standard retention policy unless the Company shall direct that they be returned to it.

Section 2.14&nbsp;&nbsp;&nbsp;&nbsp;<u>DTC Eligibility</u>. At the request of the Notes Designee at any time (whether or not in connection with any proposed sale or transfer of the Purchase Money Notes), the Company shall, at its own expense, use commercially reasonable efforts to, as promptly as practicable after such request of the Notes Designee, make the Purchase Money Notes DTC Eligible (which efforts may include making any amendments to, or exchanges of, the Purchase Money Notes as are requested by the Notes Designee and necessary in connection with effecting or facilitating such DTC Eligibility, executing any Letter of Representations and other documentation required by the DTC in connection with effecting such DTC Eligibility and securing CUSIP and ISIN numbers for the Purchase Money Notes). From and after the date on which the Purchase Money Notes have been made DTC Eligible, the Company will use commercially reasonable efforts to maintain the Purchase Money Notes as DTC Eligible unless otherwise agreed by the Notes Designee.

Section 2.15&nbsp;&nbsp;&nbsp;&nbsp;<u>Interest Rate Determinations</u>. The Lender shall determine each applicable "Applicable Interest Rate," under the Advance Facility Agreement, and in each case shall promptly notify the Notes Designee and the Company of such determination.

**ARTICLE III**<br>**ACCOUNTS**

Section 3.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Collection Account.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;On the Document Effective Date, the Company shall establish the Collection Account at the Account Bank in accordance with the Account Control Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Subject to the Minimum Deposit Provisions, the Debtors shall transfer, or cause to be transferred, all Loan Proceeds received at any time by any Grantor or anyone acting on behalf of any Grantor (including any Servicer with respect to any of the foregoing) ("**<u>Received</u>**") to the

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Paying Agent for deposit into the Collection Account (x) with respect to any non-ordinary course matters (including receipt by the Company of any payments under the Shared-Loss Agreement or pursuant to <u>Section 8.3</u> of the Purchase and Assumption Agreement or any other matter where immediate deposit into the Collection Account is specified in any PA Financing Transaction Document), immediately upon being Received, or (y) except as described in clause (x), (A) subject to sub-clause (B) if and to the extent (and only if and to the extent) applicable, within two (2) Business Days of being Received, or (B) with respect to (and only with respect to) any Loan Proceeds that have been received by a Servicer for any Grantor pursuant to a Legacy Assumed Servicing Contract the terms of which (as in effect on the Closing Date) do not require such Servicer to remit such Loan Proceeds to the applicable Grantor, and do not permit the applicable Grantor in its discretion to require such Servicer to remit such Loan Proceeds to the applicable Grantor, within two (2) Business Days of being Received, the earlier of (I) the first Business Day after such Servicer remits such Loan Proceeds to the applicable Grantor and (II) the fifth Business Day after the end of the calendar month during which such Loan Proceeds were received by such Servicer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;[Reserved.]

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;The Debtors may deposit funds in the Collection Account at any time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;If amounts are at any time erroneously deposited into the Collection Account, or if the Minimum Deposit Provisions otherwise permit the withdrawal of certain amounts from the Collection Account, the Company may request the withdrawal of such amounts and instruct the Paying Agent to return such amounts to the Company. The Company shall provide such requests to the Paying Agent in accordance with <u>Section 18.1</u>, with a copy of such request simultaneously being provided to the Collateral Agent and the Notes Designee. The Paying Agent shall promptly transfer such amounts in accordance with the Company's instructions, upon which the Paying Agent may conclusively rely.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent shall transfer funds from the Collection Account to the Distribution Account pursuant to <u>Section 3.2</u> and as otherwise directed by the Company in accordance with this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;Except as expressly permitted in this <u>Section 3.1</u> or in the Minimum Deposit Provisions, in no event shall the Company or any Grantor have the right to withdraw, or otherwise direct the transfer of, funds from the Collection Account.

Section 3.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Distribution Account</u>. (a) On the Document Effective Date, the Company shall establish the Distribution Account at the Account Bank in accordance with the Account Control Agreement. Subject to the Minimum Deposit Provisions, the Paying Agent shall transfer from the Collection Account to the Distribution Account, for application pursuant to <u>Section 5.1</u>, not later than 12:00 p.m. New York City time on the Business Day immediately preceding each Distribution Date (and not earlier than on such immediately preceding Business Day), the amount specified in the Distribution Date Report delivered pursuant to <u>Section 11.3</u> for such Distribution Date (it being understood that such amount shall not include any Loan Proceeds Received during the Due Period in which such Distribution Date occurs). The Paying Agent may invest overnight, solely in Permitted Investments of an overnight nature, any funds held in the Distribution Account on the Business Day prior to any Distribution Date; all income

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or gain realized from such investments of funds shall be for the benefit of the Company. Except as otherwise expressly provided in <u>Sections 3.3</u>, <u>3.4</u> and <u>3.5</u>, no funds from any other source shall be commingled in the Distribution Account. Except as otherwise expressly provided in <u>Sections 3.3</u>, <u>3.4</u> and <u>3.5</u> (with respect to amounts deposited in the Distribution Account pursuant to such sections), amounts on deposit in the Distribution Account (including interest and earnings thereon) shall be allocated and may be withdrawn and disbursed only in accordance with the provisions of <u>Section 5.1</u>. The Paying Agent shall be authorized and directed to withdraw funds from the Distribution Account only to (a) make disbursements in accordance with this Agreement or (b) correct an erroneous transfer from the Collection Account, if so directed by the Notes Designee and Lender.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;For administrative purposes, the Paying Agent shall be entitled to cause any funds to be deposited into the Distribution Account to be deposited into the Purchase Money Notes Distribution Debt Service Account or the Facility Notes Distribution Debt Service Account, in its discretion, in order to facilitate payments to be made by the Paying Agent with respect to the Purchase Money Notes or the Facility Loans.

Section 3.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Funding of Voluntary Prepayments</u>. In the event that the Company shall specify any voluntary prepayment in respect of the Purchase Money Notes or the Facility Loans pursuant to <u>Section 11.3(e)</u> hereof, the Company shall deposit with the Paying Agent, for application pursuant to clause (ii)(x) of <u>Section 11.4</u> hereof, not later than 12:00 p.m. New York City time on the Business Day immediately preceding the relevant Distribution Date, an amount of immediately available funds (in Dollars) equal to the amount of such voluntary prepayment. The Paying Agent shall deposit such funds into the Distribution Account. The Paying Agent may invest overnight, solely in Permitted Investments of an overnight nature, any such funds transferred to it pursuant to this <u>Section 3.3</u>; all income or gain realized from such investments of such funds shall be for the benefit of the Company. Such funds, including any such overnight investments (except for such income or gain), shall be held in trust by the Paying Agent for the benefit of the Note Holders and/or the Lenders, as applicable, to be applied (net of any shortfall not otherwise deposited by the Company pursuant to <u>Section 3.4(a)</u> on such Distribution Date in funds required to be distributed on such Distribution Date pursuant to <u>Section 5.1(a)(i)</u> through <u>(vii)</u>) on the relevant Distribution Date as specified in <u>Section 11.4</u>; and such funds may be disbursed only in accordance with the provisions of <u>Section 11.4</u>, and not for any other purpose. To the extent a Note Holder deposits a Settlement Payment (as defined in the Purchase Money Note) in the Distribution Account, the Company shall cause such Settlement Payment to be distributed on the next succeeding Distribution Date (so long as such deposit is made prior to the related Determination Date) by following the above procedures.

In addition to voluntary prepayments on a Distribution Date in accordance with the preceding paragraph, the Company may voluntarily prepay the Purchase Money Notes or the Facility Loans on the first Business Day of any month upon (i) at least five (5) Business Day's prior written notice to the Paying Agent and the Note Holders or Lenders, as applicable, and (ii) the Company depositing with the Paying Agent, not later than 12:00 p.m. New York City time on the Business Day immediately preceding the date of prepayment, an amount of immediately available funds (in Dollars) equal to the amount of such voluntary prepayment plus interest accrued on such principal prepayment to the date of payment; <u>provided</u>, <u>however</u>, in connection with and from the date of any Receiver Note Disposition or any Receiver Facility Disposition,

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the Receiver may determine (in its sole discretion) that voluntary prepayments shall only be permitted on a Distribution Date. The Paying Agent shall deposit such funds into the Distribution Account. The Paying Agent may invest overnight, solely in Permitted Investments of an overnight nature, any such funds transferred to it pursuant to this <u>Section 3.3</u>; all income or gain realized from such investments of such funds shall be for the benefit of the Company. Such funds, including any such overnight investments (except for such income or gain), shall be held in trust by the Paying Agent for the benefit of the Note Holders and/or the Lenders, as applicable, to be applied on the relevant date of prepayment as specified in irrevocable instructions from the Company to the Paying Agent. Any such prepayments shall be made to each Note Holder or Lender, as the case may be, in accordance with its Pro Rata Share.

Section 3.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Funding of Certain Payment Obligations.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;If the amounts transferred from the Collection Account to the Distribution Account in accordance with <u>Section 3.2</u> are less than the amount necessary to pay all amounts required to be paid pursuant to <u>Sections 5.1(a)(i)</u> through <u>(vii)</u> on any Distribution Date, then, not later than 12:00 p.m. New York City time on the Business Day immediately preceding such Distribution Date, the Company shall deposit with the Paying Agent an amount of immediately available funds (in Dollars) equal to the amount of the shortfall in amounts required to be paid by <u>Sections 5.1(a)(i)</u> through <u>(vii)</u> on such Distribution Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Not later than 12:00 p.m. New York City time on the Business Day immediately preceding the Maturity Date, the Company shall deposit with the Paying Agent immediately available funds (in Dollars) in an amount sufficient, after taking into account all distributions to be made on the Maturity Date (treating such Maturity Date as if it were a Distribution Date) pursuant to <u>Section 5.1</u> hereof, to pay the outstanding principal amount of, all accrued and unpaid interest on, and any other amounts due and owing with respect to the Purchase Money Notes and the Facility Loans in full on the Maturity Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent shall deposit into the Distribution Account any funds transferred to it pursuant to this <u>Section 3.4</u>. The Paying Agent may invest overnight, solely in Permitted Investments of an overnight nature, any funds transferred to it pursuant to this <u>Section 3.4</u>; all income or gain realized from such investments of such funds shall be for the benefit of the Company. Such funds, including any such overnight investments (except for such income or gain), shall be held in trust by the Paying Agent for the benefit of the Note Holders and/or the Lenders, as applicable, to be applied on the relevant Distribution Date or the Maturity Date, as applicable (or, in the case of <u>Section 3.4(b)</u> and with respect to any particular Note Holder or Lender, upon later surrender of the Purchase Money Notes of such Note Holder or the Facility Notes of such Lender, if required), to the payment of the relevant amounts described in <u>Section 3.4(a)</u> or <u>(b),</u> as applicable; and such funds may be disbursed only in accordance with the provisions of this <u>Section 3.4</u>, and not for any other purpose.

Section 3.5&nbsp;&nbsp;&nbsp;&nbsp;<u>Purchase Price Adjustment</u>. If the Receiver is required to make any payment to the Company pursuant to <u>Section 8.3</u> of the Purchase and Assumption Agreement, and elects to make such payment in cash to the Paying Agent (rather than by setoff against the Purchase Money Notes), then the Paying Agent shall (i) deposit any such funds paid to it into the Distribution Account and (ii) on the first Distribution Date following its receipt of such payment from the Receiver, apply such payment to the Purchase Money Notes, based on their

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Pro Rata Shares, as a prepayment of the outstanding principal owed thereunder. The Paying Agent may invest overnight, solely in Permitted Investments of an overnight nature, any such funds transferred to it by the Receiver as described above in this <u>Section 3.5</u>; all income or gain realized from such investments of such funds shall be for the benefit of the Company. Such funds, including any such overnight investments (except for such income or gain), shall be held in trust by the Paying Agent for the benefit of the Note Holders, to be applied on the Distribution Date described above in this <u>Section 3.5</u>; and such funds may be disbursed only in accordance with the provisions of this <u>Section 3.5</u>, and not for any other purpose. With respect to any deposit made pursuant to this <u>Section 3.5</u>, the Paying Agent shall inform the Company that such deposit has been made, and the Company shall promptly thereafter provide the Paying Agent with instructions specifying the amounts to be paid to the Note Holders.

Section 3.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Account Bank Provisions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;Any instruction to the Paying Agent given pursuant to the terms of this Agreement or to the Account Bank under the Account Control Agreement with respect to the transfer, holding, deposit and withdrawal of all funds held in the Debtor Accounts shall be deemed to constitute an instruction to the Account Bank and to the Paying Agent, respectively (even if given to one and not the other). The Account Bank shall be a third-party beneficiary of this Agreement.

<u>Section 3.7</u>&nbsp;&nbsp;&nbsp;&nbsp;<u>Custodial Account.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)&nbsp;&nbsp;&nbsp;&nbsp;On or prior to the Amendment No. 1 Effective Date, the Company shall establish the Custodial Account at the Securities Intermediary in accordance with the Securities Account Control Agreement, into which the Company from time to time may deposit Eligible US Treasury Securities for inclusion in the Borrowing Base.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent shall cause the Securities Intermediary to make available to the Collateral Agent its monthly statements of the Custodial Account, each showing all Custodial Account activity for the prior calendar month, including but not limited to any deposits, withdrawals, sales, substitutions and maturities of Eligible US Treasury Securities in the Custodial Account.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent shall cause the Securities Intermediary to provide the Collateral Agent with real-time electronic access to information showing all Custodial Account activity.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)&nbsp;&nbsp;&nbsp;&nbsp;In connection with Section 3(b)(v) of the Securities Account Control Agreement and subject to Section 3.7(f) hereof, the Company may submit a proposed transfer of Eligible US Treasury Securities out of the Custodial Account in the form of the notice and certification attached hereto as Exhibit O (each, a "Transfer Certificate"), for review by the Collateral Agent. The Company may propose a concurrent transfer of Eligible US Treasury Securities into the Custodial Account as part of such proposal. The Company may not submit more than one Transfer Certificate per calendar month unless otherwise permitted by the Collateral Agent in its sole and absolute discretion. The Collateral Agent may reject all or any part of any proposed transfer if it reasonably determines that the same could cause a breach of, or otherwise result in the Company failing to fully comply with, any term of this Agreement or any other PA Financing Transaction Document. If the Collateral Agent does not reject a transfer proposed in accordance with this Section 3.7(d) within five (5) Business Days of the Collateral Agent's receipt of the related Transfer Certificate from the Company, the Company may proceed with</u> 

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<u>directing the Securities Intermediary to execute such transfer in accordance with Section 3 of the Securities Account Control Agreement. The Collateral Agent will have no liability or responsibility whatsoever for the contents of any Transfer Certificate and no obligation to review or verify the same. No acceptance by the Collateral Agent of a Transfer Certificate or failure of the Collateral Agent to reject a proposed transfer under this Section 3.7(d) shall operate as a waiver of any right of the Collateral Agent under this Agreement or any other PA Financing Transaction Document, nor shall any such acceptance or failure to reject on any one occasion be deemed a bar to or waiver of the same or any other right on any future occasion.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)&nbsp;&nbsp;&nbsp;&nbsp;The Company may submit proposed transactions with respect to the Custodial Account to the Collateral Agent in writing, for approval or rejection in the Collateral Agent's sole discretion, in accordance with Section 3(b)(vi) of the Securities Account Control Agreement. The Collateral Agent shall use commercially reasonable efforts to notify the Company of its approval or rejection of any such transaction within ten (10) Business Days of the Collateral Agent's receipt of the related submission from the Company; provided, that if the Collateral Agent does not approve or reject such transaction within such time period, such transaction shall be deemed to be rejected.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)&nbsp;&nbsp;&nbsp;&nbsp;In no event shall the Company have the right to, and the Company hereby covenants that it shall not, withdraw, or otherwise direct the transfer of cash and/or Eligible US Treasury Securities from the Custodial Account if such withdrawal or transfer would result in a Borrowing Base Shortfall, provided that the Company shall not be deemed to be in breach of this covenant so long as (i) no later than the close of business on the second (2</u><sup>nd</sup><u>) Business Day following the Company gaining knowledge or receiving notice of such Borrowing Base Shortfall the Company shall have deposited sufficient cash and/or Eligible US Treasury Securities to the Custodial Account to eliminate such Borrowing Base Shortfall and (ii) the creation of the Borrowing Base Shortfall through such withdrawal or transfer was not intentional. Notwithstanding the cure period provided for in Section 4.1(j) of the Security Agreement, no cure period shall apply to the Company's failure to observe this Section 3.7(f) and such failure to observe this Section 3.7(f) shall result in an immediate Event of Default pursuant to Section 4.1(j) of the Security Agreement.</u> 

<u>Section 3.8</u>&nbsp;&nbsp;&nbsp;&nbsp;<u>Valuation of Eligible US Treasury Securities in the Custodial Account.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)&nbsp;&nbsp;&nbsp;&nbsp;On or before the second Business Day of each calendar month, the Paying Agent shall cause the Securities Intermediary to make available to the Company and the Collateral Agent a schedule containing the CUSIP number, face amount and Market Value of each Eligible US Treasury Security on deposit in the Custodial Account as of the last day of the prior calendar month.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)&nbsp;&nbsp;&nbsp;&nbsp;The Company will include with each Distribution Date Report delivered on or after the Amendment No. 1 Effective Date a schedule (in the form of an Excel spreadsheet or in another format acceptable to the Collateral Agent) of (i) the Market Value, as of the immediately preceding month's end, of the Eligible US Treasury Securities on deposit in the Custodial Account, (ii) the Assumed UST Value, determined by the Company as of the immediately preceding month's end, of the Eligible US Treasury Securities on deposit in the Custodial Account and (iii) the amount (in Dollars) of any Cash Proceeds on deposit in the Custodial Account.</u>

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)&nbsp;&nbsp;&nbsp;&nbsp;On or before the fifth (5</u><sup>th</sup><u>) Business Day after receipt of the related Distribution Date Report, the Collateral Agent shall notify the Company and the Paying Agent of any discrepancies in the Market Value and the Assumed UST Value of each Eligible US Treasury Security. The Paying Agent shall cause the Securities Intermediary to provide to the Collateral Agent, for use in validating the Market Value, online portal access to the Custodial Account as provided in Section 3.7(c).</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)&nbsp;&nbsp;&nbsp;&nbsp;In determining Market Value, the Paying Agent shall report the value of any Eligible US Treasury Security on deposit in the Custodial Account in accordance with the definition of "Market Value", but shall not have any duty to independently value any Eligible US Treasury Security.</u> 

**ARTICLE IV<br>ADDITIONAL PROVISIONS RELATED TO THE ACCOUNTS**

Section 4.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Investment of Funds in Debtor Accounts.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent shall invest the amounts on deposit in the Collection Account in Permitted Investments in accordance with investment directions from the Company but with a maturity that allows for, or otherwise in a Permitted Investment that permits, their timely liquidation and transfer to the Distribution Account in accordance with <u>Section 3.2</u>. If the Paying Agent has not been given any such investment directions, the balance standing to the credit of the Collection Account will remain uninvested with no liability for interest thereon. It is agreed and understood that the Paying Agent may earn fees associated with Permitted Investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;If, on any date when the Paying Agent is to transfer funds from the Collection Account to the Distribution Account, the amount of funds (disregarding Permitted Investments) then on deposit in the Collection Account is less than the amount that the Paying Agent is so required to transfer to the Distribution Account, the Paying Agent shall liquidate the Permitted Investments (or portions thereof) to the extent necessary to make up such shortfall. The net costs and expenses, if any, of such liquidation (including any loss of principal) shall be allocated entirely to the Collection Account. The Paying Agent shall liquidate all those Permitted Investments that can be liquidated without interest cost or penalty before it shall liquidate any Permitted Investment, the liquidation of which would involve an interest cost or penalty. The Paying Agent shall have no liability with respect to any interest cost or penalty on the liquidation of any Permitted Investment pursuant to this <u>Section 4.1(b).</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent shall have no liability with respect to Permitted Investments (or any losses resulting therefrom) made at the direction of the Company pursuant to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;All references in this Agreement to the cash, moneys or funds in the Debtor Accounts or balances of the Debtor Accounts shall include the investments in which such

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moneys are invested.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent may execute any investment directions provided to it in respect of the Permitted Investments through its Affiliates, and neither the Paying Agent nor its Affiliates shall have a duty to monitor the investment rating of any such Permitted Investments. The Paying Agent will have no obligation to invest or reinvest any funds if all or a portion of such funds are deposited with the Paying Agent after 11:00 a.m. New York City time on the day of deposit. Directions to invest or reinvest that are received after 11:00 a.m. New York City time will be treated as if received on the following Business Day in New York. Subject to <u>Section 4.1(b)</u> above, the Paying Agent will have the power to sell or liquidate Permitted Investments whenever the Paying Agent will be required to make a transfer pursuant to the terms hereof. The Paying Agent will have no responsibility for any investment losses resulting from the investment, reinvestment or liquidation of any funds in accordance with the terms of this Agreement.

Section 4.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Interest</u>. Any interest or other earnings accrued on any balances in any Debtor Account, or on any investment thereof, shall be credited to and accumulated in such Debtor Account and thereafter be applied without differentiation from other funds in such Debtor Account.

Section 4.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Payment Procedures</u>. All amounts that from time to time are distributable by the Paying Agent from the Distribution Account in accordance herewith shall be paid by the Paying Agent (from amounts on deposit in the Distribution Account) not later than 12:00 p.m. New York City time on the Distribution Date (or, in the case of any distribution specified in <u>Section 3.4(b)</u>, on such other date as may be specified in such section) in immediately available funds (but not before such amounts become immediately available to it). All payments made by the Paying Agent shall be made in accordance with the Distribution Date Report (or, in the case of any distribution specified in <u>Section 3.3 or 3.4(b)</u>, in accordance with such instructions as the Company delivers to the Paying Agent in accordance with such section) and this Agreement.

**ARTICLE V**<br>**DISTRIBUTIONS**

Section 5.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Priority of Payments.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Not later than 12:00 p.m. on each Distribution Date, the Paying Agent shall disburse amounts on deposit in the Distribution Account (which shall include the Purchase Money Notes Distribution Debt Service Account and the Facility Notes Distribution Debt Service Account) in accordance with the priorities set forth in <u>Sections 5.1(a)(i)</u> through <u>(viii)</u> below (the "**<u>Priority of Payments</u>**") and pursuant to the Distribution Date instructions contained in the Distribution Date Reports delivered pursuant to <u>Section 11.4</u> in the following order of priority:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;<u>Custodian/Paying Agent/Account Bank/Notes Registrar Payments</u>. *First,* to pay any unpaid fees and expenses and indemnities of the Custodian, the Paying Agent, the Notes Registrar and the Account Bank, including any indemnification payments, taxes

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owed or Attorney Costs owed to the Custodian, the Paying Agent, the Notes Registrar and the Account Bank in accordance with the terms of this Agreement or other applicable PA Financing Transaction Document as of the Determination Date immediately preceding such Distribution Date and invoiced to the Company by the Custodian, the Paying Agent, the Notes Registrar or the Account Bank, as the case may be, at least fifteen (15) days prior to submitting the Distribution Date Report; provided that, while the Company is the Custodian, the Company may elect, in its sole discretion and by indicating so in the Distribution Date Report, to forego the distribution of funds owed to the Custodian pursuant to this clause (i);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;<u>Reimbursable Expenses</u>. *Second,* to Agents, Lenders (to their respective Lender's Account) and Note Holders (to their respective Note Holder's Account), to repay any outstanding Reimbursable Expenses of such Agents, Lenders and Note Holders that made or incurred such Reimbursable Expenses of which the Company received written demand for payment at least fifteen (15) days prior to submitting the Distribution Date Report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;<u>Interest on Purchase Money Notes</u>. *Third,* to the Note Holders (to their respective Note Holder's Account and in accordance with such Note Holder's Pro Rata Share), to pay all accrued and unpaid interest (including any Default Interest and any Withholding Tax Gross-Up Payment, if applicable) with respect to the Purchase Money Notes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;<u>Borrowing Base Shortfall</u>. *Fourth*, the amount of any Borrowing Base Shortfall, first (A) to the Note Holders (to their respective Note Holder's Account and in accordance with such Note Holder's Pro Rata Share), until the outstanding principal balances of the Purchase Money Notes have been reduced to zero, and (B) the remainder, if any, to the Lenders (to their respective Lender's Account and in accordance with such Lender's Pro Rata Share);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;<u>Principal of Purchase Money Notes</u>. *Fifth*, to the Note Holders (to their respective Note Holder's Account and in accordance with such Note Holder's Pro Rata Share) to pay any principal then due and payable on the Purchase Money Notes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;&nbsp;&nbsp;<u>Interest on Facility Loans</u>. *Sixth*, to the Lenders (to their respective Lender's Account and in accordance with such Lender's Pro Rata Share) if such Distribution Date is an Interest Payment Date, to pay all accrued and unpaid interest (including any Default Interest and any Withholding Tax Gross-Up Payment, if applicable) with respect to the Facility Loans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii)&nbsp;&nbsp;&nbsp;&nbsp;<u>Principal of Facility Loans</u>. *Seventh*, to the Lenders ((to their respective Lender's Account and in accordance with such Lender's Pro Rata Share) to pay any principal then due and payable on the Facility Loans; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii)&nbsp;&nbsp;&nbsp;&nbsp;<u>Conditional Distribution to the Company</u>. *Eighth*, any remaining portion of the amount first described above in this Section 5.1(a), to such account as the Company may designate to the Paying Agent in writing from time to time, <u>provided</u> that if the Paying Agent has received a Notice of Exclusive Control (as defined in the Account Control Agreement) from the Collateral Agent, then, unless and until the Paying Agent has received another written notice from the Collateral Agent rescinding such Notice of Exclusive Control (and in any event without limitation of the Collateral Agent's rights

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under the Account Control Agreement and the Security Agreement), such remaining portion shall be applied as directed by the Collateral Agent from time to time (and held by the Paying Agent for the benefit of the Collateral Agent pending such directions).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;If the aggregate amount available to be distributed on the applicable Distribution Date pursuant to <u>Sections 5.1(a)(i)</u> through <u>(vii)</u> is less than the amount required to be distributed by such <u>Sections 5.1(a)(i)</u> through <u>(vii)</u>, then the Company shall deposit the amount of the shortfall into the Distribution Account from its own funds such that the full amount of such required distributions for such Distribution Date may be made on such date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent shall also distribute on the relevant Distribution Date the amount of voluntary prepayments made for such date pursuant to <u>Section 3.3</u>, to the Lenders in the case of prepayment of the Facility Loans (to their respective Lender's Account and in accordance with such Lender's Pro Rata Share), or to the Note Holders in the case of prepayment of the Purchase Money Notes (to their respective Note Holder's Account and in accordance with such Note Holder's Pro Rata Share).

**ARTICLE VI**<br>**CUSTODIAL DOCUMENTS**

Section 6.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Delivery of Custodial Documents.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Delivery</u>. (i) On the Document Effective Date while the Company is acting as Custodian and (ii) ninety (90) days (or such later date as the Collateral Agent may consent to with respect to all or any portion of the Custodial Documents, such consent not to be unreasonably withheld or delayed) after the appointment of a Custodian other than the Company, the Debtors shall deliver or cause to be delivered the Custodial Documents (together with an index thereof) to the Custodian at the offices of the Custodian designated in writing to the Company (the "**<u>Office</u>**"), which initially shall be located at 10 Post Office Square, Boston, MA 02109, 160 Bovet Road, San Mateo, CA 94402, 75 North Oaks Boulevard, Pasadena, CA 91103 and 3003 Tasman Drive, Santa Clara, CA 95054. Without limitation of the foregoing, the Company shall deliver a notice to the Custodian (with copies to the Collateral Agent and the Notes Designee) when it considers the Debtors to have complied with the foregoing obligation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Collateral Certificate; Exceptions</u>. The Custodian shall make available during normal business hours, and at such other hours as might be reasonable in the circumstances, to the Company and the Receiver (and representatives of the Company and the Receiver) an office space at the Office that is sufficient to accommodate up to six (6) people to review the Custodial Documents with representatives of the Custodian for a period of not more than ten (10) days prior to the delivery of the Collateral Certificate (as defined below). In the case of the Company as Custodian, within ninety (90) days after the Document Effective Date or, in the case of any other Custodian, within ninety (90) days after the delivery of the Custodial Documents to the Custodian (or, if earlier, the delivery to the Custodian of the notice described in the third sentence of <u>Section 6.1(a)</u>), the Custodian shall execute and deliver to the Company, the Notes Designee, and the Collateral Agent a certificate, substantially in the form annexed hereto as <u>Exhibit E</u>, to the effect that the Custodian has received and reviewed the Custodial Documents, including a Loan Schedule and Exception List ("**<u>Collateral Certificate</u>**"). In reviewing the documents provided with respect to a Loan, the Custodian shall examine the same in accordance

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with the Review Procedures and determine, with respect to each such document, whether it (i) appears regular on its face (i.e., is not mutilated, damaged, torn, defaced or otherwise physically altered), (ii) relates to such Loan, (iii) has been executed by the named parties thereon, (iv) where applicable, purports to be recorded and (v) appears to be what it purports to be. Notwithstanding the foregoing, with respect to each Loan, the Custodian shall not be required to examine the Underlying Collateral Documents in accordance with the foregoing but shall only be required to determine (I) whether all Loan Documents reasonably expected to accompany that Loan have been delivered to it, and (II) if any of the required endorsements on any Loan Notes are missing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;<u>Custodial Documents</u>. For each Loan and Acquired Property, to the extent applicable and available, the "**<u>Custodial Documents</u>**" shall include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;the original Loan Note bearing all intervening endorsements, and for each Loan Note, (i) (x) an executed Receiver Allonge, (y) a stamped and executed endorsement on such Loan Note by or on behalf of the Receiver to the Company, or (z) if such Loan Note is not available, an executed Receiver Assignment and Lost Instrument Affidavit, and (ii) (x) an executed Grantor Allonge effecting the current endorsement of the original Loan Note in blank, (y) the following endorsement in blank stamped and executed on the original Loan Note:

**PAY TO THE ORDER OF _______________________________, WITHOUT RECOURSE.**

**__________________________________**

**By: <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;** 

**Name: <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>**

**Title: <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>**

or (z) if such Loan Note is not available, an executed Grantor Assignment and Lost Instrument Affidavit;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;the original Mortgage with evidence of recording thereon, or a certified copy thereof from the applicable Recording Office, or a copy thereof together with an officer's certificate of the related Borrower, title company, escrow agent or closing attorney certifying that such represents a true and correct copy of the original and that such original has been submitted for recordation in the applicable Recording Office;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;the originals of all assumption, modification, consolidation or extension agreements (if any) with evidence of recording thereon, or certified copies thereof from the applicable Recording Office, or copies thereof together with a certification by or other similar evidence from the applicable Recording Office or an officer's certificate of the related Borrower, title company, escrow agent or closing attorney certifying that such represents a true and correct copy of the original and that such original has been submitted for recordation in the applicable Recording Office;

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;the Acquired Property Files;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;[Reserved];

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;&nbsp;&nbsp;for each Mortgage, (x) the original Grantor Mortgage Assignment in blank, signed in the name of the Company (or other applicable Grantor), and (y) the original Receiver Mortgage Assignment, signed in the name of the Receiver, in each case in form and substance acceptable for recording;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii)&nbsp;&nbsp;&nbsp;&nbsp;for each Mortgage, the originals of all other intervening mortgage assignments (if any) with evidence of recording thereon, or certified copies thereof from the applicable Recording Office, or copies thereof together with an officer's certificate of the related Borrower, title company, escrow agent or closing attorney certifying that such represents a true and correct copy of the original and that such original has been submitted for recordation in the applicable Recording Office;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii)&nbsp;&nbsp;&nbsp;&nbsp;the original attorney's opinion of title and abstract of title or the original mortgage title insurance policy or, if the original mortgage title insurance policy has not been issued, the irrevocable commitment to issue the same;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix)&nbsp;&nbsp;&nbsp;&nbsp;the originals of all Underlying Collateral Documents executed in connection with the Loan, if available;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;&nbsp;&nbsp;&nbsp;Uniform Commercial Code financing statements with recording information thereon from the Recording Offices if necessary to perfect the security interest of the Loan under the Uniform Commercial Code;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi)&nbsp;&nbsp;&nbsp;&nbsp;[Reserved];

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii)&nbsp;&nbsp;&nbsp;&nbsp;any bailee letters regarding any Loan Notes or other Custodial Documents held by the bailee.

The "Custodial Documents" shall not include (x) with respect to Floor Plan Loans, any vehicle title certificate or other document evidencing title in or ownership of motor vehicles constituting Underlying Collateral, and (y) with respect to Warehouse Loans, any note, promissory note or loan agreement evidencing extensions of credit by the Borrower thereunder, or any deed of trust, deed, trust deed, deed to secure debt, mortgage, contract for the sale of real property, assignment, or collateral agreement in respect of the Underlying Collateral (such documents in (x) and (y), "**<u>Springing Custodial Documents</u>**"); provided that (1) the Debtors shall, within ten (10) days of the Collateral Agent's request therefor during the continuance of an Event of Default, use commercially reasonable efforts to obtain and deliver or cause to be delivered such Springing Custodial Documents to the Custodian together with a corresponding Supplemental Delivery Certificate, and (2) ten (10) days after the Collateral Agent's request therefor during the continuance of an Event of Default, the Springing Custodial Documents shall be considered "Custodial Documents".

From time to time, the Collateral Agent may designate in writing to the Custodian and the

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

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Company such other documents ("**<u>Designated Custodial Documents</u>**") as the Collateral Agent shall deem reasonably necessary or appropriate to effect, perfect or protect the priority of the Liens granted (or purported to be granted) in <u>Section 3.1</u> of the Security Agreement as "Custodial Documents" and, upon and after such designation, such Designated Custodial Documents shall be considered "Custodial Documents".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;<u>Supplemental Deliveries</u>. The Debtors shall deliver or cause to be delivered to the Custodian (i) any and all additional Custodial Documents other than with respect to any Acquired Property within thirty (30) days following the execution and delivery of any such instrument and (ii) any and all Custodial Documents with respect to any Acquired Property within thirty (30) days following receipt of any such instrument. All such deliveries of Custodial Documents pursuant to this <u>Section 6.1(d)</u> shall be accompanied by a certificate in the form of <u>Exhibit G</u> (a "**<u>Supplemental Delivery Certificate</u>**"), prepared by an Authorized Representative of the Company, itemizing the Custodial Documents being delivered to the Custodian in such delivery and identifying the Loan or Acquired Property to which each such Custodial Document relates. After the receipt thereof, the Custodian shall (A) examine the additional Custodial Documents provided with respect to a Loan or Acquired Property in accordance with the Review Procedures and determine, with respect to each such document, whether it (i) appears regular on its face (i.e., is not mutilated, damaged, torn, defaced or otherwise physically altered), (ii) relates to such Loan or Acquired Property, (iii) has been executed by the named parties thereon, (iv) where applicable, purports to be recorded and (v) appears to be what it purports to be and (B) ensure that all such Custodial Documents with respect to a Loan or Acquired Property are placed in the file for the related Loan. In the event the Custodian determines that the Supplemental Delivery Certificate is inaccurate, the Custodian shall so notify the Company in writing no later than three (3) Business Days following its receipt of the Supplemental Delivery Certificate. Within fifteen (15) Business Days after the end of each calendar month, the Custodian shall provide the Company (with a copy to the Collateral Agent and Notes Designee) with a Collateral Certificate, to the effect that the Custodian has received and reviewed the additional Underlying Collateral Documents received by the Custodian during such calendar month, and include a revised Loan Schedule and Exception List.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;<u>Loan Schedules; Exception Lists; Review Procedures</u>. Each Loan Schedule and Exception List shall list all Exceptions using such codes as shall be in form and substance agreed to by the Custodian and the Company. Each Loan Schedule and Exception List delivered by the Custodian to the Company shall supersede and cancel the Loan Schedule and Exception List previously delivered by the Custodian to the Company hereunder and shall replace the then-existing Loan Schedule and Exception List to be attached to the Collateral Certificate. Notwithstanding anything to the contrary set forth herein, in the event that the Loan Schedule and Exception List attached to the Collateral Certificate is different from the most recently delivered Loan Schedule and Exception List, then the most recently delivered Loan Schedule and Exception List shall control and be binding upon the parties hereto. The delivery of each Loan Schedule and Exception List to the Company shall constitute the Custodian's representation to each of the Company, the Note Holders, the Lenders, the Notes Designee and the Collateral Agent that, other than the Exceptions listed as part of the last delivered Loan Schedule and Exception List: (i) all documents reasonably expected to accompany any Loan or Acquired Property pursuant to <u>Section 6.1</u> of this Agreement have been delivered and are in the possession of the Custodian as part of the Custodial Documents, (ii) all such documents have been reviewed and examined by the Custodian in accordance with the Review Procedures and appear on their

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

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face to be regular and to relate to such Loan or Acquired Property and to satisfy the requirements set forth in <u>Section 6.1</u> of this Agreement and (iii) subject to the provisions of <u>Section 7.2(b),</u> each Loan or Acquired Property identified on such Loan Schedule and Exception List is being held by the Custodian as the bailee for the applicable Debtor. In connection with a Loan Schedule and Exception List delivered hereunder by the Custodian, the Custodian shall make no representations as to and shall not be responsible for verifying (A) the validity, legality, enforceability, due authorization, recordability, sufficiency or genuineness of any of the Custodial Documents or (B) the collectability, insurability, effectiveness or suitability of any such Loan or Acquired Property. To the extent that any of the documents or materials required to be provided by the Company to the Custodian pursuant to <u>Sections 6.1(c)(ii) - (iii), (vii)</u> and <u>(viii)</u> are not available as originals or as certified copies and the absence of such item would not, in the reasonable judgment of the Company, affect the value of the Loan or Acquired Property or the ability to enforce the rights of the mortgagee (and the Company otherwise is not required to do so in order to comply with the Servicing Obligations), the Company shall not be required to expend more than nominal funds to provide such original or certified copies unless or until they are necessary for the enforcement of such rights, or unless or until the Notes Designee or the Collateral Agent provides written notice to the Custodian that it requires the Company to act to cure such exceptions, and all such matters shall remain as exceptions on the Loan Schedule and Exception List.

Section 6.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Examination of Custodian Files; Copies.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The Company, the Notes Designee and the Collateral Agent and their respective agents, accountants, attorneys and auditors, and any other Persons designated by the Company, the Notes Designee or the Collateral Agent, as applicable, in writing as authorized to access and review the Custodial Documents, shall be permitted during normal business hours to examine the Custodial Documents upon reasonable prior written notice to the Custodian.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Upon the request of the Company, the Notes Designee or the Collateral Agent, the Custodian shall provide copies of any requested Custodial Documents. The requesting party shall reimburse the Custodian for the actual, reasonable and customary costs incurred in providing copies of such Custodial Documents.

Section 6.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Shipment of Custodial Documents</u>. Prior to any shipment of any Custodial Documents hereunder, the Company shall deliver to the Custodian written instructions as to the method of shipment and the shipper that the Custodian is to utilize in connection with the transmission of such Custodial Documents. The Company shall arrange for the provision of such services at its sole cost and expense (or, at the Custodian's option, reimburse the Custodian for all costs and expenses incurred by the Custodian consistent with such instructions) and will maintain such insurance against loss or damage to the Custodial Documents as the Company may deem appropriate. It is expressly agreed that in no event shall the Custodian have any liability for any losses or damages to any Person, including the Company, arising out of actions of the Custodian pursuant to this <u>Section 6.3</u> consistent with the instructions of the Company. In the event that the Custodian does not receive such written instructions, the Custodian shall be authorized and shall be indemnified as provided herein to utilize a nationally recognized courier service.

Section 6.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Delivery of Non-Original Signatures</u>. A facsimile, machine-generated or

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

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stamp signature may be used on the endorsements of any Loan Note (including the endorsements by allonge) if and to the extent that a facsimile, machine-generated or stamp signature on an endorsement or an allonge (as applicable) is legally enforceable under applicable Law. If the Company endorses any Loan Notes using a facsimile or machine-generated signature or stamp signature, it shall so inform the Collateral Agent, with a copy to the Custodian prior to the time that the Company undertakes to endorse the applicable Loans or delivers any further Custodial Documents to the Custodian. The Collateral Agent reserves the right to request that the Company provide the Collateral Agent with a written legal opinion from the Company's counsel to the effect that such facsimile or machine-generated or stamp signatures are legally enforceable, to the same extent as original signatures, under applicable Law. If the Company provides notice to the Collateral Agent, with a copy to the Custodian, that it will use facsimile or machine-generated or stamp signatures on its endorsements, the Custodian shall be authorized to accept such endorsements unless and until the Collateral Agent directs otherwise in writing to the Custodian, with a copy to the Company (which the Collateral Agent will do only if it requests and does not receive a legal opinion regarding the same from the Company).

**ARTICLE VII**<br>**CUSTODIAN**

Section 7.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Appointment of the Custodian.</u>

Subject to the terms and conditions of this Agreement, the Debtors hereby appoint the Company to perform the duties of the Custodian, and the Company hereby accepts such appointment as Custodian, to act as the Collateral Agent's agent, custodian, and bailee to hold and maintain custody of the Custodial Documents. For the purpose of satisfying clause (vi) of the definition of "Qualified Custodian", the Collateral Agent hereby consents, subject to ongoing compliance with the BIC Requirements, to the appointment of the Company as the Custodian.

Section 7.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Obligations of the Custodian.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Maintenance of Custody</u>. Subject to the provisions of this <u>Section 7.2</u>, the Custodian shall (i) hold and maintain continuous custody of all Custodial Documents received by it in trust for and for the benefit of the Debtor, (ii) act with the same degree of care and skill that the Custodian exercises with respect to any loan files relating to similar loans owned, serviced or held as custodian by the Custodian and, in any event, in accordance with customary standards for such custody and, for so long as the Company is the Custodian, in accordance with the BIC Requirements, (iii) reflect in its records the interest of the applicable Debtor therein, (iv) dispose of the Custodial Documents only in accordance with the provisions of this Agreement and (v) subject to the provisions of <u>Section 7.2(b),</u> hold all Custodial Documents received by it for the exclusive use and benefit of the applicable Debtor, and make disposition thereof only in accordance with written instructions furnished by the applicable Debtor. The Custodian shall hold the Custodial Documents in the mainland United States.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Pledge of Loans to the Collateral Agent</u>. Pursuant to the terms and conditions of the Security Agreement, the Company has pledged all of its rights, title and interest in and to the Collateral to the Collateral Agent for the benefit of the Secured Parties as security for the Secured Obligations. Accordingly, notwithstanding anything to the contrary contained in this

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

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Agreement, the Custodian acknowledges and agrees that it holds possession of the Loan Notes and the other Custodial Documents for the Collateral Agent's benefit pursuant to <u>Section 9-313(c)</u> of the NY UCC (or the analogous provision under the Uniform Commercial Code as adopted in any other relevant jurisdiction) as in effect on the date hereof and as bailee for the Collateral Agent; <u>provided</u>, <u>however</u>, that, subject to the provisions of <u>Section 7.2(d)</u>, such pledge shall not affect the right of the Custodian to rely on instructions from the Company hereunder. The Custodian's records shall reflect the pledge of the Loans, the Acquired Property and the Custodial Documents by the Grantors to the Collateral Agent until such time as the Custodian receives a Request for Release and Receipt of Custodial Documents from the Company pursuant to Section 7.2(f)(ii) or Section 7.2(f)(iv) at which time the Custodian shall change its records to reflect the release of the pledge of such Loans, such Acquired Property and such Custodial Documents and that the Custodian is holding such Loans, such Acquired Property and such Custodial Documents as custodian for, and for the benefit of, the Company or its respective designees. In the circumstances described in Section 7.2(f)(iii), the Custodian shall (i) make a written request for the return of all Custodial Documents removed from the Custodian's possession within fifteen (15) days after their removal (if the same are not returned before such time) and thereafter, continue to use commercially reasonable efforts to obtain the return of such removed Custodial Documents until such time as the Custodial Documents are returned and (ii) provide on a monthly basis to the Collateral Agent and the Company an aging report identifying the released (and unreturned) Custodial Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;<u>Qualification To Conduct Business</u>. Nothing contained in this Agreement shall be construed to require the Custodian to qualify to do business in any jurisdiction other than (i) any jurisdiction in which any Custodial Document is or may be held by the Custodian from time to time under this Agreement or (ii) any jurisdiction in which the ownership of its property or the conduct of its business requires such qualification and in which the failure to qualify could have a material adverse effect on the Custodian or its property or business or on the ability of the Custodian to perform its duties and obligations under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;<u>Event of Default Under the Security Agreement</u>. Any term of this Agreement to the contrary notwithstanding, upon the Custodian's receipt from the Collateral Agent of written notice that an Event of Default has occurred and is continuing, the Custodian shall take instructions only from the Collateral Agent (and shall not take instruction from the Company or any other Person) as to any action to be taken by the Custodian hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;<u>Third Party Demands</u>. In the event that (i) the Company or the Custodian is served by a third party with any type of levy, attachment, writ or court order with respect to any Custodial Document or (ii) a third party shall institute any court proceeding by which any Custodial Document shall be required to be delivered otherwise than in accordance with the provisions of this Agreement, the party receiving such service shall promptly deliver or cause to be delivered to the other parties to this Agreement copies of all court papers, orders, documents and other materials concerning such proceedings, to the extent permitted by applicable Law. The Custodian shall, to the extent permitted by applicable Law, continue to hold and maintain all of the Custodial Documents that are the subject of such proceedings pending a final, non-appealable order of a court of competent jurisdiction permitting or directing disposition thereof. Upon final determination of such court, the Custodian shall release such Custodial Documents as directed by the Company, which shall give a direction consistent with such court determination.

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;<u>Release of Custodial Documents</u>. Subject to the provisions of <u>Section 7.2(d),</u> the Custodian shall retain the Custodial Documents in its possession and custody at all times during the term hereof unless any one of the following events has occurred:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;If the Custodian has resigned or has been removed in accordance with the provisions of <u>Section 9.1</u>, the Custodian shall deliver the Custodial Documents to the successor Custodian in accordance with <u>Section 9.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;If the Custodian has received a Request for Release and Receipt of Custodial Documents from an Authorized Representative of the Company stating that the Company has received all amounts due under a Loan, or a discounted payoff as payment in full of such Loan, the Custodian shall release the related Custodial Documents to the Company in accordance with the instructions provided in such notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;If the Custodian has received a Request for Release and Receipt of Custodial Documents from an Authorized Representative of the Company stating that the Company needs the Custodial Documents in order to foreclose on a Mortgaged Property, accept a deed in lieu thereof, or modify or restructure the terms thereof, the Custodian shall release the related Custodial Documents to the Company in accordance with the instructions provided in such notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;If the Custodian has received a Request for Release and Receipt of Custodial Documents from an Authorized Representative of the Company stating that the Company has agreed to sell a Loan or the Underlying Collateral in accordance with <u>Section 7.12(c)</u> of the Security Agreement, the Custodian shall deliver the related Custodial Documents to the Company in accordance with the instructions provided in such notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;<u>No Other Duties</u>. The Custodian shall have no duties or responsibilities as Custodian except those that are specifically set forth herein and shall not be liable except for the performance of such duties and obligations. No implied covenants or obligations shall be read into this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;<u>No Investigation</u>. The Custodian shall be under no obligation to make any investigation into the facts or matters stated in any resolution, certificate, statement, acknowledgement, consent, order or other document that is included in the Custodial Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;<u>Cooperation</u>. The Company shall use commercially reasonable efforts to provide any additional documentation or information reasonably requested by the Custodian in performing its duties and obligations hereunder.

**ARTICLE VIII**<br>**FEES AND EXPENSES**

Section 8.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Fees and Expenses</u>. The Custodian and the Paying Agent each shall charge such fees for its services and be reimbursed for such of its expenses under this Agreement as are set forth on <u>Exhibit J</u>, which fees and expenses the parties agree are reasonable and customary. The Company shall pay such fees and expenses (i) so long as the Company is acting as Custodian, directly to the Custodian and (ii) otherwise pursuant to the Priority of Payments. The Custodian's and the Paying Agent's rights to receive such fees and expenses for services performed shall survive any resignation or removal of the

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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Custodian (including the Company while it serves in such capacity) or the Paying Agent or the termination or assignment of this Agreement. Nothing in this <u>Section 8.1</u> shall be construed to limit in any way the right of the Custodian (including the Company while it serves in such capacity) or the Paying Agent to receive indemnification and reimbursement from the Debtors pursuant to <u>Section 13.1</u>.

**ARTICLE IX**<br>**REMOVAL OR RESIGNATION**

Section 9.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Removal or Resignation of the Custodian or the Paying Agent.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Resignation</u>. Subject to the provisions of <u>Section 9.1(c)</u>, the Custodian (unless the Custodian is the Company) or the Paying Agent may at any time resign (such resigning Person, the "**<u>Resigning Agent</u>**") and terminate its respective obligations as Custodian or Paying Agent, as applicable, under this Agreement upon at least thirty<u>ninety</u> (30<u>90</u>) days' prior written notice to the Notes Designee and the Collateral Agent. In the event the Custodian and the Paying Agent are the same Person, such Person must resign as both Custodian and Paying Agent. Promptly upon the Resigning Agent's resignation as Custodian and/or Paying Agent, as applicable, subject to the provisions of the Security Agreement, the Company shall appoint, by written instrument, and with the prior written consent of the Collateral Agent (not to be unreasonably withheld, delayed or conditioned), a successor Custodian and/or Paying Agent, as applicable. Any such successor Custodian must be a Qualified Custodian and any such successor Paying Agent must be a Qualified Paying Agent. In the event that no successor shall have been appointed as Custodian and/or Paying Agent, as applicable, within such thirty<u>ninety</u> (30<u>90</u>) day period, the Resigning Agent, at the expense of the Company, may petition any court of competent jurisdiction to appoint a successor Custodian and/or Paying Agent, as applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Removal</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) In the case of any Custodian (other than the Company acting as Custodian) or any Paying Agent, and subject to the provisions of <u>Section 9.1(c)</u>, the Company (with the prior written consent of the Collateral Agent (not to be unreasonably withheld or delayed)) or the Collateral Agent (which, when no Event of Default has occurred and is continuing, must be with the prior written consent of the Company (not to be unreasonably withheld or delayed)) may remove and discharge any Custodian and any Paying Agent (or any successor custodian or any successor paying agent thereafter appointed) without cause from the performance of its obligations under this Agreement upon at least thirty (30) days' prior written notice to the Custodian or the Paying Agent, as applicable. Promptly after the giving of notice to the Custodian or the Paying Agent, as applicable, the Company shall appoint, by written instrument, and with the prior written consent of the Collateral Agent (not to be unreasonably withheld or delayed), a successor Custodian and/or Paying Agent, as applicable. Any such successor Custodian must be a Qualified Custodian and any such successor Paying Agent must be a Qualified Paying Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)&nbsp;&nbsp;&nbsp;&nbsp;In the case of the Company acting as Custodian, and subject to the provisions of <u>Section 9.1(c)</u>, the Collateral Agent may remove and discharge the Company as Custodian from the performance of its obligations under this Agreement by written notice to the Company as Custodian upon a Company Custodian Termination

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

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Trigger Event. Promptly after the giving of notice to the Company as Custodian, the Collateral Agent shall appoint, by written instrument, a successor Custodian.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;<u>Effectiveness</u>. No resignation or removal of the Person serving as Custodian and/or as Paying Agent pursuant to <u>Section 9.1(a)</u> or <u>(b)</u> shall be effective prior to the appointment of a successor Custodian and/or Paying Agent, as applicable, the acceptance of such appointment by such successor Custodian and/or Paying Agent, as applicable, and, in the case of a successor Paying Agent, the execution and delivery by such successor Paying Agent of an Account Control Agreement in the form of <u>Exhibit N</u> or otherwise satisfactory to the Collateral Agent. Upon appointment of a successor Custodian and/or Paying Agent, the successor Custodian and/or Paying Agent, as applicable, shall execute, acknowledge and deliver an instrument accepting such appointment under, and agreeing to be bound by the terms of, this Agreement, at which time the resignation or removal of the predecessor Custodian and/or Paying Agent shall become effective and the successor Custodian and/or Paying Agent, without any further act, deed or conveyance, shall become fully vested with all rights, powers, duties and obligations of the Custodian and/or the Paying Agent, as applicable, under this Agreement, as if originally named Custodian and/or Paying Agent, as applicable, hereunder. A copy of such instrument shall be delivered to each Debtor, the Notes Designee, the Collateral Agent, the predecessor Custodian and/or Paying Agent, and the successor Custodian and/or Paying Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;<u>Transfer of Documents; Transfer of Funds</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) In the event of any removal or resignation as Custodian, the outgoing Custodian shall promptly transfer to the successor Custodian, as directed, all Custodial Documents, and each Debtor and the outgoing Custodian shall execute and deliver such instruments and do such other things as may reasonably be required for more fully and certainly vesting and confirming in the successor Custodian all rights, powers, duties and obligations of the Custodian as Custodian under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) In the event of any removal or resignation as Paying Agent, the outgoing Paying Agent shall promptly transfer to the successor Paying Agent, as directed, all funds deposited in the Debtor Accounts, and each Debtor and the Paying Agent shall execute and deliver such instruments and do such other things as may reasonably be required for more fully and certainly vesting and confirming in the successor Paying Agent all rights, powers, duties and obligations of the Paying Agent as Paying Agent under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;<u>Costs</u>. The Company shall be responsible for payment to any successor Custodian and/or Paying Agent, as applicable, of all reasonable fees and expenses of the successor Custodian and/or Paying Agent, as applicable, in becoming the Custodian and/or Paying Agent and any fees and expenses for transferring Custodial Documents or funds deposited in the Debtor Accounts to the successor Custodian and/or Paying Agent, as applicable.

**ARTICLE X**

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**<br>REPRESENTATIONS, WARRANTIES AND COVENANTS**

Section 10.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Representations, Warranties and Covenants.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The Custodian, the Paying Agent and each Debtor represent and warrant to each other (and to each of the Note Holders, the Lender, the Notes Designee and the Collateral Agent) as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;it has the requisite power and authority and the legal right to execute and deliver, and to perform its obligations under, this Agreement, and has taken all necessary corporate or other action to authorize its execution, delivery and performance of this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;no consent or authorization of, filing with, or other act by or in respect of any Governmental Authority, and no consent of any other Person (including any stockholder or creditor), is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement by it;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;this Agreement has been duly executed and delivered on behalf of it and constitutes a legal, valid and binding obligation of it enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity (whether enforcement is sought in a proceeding in equity or at law).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The Custodian represents and warrants to each of the Debtors, the Note Holders, the Lender, the Notes Designee and the Collateral Agent that the Custodian is a Qualified Custodian.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent represents and warrants to each of the Debtors, the Note Holders, the Lender, the Notes Designee and the Collateral Agent that the Paying Agent is a Qualified Paying Agent.

Section 10.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Insurance</u>. At its own respective expense, each of the Custodian and the Paying Agent shall maintain at all times and keep in full force and effect (a) fire and other casualty insurance, (b) fidelity insurance, (c) theft of documents insurance, (d) forgery insurance and (e) errors and omissions insurance. All such insurance shall be in amounts, with standard coverage and subject to deductibles, as are customary for insurance typically maintained by financial institutions which act as paying agent and/or as custodian, as applicable, of collateral substantially similar to the Collateral. Upon written request, the Company shall be entitled to receive a certificate of the respective insurer that such insurance is in full force and effect.

**ARTICLE XI**<br>**REPORTS**

Section 11.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Paying Agent Report.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent shall make available to the Company, the Notes Designee and the Collateral Agent no later than 12:00 noon, New York City time, on each Distribution Date

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(commencing with the Distribution Date in December 2023), a report for the applicable Due Period (the "**<u>Paying Agent Report</u>**") with respect to the Debtor Accounts (including setting forth in reasonable detail the balances of and any investments in such Debtor Accounts as of such date and all deposits (including Loan Proceeds deposits) to and disbursements from such Debtor Accounts, including the date on which made, since the date of the previous report) held by the Paying Agent pursuant to this Agreement and on such other information as may otherwise be agreed by the parties with respect to such Due Period, all as set forth on Exhibit K. The Paying Agent shall follow the procedures and perform the calculations and reconciliations required to prepare the Paying Agent Report, in each case as set forth on Exhibit K.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent Report shall be based on information included in (i) the Distribution Date Report for the applicable Due Period and (ii) the internal records of the Paying Agent relating to distributions from the Distribution Account.

Section 11.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Additional Reports.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Within two (2) Business Days after receipt of a written request of the Company, the Notes Designee or the Collateral Agent for a Custodial Document Release Report, an updated Loan Schedule and Exception List, or (after the first delivery of a Collateral Certificate) an updated Collateral Certificate, the Custodian shall provide the requesting party with the Custodial Document Release Report, the updated Loan Schedule and Exception List or the updated Collateral Certificate, as applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent shall provide the Company, the Notes Designee and the Collateral Agent with online, real-time, view-only access to the Debtor Accounts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent shall provide any additional information or reports relating to the Debtor Accounts and the transactions therein reasonably requested from time to time by the Company, the Notes Designee or the Collateral Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Upon request of the Collateral Agent or the Notes Designee the Company shall prepare and deliver to the Collateral Agent or the Notes Designee, as applicable, a trial balance report having the fields described on <u>Exhibit R</u> (or, with respect to Additional Collateral and following consultation with, on a time-of-the-essence basis, the Company, such other fields as may be reasonably requested by the Collateral Agent or the Notes Designee from time to time).

Section 11.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Debtor Distribution Date Accounting</u>. Not later than seven (7) Business Days prior to each Distribution Date (commencing with the Distribution Date in December 2023), the Company shall prepare and deliver to the Paying Agent, the Collateral Agent and the Notes Designee a report, in the form of <u>Exhibit Q</u>, which shall specify the amounts and recipients of all funds to be distributed on such Distribution Date from the Distribution Account, all as determined as of the date of such report on the basis of information timely received by the Company prior to such date (the "**<u>Determination Date</u>**") and certified by an Authorized Representative of the Company (with respect to any particular Distribution Date, the "**<u>Distribution Date Report</u>**"). In the event that the Collateral Agent wishes to revise the form of Distribution Date Report, the Collateral Agent shall, in its reasonable discretion after consultation with, on a time-of-the-essence basis, and upon not less than five (5) Business Days' prior notice, to the Company and Paying Agent, provide a revised form of Distribution Date Report. The Distribution Date Report with respect to any particular Distribution Date shall

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contain the information listed below, the information indicated on the form of Distribution Date Report, and any other information reasonably requested by the Collateral Agent or the Paying Agent that is available to the Company and can be provided without undue burden:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;the aggregate amount of Loan Proceeds Received during the Due Period with respect to such Distribution Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;the Minimum Deposit Amount for the Due Period with respect to the following Distribution Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;the portion of the amount described in sub-clause (a) that consisted of interest payments collected on the Loans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;for the Collection Account and the Distribution Account:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;the amount to be transferred from the Collection Account to the Distribution Account on the Business Day immediately preceding such Distribution Date (pursuant to <u>Section 3.2</u>); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;the amounts payable from the Distribution Account on such Distribution Date pursuant to the Priority of Payments (subject to the provisos set forth therein); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;the amount of any voluntary prepayment to be made on such Distribution Date in respect of the outstanding principal amount of (i) the Purchase Money Notes or (ii) the Facility Loans (separately specifying each of (i) and (ii)) in accordance with the terms of the Purchase Money Notes and the Advance Facility Agreement, respectively; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;the amount of any additional payment to be made by the Paying Agent on such Distribution Date pursuant to <u>Section 3.4(a)</u> hereof.

Any specification in a Distribution Date Report of a voluntary prepayment described in <u>Section 11.3(e)</u> shall be irrevocable and (without limitation of the foregoing) shall obligate the Company to deposit the funds necessary to effect the voluntary prepayment described in <u>Section 11.3(e)</u> as specified in <u>Section 3.3</u> hereof. The Paying Agent may conclusively rely on each Distribution Date Report delivered to it, and each Distribution Date Report shall constitute instructions to the Paying Agent to make the transfers and distributions set forth therein.

Section 11.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Distribution Date Instructions</u>. Each Distribution Date Report shall contain, or be accompanied by (or shall otherwise be deemed to constitute), irrevocable instructions to the Paying Agent to (i)(x) transfer from the Collection Account to the Distribution Account the amount described in <u>Section 11.3(d)(i)</u> and <u>(y)</u> withdraw on the related Distribution Date from the Distribution Account and pay or transfer (on the relevant Distribution Date) the amounts described in <u>Section 11.3(d)(ii)</u> (in any event subject to the provisos set forth in <u>Section 5.1</u> of this Agreement) and (ii) make on the relevant Distribution Date (x) the additional voluntary prepayments in respect of the Purchase Money Notes or the Facility Loans described in <u>Section 11.3(e)</u> (to each Note Holder or Lender, as the case may be, in accordance with its Pro Rata Share) and (y) the additional payments described in <u>Section 11.3(f),</u> in each case to the

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extent applicable.

Section 11.5&nbsp;&nbsp;&nbsp;&nbsp;<u>Books and Records</u>. The Paying Agent shall maintain all such accounts, books and records as may be necessary to properly record all transactions carried out by it with respect to the Debtor Accounts, including all disbursements therefrom. The Paying Agent shall permit each Debtor, the Notes Designee and the Collateral Agent to examine such accounts, books and records that relate to any Debtor Account, provided that any such examination shall occur upon reasonable notice and during normal business hours.

**ARTICLE XII**<br>**NO ADVERSE INTERESTS**

Section 12.1&nbsp;&nbsp;&nbsp;&nbsp;<u>No Adverse Interests</u>. By execution of this Agreement, the Company (i) represents and warrants that, except for Permitted/Excluded Liens, no Responsible Officer of the Company has any actual knowledge of any adverse interest, by way of security or otherwise, in any Loan and (ii) covenants that promptly after any Responsible Officer of the Company shall first have any actual knowledge of any such adverse interest (whether existing on the date hereof or hereafter arising), except for Permitted/Excluded Liens, the Company shall notify the Collateral Agent and the Notes Designee thereof (which notice shall describe such adverse interest in reasonable detail). The Loans shall not be subject to any security interest, lien or right to set-off by the Company or any third party claiming through the Company, and, except for Permitted/Excluded Liens, the Company shall not pledge, encumber, hypothecate, transfer, dispose of, or otherwise grant any third party interest in any of the Loans. For the purposes of this <u>Section 12.1</u>, a "Responsible Officer" of the Company means any Responsible Officer and any other officer of the Company directly responsible for the administration of this Agreement.

**ARTICLE XIII**<br>**LIABILITY AND INDEMNIFICATION**

Section 13.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Liability; Indemnification.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The Debtors shall, jointly and severally, indemnify and hold harmless each of the Custodian, the Paying Agent (including in its capacity as Notes Registrar) and their respective directors, officers, affiliates, assigns, agents and employees (each, a "**<u>Debtor Indemnitee</u>**") against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (whether involving such Debtor or any third person), including Attorney Costs and litigation costs that may be imposed on, incurred by, or asserted against it or them in any way relating to or arising out of this Agreement, any PA Financing Transaction Documents or any action taken or not taken by it or them hereunder or thereunder, including in connection with the enforcement of this indemnity (collectively, "**<u>CPAA Losses</u>**") unless such CPAA Losses imposed on, incurred by or asserted against such Debtor Indemnitee were caused by the gross negligence, or willful misconduct of such Debtor Indemnitee. The foregoing indemnification shall survive any resignation or removal of the Custodian or the Paying Agent, as applicable, or the termination or assignment of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;In the event that the Custodian fails to produce a Custodial Document that was not identified as an Exception in the then-controlling Loan Schedule and Exception List within two (2) Business Days after required or requested by the Company, and such Custodial Document is

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not outstanding pursuant to a Request for Release and Receipt of Custodial Documents (a "**<u>Custodial Delivery Failure</u>**"), then (i) with respect to any missing Loan Note with respect to which a Custodial Delivery Failure has occurred and has continued in excess of three (3) Business Days, the Custodian promptly shall deliver to the Company upon request a Lost Instrument Affidavit in the form attached as <u>Exhibit L</u> (unless the original Loan Note shall have been delivered prior to such time) and (ii) with respect to any missing document related to such Loan, including a missing Loan Note, (A) the Custodian shall indemnify each Debtor and each Secured Party in accordance with <u>Section 13.1(c)</u> and (B) at the Company's option, at any time the long-term obligations of the Custodian are rated below the second highest rating category of Moody's or S&P, the Custodian shall obtain and maintain an insurance bond naming the Debtors and the Collateral Agent, and their successors in interest and assigns, as loss payees, insuring against any losses associated with the loss of such document, in an amount equal to the then-outstanding principal balance of the related Loan or such lesser amount requested by the Company in the Company's sole discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;The Custodian hereby indemnifies and holds harmless the other parties to this Agreement, the Secured Parties and their respective directors, officers, employees, agents and designees against any and all CPAA Losses that may be imposed on, incurred by, or asserted against it or them in any way relating to or arising out of a Custodial Delivery Failure or the Custodian's negligence, lack of good faith, fraud or willful misconduct or any breach of any of the conditions, representations, warranties or obligations of the Custodian contained herein; provided that in no event shall the Custodian or any directors, officers, agents or employees of the Custodian have any liability with respect to any special, indirect, punitive or consequential damages suffered by any such indemnitee. The foregoing indemnification shall survive any termination or assignment of this Agreement.

**ARTICLE XIV**<br>**CUSTODIAN AND PAYING AGENT**

Section 14.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Reliance of Custodian and Paying Agent.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Documents; Communications</u>. Each of the Custodian and the Paying Agent may rely conclusively on any request, instruction, certificate, direction, receipt, demand, consent, resolution, statement, instrument, opinion, report, order, judgment, notice or other document or communication furnished to the Custodian or the Paying Agent, as applicable, hereunder or under any other PA Financing Transaction Document that the Custodian or the Paying Agent, as applicable, believes in good faith (i) to have been signed or presented by an Authorized Representative and (ii) substantially conforms in form to the requirements of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Requested Instructions</u>. Subject to the provisions of <u>Section 7.2(d)</u>, in which case the Custodian shall take instructions only from the Collateral Agent, if the Custodian or the Paying Agent requests instructions from the Company, the Collateral Agent or the Notes Designee with respect to any act, action or failure to act in connection with this Agreement, the Custodian or the Paying Agent, as applicable, shall be entitled (without incurring any liability therefor to any Debtor, any Secured Party or any other Person) to refrain from taking such action and continue to refrain from acting unless and until the Custodian or the Paying Agent, as applicable, shall have received written instructions from the Company, the Notes Designee or the Collateral Agent, as applicable.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;<u>Certificates</u>. Whenever the Custodian or the Paying Agent shall deem it necessary or desirable that a matter be proved or established in connection with taking or omitting any action by it hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of gross negligence, fraud or willful misconduct on the part of the Custodian or the Paying Agent, as applicable, be deemed to be conclusively proved or established by a certificate of an Authorized Representative of the relevant party delivered to the Custodian or the Paying Agent, as applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;<u>Reliance on Experts</u>. The Custodian and the Paying Agent may consult with and obtain advice from reputable and experienced outside counsel, certified public accountants that are nationally recognized, or other experts, and the advice or any opinion of such counsel, accountants or other experts shall be full and complete authorization and protection in respect of any action taken or omitted by it hereunder in good faith and in accordance with such advice or opinion of counsel, accountants or other experts. In the event the Custodian and/or the Paying Agent retains counsel, the Custodian and the Paying Agent shall be afforded the benefit of the attorney-client privilege with respect to all communications with such counsel, and in no event shall the Custodian or the Paying Agent be deemed to have waived any right or privilege, including, without limitation, the attorney-client privilege even if the communications with counsel had the effect of guiding the Custodian or the Paying Agent in the performance of duties hereunder. A successor Custodian or Paying Agent shall succeed to and hold the same respective rights and benefits of the predecessor for purposes of privilege, including the attorney-client privilege. No Person may raise any exception to the attorney-client privilege described herein as any such exceptions are hereby waived by all parties hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;<u>Limited Risk</u>. None of the provisions of this Agreement shall require the Custodian or the Paying Agent to expend or risk its own funds or otherwise to incur any liability, financial or otherwise, in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it has reasonable grounds for believing that repayment of such funds or indemnity satisfactory to it against such risk or liability is not assured to it.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;<u>Other Limitations on Liability</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Neither of the Paying Agent nor the Custodian shall be deemed to have knowledge of any default, event of default, event or information, or be required to act upon any default, event of default, event or information (including the sending of any notice) unless the Paying Agent or Custodian shall have received written notice sent to the Paying Agent or the Custodian in accordance with Section 18.1 or a Responsible Officer of the Paying Agent or the Custodian has actual knowledge of such event or information and shall have no duty to take any action to determine whether any such event, default or event of default has occurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;Delivery of any reports, information and documents to the Paying Agent or the Custodian provided for herein is for informational purposes only and the Paying Agent's or Custodian's receipt of such reports (including monthly distribution or servicer reports) and any Custodial and Paying Agency Agreement publicly available information, shall not constitute actual or constructive knowledge or notice of any information contained therein or determinable from information contained therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;Knowledge of the Paying Agent shall not be attributed or imputed to U.S. Bank

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Trust Company, National Association's (or its Affiliates') other roles in the transaction or any other transaction (and vice versa).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;None of the Paying Agent, the Custodian or any of their respective directors, officers or employees shall be liable for any act or omission hereunder except in the case of its gross negligence or willful misconduct (as determined by a court of competent jurisdiction or as otherwise agreed to by the applicable parties).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;None of the Paying Agent, the Custodian or any of their respective officers or employees shall be required to ascertain whether the issuance or sale of the Purchase Money Notes or any Facility Loans has been duly authorized or is in compliance with any other agreement to which the Company is a party (whether or not the Paying Agent or Custodian is also a party to such other agreement).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent and the Custodian shall not be bound to make any investigation into or to recalculate or otherwise verify the facts or matters stated in any certificate, report or other document.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii)&nbsp;&nbsp;&nbsp;&nbsp;In no event shall the Paying Agent or the Custodian be liable for incidental, indirect, special, consequential or punitive damages or penalties (including, but not limited to, lost profits), even if the Paying Agent or the Custodian, as applicable, has been advised of the likelihood of such damages or penalty and regardless of the form of action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent and the Custodian shall have no implied duty to enforce another party's obligations if a transaction agreement has not assigned such responsibility to a particular party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent and the Custodian shall not be responsible for delays or failures in performance resulting from acts beyond its control, including without limitation acts of God, strikes, lockouts, riots, acts of war or terror, epidemics, pandemics, governmental regulations, fire, communication line failures, computer viruses, power failures, earthquakes or other disasters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent and the Custodian shall not be obligated to take any legal action or commence any proceeding in connection with this Agreement or any other agreement, or to appear in, prosecute or defend any such legal action or proceeding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi)&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding anything to the contrary in this Agreement, neither of Paying Agent nor the Custodian shall be required to take any action that is not in accordance with applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii)&nbsp;&nbsp;&nbsp;&nbsp;The right of the Paying Agent or the Custodian to perform any permissive or discretionary act enumerated in this Agreement or any related document shall not be construed as a duty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii)&nbsp;&nbsp;&nbsp;&nbsp;Neither of Paying Agent nor the Custodian shall be responsible or liable for the existence, genuineness, value or protection of any collateral securing the Secured

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Obligations, for the legality, enforceability, effectiveness or sufficiency of the PA Financing Transaction Documents, for the creation, perfection, continuation, priority, sufficiency or protection of any of the liens, or for any defect or deficiency as to any such matters, or for monitoring the status of any Lien or performance of the Collateral.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv)&nbsp;&nbsp;&nbsp;&nbsp;Neither of the Paying Agent nor the Custodian shall be responsible for, and makes no representation or warranty as to, the validity, legality, enforceability, sufficiency or adequacy of this Agreement, any of the other PA Financing Transaction Documents or any related document, or as to the correctness of any statement of any other party contained in any thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv)&nbsp;&nbsp;&nbsp;&nbsp;Neither of the Paying Agent nor the Custodian shall be liable for any action or inaction of the Company or any other party (or agent thereof) to any PA Financing Transaction Document.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvi)&nbsp;&nbsp;&nbsp;&nbsp;In the exercise or administration of each of their duties hereunder or under any PA Financing Transaction Document to which it is a party, each of the Custodian and the Paying Agent may act directly or through agents, attorneys, custodians or nominees, and the Custodian and the Paying Agent shall not be personally liable for the conduct or misconduct of such agents, attorneys, custodians or nominees if such persons have been selected with due care by the Custodian or the Paying Agent, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvii)&nbsp;&nbsp;&nbsp;&nbsp;Neither of the Custodian nor the Paying Agent shall be liable for any error of judgment, or for any action taken or omitted to be taken by it in good faith by any of its officers or employees; provided, however, this shall not protect the Custodian, the Paying Agent or such officers or employees from their own acts or omissions that constitute gross negligence or willful misconduct (as determined by a court of competent jurisdiction or as otherwise agreed to by the applicable parties).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xviii)&nbsp;&nbsp;&nbsp;&nbsp;The rights, benefits, protections, immunities and indemnities afforded the Paying Agent and the Custodian hereunder shall extend to the Paying Agent (in any of its capacities) and the Custodian (in its capacity as such), respectively, under any other PA Financing Transaction Document or related agreement as though set forth therein in their entirety mutatis mutandis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xix)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent and Custodian shall not be deemed to have actual or constructive knowledge of any terms of any PA Financing Transaction Document to which it is not a party or whether the Company any other obligor or any Note Holder or Lender or other Person have complied with any such terms or provisions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xx)&nbsp;&nbsp;&nbsp;&nbsp;It is understood and agreed that the use of the term "agent" herein or in any other PA Financing Transaction Document (or any other similar term) with reference to the Paying Agent is not intended to connote any fiduciary or other implied (or express)

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obligations arising under agency doctrine of any applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties. The Paying Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a default or event of default has occurred under any of the Company's Secured Obligations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxi)&nbsp;&nbsp;&nbsp;&nbsp;The Paying Agent shall have no obligations hereunder to confirm or verify any determinations by the Company or any other Person with respect to (i) interest and principal and other amounts owing to any Note Holder or any Lender on the Purchase Money Notes or the Facility Loans, respectively, (ii) the Minimum Deposit Amount, or (iii) any other calculations or amounts due pursuant to Sections 3.3, 3.4, 3.5 or 5.1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxii)&nbsp;&nbsp;&nbsp;&nbsp;In the event that U.S. Bank National Association or U.S. Bank Trust Company, National Association or any of their respective affiliates is acting in any capacity other than Paying Agent or Notes Registrar, the rights, protections, benefits, immunities and indemnities afforded to the Paying Agent pursuant to this Agreement shall also be afforded to it in such other capacity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;<u>Merger or Consolidation</u>. Any corporation into which the Custodian or the Paying Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Custodian or the Paying Agent, as applicable, shall be a party, or any corporation succeeding to the business of the Custodian or succeeding to the corporate trust business or to which the Paying Agent transfers all or substantially all of its corporate trust business will be the successor of the Paying Agent, as applicable, except for any such Person who is or, upon consummation of such transaction, will be an Affiliate of any Debtor or of any Servicer for any Grantor, shall be the successor of the Custodian or the Paying Agent, as applicable, hereunder without the execution or filing of any paper with any party hereto or any further act on the part of any of the parties hereto except where an instrument of transfer or assignment is required by law to effect such succession, anything herein to the contrary notwithstanding; provided that any such successor shall satisfy the representations, warranties and covenants set forth in <u>Section 10.1</u> of this Agreement. The Custodian (or successor Custodian) or the Paying Agent (or successor Paying Agent), as applicable, shall provide the Company with notice of the consummation of any such transaction. Any such Custodian (or successor Custodian) must be a Qualified Custodian and any such Paying Agent (or successor Paying Agent) must be a Qualified Paying Agent. Nothing in this <u>Section 14.1(f)</u> shall be construed as consent to, or satisfaction of, any other provision or requirement in any other PA Financing Transaction Document.

Section 14.2. <u>Document Effective Date</u>. Notwithstanding anything to the contrary contained herein or in any PA Financing Transaction Documents, the obligations of the Paying Agent, Account Bank and Notes Registrar shall commence as of the Document Effective Date and not as of the Closing Date, and under no circumstances shall the Paying Agent, Notes Registrar or Account Bank be liable for or otherwise assume any duties with respect to any matters that arose prior to the Document Effective Date.

**ARTICLE XV**

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<br>**TAXES**

Section 15.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Tax Reports</u>. Neither the Custodian nor the Paying Agent shall be responsible for the preparation or filing of any reports or returns relating to federal, state or local income taxes with respect to this Agreement, other than in respect of the Custodian's or the Paying Agent's, as applicable, compensation or for reimbursement of expenses.

Section 15.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Stamp and Other Similar Taxes</u>. The Debtors agree to indemnify and hold harmless each of the Custodian and the Paying Agent from, and shall reimburse the Custodian and the Paying Agent for, any present or future claim for liability for any stamp or other similar tax and any penalties or interest with respect thereto, which may be assessed, levied or collected by any jurisdiction in connection with this Agreement. The obligations of the Debtors under this <u>Section 15.2</u> shall survive the termination of the other provisions of this Agreement.

**ARTICLE XVI**<br>**TERM**

Section 16.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Term</u>. This Agreement shall terminate upon (a) the payment in full of the Secured Obligations (other than inchoate indemnification obligations), the satisfaction and discharge of all Purchase Money Notes, and the termination of Lender's obligation to make Facility Loans under the Advance Facility Agreement, and (b) the release and delivery in accordance with the terms of this Agreement of all of the Custodial Documents held by or in the possession of the Custodian. Promptly following such termination, the Collateral Agent shall confirm in writing to all other parties hereto the release of the Liens granted to the Collateral Agent pursuant to the Security Agreement. Notwithstanding anything to the contrary herein, this Agreement may be terminated without cause upon at least thirty (30) days' prior written notice to the Custodian and the Paying Agent, by notice to such effect, executed by each of the Company, the Notes Designee and the Collateral Agent.

**ARTICLE XVII<br>AUTHORIZED REPRESENTATIVES**

Section 17.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Authorized Representatives</u>. Each individual designated as an Authorized Representative of any Person is authorized to give and receive notices, requests and instructions and to deliver certificates and documents in connection with this Agreement on behalf of such Person, and the specimen signature for each such Authorized Representative, initially authorized hereunder, is set forth on <u>Exhibit M</u>. From time to time, any party hereto may, by delivering to the other parties hereto a revised copy of <u>Exhibit M</u>, change such party's Authorized Representatives (and amend this Agreement to so provide), but until a new <u>Exhibit M</u> with the information regarding the successor Authorized Representatives is delivered to a party in accordance with this Agreement, that party shall be entitled to rely conclusively on the <u>Exhibit M</u> last delivered hereunder.

**ARTICLE XVIII**<br>**NOTICES**

Section 18.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Notices</u>. All notices, requests, demands, and other communications required or permitted to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be electronically delivered to the applicable electronic mail address of the parties specified below for such Person or to such other electronic mail address as shall be designated by such party in a notice to the other parties. All such notices and other communications shall be deemed to be

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given when delivered. From time to time, any Person may designate a new electronic mail address for purposes of notice hereunder by notice to such effect to the other Persons identified below.

**If to the Debtor(s):**

First-Citizens Bank & Trust Company

4300 Six Forks Road

Raleigh, North Carolina 27609

Attention: Chief Financial Officer

Email Address: craig.nix@firstcitizens.com

with a copy to:

First-Citizens Bank & Trust Company

4300 Six Forks Road

Raleigh, North Carolina 27609

Attention: Treasurer

Email Address: tom.eklund@firstcitizens.com

**If to the FDIC (including the FDIC in its capacity as Receiver, Lender, as the Collateral Agent or as the Notes Designee):**

Mark L Patterson<u>Michael Clippinger</u>

Federal Deposit Insurance Corporation

Chief, Structured Transactions and Oversight Section

3501 North Fairfax Dr.

VA SQ 3701-10038

Arlington, VA 22203

Email Address: STCreditMailbox@fdic.gov

with a copy to

FDIC Legal Division

Email Address: krusso<u>BeBurns</u>@fdic<u>FDIC</u>.gov

**If to the Custodian:**

First-Citizens Bank & Trust Company

4300 Six Forks Road

Raleigh, North Carolina 27609

Attention: Chief Financial Officer

Email Address: craig.nix@firstcitizens.com

with a copy to:

First-Citizens Bank & Trust Company

4300 Six Forks Road

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Raleigh, North Carolina 27609

Attention: Treasurer

Email Address: tom.eklund@firstcitizens.com

**If to the Paying Agent:**

U.S. Bank Trust Company, National Association

214 N. Tryon Street, 27<sup>th</sup> Floor

Charlotte, North Carolina 28202

Facsimile: (704) 335- 4676

Email: allison.lancasterpoole@usbank.com

**ARTICLE XIX**<br>**MISCELLANEOUS**

Section 19.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Governing Law</u>. EACH PARTY TO THIS AGREEMENT AGREES AND ELECTS THAT, IN ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, THIS AGREEMENT IS TO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCLUDING ANY CONFLICT OF LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION, AND EACH PARTY TO THIS AGREEMENT UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT EITHER (1) THE LAWS OF ANY OTHER JURISDICTION GOVERN THIS AGREEMENT OR (2) THE PROVISIONS OF THIS SECTION 19.1 DO NOT APPLY TO ANY OTHER PA FINANCING TRANSACTION DOCUMENT. NOTHING IN THIS AGREEMENT SHALL REQUIRE ANY UNLAWFUL ACTION OR INACTION BY ANY PARTY TO THIS AGREEMENT.

Section 19.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Waiver of Jury Trial</u>. EACH PARTY HERETO (INCLUDING THE FDIC IN ANY CAPACITY AND THE LENDERS OR ANY NOTE HOLDERS BY ACCEPTING THE BENEFITS HEREOF) IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.

Section 19.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Jurisdiction; Venue and Service.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Each of the Debtors and the Company hereby irrevocably and unconditionally:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;consents to the jurisdiction of the United States District Court for the Southern District of New York and to the jurisdiction of the United States District Court for the District of Columbia for any suit, action or proceeding against it commenced by the FDIC (in any capacity) arising out of, relating to, or in connection with this Agreement or any other PA Financing Transaction Document, and waives any right to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)&nbsp;&nbsp;&nbsp;&nbsp;remove or transfer such suit, action or proceeding to any court or dispute-resolution forum other than the court in which the FDIC (in the capacity in which it is a party in such suit, action or proceeding) files the suit, action or proceeding

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without the consent of the FDIC (in the capacity in which it is a party in such suit, action or proceeding);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)&nbsp;&nbsp;&nbsp;&nbsp;assert that venue is improper in either the United States District Court for the Southern District of New York or the United States District Court for the District of Columbia; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)&nbsp;&nbsp;&nbsp;&nbsp;assert that the United States District Court for the Southern District of New York or the United States District Court for the District of Columbia is an inconvenient forum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;consents to the jurisdiction of the Supreme Court of the State of New York for any suit, action or proceeding against it commenced by FDIC (in any capacity) arising out of, relating to, or in connection with this Agreement or any other PA Financing Transaction Document, and waives any right to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)&nbsp;&nbsp;&nbsp;&nbsp;remove or transfer such suit, action or proceeding to any other court or dispute-resolution forum, other than the courts identified in <u>Section 19.3(a)(i)</u>, without the consent of the FDIC (in the capacity in which it is a party in such suit, action or proceeding);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)&nbsp;&nbsp;&nbsp;&nbsp;assert that venue is improper in the Supreme Court of the State of New York; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)&nbsp;&nbsp;&nbsp;&nbsp;assert that the Supreme Court of the State of New York is an inconvenient forum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;agrees to bring any suit, action or proceeding by any Debtor or the Company against the FDIC (in any capacity) arising out of, relating to, or in connection with this Agreement or any other PA Financing Transaction Document exclusively in either the United States District Court for the Southern District of New York or the United States District Court for the District of Columbia, and waives any right to remove or transfer such suit, action or proceeding to any other court or dispute-resolution forum without the consent of the FDIC (in the capacity in which it is a party in such suit, action or proceeding), and agrees to consent thereafter to transfer of the suit, action or proceeding to either the United States District Court for the Southern District of New York or the United States District Court for the District of Columbia at the option of the FDIC (in the capacity in which it is a party in such suit, action or proceeding); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;agrees, if the United States District Court for the Southern District of New York and the United States District Court for the District of Columbia both lack jurisdiction to hear a suit, action or proceeding falling within <u>Section 19.3(a)(iii)</u>, to bring that suit, action or proceeding exclusively in the Supreme Court of the State of New York, and

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waives any right to remove or transfer such suit, action or proceeding to any other court or dispute-resolution forum without the consent of the FDIC (in the capacity in which it is a party in such suit, action or proceeding).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Each of the Debtors and the Company hereby irrevocably and unconditionally agrees that any final judgment entered against it in any suit, action or proceeding falling within <u>Section 19.3(a)</u> may be enforced in any court of competent jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Subject to the provisions of <u>Section 19.3(d)</u>, each of the Debtors and the Company hereby irrevocably and unconditionally agrees that service of all writs, process and summonses in any suit, action or proceeding pursuant to <u>Section 19.3(a)</u> or <u>Section 19.3(b)</u> may be effected by the mailing of copies thereof by registered or certified mail, postage prepaid, to it at its address for notices pursuant to <u>Section 18.1</u> (with copies to such other Persons as specified therein); <u>provided</u>, <u>however</u>, that nothing contained in this <u>Section 19.3(c)</u> shall affect the right of any party to serve process in any other manner permitted by Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Nothing in this <u>Section 19.3</u> shall constitute consent to jurisdiction in any court by the FDIC (in any capacity), or in any way limit the right of the FDIC (in any capacity) to remove, transfer, seek to dismiss, or otherwise respond to any suit, action, or proceeding against it in any forum.

Section 19.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Counterparts</u>. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute but one and the same agreement. This Agreement and any amendments hereto, to the extent signed and delivered by facsimile or other electronic means, shall be treated in all manner and respects as an original agreement and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. No signatory to this Agreement shall raise the use of a facsimile machine or other electronic means to deliver a signature or the fact that any signature or agreement was transmitted or communicated through the use of a facsimile machine or other electronic means as a defense to the formation or enforceability of a contract and each such Person forever waives any such defense.

Section 19.5&nbsp;&nbsp;&nbsp;&nbsp;<u>Severability</u>. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall be ineffective, but such ineffectiveness shall be limited as follows: (i) if such provision is prohibited or unenforceable in such jurisdiction only as to a particular Person or Persons and/or under any particular circumstance or circumstances, such provision shall be ineffective, but only in such jurisdiction and only with respect to such particular Person or Persons and/or under such particular circumstance or circumstances, as the case may be; (ii) without limitation of clause (i), such provision shall in any event be ineffective only as to such jurisdiction and only to the extent of such prohibition or unenforceability, and such prohibition or unenforceability in such jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction; and (iii) without limitation of clauses (i) or (ii), such ineffectiveness shall not invalidate any of the remaining provisions of this Agreement. Without limitation of the preceding sentence, it is the intent of the parties to this Agreement that in the event that in any court proceeding, such court determines that any provision of this Agreement is prohibited or unenforceable in any jurisdiction (because of the duration or scope (geographic or otherwise) of such provision, or for any other reason), such court shall have the power to, and shall, (x) modify such provision

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(including, to the extent applicable, by limiting the duration or scope of such provision and/or the Persons against whom, and/or the circumstances under which, such provision shall be effective in such jurisdiction) for purposes of such proceeding to the minimum extent necessary so that such provision, as so modified, may then be enforced in such proceeding and (y) enforce such provision, as so modified pursuant to clause (x), in such proceeding. Nothing in this <u>Section 19.5</u> is intended to, or shall, limit (1) the ability of any party to this Agreement to appeal any court ruling or the effect of any favorable ruling on appeal or (2) the intended effect of <u>Section 19.1</u>.

Section 19.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Compliance With Law</u>. Without limiting in any way the Debtors' obligations under Section 13.1, each party to this Agreement shall, at its own cost and expense, obey and comply with all applicable Laws, as they may pertain to such party's performance of its obligations hereunder.

Section 19.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Entire Agreement</u>. This Agreement contains the entire agreement, and supersedes any and all other prior agreements, whether oral or written, between the Debtors, the Notes Designee, the Collateral Agent and the Company with respect to the subject matter hereof.

Section 19.8&nbsp;&nbsp;&nbsp;&nbsp;<u>Assignment; Binding Effect</u>. Except as is permitted pursuant to the provisions of this Agreement providing for successor Custodians and successor Paying Agents, neither the Custodian nor the Paying Agent may assign or delegate this Agreement or any of its respective rights or obligations hereunder without the prior written consent of the Debtors, the Notes Designee and the Collateral Agent (not to be unreasonably withheld, delayed or conditioned); any such purported assignment or delegation without such consent shall be void *ab initio*. Neither the Notes Designee nor the Collateral Agent (in their respective capacities as such) may assign or delegate this Agreement or any of its respective rights or obligations hereunder without the prior written consent of the Company (not to be unreasonably withheld, delayed or conditioned); any such purported assignment or delegation without such consent shall be void *ab initio*. This Agreement shall be binding on and inure to the benefit of the parties hereto and their respective successors and permitted assigns, and no other Person or Persons shall have any rights or remedies under or by reason of this Agreement. Anything in this Agreement to the contrary notwithstanding, <u>Section 19.3</u> hereof inures to the benefit of, and is enforceable by (without limitation), the FDIC in its corporate capacity, and said <u>Section 19.3</u> may not be modified or waived in relation to the FDIC (in any capacity) without the prior written consent of the FDIC in its corporate capacity.

Section 19.9&nbsp;&nbsp;&nbsp;&nbsp;<u>Rights Cumulative</u>. The rights, powers and remedies of the Custodian, the Paying Agent, the Notes Designee and the Collateral Agent under this Agreement shall be in addition to all rights, powers and remedies given to the Custodian, the Paying Agent, the Notes Designee and the Collateral Agent by virtue of any statute or rule of law, or any other agreement, all of which rights, powers and remedies shall be cumulative and may be exercised successively or concurrently.

Section 19.10&nbsp;&nbsp;&nbsp;&nbsp;<u>Amendments</u>. This Agreement may be amended from time to time by written agreement signed by the Debtors, the Collateral Agent, the Notes Designee, the Custodian and the Paying Agent. No amendment to any PA Financing Transaction Document that adversely affects the Custodian or the Paying Agent shall be valid against the Custodian or

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Paying Agent without its written consent.

Section 19.11&nbsp;&nbsp;&nbsp;&nbsp;<u>Headings.</u> Paragraph titles or captions contained in this Agreement are inserted only as a matter of convenience and for reference and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provisions hereof. All section and paragraph references contained herein shall refer to sections and paragraphs in this Agreement unless otherwise specified.

Section 19.12&nbsp;&nbsp;&nbsp;&nbsp;<u>Effect of Joinder Agreement</u>. Upon execution of a Joinder Agreement by the Collateral Agent and a prospective "Debtor", such prospective "Debtor" shall thereafter for all purposes hereof be a party hereto as a "Debtor", with the same effect as if it had executed this Agreement. Each Debtor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Debtor hereunder, nor by any election of the Collateral Agent not to cause any particular Person to become a Debtor hereunder. This Agreement shall be fully effective as to any Person that is or becomes a party hereto as a "Debtor" regardless of whether any other Person becomes or fails to become or ceases to be a "Debtor" hereunder. The Company shall deliver to the Collateral Agent and the Notes Designee a fully executed copy of any Joinder Agreement pursuant to which any Person becomes a "Debtor" hereunder.

<u>Section 19.13</u>&nbsp;&nbsp;&nbsp;&nbsp;<u>Termination of Shared-Loss Agreement.</u> <u>The Company, the Receiver and the Collateral Agent acknowledge and agree that (i) the Shared-Loss Agreement has been terminated as provided in the Termination Agreement dated as of April 7, 2025, among the Receiver, the Notes Designee, the Collateral Agent and the Company, and (ii) the remaining provisions of the PA Financing Transaction Documents are hereby ratified in their entirety.</u> 

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IN WITNESS WHEREOF, the Company, the Debtor(s), the Notes Designee, the Collateral Agent, the Custodian and the Paying Agent have each caused this Agreement to be executed as of the date first written above.

**<u>Debtor, the Company and the Custodian</u>**

**FIRST-CITIZENS BANK & TRUST COMPANY**

By: <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>

Name:

Title:

[Signature Page to Custodial and Paying Agency Agreement]

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**<u>Notes Designee</u>**

**FEDERAL DEPOSIT INSURANCE CORPORATION**, as Receiver for Silicon Valley Bridge Bank, National Association, as Notes Designee

By: <u>&nbsp;&nbsp;&nbsp;&nbsp;</u>

Name:

Title:

**<u>Collateral Agent</u>**

**FEDERAL DEPOSIT INSURANCE CORPORATION**, as Receiver for Silicon Valley Bridge Bank, National Association, as Collateral Agent

By: <u>&nbsp;&nbsp;&nbsp;&nbsp;</u>

Name:

Title:

[Signature Page to Custodial and Paying Agency Agreement]

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**<u>Paying Agent</u>**

**U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Paying Agent**

By: <u>&nbsp;&nbsp;&nbsp;&nbsp;</u>

Name:

Title:

[Signature Page to Custodial and Paying Agency Agreement]

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**Schedule 1**

"**<u>Acceptable Investment Rating</u>**" means any of the top three rating categories that may be assigned to any security, obligation or entity by the Rating Agencies.

**"<u>Account Bank</u>"** shall mean, so long as U.S. Bank Trust Company, National Association is the Paying Agent, U.S. Bank National Association, a national banking institution.

"**<u>Account Control Agreement</u>**" means (i) the Account Control Agreement, dated as of the date of the Security Agreement, among the Company, the Account Bank, and the Collateral Agent, in the form of <u>Exhibit N</u> to the Custodial and Paying Agency Agreement or (ii) any analogous agreement among the Company, the Collateral Agent and any successor to the Paying Agent or successor Account Bank, in the form of <u>Exhibit N</u> to the Custodial and Paying Agency Agreement or otherwise satisfactory to the Collateral Agent.

"**<u>Acquired Property</u>**" means (x) the Underlying Collateral to which title is (at or after the Closing Date) or was (prior to the Closing Date) acquired by or on behalf of any Grantor, or the Failed Bank, by foreclosure, by deed in lieu of foreclosure, by power of sale or by sale pursuant to the Uniform Commercial Code, or otherwise, and (y) any and all Shared-Loss Assets other than the Shared-Loss Loans.

"**<u>Acquired Property Deed</u>**" means, with respect to any Acquired Property, the instrument or document required by the law of the jurisdiction in which the Acquired Property is located to convey fee title.

"**<u>Acquired Property Files</u>**" means, with respect to each Acquired Property, to the extent applicable, the following: (A) if the related Acquired Property Deed has been delivered for recordation, a copy thereof (which may be electronic) file-stamped with evidence of recording thereon in the name of the appropriate Grantor, together with a certificate of the related servicer or the foreclosure attorney certifying that such Acquired Property Deed is a true, correct and complete copy of the original document, or (y) if the related Acquired Property Deed has been delivered for recordation but not yet returned, a copy thereof (which might be electronic) together with a certificate of the servicer or the foreclosure attorney certifying that such Acquired Property Deed is a true, correct and complete copy of the original document, and that the original Acquired Property Deed has been delivered to the proper recording office for recordation; (B) as applicable, either (x) a copy of each Acquired Property Deed (which may be electronic) that is intervening between the lender that obtained title to such property assets as a result of foreclosure or deed in lieu of foreclosure of a mortgage or deed of trust and the appropriate Grantor with the same certification documentation required in clause (A) above, or (y) the original or a copy of the assignment of foreclosure bid between the foreclosing lender and the appropriate Grantor with respect to the related Acquired Property, and in the case of a copy, together with a certificate of the appropriate Grantor or the foreclosure attorney certifying that such assignment of foreclosure bid is a true, correct and complete copy of the original document, with the same certification documentation required in clause (A) above; (C) the original or copy policy of title insurance prior to foreclosure of the related mortgage loan accompanied by a title report procured upon foreclosure of the related mortgage loan, with respect to the Acquired Property; and (D) for any Acquired Property that is subject to any lease, (x) a copy of each such lease together with a certificate of the appropriate Grantor certifying that such lease is a true, correct

Schedule 1-1

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

------

and complete copy of the original document, and (y) if required by the Collateral Agent, the original assignment of such lease from the lessor thereunder to the appropriate Grantor, or a copy thereof together with a certificate of the appropriate Grantor certifying that such assignment is a true, correct and complete copy of the original document.

<u>"</u>**<u>Additional Collateral</u>**<u>" has the meaning given in Section 3.1 of the Security Agreement.</u>

"**<u>Advance Facility Agreement</u>**" means the Advance Facility Agreement, dated as of the Closing Date, by and among the Company and the Receiver, as the Lender and as Collateral Agent.

"**<u>Affiliate</u>**" means, with respect to any specified Person, (i) any other Person directly or indirectly Controlling or Controlled by or under common Control with such specified Person, (ii) any Person owning or Controlling ten percent (10%) or more of the outstanding voting securities, voting equity interests, or beneficial interests of the Person specified, (iii) any officer, director, general partner, managing member, trustee, employee or promoter of the Person specified or any Immediate Family Member of such officer, director, general partner, managing member, trustee, employee or promoter, (iv) any corporation, partnership, limited liability company or trust for which any Person referred to in clause (ii) or (iii) acts in that capacity, or (v) any Person who is an officer, director, general partner, managing member, trustee or holder of ten percent (10%) or more of the outstanding voting securities, voting equity interests or beneficial interests of any Person described in clauses (i) through (iv).

"**<u>Agent Members</u>**" shall mean members of, or participants in, DTC and the Clearing Agencies.

"**<u>Agents</u>**" means, collectively, the Collateral Agent and the Notes Designee, and each co-agent or sub-agent appointed by any of them from time to time pursuant to the Advance Facility Agreement or the Security Agreement.

<u>"</u>**<u>Aggregate Value</u>**<u>" means, with respect to any Additional Collateral pledged to the Collateral Agent pursuant to the Security Agreement (including Exhibit L thereto), the value ascribed to such Additional Collateral pursuant to such Exhibit L.</u>

"**<u>Amended and Restated Initial Purchase Money Note</u>**" means that certain Purchase Money Note issued by the Company to the Receiver on the Document Effective Date and dated as of the Closing Date in the face amount of $36,071,816,117.12 (as the same may hereafter be amended, supplemented, restated, replaced, increased, extended, consolidated or severed from time to time), which Amended and Restated Initial Purchase Money Note was exchanged for and replaced the Initial Purchase Money Note.

<u>"</u>**<u>Amendment No. 1 Effective Date</u>**<u>" means July 18, 2025.</u>

Schedule 1-2

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

------

"**<u>Approved Trustee</u>**" means the following entities and their related or controlled entities: (i) Citibank, N.A., (ii) Citicorp Trust Delaware, National Association, (iii) Computershare Trust Company, N.A., (iv) Computershare Delaware Trust Company, (v) The Bank of New York Mellon, (vi) The Bank of New York Mellon Trust Company, N.A., (vii) U.S. Bank National Association, (viii) U.S. Bank Trust Company, National Association, (ix) Wilmington Savings Fund Society, FSB and (x) Wilmington Trust, National Association.

<u>"</u>**<u>Assumed UST Value</u>**<u>" means, with respect to any Eligible US Treasury Security and any date of determination as determined by the Company, the product of (i) the "Collateral Value" percentage reflected on the website https://www.frbdiscountwindow.org/ pages/ collateral/collateral_valuation as of such date for securities of the same type and duration as the pledged securities, minus 200 basis points (2.00%), and (ii) the Market Value as of such date.</u> 

"**<u>Attorney Costs</u>**" means reasonable fees, expenses and disbursements of any law firm or other external legal counsel.

"**<u>Authorized Representative</u>**" means, with respect to any Person, each individual designated, in writing as required by <u>Section 17.1</u> of the Custodial and Paying Agency Agreement, by such Person to the Custodian to act as an authorized representative of such Person for purposes of the Custodial and Paying Agency Agreement.

"**<u>Availability Period</u>**" has the meaning given to it in the Advance Facility Agreement.

"**<u>Bank Closing Date</u>**" has the meaning given to it in the Purchase and Assumption Agreement.

"**<u>Bankruptcy Code</u>**" means Title 11 of the United States Code (11 U.S.C. §§101, et seq.).

"**<u>BIC Requirements</u>**" means the requirements described on <u>Exhibit S</u> to the Custodial and Paying Agency Agreement.

"**<u>Borrower</u>**" means any borrower with respect to any Loan.

"**<u>Borrowing Base</u>**" has the meaning given to it in the Advance Facility Agreement.<u>means, as of any date of determination and without duplication, an amount equal to:</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(i)&nbsp;&nbsp;&nbsp;&nbsp;the aggregate unpaid principal balance of, and up to 60 days' accrued but unpaid interest on, all of the Loans (including Unfunded Failed Bank Commitments Disbursed) that are then subject to the lien of the Security Agreement as "Collateral" under the Security Agreement (other than (x) Foreign Loans and (y) any Loans that have become REO Property as of such date),</u> *<u>plus</u>*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(ii)&nbsp;&nbsp;&nbsp;&nbsp;the aggregate unpaid principal balance of, and up to 60 days' accrued but unpaid interest on, all of the Foreign Loans (including Unfunded Failed Bank Commitments Disbursed) that are then subject to the lien of the Security Agreement as "Collateral" under the Security Agreement and as to which the Company has (x) notified the Receiver and the Collateral Agent of the Company's election to have such Foreign Loans included in the Borrowing Base, (y) included such Foreign Loans in the aggregate reporting on the Borrowing</u> 

Schedule 1-3

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

------

<u>Base in all Facility Loan Certificates delivered following such notice and (z) satisfied the requirements of Section 3.7(d) of the Security Agreement,</u> *<u>plus</u>*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(iii)&nbsp;&nbsp;&nbsp;&nbsp;the aggregate value (which shall be the fair market value determined by the Company in good faith and reviewed and accepted by the Collateral Agent) of REO Property that is then subject to the lien of the Security Agreement as "Collateral" under the Security Agreement (other than REO Property whose Site Assessment determines there are material Environmental Hazards, whether actual or reasonably threatened) and as to which the Company has (x) notified the Receiver and the Collateral Agent of the Company's election to have such REO Property included in the Borrowing Base, (y) included such REO Property in the aggregate reporting on the Borrowing Base in all Facility Loan Certificates delivered following such notice and (z) satisfied the requirements of Section 7.11 of the Security Agreement,</u> *<u>plus</u>*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(iv)&nbsp;&nbsp;&nbsp;&nbsp;the aggregate Assumed UST Value of any Eligible US Treasury Securities (plus the amount (in Dollars) of any Cash Proceeds thereof in the Custodial Account) that are then subject to the lien of the Security Agreement as "Collateral" under the Security Agreement and as to which the Company has (x) included such Assumed UST Value in the aggregate reporting on the Borrowing Base in all Facility Loan Certificates delivered following such notice and (y) satisfied the requirements of Section 3.8 of the Security Agreement,</u> *<u>plus</u>*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(v)&nbsp;&nbsp;&nbsp;&nbsp;the Aggregate Value of, and up to 60 days' accrued but unpaid interest on (if applicable), all Additional Collateral that is then subject to the lien of the Security Agreement as "Collateral" under the Security Agreement (other than such Additional Collateral consisting of real property whose Site Assessment determines there are material Environmental Hazards, whether actual or reasonably threatened) and as to which the Company satisfied the requirements of Section 3.8 of the Security Agreement,</u> *<u>minus</u>*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(vi)&nbsp;&nbsp;&nbsp;&nbsp;the aggregate outstanding principal balance of the Purchase Money Notes,</u> *<u>minus</u>*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(vii)&nbsp;&nbsp;&nbsp;&nbsp;the aggregate outstanding principal balance of the Facility Notes (immediately prior to the issuance of any Facility Loan on such date),</u> *<u>minus</u>*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(viii)&nbsp;&nbsp;&nbsp;&nbsp;accrued and unpaid interest (including Default Interest) and any other amounts due and owing by the Company under the Purchase Money Notes and the Facility Notes.</u>

<u>For the avoidance of doubt, references herein to "Borrowing Base" are to the Borrowing Base as defined above and are not references to the Borrowing Base</u> <u>as defined in the Advance Facility Agreement.</u> 

"**<u>Borrowing Base Shortfall</u>**" means, as of any date of determination, (i) if the Borrowing Base is less than zero, the absolute value of the Borrowing Base, and (ii) otherwise, zero.

Schedule 1-4

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

------

"**<u>Business Day</u>**" means any day except (i) a Saturday, Sunday or other day on which commercial banks in the State of New York, the State of North Carolina or United States federal government offices are required or authorized by Law to close, or (ii) with respect to any day on which any party to the Custodial and Paying Agency Agreement owes an obligation to the Custodian or the Paying Agent or on which the Custodian or the Paying Agent owes an obligation to any other party to the Custodial and Paying Agency Agreement, any day on which the offices of the Custodian or the Paying Agent (as applicable) are closed.

<u>"</u>**<u>Cash Proceeds</u>**<u>" means, with respect to any Eligible US Treasury Security, any cash proceeds (in Dollars) arising from the accrual of interest on or the sale or maturity of such Eligible US Treasury Security, in each case while on deposit in the Custodial Account.</u>

A "**<u>Change of Control</u>**" shall be considered to have occurred if (i) the Company assigns or otherwise transfers, or purports to assign or otherwise transfer, the Shared-Loss Agreement (in whole or in part) without the prior written consent of the Receiver, except as expressly permitted under <u>Section 6.2</u> of the Shared-Loss Agreement, or (ii) without limitation of the generality of clause (i), any other transaction that is specified in <u>Section 6.2</u> of the Shared-Loss Agreement to constitute the assignment or transfer of the Shared-Loss Agreement occurs without the prior written consent of the Receiver.

"**<u>Clearing Agency</u>**" shall mean an organization registered as a "clearing agency" pursuant to <u>Section 17A</u> of the Exchange Act.

"**<u>Closing Date</u>**" means March 27, 2023.

"**<u>Code</u>**" means the United States Internal Revenue Code of 1986, together with the regulations promulgated thereunder, as may be amended from time to time.

"**<u>Collateral</u>**" has the meaning given in <u>Section 3.1</u> of the Security Agreement.

"**<u>Collateral Agent</u>**" means the Person serving as the "Collateral Agent" from time to time pursuant to Article X of the Security Agreement. Until the effectiveness of its resignation or replacement in accordance with Article X of the Security Agreement, the Receiver is the Collateral Agent.

"**<u>Collateral Books and Records</u>**" has the meaning given in <u>Section 3.1</u> of the Security Agreement.

"**<u>Collateral Certificate</u>**" has the meaning given in <u>Section 6.1(b)</u> of the Custodial and Paying Agency Agreement.

"**<u>Collection Account</u>**" means a segregated trust or custodial account established and maintained with the Paying Agent or with the Account Bank (pursuant to the Custodial and Paying Agency Agreement) for the purpose of holding and distributing Loan Proceeds and funding the Distribution Account, and bearing, as of the Document Effective Date, the account number indicated on <u>Schedule 2</u> attached hereto.

Schedule 1-5

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

------

<u>"</u>**<u>Commercial Loan</u>**<u>" means the commercial loans on the Loan Schedule, including for clarity all Unfunded Failed Bank Commitments prior and subsequent to their funding by the Company.</u>

<u>"</u>**<u>Commercial</u> <u>Loan Documents</u>**<u>" means all documents, agreements, certificates, instruments and other writings (including all Underlying Collateral Documents) now or hereafter executed by or delivered or caused to be delivered by any Borrower, any Obligor or any other obligor evidencing, creating, guaranteeing or securing, or otherwise executed or delivered in respect of, all or any part of a Commercial Loan or any Acquired Property or evidencing any transaction contemplated thereby (including, for this purpose, title insurance policies and endorsements thereto), and all Modifications thereto.</u>

"**<u>Commitments</u>**" has the meaning given in the Advance Facility Agreement.

"**<u>Company</u>**" has the meaning given in the introductory paragraph to the Custodial and Paying Agency Agreement.

"**<u>Company Custodian Termination Trigger Event</u>**" means: (i) the occurrence and continuance of an Event of Default, (ii) the Collateral Agent, in its reasonable discretion related to its dissatisfaction with a Section 7.13(f) Review (as defined in the Security Agreement), is not comfortable with the Company's overall financial condition, loan administration controls, documentation practices, asset quality or ability to meet all of the BIC Requirements, including any determination by the Collateral Agent that the Company is not in sound financial condition, (iii) if the long-term obligations of the Company that are rated by Moody's or S&P no longer are rated at or above investment grade by either Moody's or S&P, or (iv) if the Company is the Custodian, the Company as Custodian fails, at any time after twenty (20) days after the Document Effective Date and receipt of a written notice of non-compliance from the FDIC, to comply with the BIC Requirements within twenty (20) days of such receipt.

"**<u>Contract for Deed</u>**" means an executory contract with a third party to convey real property to such third party upon payment of the amounts set forth therein and/or the performance of any other obligations described therein, including any installment land contract.

"**<u>Control</u>**" (including the phrases "**<u>Controlled by</u>**" and "**<u>under common Control with</u>**") when used with respect to any specified Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or interests, by contract or otherwise.

"**<u>CPAA Losses</u>**" has the meaning given in <u>Section 13.1(a)</u> of the Custodial and Paying Agency Agreement.

<u>"</u>**<u>Custodial Account</u>**<u>" means a segregated trust or custodial account established and maintained with the Securities Intermediary for the purpose of holding US Treasury securities and proceeds, and bearing, as of the Amendment No. 1 Effective Date, the account number indicated on Schedule 2 attached hereto.</u>

Schedule 1-6

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

------

"**<u>Custodial Delivery Failure</u>**" has the meaning given in <u>Section 13.1(b)</u> of the Custodial and Paying Agency Agreement.

"**<u>Custodial and Paying Agency Agreement</u>**" means the Custodial and Paying Agency Agreement, dated as of the Closing Date, by and among the Debtor(s), the Company, the Notes Designee, the Collateral Agent, the Custodian and the Paying Agent.

"**<u>Custodial Documents</u>**" has the meaning given in <u>Section 6.1(c)</u> of the Custodial and Paying Agency Agreement.

"**<u>Custodial Document Release Report</u>**" means a report prepared by the Custodian, which shall be in a form reasonably acceptable to the Company and the Collateral Agent, detailing, with respect to any Loan with respect to which any Custodial Document has been released by the Custodian, the following: (i) the Borrower name and any identification number assigned to the Loan to which the Custodial Document relates, (ii) the location to which the Custodial Document with respect to such Loan was delivered by the Custodian, and (iii) the date on which such Custodial Document was released by the Custodian.

"**<u>Custodian</u>**" means the Company or any successor custodian that is a Qualified Custodian and is acceptable and approved by the Collateral Agent, such approval not to be unreasonably withheld, delayed or conditioned. At any time that the Company is acting as Custodian under this Agreement references to the "Custodian" shall mean the Company only as it is acting in such capacity, and shall not alter the obligations that the Company has in other capacities under this Agreement or any other PA Financing Transaction Document.

"**<u>Customary Servicing Procedures</u>**" means collectively, the procedures (including collection procedures) that the Company (or, to the extent that a Servicer is appointed, such Servicer) customarily employs and exercises in servicing and administering loans for its own account and, if applicable, the servicing procedures established by the Federal National Mortgage Association or Federal Home Loan Mortgage Corporation (as in effect from time to time), in each case, if and to the extent that such procedures are in accordance with accepted servicing practices of prudent lending institutions and all applicable Law.

"**<u>Debt</u>**" means, as applied to any Person, without duplication, (i) all indebtedness of such Person for borrowed money, (ii) all obligations of such Person for the deferred purchase price of property or services (excluding trade payables arising in the ordinary course of business), (iii) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (iv) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (v) all obligations of such Person as lessee under leases that have been or should be, in accordance with GAAP, recorded as capitalized leases, or (vi) all indebtedness or obligations of others of the kinds referred to in clauses (i) through (v) above in respect of which such Person has entered into or issued any Guaranty.

Schedule 1-7

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

------

"**<u>Debtor Accounts</u>**" means, collectively, the Collection Account and the Distribution Account.

"**<u>Debtor Relief Laws</u>**" means FIRREA, the Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States, states, commonwealths, territories, laws of other nations or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

"**<u>Debt Agreements</u>**" has the meaning given in <u>Section 2.2</u> of the Custodial and Paying Agency Agreement.

"**<u>Debtor</u>**" has the meaning given in the introductory paragraph to the Custodial and Paying Agency Agreement.

"**<u>Default</u>**" means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would constitute an Event of Default.

"**<u>Default Interest</u>**" means, to the fullest extent permitted by applicable Law, to the extent accrued interest under a Purchase Money Note is not paid in full on any Distribution Date, or the principal of a Purchase Money Note, or any other amount payable by the Company under a Purchase Money Note, is not paid when due, such overdue amount will (without limitation of the rights or remedies of the Note Holder, the Notes Designee or the Collateral Agent with respect to such default) accrue interest until paid at the Note Interest Rate (as defined in the applicable Purchase Money Note) plus 2% per annum (calculated on the same basis as non-default interest for the related period).

"**<u>Deficiency Balance</u>**" means the remaining unpaid principal balance of any Loan Note or Loan after crediting to it the proceeds of any foreclosure sale, deed in lieu of foreclosure or any other exercise of remedies with respect to Underlying Collateral.

"**<u>Depository</u>**" or "**<u>DTC</u>**" shall mean the Depository Trust Company, its nominees, and their respective successors.

"**<u>Determination Date</u>**" has the meaning given in <u>Section 11.3</u> of the Custodial and Paying Agency Agreement.

"**<u>Disposition</u>**" or "**<u>Dispose</u>**" means the sale, transfer, license, lease, or other disposition (including any sale and leaseback transaction) of any property by any Person (or the granting of any option or other right to do any of the foregoing), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

"**<u>Distribution Account</u>**" means a segregated trust or custodial account established and maintained with the Paying Agent or with the Account Bank (pursuant to the Custodial and Paying Agency Agreement) for the sole purpose of holding and distributing funds deposited into such account in accordance with the Custodial and Paying Agency Agreement, and bearing, as of the Document Effective Date, the account number indicated on <u>Schedule 2</u> attached hereto, and which shall include for administrative purposes the Purchase Money Notes Distribution Debt

Schedule 1-8

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

------

Service Account and the Facility Notes Distribution Debt Service Account.

"**<u>Distribution Date</u>**" means (i) each Initial Distribution Date and (ii) the twentieth (20th) day of each calendar month or, if such day is not a Business Day, the next succeeding day that is a Business Day, commencing in December 2023.

"**<u>Distribution Date Report</u>**" has the meaning given in <u>Section 11.3</u> of the Custodial and Paying Agency Agreement.

"**<u>Document Effective Date</u>**" means November 20, 2023.

"**<u>Document Effective Date REO Property</u>**" means any REO Property as of the Document Effective Date.

"**<u>Dollar</u>**", "**<u>Dollars</u>**" and "**<u>$</u>**" mean lawful money of the United States.

"**<u>DTC Eligible</u>**" or "**<u>DTC Eligibility</u>**" means eligible for deposit at DTC and for trading through DTC's book-entry system, or the status of being eligible for deposit at DTC and for trading through DTC's book-entry system, respectively.

"**<u>Due Period</u>**" means (i) for the first of the Initial Distribution Dates the period from the Closing Date through and including April 30, 2023, and for the Initial Distribution Dates (other than the first of the Initial Distribution Dates) the period from the first day of the calendar month immediately preceding each such Initial Distribution Date through and including the last day of such calendar month, through October 31, 2023, and (ii) with respect to any Distribution Date, Interest Payment Date or Maturity Date thereafter, the calendar month prior to the month in which the Distribution Date, Interest Payment Date or Maturity Date occurs.

<u>"</u>**<u>Eligible US Treasury Securities</u>**<u>" means United States treasury securities, the obligations of which are backed by the full faith and credit of the United States of America, (i) with maturity dates no later than 36 months from the date deposited in the Custodial Account and (ii) on deposit in the Custodial Account and subject to the Securities Account Control Agreement.</u>

"**<u>Embargoed Person</u>**" shall mean any person subject to trade restrictions under United States law, including, without limitation, the International Emergency Economic Powers Act, 50 U.S.C. §§1701, *et seq.*, The Trading with the Enemy Act, 50 U.S.C. §§ App. 1, *et seq.*, any foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended), or any enabling legislation or regulations promulgated thereunder or any executive order relating thereto (including Executive Order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions With Persons who Commit, Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079 (2001)) or 31 C.F.R. §594.101, et seq.) with the result that a purchase of assets or any other transaction entered into with respect to any assets (including, without limitation, any investment in any structured transaction), whether directly or indirectly, is prohibited by or in violation of law.

Schedule 1-9

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

------

"**<u>Environmental Hazard</u>**" means the presence at, in or under any Collateral or Underlying Collateral (whether held in fee simple or subject to a ground lease or otherwise, and including any improvements whether by buildings or facilities, and any personal property, fixtures, leases and other property or rights pertaining thereto), of any "hazardous substance," as such term is defined in <u>Section 101(14)</u> of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §9601(14), or of any other Hazardous Materials.

"**<u>Environmental Laws</u>**" means any and all Federal, state, local, and foreign Laws, regulations, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution, the protection of the environment, natural resources or human health or to the release of any materials into the environment, including those related to air emissions and discharges to waste or public systems.

"**<u>ERISA</u>**" means the United States Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute of similar import, in each case, as in effect from time to time. References to sections of ERISA also refer to any successor sections.

"**<u>Event of Default</u>**" has the meaning given to that term in <u>Section 4.1</u> of the Security Agreement.

"**<u>Exception</u>**" means, with respect to any Loan, any variance from the requirements of <u>Section 6.1</u> of the Custodial and Paying Agency Agreement, including any missing Custodial Document required and any document that does not meet the applicable requirements set forth in <u>Sections 6.1(b)(i)-(v)</u> or <u>Section 6.1(c)</u> of the Custodial and Paying Agency Agreement.

"**<u>Exchange Act</u>**" means the United States Securities Exchange Act of 1934, as amended.

"**<u>Facility Loan</u>**" has the meaning given in <u>Section 2.01</u> of the Advance Facility Agreement.

<u>"</u>**<u>Facility Loan Certificate</u>**<u>" has the meaning given in Section 2.02(a) of the Advance Facility Agreement.</u>

"**<u>Facility Note</u>**" has the meaning given in the Advance Facility Agreement.

"**<u>Facility Notes Distribution Debt Service Account</u>**" means a subaccount of the Distribution Account established and maintained with the Paying Agent or with the Account Bank (pursuant to the Custodial and Paying Agency Agreement) for the sole purpose of holding and distributing funds deposited into such account for distribution on the Facility Notes in accordance with the Custodial and Paying Agency Agreement, and bearing, as of the Document Effective Date, the account number indicated on Schedule 2 attached hereto.

"**<u>Failed Bank</u>**" has the meaning given in the recitals to the Custodial and Paying Agency Agreement.

Schedule 1-10

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

------

"**<u>FDIC</u>**" has the meaning given to that term in the introductory paragraph of the Custodial and Paying Agency Agreement.

"**<u>FIRREA</u>**" means the Financial Institutions Reform, Recovery and Enforcement Act of 1989, Pub. L. 101-73, 103 Stat. 183.

"**<u>First Lien Claimholders</u>**" means the holders of the Purchase Money Notes.

"**<u>First Lien Collateral Agent</u>**<u>"</u> means the Collateral Agent, together with its successors and assigns in such capacity under an Intercreditor Agreement.

"**<u>First Lien Obligations</u>**" means the obligations of the Company and any other Grantors and Debtors under the Purchase Money Note and the related obligations under the PA Financing Transaction Documents.

"**<u>First Lien Representative</u>**" means the Note Holder, together with its successors and assigns in such capacity under an Intercreditor Agreement.

"**<u>Fiscal Year</u>**" means the fiscal year of the Company.

"**<u>Fitch</u>**" means Fitch, Inc. and any successor thereto.

"**<u>Floor Plan Loan</u>**" means a Loan to a Borrower to finance such Borrower's purchase of inventory secured by such inventory.

"**<u>Foreign Jurisdiction</u>**" means any jurisdiction other than the United States or any political subdivision of or in the United States, and any subdivision of or in such other jurisdiction.

"**<u>Foreign Loan</u>**" means a Loan whose principal document is stated to be governed by the laws of any Foreign Jurisdiction.

"**<u>FRB</u>**" means the Board of Governors of the Federal Reserve System of the United States.

"**<u>GAAP</u>**" means United States generally accepted accounting principles as in effect from time to time.

"**<u>Global Note</u>**" has the meaning given to that term in <u>Section 2.5(a)</u> of the Custodial and Paying Agency Agreement.

"**<u>Governmental Authority</u>**" means (i) any United States or non-United States national, federal, state, local, municipal, provincial or international government or any political subdivision of any thereof or (ii) any governmental, regulatory or administrative authority, agency or commission, or judicial or arbitral body of any of the foregoing described in clause (i).

"**<u>Grantor</u>**" and "**<u>Grantors</u>**" have the meanings set forth in the introductory paragraph to the Security Agreement.

Schedule 1-11

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

------

"**<u>Grantor</u> <u>Allonge</u>**" shall mean an allonge in the form of <u>Exhibit H</u> to the Security Agreement but with such deviations from such form, approved by the Collateral Agent, as may be required for such form to be sufficient under the applicable Law of the jurisdiction governing the applicable Loan to reflect the assignment and pledge of such Loan.

"**<u>Grantor Assignment and Lost Instrument Affidavit</u>**" means an instrument in the form of <u>Exhibit J</u> to the Security Agreement but with such deviations from such form, approved by the Collateral Agent, as may be required for such form to be sufficient under the applicable Law of the jurisdiction governing the applicable Loan to reflect the assignment and pledge of such Loan.

"**<u>Grantor Mortgage Assignment</u>**" means, with respect to any Mortgage, an instrument in the form of <u>Exhibit I</u> to the Security Agreement but with such deviations from such form, approved by the Collateral Agent, as may be required for such form to be in recordable form under the applicable Law of the jurisdiction wherein the related Mortgaged Property is located and otherwise sufficient under such applicable Law to reflect the assignment and pledge of the Mortgage.

"**<u>Grantor PA Financing Transaction Documents</u>**" means, with respect to any particular Grantor, each PA Financing Transaction Document to which such Grantor is (or is required or contemplated to be) a party, or by which such Grantor is (or is required or contemplated to be) bound (including by execution of a Joinder Agreement or an REO Mortgage), including (in the case of the Company) the Purchase Money Notes and the Advance Facility Agreement.

"**<u>Guaranty</u>**" means, with respect to any particular indebtedness or other obligation, (i) any direct or indirect guaranty thereof by a Person other than the obligor with respect to such indebtedness or other obligation or any transaction or arrangement intended to have the effect of directly or indirectly guarantying such indebtedness or other obligation, including without limitation any agreement by a Person other than the obligor with respect to such indebtedness or other obligation (A) to pay or purchase such indebtedness or other obligation or to advance or supply funds for the payment or purchase of such indebtedness or other obligation, (B) to purchase, sell or lease (as lessee or lessor) property of, to purchase or sell services from or to, to supply funds to or in any other manner invest in, the obligor with respect to such indebtedness or other obligation (including any agreement to pay for property or services of the obligor irrespective of whether such property is received or such services are rendered), primarily for the purpose of enabling the obligor to make payment of such indebtedness or other obligation or to assure the holder or other obligee of such indebtedness or other obligation against loss, or (C) otherwise to assure the obligee of such indebtedness or other obligation against loss with respect thereto, or (ii) any grant (or agreement in favor of the obligee of such indebtedness or other obligation to grant such obligee, under any circumstances) by a Person other than the obligor with respect to such indebtedness or other obligation of a security interest in, or other Lien on, any property or other interest of such Person, whether or not such other Person has not assumed or become liable for the payment of such indebtedness or other obligation.

"**<u>Hazardous Materials</u>**" means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, radiation, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant

Schedule 1-12

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

------

to any Environmental Law.

"**<u>Immediate Family Member</u>**" means, with respect to any individual, his or her spouse, parents, parents-in-law, grandparents, descendants, nephews, nieces, brothers, sisters, brothers-in-law, sisters-in-law, children (whether natural or adopted), children-in-law, stepchildren, grandchildren and grandchildren-in-law.

"**<u>Indemnified Parties</u>**" has the meaning given in <u>Section 11.4</u> of the Security Agreement.

"**<u>Initial Distribution Date</u>**" means each of June 1, 2023, June 25, 2023, July 25, 2023, August 25, 2023, September 25, 2023, October 25, 2023 and November 20, 2023.

"**<u>Initial Purchase Money Note</u>**" means that certain Purchase Money Note issued by the Company to the Receiver on March 27, 2023 in the face amount of Thirty-Five Billion Dollars ($35,000,000,000).

"**<u>Insolvency Event</u>**" means, with respect to any specified Person, the occurrence of any of the following events:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;the specified Person makes a general assignment for the benefit of creditors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;the specified Person files a voluntary petition for relief in any Insolvency Proceeding;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;the specified Person is adjudged bankrupt or insolvent or there is entered against the specified Person an order for relief in any Insolvency Proceeding;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;the specified Person files a petition or answer seeking for the specified Person any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any Law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;a trustee, receiver or liquidator is appointed in respect of such Person or all or any substantial part of such Person's properties, or such Person seeks or consents to such appointment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;&nbsp;&nbsp;the specified Person files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the specified Person in any proceeding described in clauses (i) through (v) above;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii)&nbsp;&nbsp;&nbsp;&nbsp;such Person is "critically undercapitalized", as such term is defined in Section 1831(*o*)(b)(1)(E) of Title 12 of the United States Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii)&nbsp;&nbsp;&nbsp;&nbsp;the specified Person becomes unable to pay its obligations as they become due or the sum of such specified Person's debts is greater than all of such Person's property, at a fair valuation;

Schedule 1-13

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix)&nbsp;&nbsp;&nbsp;&nbsp;at least sixty (60) days have passed following the commencement of any proceeding against the specified Person seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any Law, and such proceeding has not been dismissed; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;&nbsp;&nbsp;&nbsp;the specified Person is the subject of a proceeding under FIRREA.

"**<u>Insolvency Proceeding</u>**" means any proceeding under any Debtor Relief Law.

"**<u>Intercreditor Agreement</u>**" means any agreement entered into by two or more of a Note Holder, a Lender, the Notes Designee and the Collateral Agent to further provide for the relative rights of the Lenders and the Note Holders in respect of the Collateral and related matters in connection with a disposition of Purchase Money Notes or Facility Notes.

"**<u>Interest Payment Date</u>**" has the meaning given to it in the Advance Facility Agreement.

"**<u>Investment Company Act</u>**" means the Investment Company Act of 1940, as amended from time to time.

"**<u>Joinder Agreement</u>**" means an agreement substantially in the form of <u>Exhibit A</u> to the Security Agreement.

"**<u>Law</u>**" means any applicable statute, law, ordinance, regulation, rule, code, injunction, judgment, decree or order (including any executive order) of any Governmental Authority.

"**<u>Legacy Assumed Servicing Contract</u>**" means a servicing agreement to which the Failed Bank was a party as of the Closing Date and which was included in the "Liabilities Assumed" within the meaning of the Purchase and Assumption Agreement, as in effect on the Closing Date.

"**<u>Lender</u>**" has the meaning given in the introductory paragraph of the Advance Facility Agreement.

"**<u>Lender's Account</u>**" means, as to any Lender, the account of such Lender specified in writing by such Lender to the Collateral Agent and the Paying Agent from time to time.

"**<u>Lien</u>**" means any mortgage, deed of trust, pledge, security interest, charge, restriction on or condition to transfer, voting or exercise or enjoyment of any right or beneficial interest, option, right of first refusal, easement, covenant, restriction and any other lien, claim or encumbrance of any nature whatsoever.

"**<u>Loan</u>**" means (x) (A) each Shared-Loss Asset and each Shared-Loss Loan, and (B) without limitation of sub-clause (A), any loan, Loan Participation or other property (whether real or personal, or tangible or intangible) listed or described on the Loan Schedule, including for clarity all Unfunded Failed Bank Commitments (as defined in the Advance Facility Agreement) or<u>or</u> otherwise purchased by the Company pursuant to the Purchase and Assumption Agreement (and, in the case of any such real property, any related personal property), and (y) any loan into which any loan or Loan Participation described in clause (x) is refinanced or modified, and

Schedule 1-14

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

------

includes with respect to each such loan, Loan Participation or Acquired Property (or other property or asset) listed or described in clause (x) or (y) or other related asset or Related Agreement: (i) any obligation evidenced by any Loan Note; (ii) all rights, powers or Liens of any Grantor in or under the Underlying Collateral and Underlying Collateral Documents and in and to Acquired Property; (iii) all rights of any Grantor pursuant to any Contract for Deed and in or to the real property that is subject to any such Contract for Deed; (iv) all rights of any Grantor pursuant to any lease and in or to the related leased property; (v) all rights of any Grantor under the Related Agreements; (vi) all rights of any Grantor to any Deficiency Balances; (vii) all rights to causes of action, lawsuits, judgments, claims and demands of any nature available to or being pursued by or for the benefit of any Grantor with respect to any of the ownership, use, function, value of or other rights pertaining to any of the foregoing, whether arising by way of counterclaim or otherwise; and (viii) all guaranties, warranties, indemnities and similar rights in favor of any Grantor with respect to any of the foregoing.

"**<u>Loan Documents</u>**" means all documents, agreements, certificates, instruments and other writings (including all Underlying Collateral Documents) now or hereafter executed by or delivered or caused to be delivered by any Borrower, any Obligor or any other obligor evidencing, creating, guaranteeing or securing, or otherwise executed or delivered in respect of, all or any part of a Loan or any Acquired Property or evidencing any transaction contemplated thereby (including, for this purpose, title insurance policies and endorsements thereto), and all Modifications thereto.

"**<u>Loan Note</u>**" means, as the context requires, each note or promissory note, lost instrument affidavit, loan agreement, shared credit or Loan Participation Agreement, intercreditor agreement, reimbursement agreement, any other evidence of indebtedness of any kind, or any other agreement, document or instrument evidencing the indebtedness of a borrower under a Loan, and all Modifications to the foregoing.

"**<u>Loan Participation</u>**" means any loan identified on the Loan Schedule that is subject to a shared credit, participation, co-lending or similar inter-creditor agreement under which the Failed Bank was, or any Debtor is, the lead or agent financial depository institution or otherwise managed or held the credit or sold participations, or under which the Failed Bank was, or any Debtor is, a participating financial depository institution or purchased participations in a credit managed by another Person.

"**<u>Loan Participation Agreement</u>**" means an agreement under which the Failed Bank was and, after the Closing Date, any Debtor is the lead or agent financial depository institution or otherwise managed or held a shared credit or sold participations, or pursuant to which the Failed Bank was and, after the Closing Date, any Debtor is a participating financial depository institution or purchased participations in a credit managed by another Person.

"**<u>Loan Proceeds</u>**" means all of the following: (i) any and all proceeds with respect to any or all of the Loans, any or all of the Underlying Collateral and/or any or all of the Acquired Property (including any REO Property as to which no REO Mortgage exists), including principal, interest, Default Interest, prepayment fees, premiums and charges, extension and exit fees, late fees, assumption fees, other fees and charges, insurance proceeds and condemnation payments (or any portion thereof) that are not used and disbursed to repair, replace or restore the related Underlying Collateral in accordance with the terms of the Loan Documents, and, with

Schedule 1-15

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

------

respect to any Acquired Property (including any REO Property as to which no REO Mortgage exists), operating cash flow realized from such Acquired Property; (ii) any and all proceeds from sales or other dispositions or refinancings of any or all of the Loans (including Acquired Property (including any REO Property as to which no REO Mortgage exists)); (iii) any proceeds from making a draw under any letter of credit or certificate of deposit held with respect to any Loan, provided that such draw is permitted by the terms of the Loan Documents; (iv) any recoveries from Borrowers or Obligors of any kind or nature with respect to the Loans; (v) any deposits or down payments forfeited by prospective purchasers or lessees of apartments or other units for space at any Underlying Collateral; (vi) any payments to the Company pursuant to either the Shared-Loss Agreement or pursuant to Article VIII of the Purchase and Assumption Agreement (excluding any such payment to the extent directly set off (by the Receiver) against, or otherwise directly applied (by the Receiver) to, amounts owed by the Company under the Purchase Money Note and/or the Facility Loans), regardless (for the avoidance of doubt) of whether or not such payments are with respect to Collateral; (vii) any and all other proceeds with respect to any of the Collateral; and (viii) any interest or other earnings accrued and paid on any of the amounts described in the foregoing clauses (i) through (vii) while held in the Collection Account or any other account; provided, however, that, with respect to proceeds of any Loan Participation (including as a result of any sale or other disposition of such Loan Participation or of Underlying Collateral relating thereto), the Loan Proceeds shall exclude any amounts payable to other Persons under the applicable Loan Participation Agreement.

"**<u>Loan Schedule</u>**" means the Loan Schedule available in a "Venue" data room provided by Donnelly Financial Solutions and identified as: First Citizens Bank – 11063, JPMorgan Chase Bank, National Association – 628, within the folder entitled "SVB Collateral".

"**<u>Loan Schedule and Exception List</u>**" means a list of the Loans and Acquired Property, identifying, with respect to each Loan, each Exception.

"**<u>Losses</u>**" has the meaning given in <u>Section 11.4(a)</u> of the Security Agreement.

"**<u>Lost Instrument Affidavit</u>**" means an instrument in the form of <u>Exhibit L</u> to the Custodial and Paying Agency Agreement.

"**<u>Majority Note Holders</u>**" means, at any date of determination, the Note Holders (according to the Notes Register) holding more than fifty percent (50%) of the aggregate unpaid principal amount of the Purchase Money Notes outstanding at such date.

<u>"</u>**<u>Market Value</u>**<u>" means, with respect to an Eligible US Treasury Security, the market value thereof established by the Securities Intermediary, in good faith, using the evaluated bid pricing type and methodology from Intercontinental Exchange ("ICE") as the primary pricing source, which is determined daily at 4 p.m. EST with evaluations based on various market and industry inputs. In the event that ICE is unavailable, secondary pricing sources shall be, in order of priority, Bloomberg, LSEG, and S&P Global.</u> 

Schedule 1-16

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

------

"**<u>Material Adverse Change</u>**" shall be considered to have occurred if, at any date following the Availability Period, the consolidated financial condition or consolidated operations of the Company and its consolidated subsidiaries as of such date has materially adversely changed as compared to the consolidated financial condition or consolidated operations of the Company and its consolidated subsidiaries immediately prior to the end of the Availability Period.

"**<u>Maturity Date</u>**" means the fifth anniversary of the Closing Date (or, if such day is not a Business Day, the immediately following Business Day).

"**<u>Minimum Deposit Amount</u>**" has the meaning given to that term in the Minimum Deposit Provisions.

"**<u>Minimum Deposit Certification</u>**" has the meaning given to that term in the Minimum Deposit Provisions.

"**<u>Minimum Deposit Provisions</u>**" means the provisions regarding deposits into the Collection Account described on <u>Exhibit T</u> to the Custodial and Paying Agency Agreement.

"**<u>Minimum Deposit Report</u>**" has the meaning given to that term in the Minimum Deposit Provisions.

"**<u>Modification</u>**" means any extension, renewal, substitution, replacement, supplement, amendment or modification of any agreement, certificate, document, instrument or other writing, whether or not contemplated in the original agreement, document or instrument.

"**<u>Moody's</u>**" means Moody's Investors Service, Inc. and any successor thereto.

"**<u>Mortgage</u>**" means the mortgage, deed of trust or other instrument, including any Modifications thereto, creating a first or junior lien on or ownership interest in a Mortgaged Property.

"**<u>Mortgaged Property</u>**" means (i) the underlying real property or interest in real property, whether or not improved by buildings or facilities, and any personal property, fixtures, leases and other property or rights pertaining thereto, securing a mortgage loan, or (ii) with respect to any other type of loan, the collateral securing such loan. The Underlying Collateral for a Loan may include one or more of the collateral types described in clauses (i) or (ii). REO Property does not constitute Mortgaged Property.

"**<u>Non-Global Certificated Note</u>**" has the meaning given to that term in <u>Section 2.5(a)</u> of the Custodial and Paying Agency Agreement.

"**<u>Note Holder</u>**" means, with respect to any Purchase Money Note, the Person whose name appears on the Notes Register as the registered holder of such Purchase Money Note.

Schedule 1-17

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

------

"**<u>Note Holder's Account</u>**" means, as to any Note Holder, the account of such Note Holder specified in writing by such Note Holder to the Collateral Agent and the Paying Agent from time to time.

"**<u>Notes Designee</u>**" means the Receiver or any successor or permitted assignee of all rights and obligations assigned to the 'Notes Designee' under the PA Financing Transaction Documents.

"**<u>Notes Register</u>**" has the meaning given to that term in <u>Section 2.8(a)</u> of the Custodial and Paying Agency Agreement.

"**<u>Notes Registrar</u>**" has the meaning given to that term in <u>Section 2.8(a)</u> of the Custodial and Paying Agency Agreement.

"**<u>NY UCC</u>**" means the Uniform Commercial Code as in effect on the date of the Security Agreement in the State of New York, as amended from time to time, and any successor statute.

"**<u>Obligor</u>**" means (i) any guarantor of all or any portion of any Loan or all or any of any Borrower's obligations set forth and described in the Loan Documents or (ii) any other Person (other than the Borrower, the lender(s) and any administrative or other agent) that is obligated pursuant to the Loan Documents with respect to a Loan, and shall include the guarantor under any completion guaranty or similar document.

"**<u>OFAC</u>**" has the meaning given in <u>Section 6.1(h)</u> of the Security Agreement.

"**<u>Office</u>**" has the meaning given in <u>Section 6.1(a)</u> of the Custodial and Paying Agency Agreement.

"**<u>Organizational Documents</u>**" means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

"**<u>Original Amount</u>**" means, with respect to a Purchase Money Note, the stated original principal amount of such Purchase Money Note.

"**<u>PA Financing Transaction Documents</u>**" means (i) the Custodial and Paying Agency Agreement, the Advance Facility Agreement, the Security Agreement, the Purchase and Assumption Agreement, the Shared-Loss Agreement, the <u>Account Control Agreement, the Securities</u> Account Control Agreement, the Purchase Money Notes, the Facility Notes, and any Joinder Agreement or REO Mortgage that may be executed and delivered pursuant to the Security Agreement, and (ii) any and all other agreements, instruments or certificates executed and delivered by any Grantor in connection with the execution and delivery of, or otherwise

Schedule 1-18

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

------

pursuant to, any of the agreements specified in clause (i).

"**<u>Paying Agent</u>**" means U.S. Bank Trust Company, National Association, or any successor paying agent that is a Qualified Paying Agent and is acceptable and approved by the Collateral Agent, such approval not to be unreasonably withheld, delayed or conditioned.

"**<u>Paying Agent Report</u>**" has the meaning given in <u>Section 11.1(a)</u> of the Custodial and Paying Agency Agreement.

"**<u>Perfection Requirements</u>**" has the meaning given in <u>Section 6.1(e)</u> of the Security Agreement.

"**<u>Permitted/Excluded Liens</u>**" means the Liens granted to the Collateral Agent pursuant to the PA Financing Transaction Documents and the following Liens (excluding any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Code or by ERISA, any such Lien relating to or imposed in connection with liability under any Environmental Laws, and any such Lien expressly prohibited by any applicable terms of the Security Agreement): (i) any Lien on the Collateral in favor of any Person claiming by, through or under the Failed Bank, to the extent that such Lien secured obligations other than obligations assumed by the Company pursuant to the Purchase and Assumption Agreement, (ii) with respect to any REO Property, (v) leases or subleases granted to third parties, and contracts for the sale of condominiums and cooperative units entered into with third parties, in each case to the extent (if any) permitted under the Security Agreement, (w) Liens or other encumbrances that are excepted on existing policies of title insurance as of the Closing Date, (x) Liens for taxes, assessments or governmental charges not overdue or which are being contested in good faith and by appropriate proceedings diligently conducted, so long as (A) such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts, and (B) such contest proceedings conclusively operate to stay the sale of any portion of the Collateral on account of such Lien, (y) carriers', warehousemen's, mechanics', landlord's, materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings diligently conducted, so long as (A) such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts, and (B) such contest proceedings conclusively operate to stay the sale of any portion of the Collateral on account of such Lien, or (z) easements, rights-of-way, restrictions, encroachments, and minor defects or irregularities in title, in each case which do not and will not interfere in any material respect with the use or proposed used of any Collateral or REO Property or result in a material diminution in the value of any Collateral or REO Property or which are otherwise determined to be acceptable by the Collateral Agent, and (iii) to the extent constituting a Lien, the rights of the Receiver under the Purchase and Assumption Agreement and the Shared-Loss Agreement.

"**<u>Permitted Investments</u>**" means any one or more of the following obligations or securities having at the time of purchase, or at such other time as might be specified, the required ratings, if any, provided for in this definition:

Schedule 1-19

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;direct obligations of, or guaranteed as to timely payment of principal and interest by, the United States of America or any agency or instrumentality of the United States of America, the obligations of which are backed by the full faith and credit of the United States of America;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;demand and time deposits in or certificates of deposit of, or bankers' acceptances issued by, any bank or trust company, savings and loan association or savings bank, provided that, in the case of obligations that are not fully FDIC-insured deposits, the commercial paper and/or long-term unsecured debt obligations of such depository institution or trust company (or in the case of the principal depository institution in a holding company system, the commercial paper or long-term unsecured debt obligations of such holding company) have an Acceptable Investment Rating;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;general obligations of or obligations guaranteed by any state of the United States or the District of Columbia receiving ratings of not less than the highest rating of each Rating Agency rating such obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;commercial paper issued by any Person organized under the laws of any state of the United States of America and rated at least "Prime-1" (or the then equivalent grade) by Moody's or at least "A-1" (or the then equivalent grade) by S&P, in each case with maturities of not more than 30 days from the date of acquisition thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;mutual funds or money market funds in which investments are limited to the obligations referred to in clauses (i) through (iv) of this definition; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;&nbsp;&nbsp;with the prior written consent of the Collateral Agent, any other demand, money market or time deposit or other obligation, security or investment.

"**<u>Person</u>**" means any individual, corporation, partnership (general or limited), limited liability company, limited liability partnership, firm, joint venture, association, joint-stock company, trust, estate, unincorporated organization, governmental or regulatory body or other entity.

**"<u>Priority of Payments</u>**" has the meaning given in <u>Section 5.1(a)</u> of the Custodial and Paying Agency Agreement.

"**<u>Pro Rata Share</u>**" means, as of any date of determination, (i) for any Note Holder, a fraction the numerator of which equals the then-outstanding aggregate unpaid principal amount of the Purchase Money Notes registered in the name of such Note Holder according to the Notes Register and the denominator of which equals the then-outstanding aggregate unpaid principal amount of all of the Purchase Money Notes and (ii) for any Lender, a fraction the numerator of which equals the then-outstanding aggregate unpaid principal amount of the Facility Loans held by such Lender according to the Register and the denominator of which equals the then-outstanding aggregate unpaid principal amount of all of the Facility Loans.

Schedule 1-20

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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"**<u>Proceedings</u>**" means any suit in equity, action at law or other judicial or administrative proceeding.

"**<u>Purchase and Assumption Agreement</u>**" means the Purchase and Assumption Agreement, dated as of March 27, 2023, between the Receiver, the FDIC in its corporate capacity and the Company.

"**<u>Purchase Money Note</u>**" means (i) the Amended and Restated Initial Purchase Money Note (which replaced the Initial Purchase Money Note) or (ii) any note or notes executed upon registration of transfer of, in exchange for, or in lieu of, the Amended and Restated Initial Purchase Money Note or another Purchase Money Note in accordance with the terms of the Custodial and Paying Agency Agreement (as each of the same may be amended, supplemented, restated, or replaced from time to time in accordance with the Custodial and Paying Agency Agreement).

"**<u>Purchase Money Notes Distribution Debt Service Account</u>**" means a subaccount of the Distribution Account established and maintained with the Paying Agent or with the Account Bank (pursuant to the Custodial and Paying Agency Agreement) for the sole purpose of holding and distributing funds deposited into such account for distribution on the Purchase Money Notes in accordance with the Custodial and Paying Agency Agreement, and bearing, as of the Document Effective Date, the account number indicated on Schedule 2 attached hereto.

"**<u>Qualified Custodian</u>**" means any Person that (i) is a bank, trust company or title insurance company subject to supervision and examination by any federal or state regulatory authority, (ii) is experienced in providing services of the type required to be performed by the Custodian under the Custodial and Paying Agency Agreement, (iii) is qualified and licensed to do business in each jurisdiction in which the Custodial Documents will be held to the extent required unless and to the extent the failure to be so qualified or licensed will not have a material adverse effect on the Custodian or the ability of the Custodian to perform its obligations under the Custodial and Paying Agency Agreement, (iv) is not prohibited from exercising custodial powers in any jurisdiction in which the Custodial Documents are or will be held, (v) has the facilities to safeguard the Loan Documents and other Custodial Documents, (vi) unless otherwise consented to by Collateral Agent, is not a Grantor or an Affiliate of any Grantor (or of any Servicer with respect to any Grantor) and (vii) has all of its long-term obligations rated at or above investment grade by Moody's or S&P.

"**<u>Qualified Paying Agent</u>**" means any Person that (i) is a bank, trust company or title insurance company subject to supervision and examination by any federal or state regulatory authority, (ii) is experienced in providing services of the type required to be performed by the Paying Agent under the Custodial and Paying Agency Agreement, (iii) has the facilities to safeguard the funds deposited in the Debtor Accounts, (iv) unless otherwise consented to by Collateral Agent, is not a Grantor or an Affiliate of any Grantor (or of any Servicer with respect to any Grantor) and (v) has all of its long-term obligations rated at or above investment grade by Moody's or S&P.

"**<u>Rating Agency</u>**" means each of Moody's, S&P, Fitch and such other rating agencies as are nationally recognized.

Schedule 1-21

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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"**<u>Received</u>**" has the meaning given in <u>Section 3.1(b)</u> of the Custodial and Paying Agency Agreement.

"**<u>Receiver</u>**" has the meaning given in the recitals to the Custodial and Paying Agency Agreement.

"**<u>Receiver</u> <u>Allonge</u>**" means an allonge in the form of <u>Exhibit C</u> to the Security Agreement but with such deviations from such form, approved by the Collateral Agent, as may be required for such form to be sufficient under the applicable Law of the jurisdiction governing the applicable Loan to reflect the assignment and pledge of such Loan.

"**<u>Receiver Assignment and Lost Instrument Affidavit</u>**" means an instrument in the form of <u>Exhibit D</u> to the Security Agreement but with such deviations from such form, approved by the Collateral Agent, as may be required for such form to be sufficient under the applicable Law of the jurisdiction governing the applicable Loan to reflect the assignment and pledge of such Loan.

"**<u>Receiver Facility Disposition</u>**" has the meaning given in <u>Section 10.07(e)</u> of the Advance Facility Agreement.

"**<u>Receiver Lease Assignments</u>**" means, with respect to any lease, an instrument in the form of <u>Exhibit G</u> to the Security Agreement but with such deviations from such form, approved by the Collateral Agent, as may be required for such form to be in recordable form under the applicable Law of the jurisdiction wherein the relevant related Mortgaged Property is located and otherwise sufficient under such applicable Law to reflect the assignment and pledge of such lease.

"**<u>Receiver Mortgage Assignment</u>**" means, with respect to any Mortgage, an instrument in the form of <u>Exhibit E</u> to the Security Agreement but with such deviations from such form, approved by the Collateral Agent, as may be required for such form to be in recordable form under the applicable Law of the jurisdiction wherein the related Mortgaged Property is located and otherwise sufficient under such applicable Law to reflect the assignment and pledge of the Mortgage.

"**<u>Receiver Note Disposition</u>**" has the meaning given in <u>Section 2.11(e)</u> of the Custodial and Paying Agency Agreement.

"**<u>Receiver Trust Assignment</u>**" means, with respect to any deed of trust, an instrument in the form of <u>Exhibit F</u> to the Security Agreement but with such deviations from such form, approved by the Collateral Agent, as may be required for such form to be in recordable form under the applicable Law of the jurisdiction wherein the related Mortgaged Property is located and otherwise sufficient under such applicable Law to reflect the assignment and pledge of such deed of trust.

"**<u>Record Date</u>**" means, with respect to any Distribution Date or Maturity Date, the Business Day immediately preceding such Distribution Date or Maturity Date, as applicable, for the purpose of determining the Note Holders entitled to receive a payment in respect of principal or other amounts on such Distribution Date or Maturity Date, as applicable.

Schedule 1-22

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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"**<u>Recording Office</u>**" means the appropriate recording office of the jurisdiction in which the Mortgaged Property is located with respect to any given Loan (if such Loan is not Acquired Property) or in which the Acquired Property is located.

"**<u>Register</u>**" has the meaning given in <u>Section 2.07(a)</u> of the Advance Facility Agreement.

"**<u>Reimbursable Expenses</u>**" means costs and expenses incurred by an Agent, a Note Holder or a Lender which are payable or reimbursable by the Company pursuant to <u>Section 11.2</u> of the Security Agreement.

"**<u>Related Agreement</u>**" means (i) any agreement, document or instrument (other than the Loan Note and Underlying Collateral Documents) relating to or evidencing any obligation to pay or securing any Loan (including any equipment lease, letter of credit, bankers' acceptance, draft, system confirmation of transaction, loan history, affidavit, general collection information, and correspondence and comments relating to any obligation), (ii) any agreement relating to real property or rights in or to any real property (including leases, property or asset management agreements, brokerage agreements, or other agreements granting tenancies, concessions, licenses or other rights of occupancy or use and security deposits related thereto) related specifically only to the Loans, the Underlying Collateral or Acquired Property or any of the foregoing, (iii) any collection or contingency fee, and tax and other service agreements that are specific only to the Loans (or any of them) and that are assignable, (iv) any letter of assurance, letter of credit or similar instrument evidencing an obligation of any Grantor or the Failed Bank that was issued for the benefit of any Person and relates in any way to a Loan or the acquisition, development or construction of any project with respect to which the proceeds of such Loan were used or were intended to be used, and (v) any interest rate swap arrangement between the Borrower and any of the Failed Bank or a Debtor (in each case as the applicable lender, agent or other creditor under the Loan) that relates to any Loan.

"**<u>Related Entities</u>**" has the meaning given in <u>Section 11.4(a)</u> of the Security Agreement.

"**<u>REO Mortgage</u>**" means, with respect to each REO Property, a mortgage, deed of trust, trust deed or deed to secure debt securing the Secured Obligations in form suitable for recording in the appropriate public records and otherwise in form and substance satisfactory to the Collateral Agent (which REO Mortgage may, if the Mortgage on the applicable REO Property has not been discharged and if the Collateral Agent agrees, consist of such Mortgage, as assigned to the Collateral Agent and including such modifications thereto as the Collateral Agent may require).

"**<u>REO Property</u>**" means any real property (and related personal property) included in the Acquired Property.

"**<u>Request for Release and Receipt of Custodial Documents</u>**" means a notice or instructions in the form of <u>Exhibit H</u> of the Custodial and Paying Agency Agreement.

"**<u>Resigning Agent</u>**" has the meaning given in <u>Section 9.1</u> of the Custodial and Paying Agency Agreement.

Schedule 1-23

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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"**<u>Responsible Officer</u>**" means the chief executive officer, chief operating officer, chief financial officer, chief accounting officer, treasurer, controller, or any deputy or assistant treasurer of the Company. Any document delivered in accordance with a PA Financing Transaction Document that is signed by a Responsible Officer shall be conclusively presumed to have been authorized by all necessary corporate, limited liability company and/or other action on the part of the Company and a Responsible Officer of the Company shall be conclusively presumed to have acted on behalf of the Company.

"**<u>Retention Date</u>**" means the date that is the later of (i) six (6) years after the Closing Date and (ii) three (3) years after the later of the satisfaction and discharge of all Secured Obligations in full, the satisfaction and discharge of all Facility Obligations and the termination or expiration of the Commitments.

"**<u>Review Procedures</u>**" means the review procedures set forth on <u>Exhibit F</u> of the Custodial and Paying Agency Agreement.

"**<u>S&P</u>**" means S&P Global Ratings and any successor thereto.

"**<u>Sale</u>**" has the meaning given in <u>Section 5.3(a)</u> of the Security Agreement.

"**<u>Second Lien Claimholders</u>**" means the holders of the Facility Notes.

"**<u>Second Lien Collateral Agent</u>**" means the Collateral Agent, together with its successors and assigns in such capacity under an Intercreditor Agreement.

"**<u>Second Lien Obligations</u>**" means the obligations of the Company under the Facility Note.

"**<u>Second Lien Representative</u>**" means the Lender, together with its successors and assigns in such capacity under an Intercreditor Agreement.

"**<u>Secured Obligations</u>**" means (i) (x) all debts, liabilities and obligations of any Grantor under or otherwise in respect of the Facility Loans, the Facility Notes and/or Purchase Money Notes, including on account of principal, interest and any Withholding Tax Gross-Up Payments, (y) without limitation of sub-clause (x), the principal of, and interest, and all other amounts (including any Withholding Tax Gross-Up Payment), payable at any time (or from time to time) by any Grantor under or otherwise in respect of, the Facility Loans, the Facility Notes and/or the Purchase Money Notes, and (z) all other debts, liabilities, obligations, covenants and duties of any Grantor under, or arising under, the Advance Facility Agreement, the Purchase Money Notes and/or the Security Agreement, and (ii) all debts, liabilities, obligations, covenants and duties of any Grantor to any Secured Party (not covered under clause (i)) under, or arising under, any PA Financing Transaction Document, in the case of each of (i) and (ii) whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Grantor of any proceeding under any Debtor Relief Laws naming such Person as a debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding. Without limiting the generality of the foregoing, the Secured Obligations of the Grantor under the PA Financing Transaction Documents include (x) the obligation (including guarantee obligations) to pay principal, interest, charges, expenses, fees, costs and other charges

Schedule 1-24

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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of attorneys, indemnities and other amounts payable by any Grantor (A) under the Purchase Money Notes, the Advance Facility Agreement or the Security Agreement or (B) to any Secured Party under any PA Financing Transaction Document and (y) the obligation of any Grantor to reimburse any amount in respect of any of the foregoing that any of the Note Holder, the Lender or the Collateral Agent, in its sole discretion, may elect to pay or advance on behalf of such Grantor. The foregoing notwithstanding, the liabilities and obligations of the Company under the Purchase and Assumption Agreement do not constitute "Secured Obligations".

"**<u>Secured Parties</u>**" means, collectively, the Note Holders, the Lender, the Indemnified Parties, FDIC in its corporate capacity, the Paying Agent and the Account Bank. For clarity, the term "Secured Parties" shall not include Participating Holders (as such term is defined in the Purchase Money Note) or Participants (as such term is defined in the Advance Facility Agreement).

"**<u>Securities Act</u>**" means the Securities Act of 1933, as amended.

"**<u>Security Agreement</u>**" means the Security Agreement, dated as of the Closing Date, among the Company, the Notes Designee, the Collateral Agent and each Grantor.

<u>"</u>**<u>Securities Account Control Agreement</u>**<u>" means that certain Securities Account Control Agreement, dated as of July 18, 2025, among the Company, the Collateral Agent and the Securities Intermediary.</u>

<u>"</u>**<u>Securities Intermediary</u>**<u>" means U.S. Bank National Association acting as securities intermediary under the Securities Account Control Agreement, or any permitted successor pursuant to Section 15 of the Securities Account Control Agreement.</u> 

"**<u>Servicer</u>**" means, with respect to any specified Person, (i) any other Person retained by such specified Person, or by any Affiliate of such specified Person, to service, manage or administer any of the Loans or any of the Underlying Collateral or Acquired Property, and (ii) any Person retained by any retained Person described in clause (i) to service, manage or administer any of the Loans or any of the Underlying Collateral or Acquired Collateral.

"**<u>Servicing Agreement</u>**" means each servicing agreement entered into by any Grantor, or any Affiliate of any Grantor, with any Servicer (or by any such Servicer with any other Servicer), in each case with respect to the servicing, management or administration of any of the Loans or any of the Underlying Collateral or Acquired Property.

"**<u>Servicing Obligations</u>**" means the obligations of the Company set forth in Article III of the Shared-Loss Agreement and, in any event, the obligations of the Company to service the Loans at all times in accordance with usual and prudent business and banking practices, and Customary Servicing Procedures.

Schedule 1-25

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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"**<u>Servicing Records</u>**" means all servicing records (including any and all servicing agreements, files, documents, records, data bases, computer tapes, copies of computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing documentation, payment history records and any other records) relating to or evidencing the servicing of the Loans.

"**<u>Shared-Loss Agreement</u>**" means the Commercial Shared-Loss Agreement dated as of March 27, 2023 between the Company and the Receiver.

"**<u>Shared-Loss Assets</u>**" has the meaning given in the Shared-Loss Agreement.

"**<u>Shared-Loss Loans</u>**" has the meaning given in the Shared-Loss Agreement.

"**<u>Site Assessment</u>**" has the meaning given in <u>Section 3.2(b)</u> of the Security Agreement.

"**<u>Subsidiary</u>**" means, with respect to any specified Person, each of (i) any other Person not less than a majority of the overall economic equity in which is owned, directly or indirectly through one of more intermediaries, by such specified Person, and (ii) without limitation of clause (i), any other Person who or which, directly or indirectly through one or more intermediaries, is Controlled by such specified Person (it being understood with respect to clause (i) that a pledge for collateral security purposes of an equity interest in a Person shall not be deemed to affect the ownership of such equity interest by the pledgor so long as such pledgor continues to be entitled, in all material respects, to all the income with respect to such equity interest).

"**<u>Supplemental Delivery Certificate</u>**" has the meaning given in <u>Section 6.1(d)</u> of the Custodial and Paying Agency Agreement.

"**<u>Total Deposits</u>**" has the meaning given in the Advance Facility Agreement.

"**<u>Transfer Documents</u>**" means the endorsements and Receiver Allonges, Receiver Assignment and Lost Instrument and Assignment Affidavits (if applicable), Receiver Mortgage Assignments, Receiver Trust Assignments, Receiver Lease Assignments, deeds, assignment of leases and other documents of assignment, conveyance or transfer required under any applicable Law to evidence the transfer to the Company of the Loans, the Underlying Collateral, the Underlying Collateral Documents and the Acquired Property.

"**<u>Trust Indenture Act</u>**" means the Trust Indenture Act of 1939, as amended, and the rules and regulations promulgated thereunder.

"**<u>Underlying Collateral</u>**" means any and all real or personal property, whether tangible or intangible or mixed, securing or pledged to secure a Loan, including (i) any account, equipment, guaranty or contract right, equity, partnership or other interest that is the subject of any Underlying Collateral Document and (ii) as the context requires, Acquired Property, whether or not expressly specified.

"**<u>Underlying</u> <u>Collateral Document</u>**" means any pledge agreement, security agreement, personal, corporate or other guaranty, deed of trust, deed, trust deed, deed to secure debt, mortgage, contract for the sale of real property, assignment, collateral agreement, stock power or

Schedule 1-26

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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other agreement or document of any kind, whether an original or a copy, whether similar to or different from those enumerated, (i) securing in any manner the performance or payment by any Borrower or any Obligor of its obligations or the obligations of any other Borrower or any Obligor under any of the Loans or the Loan Notes evidencing the Loans or (ii) evidencing ownership of any Acquired Property.

<u>"</u>**<u>Unfunded Failed Bank Commitment</u>**<u>" means the obligation of the Company assumed from the Failed Bank to fund a Commercial Loan following the Closing Date pursuant to the terms of the Commercial Loan Documents, identified as such on the Loan Schedule and expressed in Dollars.</u>

<u>"</u>**<u>Unfunded Failed Bank Commitments Disbursed</u>**<u>" means, as of any date of determination, the sum (without duplication) of (i) the aggregate principal amount of Unfunded Failed Bank Commitments funded by the Company prior to such date plus (ii) the aggregate principal amount of Unfunded Failed Bank Commitments required to be funded by the Company on or within 5 Business Days following such date.</u>

"**<u>Uniform Commercial Code</u>**" or "**<u>UCC</u>**" means the Uniform Commercial Code as in effect in any applicable jurisdiction, as amended from time to time.

"**<u>United States</u>**" and "**<u>U.S.</u>**" mean the United States of America.

"**<u>Warehouse Loans</u>**" means Loans to finance a Borrower's extension of mortgage loans.

"**<u>Withholding Tax Gross-Up Payment</u>**" means any "Withholding Tax Gross-Up Payment" as defined in the Advance Facility Agreement or any "Withholding Tax Gross-Up Payment" as defined in any Purchase Money Note.

Schedule 1-27

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**SCHEDULE 2**

**ACCOUNT NUMBERS**

[Omitted.]

Schedule 2-1

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**EXHIBIT A**

**[RESERVED]**

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

11040222v16

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**<u>EXHIBIT B-1</u>**

**FORM OF NON-GLOBAL CERTIFICATED NOTE**

**PURCHASE MONEY NOTE**

[Omitted.]

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**EXHIBIT B-2**

**FORM OF GLOBAL NOTE**

[Omitted.]

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**EXHIBIT C**

[RESERVED]

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**EXHIBIT D**

[RESERVED]

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**EXHIBIT E**

**FORM OF COLLATERAL CERTIFICATE**

[Omitted.]

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**EXHIBIT F**

**REVIEW PROCEDURES**

[Omitted.]

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**EXHIBIT G**

**FORM OF SUPPLEMENTAL DELIVERY CERTIFICATE**

[Omitted.]

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**EXHIBIT H**

**REQUEST FOR RELEASE AND RECEIPT OF CUSTODIAL DOCUMENTS**

[Omitted.]

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**EXHIBIT I**

**REQUEST FOR RELEASE AND RECEIPT OF DEBT AGREEMENTS**

[Omitted.]

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**EXHIBIT J**

**FEES OF THE CUSTODIAN** 

[Omitted.]

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**EXHIBIT K**

**PAYING AGENT REPORT**

[Omitted.]

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**EXHIBIT L**

**FORM OF LOST INSTRUMENT AFFIDAVIT**

[Omitted.]

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**EXHIBIT M**

**AUTHORIZED REPRESENTATIVES**

[Omitted.]

-1

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**EXHIBIT N**

**FORM OF ACCOUNT CONTROL AGREEMENT**

[Omitted.]

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**EXHIBIT O**

**<u>FORM OF TRANSFER CERTIFICATE</u>**

[Omitted.]

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**EXHIBIT P**

[Reserved]

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**EXHIBIT Q**

**Form of Distribution Date Report**

**Distribution Date Report**

[Omitted.]

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**EXHIBIT R**

**FORM OF TRIAL BALANCE REPORT**

[Omitted.]

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**EXHIBIT S**

**BIC REQUIREMENTS**

[Omitted.]

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

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**EXHIBIT T**

**MINIMUM DEPOSIT PROVISIONS**

Beginning on the first day of each Due Period, all Loan Proceeds Received during that Due Period must be deposited into the Collection Account in accordance with <u>Section 3.1(b)</u> of the Custodial and Paying Agency Agreement until the balance of the Collection Account equals or exceeds (a) one hundred fifty percent (150%) of all amounts reasonably estimated by the Company to be disbursed pursuant to <u>Sections 5.1(a)(i)</u>, <u>(ii)</u>, <u>(iii)</u> and <u>(vi)</u> of the Custodial and Paying Agency Agreement on the related Distribution Date (i.e., the Distribution Date occurring during the next succeeding Due Period), plus (b) one hundred percent (100%) of all amounts reasonably estimated by the Company to be disbursed pursuant to <u>Sections 5.1(a)(iv)</u>, <u>(v)</u> and <u>(vii)</u> of the Custodial and Paying Agency Agreement on the related Distribution Date, Interest Payment Date or Maturity Date, as applicable (i.e., the Distribution Date, Interest Payment Date or Maturity Date occurring during the next succeeding Due Period) (the sum of the estimated disbursements described in clauses (a) and (b) above, the "**Minimum Deposit Covered Disbursements**", and the required Collection Account balance, the "**Minimum Deposit Amount**").

At any time after the Minimum Deposit Amount for a Due Period is reached, the Company may submit to the Receiver a report, in substantially the form attached hereto as <u>Appendix A</u> (the "**Minimum Deposit Report**") showing (i) the amount of deposits into the Collection Account during that Due Period, (ii) the amount of deposits into the Collection Account during prior Due Periods and remaining in the Collection Account, and (iii) the Minimum Deposit Covered Disbursements for the related Distribution Dates. The Receiver will have five (5) Business Days in which to verify the information provided in the Minimum Deposit Report.

If no Event of Default has occurred and is continuing when the Company submits the Minimum Deposit Report to the Receiver, the Debtors may stop depositing Loan Proceeds for the related Due Period into the Collection Account (a "**Due Period Deposit Pause**"). In addition, if the Company has not received notice from the Receiver that it disagrees, on the basis of an inaccurate estimate or computation, with the Minimum Deposit Report by 9:00 a.m. on the fifth Business Day after receipt by the Receiver of such Minimum Deposit Report, then the Company may instruct the Paying Agent to transfer to an account designated by the Company any excess above the Minimum Deposit Amount reflected in the related Minimum Deposit Report. Notwithstanding the foregoing, if the Company is notified or has knowledge that, at any time, the "Minimum Deposit Amount" included in the related Minimum Deposit Report is less than the actual Minimum Deposit Amount for either related Distribution Date (if determined as of such time) (such shortfall amount, a "**Minimum Deposit Shortfall**") for any reason (including, without limitation, withdrawal of funds from the Collection Account by the Company pursuant to the Custodial and Paying Agency Agreement (including <u>Section 3.1(e)</u> thereto) or an increase in the Minimum Deposit Covered Disbursements for such related Distribution Date (including any additional interest payable on Facility Loans issued after the related Minimum Deposit Report)), the Debtors shall promptly deposit (or resume the deposit of all Loan Proceeds Received until they have deposited) an amount equal to the Minimum Deposit Shortfall into the Collection Account.

For the avoidance of doubt, (a) upon the occurrence and continuation of an Event of Default, these Minimum Deposit Provisions do not apply, any Due Period Deposit Pause then in effect is immediately (and without further action) terminated and no Due Period Deposit Pause may be commenced, and (b) Loan Proceeds not required to be remitted to the Collection Account may be retained and used by the Debtors without restriction.

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

------

APPENDIX A

Form of Minimum Deposit Report

[Omitted.]

Silicon Valley Bridge Bank, National Association

Custodial and Paying Agency Agreement

US_ACTIVE\123447983<u>130343115</u>\V-36<u>-8</u>

## Exhibit 31.1

**Exhibit 31.1**

**<u>CERTIFICATION</u>**

I, Frank B. Holding, Jr., certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this Quarterly Report on Form 10-Q of First Citizens BancShares, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 7, 2025

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| |
|:---|
| /s/ Frank B. Holding, Jr.  |
| Frank B. Holding, Jr. |
| Chief Executive Officer |

---

## Exhibit 31.2

**Exhibit 31.2**

**<u>CERTIFICATION</u>**

I, Craig L. Nix, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this Quarterly Report on Form 10-Q of First Citizens BancShares, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 7, 2025

---

| |
|:---|
| /s/ Craig L. Nix  |
| Craig L. Nix |
| Chief Financial Officer |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

## Exhibit 32.1

**Exhibit 32.1**

**<u>CERTIFICATION</u>**

The undersigned hereby certifies that (i) the Form 10-Q filed by First Citizens BancShares, Inc. (the "Issuer") for the period ended September 30, 2025, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in that report fairly presents, in all material respects, the financial condition and results of operations of the Issuer on the dates and for the periods presented therein.

November 7, 2025

---

| |
|:---|
| /s/ Frank B. Holding, Jr.  |
| Frank B. Holding, Jr. |
| Chief Executive Officer |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

## Exhibit 32.2

**Exhibit 32.2**

**<u>CERTIFICATION</u>**

The undersigned hereby certifies that (i) the Form 10-Q filed by First Citizens BancShares, Inc. (the "Issuer") for the period ended September 30, 2025, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in that report fairly presents, in all material respects, the financial condition and results of operations of the Issuer on the dates and for the periods presented therein.

November 7, 2025

---

| |
|:---|
| /s/ Craig L. Nix  |
| Craig L. Nix |
| Chief Financial Officer |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

<br>