NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Summary of Significant Accounting Policies
Nature of Operations-Columbia Banking System, Inc. is headquartered in Tacoma, Washington, and is engaged primarily in the business of commercial and consumer banking. The Company provides a broad range of banking and other financial services to corporate, institutional, small business, and individual customers through its wholly-owned banking subsidiary Columbia Bank. The Bank has a wholly-owned subsidiary, Financial Pacific Leasing, Inc., which is a commercial equipment leasing company.
The Company and its subsidiaries are subject to regulation by certain federal and state agencies and undergo periodic examination by these regulatory agencies.
Basis of Financial Statement Presentation-The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and with prevailing practices within the financial services industry. In preparing such financial statements, management is required to make certain estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the balance sheet and the reported amounts of revenues and expenses for the reporting period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the ACL and business combinations.
On August 31, 2025, Columbia completed its acquisition of Pacific Premier. The transaction was accounted for under the acquisition method of accounting and was structured as an all-stock business combination. The consolidated financial statements include the results of Pacific Premier from the acquisition date forward; periods prior to August 31, 2025 reflect Columbia's historical operations only. Accordingly, results for pre- and post-acquisition periods are not directly comparable. For additional information regarding the acquisition accounting and valuation assumptions, refer to Note 2 – Business Combinations.
In 2025, management elected to change the presentation of the Company's financial statements and accompanying footnote disclosures from thousands to millions. The change in presentation had no material impact on previously reported financial information, but certain amounts reported for prior periods may differ by insignificant amounts due to the nature of rounding relative to the change in presentation. In addition, historical percentages and per-share amounts presented may not add to their respective totals or recalculate due to rounding. The Company also revised the presentation of certain financial statement line items on the balance sheet and income statement, resulting in the aggregation of certain previously presented line items. These reclassifications were made to conform to the current period presentation and had no impact on total assets, liabilities, equity, net income, or cash flows for any period presented.
Consolidation-The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, and the Bank's wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The Company also has wholly-owned trusts that were formed to issue trust preferred securities and related common securities of the Trusts. The Company has not consolidated the accounts of the Trusts in its consolidated financial statements as they are considered to be variable interest entities for which the Company is not a primary beneficiary. As a result, the junior subordinated debentures issued by the Company to the Trusts are reflected on the Consolidated Balance Sheets as junior subordinated debentures.
Subsequent events-The Company evaluates events occurring after the balance sheet date but before the issuance of the financial statements for potential recognition or disclosure. It was determined that there were no material events requiring adjustments to the consolidated financial statements or significant disclosure in the accompanying notes.
Business Combinations-The Company applies the acquisition method of accounting for business combinations. Under the acquisition method, the acquiring entity recognizes the assets acquired and liabilities assumed at their acquisition date fair values. Management utilizes prevailing valuation techniques appropriate for the asset or liability being measured in determining these fair values. This method often involves estimates based on third-party valuations or internal valuations based on discounted cash flow analyses or other valuation techniques, all of which are inherently subjective. Any excess of the purchase price over the fair value of net assets and other identifiable intangible assets acquired is recorded as goodwill. Assets acquired and liabilities assumed from contingencies must also be recognized at fair value if the fair value can be determined during the measurement period. Acquisition‑related costs, including conversion and restructuring charges, are expensed as incurred. Fair values are subject to refinement over the measurement period, not to exceed one year after the closing date.
Cash and Cash Equivalents-Cash and cash equivalents include cash and due from banks and temporary investments which are interest-bearing balances due from other banks. Cash and cash equivalents generally have a maturity of 90 days or less at the time of purchase.
Equity and Other Securities-Equity and other securities are carried at fair value with realized and unrealized gains or losses recorded in non-interest income.
Investment Securities Available for Sale-Debt securities are classified as available for sale if the Company intends and has the ability to hold those securities for an indefinite period of time, but not necessarily to maturity. Any decision to sell a debt security classified as available for sale would be based on various factors, including significant movements in interest rates, changes in the maturity mix of assets and liabilities, liquidity needs, regulatory capital considerations, and other similar factors. Premiums and discounts are amortized or accreted over the life of the related investment security as an adjustment to yield using the effective interest method. Dividend and interest income are recognized when earned.
Securities available for sale are carried at fair value. Realized gains or losses, determined on the basis of the cost of specific securities sold, are included in earnings. Unrealized holding gains or losses are included in other comprehensive income as a separate component of shareholders' equity, net of tax. When the fair value of an available-for-sale debt security falls below the amortized cost basis, it is evaluated to determine if any of the decline in value is attributable to credit loss. Decreases in fair value attributable to credit loss would be recorded directly to earnings with a corresponding ACL, limited by the amount that the fair value is less than the amortized cost basis. If the credit quality subsequently improves, the allowance would be reversed up to a maximum of the previously recorded credit losses. If the Company intends to sell an impaired available-for-sale debt security, or if it is more likely than not that the Company will be required to sell the security prior to recovering the amortized cost basis, the entire fair value adjustment would be immediately recognized in earnings with no corresponding ACL.
Loans Held for Sale-Loans held for sale represent residential mortgage loans intended to be sold in the secondary market and non-mortgage loans that management has an active plan to sell. The Company has elected to account for residential mortgage loans held for sale at fair value and non-mortgage loans at the lower of cost or fair value. Fair value is determined based on quoted secondary market prices for similar loans, including the implicit fair value of embedded servicing rights. The change in fair value of loans held for sale is primarily driven by changes in interest rates subsequent to loan funding, resulting in revaluation adjustments to the recorded fair value. The inputs used in the fair value measurements are considered Level 2 inputs. The use of the fair value option allows the change in the fair value of loans to more effectively offset the change in the fair value of derivative instruments that are used as economic hedges to loans held for sale. Loan origination fees and direct origination costs are recognized immediately in net income. Interest income on loans held for sale is included in interest income on the Consolidated Statements of Income and recognized when earned. Loans held for sale are placed on non-accrual in a manner consistent with loans held for investment. The Company recognizes the gain or loss on the sale of loans when the sales criteria for derecognition are met.
Loans and Leases-Loans are stated at the amount of unpaid principal, net of unearned income and any deferred fees or costs. All discounts and premiums are recognized over the contractual life of the loan as yield adjustments. Origination and commitment fees and direct loan origination costs for loans and leases held for investment are deferred and recognized as an adjustment to the yield over the life of the loans and leases. The recognition of these net deferred fees is accelerated at loan payoff, if earlier than the life of the loan.
Leases are recorded at the amount of minimum future lease payments receivable and estimated residual value of the leased equipment, net of unearned income and any deferred fees. Initial direct costs related to lease originations are deferred as part of the investment in direct financing leases and amortized over their term using the effective interest method. Unearned lease income is amortized over the lease term using the effective interest method.
Loans and leases purchased or acquired through business combinations without more-than-insignificant credit deterioration are recorded at their fair value at the acquisition date. The difference between the fair value and principal balance is recognized as an adjustment to the yield over the remaining life of the loan and lease. Loans and leases purchased with more-than-insignificant credit deterioration will be recorded with their applicable ACL to determine the amortized cost basis, and the allowance portion of the fair value adjustment on such loans is not accreted. The Company periodically sells loans through either securitizations or individual loans sales from its portfolio to maintain a balanced and healthy loan portfolio, enhance liquidity, and manage credit risk.
Non-Accrual and Past Due Loans and Leases-Loans and leases are considered past due when the contractual amounts due with respect to principal and interest are not received within 30 days of the contractual due date. Loans are classified as non-accrual if the collection of principal and interest is doubtful. Generally, this occurs when a loan is past due beyond its maturity, principal payment, or interest payment due date by 90 days or more, unless such loans are well-secured and in the process of collection. Loans that are less than 90 days past due may also be classified as non-accrual if repayment in full of principal and/or interest is in doubt.
Generally, when a loan is classified as non-accrual, all uncollected accrued interest is reversed from interest income and the accrual of interest income is discontinued. In addition, any cash payments subsequently received are applied as a reduction of principal outstanding. In cases where the future collectability of the principal balance in full is expected, interest income may be recognized on a cash basis. A loan may be restored to accrual status when the borrower's financial condition improves so that full collection of future contractual payments is considered likely. For those loans placed on non-accrual status due to payment delinquency, return to accrual status will typically not occur until the borrower demonstrates repayment ability over a period of not less than six months.
Modifications to Borrowers Experiencing Financial Difficulty-A debtor is considered to be experiencing financial difficulty when there is significant doubt about the debtor’s ability to make required payments on the debt or to get equivalent financing from another creditor at a market rate for similar debt. The Company may modify the contractual terms of loans and leases to a borrower experiencing financial difficulties as a way to mitigate loss, proactively work with borrowers in financial difficulty, or to comply with regulations regarding the treatment of certain bankruptcy filing and discharge situations.
Modifications to borrowers in financial difficulty may include term extensions, interest rate reductions, principal or interest forgiveness, an other-than-insignificant payment delay, or any combination of these. The Company closely monitors the performance of loans and leases that are modified for borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. Loans and leases are considered to be in payment default at 90 days or more days past due. Loans and leases with modifications to borrowers experiencing financial difficulty are subject to policies governing accrual/non-accrual evaluation consistent with all other loans of the same product types. As such, modifications to troubled borrowers may include loans remaining on non-accrual, moving to non-accrual, or continuing on accrual status, depending on the individual facts and circumstances.
Allowance for Credit Losses-ASC Topic 326 requires an expected loss model, which encompasses allowances for credit losses expected to be incurred over the contractual life of loans measured at amortized cost, including unfunded commitments. The estimate of current expected credit losses is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. To calculate the ACL, management uses models to estimate the PD and LGD for loans, utilizing inputs that include forecasted future economic conditions and specific macroeconomic variables relevant to each of the Bank’s loan and lease portfolios. Moody's Analytics, a third party, supplies the historical and forward-looking macroeconomic data utilized in the models used to calculate the ACL.
The Company utilizes complex models to obtain reasonable and supportable forecasts. Most of the models calculate two predictive metrics: the PD and LGD. The PD measures the probability that a loan will default within a given time horizon and primarily measures the adequacy of the debtor's cash flow as the primary source of repayment of the loan or lease. The LGD is the expected loss which would be realized presuming a default has occurred and primarily measures the value of the collateral or other secondary sources of repayment related to the collateral. Acquired and newly originated loans and leases that have not been modeled receive a loss rate via an extrapolated rate methodology.
Historical loss experience is the starting point for estimating expected credit losses. Adjustments are made to historical loss experience to reflect differences in asset-specific risk characteristics, such as underwriting standards, portfolio mix or asset terms, and differences in economic conditions – both current conditions and reasonable and supportable forecasts. When the Company is not able to make or obtain reasonable and supportable forecasts for the entire life of the financial asset, it has estimated expected credit losses for the remaining life using an approach that reverts to historical credit loss information for the longer-term portion of the asset's life. The allowance related to the extrapolated population is based on loan segment, PD credit classification, and vintage year of the modeled loans and leases. A loss factor is calculated and applied to the non-modeled loans and leases.
In calculating the ACL, the Bank considered the financial and economic environment at the time of assessment and economic scenarios that differed in the levels of severity and sensitivity to the ACL results. At each measurement date, the Bank selects the scenario that reflects its view of future economic conditions and is determined to be the most probable outcome. All forecasts are updated for each variable where applicable and incorporated as relevant into the ACL calculation. Actual credit loss results and the timing thereof will differ from the estimate of credit losses, either in a strong economy or a recession, as the portfolio will change through time due to growth, risk mitigation actions and other factors. In addition, the scenarios used will differ and change through time as economic conditions change. Economic scenarios might not capture deterioration or improvement in the economy timely enough for the Bank to be able to adequately address the impact to the ACL.
The ACL is measured on a collective (pool) basis when similar characteristics exist. The Company has selected models at the portfolio level using a risk-based approach, with larger, more complex portfolios having more complex models. Except as noted below, the macroeconomic variables that are inputs to the models are reasonable and supportable over the life of the loans in that they reasonably project the key economic variables in the near term and then converge to a long-run equilibrium trend. These models produce reasonable and supportable estimates of loss over the life of the loans as the projected credit losses will also converge to a steady state in line with the variables applied.
The following provides credit quality indicators and risk elements most relevant in monitoring and measuring the ACL on loans for each of the loan portfolio segments identified:
•Commercial Real Estate: Non-owner occupied CRE, multifamily, and commercial construction loans are analyzed using a model that uses four primary property variables: net operating income, property value, property type, and location. For PD estimation, the model simulates potential future paths of net operating income given CRE market factors determined from macroeconomic and regional CRE forecasts. Using the resulting expected debt service coverage ratios, together with predicted loan-to-values and other variables, the model estimates PD from the range of conditional possibilities. In addition, the model estimates maturity PD capturing refinance default risk to produce a total PD for the loan. The model estimates LGD, inclusive of principal loss and liquidation expenses, empirically using predicted loan-to-value as well as certain market and other factors. The LGD calculation also includes a separate maturity risk component. The primary economic drivers in the model are GDP growth, U.S. unemployment rate, and 10-Year Treasury yield. These economic drivers are translated into a forecast, provided by Moody's Analytics' REIS, of real estate metrics, such as rental rates, vacancies, and cap rates. The model produces PD and LGD on a quarter-by-quarter basis for the life of loan.
The owner-occupied CRE portfolio utilizes a top-down macroeconomic model using logistic regression. This model produces portfolio level quarterly net charge-off rates according to the macroeconomic scenario over a reasonable and supportable two-year forecast. The primary economic drivers for this model are CRE price index and a five-state average unemployment rate. The model utilizes output reversion methodology, which after two years reverts on a straight-line basis over one year to the long run historical average net charge-off rate.
•Commercial: Non-homogeneous commercial loans and leases and residential development loans are analyzed in a multi-step process. An initial PD is estimated using a model driven by an obligor's selected financial statement ratios, together with cycle-adjusting information based on the obligor's state and industry. An initial LGD is derived separately based on collateral type using collateral value and a haircut to reflect the loss in liquidation. Another model then applies an auto-regression technique to the initial PD and LGD metrics to estimate the PD and LGD curves according to the macroeconomic scenario. The primary economic drivers in the model are GDP growth and CRE price index.
The model for the homogeneous lease and equipment finance agreement portfolio uses lease and equipment finance agreement information, such as origination and performance, as well as macroeconomic variables to calculate PD and LGD values. The PD calculation is based on survival analysis while LGD is calculated using a two-step regression. The model calculates LGD using an estimate of the probability that a defaulted lease or equipment finance agreement will have a loss, and an estimate of the loss amount. The primary economic drivers for the model are U.S. unemployment rate, the 5-year treasury rate, value of construction put in place, consumer price index, and a home price growth index. The model produces PD and LGD curves at the lease or equipment finance agreement level for each month in the forecast horizon.
•Residential: The models for residential real estate and HELOCs utilize loan level variables, such as origination and performance, as well as macroeconomic variables to calculate PD and LGD. The U.S. unemployment rate and home price growth rate indexes are primary economic drivers in both the residential real estate and HELOC models. In addition, the prime rate is also a primary driver in the HELOC model. The models focus on establishing an empirical relationship between default probabilities and a set of loan-level, borrower, and macroeconomic credit risk drivers. The LGD calculation for residential real estate is based on an estimate of the probability that a defaulted loan will have a loss, and then an estimate of the loss amount. HELOCs utilize the same model using residential real estate LGD values to assign loans to cohorts based on FICO scores and loan age. The model produces PD and LGD curves at the loan level for each quarter in the forecast horizon.
•Consumer: Historical net charge-off information as well as economic assumptions are used to project loss rates for the Consumer segment.
Loans and leases that have not been included in the models based on portfolio type are assigned a loss rate through an extrapolation methodology. This methodology applies to certain loans acquired through business combinations, newly originated loans and leases, and those lacking the detailed data required for the primary models. The extrapolation methodology involves calculating loss rates through the modeling process. These loss rates are determined based on the vintage year, credit classification, and reporting category of the loans and leases. The calculated loss factors are then applied to the excluded loans and leases and evaluated qualitatively to ensure reasonability and compliance with CECL.
Along with the quantitative factors, qualitative factors are also considered in determining the ACL. Qualitative factors are used to capture characteristics in the portfolio that impact expected credit losses but are not fully captured within the expected credit loss models. These factors may include adjustments for changes in policies, procedures, personnel, and unforeseen events affecting key inputs and assumptions within the Bank’s expected credit loss models.
Loss factors from the models, prepayment speeds, and qualitative factors are input into the Company's CECL accounting application, which aggregates the information. The Company then uses two methods to calculate the current expected credit loss: 1) the DCF method, which is used for all loans except lines of credit and 2) the non-DCF method, which is used for lines of credit due to the difficulty of calculating an effective interest rate when lines have yet to be drawn on. The DCF method utilizes the effective interest rate of individual assets to discount the expected credit losses adjusted for prepayments. The difference in the net present value and the amortized cost of the asset will result in the required allowance. The non-DCF method uses the exposure at default, along with the expected credit losses adjusted for prepayments to calculate the required allowance.
Typically, loans in a non-accrual status will not have an ACL as they will be written down to their net realizable value or charged-off. However, the net realizable value for homogeneous leases and equipment finance agreements is determined by the LGD calculated by the CECL model and therefore leases and equipment finance agreements on non-accrual will have an ACL until they become 181 days past due, at which time they are charged-off. The Bank has elected to exclude accrued interest receivable from the measurement of its ACL given the well-defined non-accrual policies which results in timely reversal of outstanding interest through interest income.
Fluctuations in the allowance are reported in the Consolidated Statements of Income as a component of provision for credit losses. Loans are charged-off against the allowance when deemed uncollectible by management. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.
The Bank has established an Allowance for Credit Losses Committee, which is responsible for, among other things, regularly reviewing the ACL methodology, including allowance levels, and ensuring that it is designed and applied in accordance with generally accepted accounting principles. There is, however, no assurance that future loan losses will not exceed the levels provided for in the ACL and could possibly result in additional charges to the provision for credit losses.
Collateral-Dependent Loan-A loan or lease is considered collateral dependent when repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty. The Company's classification of CDLs includes: non-homogeneous non-accrual loans and leases; non-homogeneous loans and leases determined by individual credit review; homogeneous non-accrual leases and equipment finance agreements; and homogeneous real estate secured loans that have been charged down to net realizable value or the government guaranteed balance. Except for homogeneous leases and equipment finance agreements, the expected credit losses for CDLs will be measured using the fair value of the underlying collateral, adjusted for costs to sell when applicable, less the amortized cost basis of the financial asset. The Company may also use the loan's observable market price, if available. If the value of the CDL is determined to be less than the recorded amount of the loan, a charge-off will be taken. To determine the expected credit loss for homogeneous leases or equipment finance agreements, the LGD calculated by the CECL model will be utilized. When a homogeneous lease or equipment finance agreement becomes 181 days past due, it is fully charged-off.
Reserve for Unfunded Commitments-A RUC is maintained at a level that, in the opinion of management, is adequate to absorb expected losses associated with the Bank's commitment to lend funds under existing agreements, such as letters or lines of credit. The RUC calculation utilizes the ACLLL rates by segment, and utilization rates based on the economic expectations over the contractual life of the commitment adjusted for qualitative considerations, if necessary. The reserve is based on estimates and ultimate losses may vary from the current estimates. These estimates are evaluated on a regular basis and adjustments are reported in earnings in the periods in which they become known. Draws on unfunded commitments that are considered uncollectible at the time funds are advanced are charged to the ACLLL. Provisions for unfunded commitment losses are added to the RUC, which is included in the other liabilities section of the Consolidated Balance Sheets.
Restricted Equity Securities-Restricted equity securities consists mostly of the Bank's investment in Federal Home Loan Bank of Des Moines stock that is carried at par value. As a member of the FHLB system, the Bank is required to maintain a minimum level of investment in FHLB stock based on a specific percentage of total assets, with additional stock requirements based on use of FHLB products. The Bank may request redemption at par value of any stock in excess of the minimum required investment. Stock redemptions are at the discretion of the FHLB.
Premises and Equipment-Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is allocated over the estimated useful life of equipment, generally three to ten years, and premises, up to 39 years, on a straight-line or accelerated basis. Generally, leasehold improvements are amortized or accreted over the life of the related lease, or the life of the related asset, whichever is shorter. Expenditures for major renovations and betterments of the Company's premises and equipment are capitalized. The Company purchases, as well as internally develops and customizes, certain software to enhance or perform internal business functions. Software development costs incurred in the preliminary project stages are charged to non-interest expense. Costs associated with designing software configuration, installation, coding programs and testing systems are capitalized and amortized using the straight-line method over three to seven years. Implementation costs incurred for software that is part of a hosting arrangement are capitalized in other assets and amortized on a straight-line basis over the life of the contract. In addition to annual impairment reviews, management reviews long-lived assets anytime a change in circumstance indicates the carrying amount of these assets may not be recoverable.
Operating Leases-The Company leases branch locations, corporate office space, and equipment under non-cancelable leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The leases contain various provisions for increases in rental rates, based either on changes in the published Consumer Price Index or a predetermined escalation schedule. Substantially all of the leases provide the Company with one or more options to renew, with renewal terms that can extend the lease term from one to ten years or more. The exercise of lease renewal options is at management's sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company rents or subleases certain real estate to third parties. The Company's sublease portfolio consists of operating leases of mainly former branch locations or excess space in branch or corporate facilities. In addition to annual impairment reviews, management reviews right of use assets anytime a change in circumstances indicates the carrying amount of these assets may not be recoverable.
Goodwill and Other Intangibles-Intangible assets are comprised of goodwill and other intangibles acquired in business combinations. Goodwill is not amortized but instead is periodically tested for impairment. The Company performs a goodwill impairment analysis on an annual basis as of October 31 or whenever events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is assessed for impairment at the reporting unit level either qualitatively or quantitatively. A significant amount of judgment is involved in determining if an indicator of impairment has occurred.
Intangible assets with definite useful lives are amortized to their estimated residual values over their respective estimated useful lives, and also reviewed for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Amortization of intangible assets is included in non-interest expense on the Consolidated Statements of Income.
Mortgage Servicing Rights-The Company determines its classes of servicing assets based on the asset type being serviced along with the methods used to manage the risk inherent in the servicing assets, which includes the market inputs used to value servicing assets. Fair value adjustments encompass market-driven valuation changes and the runoff in value that occurs from the passage of time, which are separately disclosed. Under the fair value method, the MSR is recorded in other assets on the balance sheet at fair value and the changes in fair value are reported in earnings under the caption residential mortgage banking revenue, net in the period in which the change occurs.
The expected life of the loans underlying the MSR can vary from management's estimates due to prepayments by borrowers, especially when rates change significantly. Prepayments outside of management's estimates would impact the recorded value of the residential MSR. The value of the MSR is also dependent upon the discount rate used in the model, which management reviews on an ongoing basis. An increase in the discount rate would reduce the value of the MSR.
Revenue Recognition-The Company's revenue within the contracts with customers guidance are presented within non-interest income and include service charges on deposits, card-based fees, merchant fee income, and financial services, brokerage revenue and trust revenue. These revenues are recognized when obligations under the terms of a contract with customers are satisfied. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. When the amount of consideration is variable, the Company will only recognize revenue to the extent that it is probable that the cumulative amount recognized will not be subject to a significant reversal in the future. Substantially all of the Company's contracts with customers have expected durations of one year or less and payments are typically due when or as the services are rendered or shortly thereafter. When third parties are involved in providing services to customers, the Company recognizes revenue on a gross basis when it has control over those services being provided to the customer; otherwise, revenue is recognized for the net amount of any fee or commission.
Revenue is segregated based on the nature of product and services offered as part of contractual arrangements. Revenue from contracts with customers is broadly segregated as follows:
•Service charges on deposits consist primarily of fees earned from deposit customers for account maintenance and transaction-based and overdraft services. Account maintenance fees consist primarily of account fees and analyzed account fees charged on deposit accounts on a monthly basis. The performance obligation is satisfied, and the fees are recognized on a monthly basis as the service period is completed. Transaction-based fees on deposit accounts are charged to deposit customers for specific services provided to the customer, such as non-sufficient funds fees, overdraft fees, and wire fees. The performance obligation is completed as the transaction occurs and the fees are recognized at the time each specific service is provided to the customer.
•Card-based fees are comprised of debit and credit card income, ATM fees, and merchant services income. Debit and credit card income is primarily comprised of interchange fees earned when the Bank's customers' debit and credit cards are processed through card payment networks. The performance obligation is satisfied, and the fees are earned when the cost of the transaction is charged to the cardholders' debit or credit card. Certain expenses and rebates directly related to the credit and debit card interchange contract are recorded on a net basis with the interchange income.
•Financial services and trust revenue consists of brokerage revenue related to third-party revenue share agreements for commissions on brokerage services and trust revenue from trust administration and investment management services. Brokerage revenue is recognized when cash payment is received by the third party based on the net revenues earned on the products and services purchased in the month prior. Trust revenue is recognized monthly and based on the portfolio values at the end of the prior month.
•Other non-interest income includes a variety of other revenue streams including residential mortgage banking, net revenue, security gains and losses, loan sales gains and losses, BOLI income revenue, swap revenue, treasury management, and miscellaneous consumer fees. These revenue streams are not in the scope of revenue from contracts with customers guidance. Revenue is recognized when, or as, the performance obligation is satisfied. Inherent variability in the transaction price is not recognized until the uncertainty affecting the variability is resolved.
Income Taxes-Income taxes are accounted for using the asset and liability method. Under this method, a deferred tax asset or liability is determined based on the enacted tax rates which will be in effect when the differences between the financial statement carrying amounts and tax basis of existing assets and liabilities are expected to be reported in the Company's income tax returns. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established to reduce the net carrying amount of deferred tax assets if it is determined to be more likely than not, that all or some portion of the potential deferred tax asset will not be realized.
Deferred tax assets are recognized subject to management's judgment that realization is "more likely than not." Uncertain tax positions that meet the "more likely than not" recognition threshold are measured to determine the amount of benefit to recognize. An uncertain tax position is measured at the amount of benefit that management believes has a greater than 50% likelihood of realization upon settlement. Interest and penalties related to income taxes are reported as a component of income tax expense.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the DTA will or will not be realized. The Company's ultimate realization of the DTA is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. Management considers the nature and amount of historical and projected future taxable income, the scheduled reversal of deferred tax assets and liabilities, and available tax planning strategies in making this assessment. The amount of deferred taxes recognized could be impacted by changes to any of these variables.
The Company earns Investment Tax Credits on certain equipment leases and uses the deferral method to account for these tax credits. Under this method, the Investment Tax Credits are recognized as a reduction of depreciation expense over the life of the asset.
Derivatives-The Bank enters into forward delivery contracts to sell residential mortgage loans or mortgage-backed securities to broker/dealers at specific prices and dates in order to hedge the interest rate risk in its portfolio of mortgage loans held for sale and its residential mortgage loan commitments. The commitments to originate mortgage loans held for sale and the related forward delivery contracts are considered derivatives. The Bank also executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are hedged by simultaneously entering into an offsetting interest rate swap that the Bank executes with a third party, such that the Bank minimizes its net risk exposure. The Bank also uses certain derivative financial instruments to offset changes in the value of its MSR. These derivatives consist primarily of interest rate futures and forward settling mortgage-backed securities. The Company considers all free-standing derivatives as economic hedges and recognizes these derivatives as either assets or liabilities in the balance sheet, and the Company requires measurement of those instruments at fair value through adjustments to current earnings. None of the Company's derivatives are designated as hedging instruments.
The fair value of the derivative residential mortgage loan commitments is estimated using the net present value of expected future cash flows. Assumptions used include pull-through rate assumption based on historical information, current mortgage interest rates, the stage of completion of the underlying application and underwriting process, direct origination costs yet to be incurred, the time remaining until the expiration of the derivative loan commitment, and the expected net future cash flows related to the associated servicing of the loan.
Stock-Based Compensation— Compensation expense is recognized in the Consolidated Statements of Income over the requisite service period, typically the vesting period, on a straight-line basis, net of estimates for forfeitures. Estimated forfeiture rates are based on historical experience and are periodically reviewed for reasonableness, with any changes reflected in the period of change.
RSAs and RSUs issued by the Company generally vest ratably over three years, with the related compensation expense recognized over this period. Certain performance-based awards are subject to performance-based and market-based vesting criteria, in addition to a requisite service period. These awards cliff vest based on the specified conditions at the end of three years, with compensation expense recognized over the service period to the extent the RSUs are expected to vest. Unvested RSUs and RSAs accrue dividends, which are paid out upon vesting and issuance of common shares. The fair value of time-based and performance-based RSAs and RSUs is equal to the fair market value of the Company’s common stock on the grant date. The fair value of market-based performance RSUs is estimated on the grant date using the Monte Carlo simulation model. Holders of certain acquired RSAs are entitled to receive non-forfeitable cash dividends prior to vesting, these awards are considered participating securities.
Earnings per Common Share-Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is computed in a similar manner, except that first the denominator is increased to include the number of additional common shares that would have been outstanding if potentially dilutive common shares were issued using the treasury stock method. For the periods presented, unvested RSUs and RSAs represent the Company’s potentially dilutive common share equivalents.
Potential common shares are excluded from diluted earnings per common share if their effect would be anti‑dilutive. Undistributed losses are not allocated to unvested stock‑based awards because the holders are not contractually obligated to share in losses.
Certain acquired unvested RSAs are considered participating securities because they are entitled to nonforfeitable dividends prior to vesting. As a result, the Company applies the two‑class method when computing earnings per common share. Under the two‑class method, distributed and undistributed net earnings allocable to participating securities are deducted from net income to determine net income available to common shareholders, which is used in the numerator of both basic and diluted earnings per common share. Participating securities are excluded from the denominator of both basic and diluted earnings per common share.
Fair Value Measurements-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. There is a three-level hierarchy for disclosure of assets and liabilities measured or disclosed at fair value. The classification of assets and liabilities within the hierarchy is based on whether the inputs to the valuation methodology used for measurement are observable or unobservable. Observable inputs reflect market-derived or market-based information obtained from independent sources, while unobservable inputs reflect estimates about market data. In general, fair values determined by Level 1 inputs utilize quoted prices for identical assets or liabilities traded in active markets that the Company has the ability to access. Fair values determined by Level 2 inputs utilize inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls was determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.
Application of New Accounting Guidance
| | | | | | | | | | | | | | | | | | | | |
| Standard | | Description | | Effective Date | | Effect on the Financial Statements or Other Significant Matters |
ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures | | The amendments are intended to provide more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The ASU requires annual disclosure of the rate reconciliation of specific categories as well as additional information related to the reconciliation of certain items that meet a quantitative threshold and further disaggregation of income taxes paid. | | Fiscal years beginning after December 15, 2024. | | The Company retrospectively adopted the guidance on January 1, 2025 for annual reporting purposes. Refined disclosures are included herein. |
| | | | | | |
| | | | | | |
Significant Accounting Standards Issued but Not Yet Adopted
| | | | | | | | | | | | | | | | | | | | |
| Standard | | Description | | Effective Date | | Effect on the Financial Statements or Other Significant Matters |
| | | | | | |
ASU Update 2025-11 Interim Reporting (Topic 270): Narrow-Scope Improvements | | The amendments in this Update refine interim reporting under ASC 270 by clarifying applicability to entities issuing a full set of GAAP-compliant interim financial statements, consolidating disclosure requirements from various topics into a single location, and introducing a principle requiring disclosure of material events occurring since the prior annual period. The guidance improves navigability and consistency without expanding or reducing existing disclosure obligations. | | Fiscal years beginning after December 15, 2027, including interim periods within those annual reporting periods. Early adoption is permitted. | | The Company is currently evaluating the impact of this ASU on the Company's consolidated financial statements. |
ASU Update 2025-09 Derivatives and Hedging (Topic 815): Hedge Accounting Improvements | | The amendments improve hedge accounting under ASC 815 by expanding eligibility for grouping forecasted transactions with similar risk, introducing flexibility for hedging choose-your-rate debt instruments, and permitting hedges of nonfinancial components of forecasted purchases or sales. The guidance also allows certain written options to qualify as hedging instruments and enables simultaneous hedging of foreign-currency-denominated debt for both interest rate and currency risk. These changes aim to reduce complexity, improve alignment with risk management strategies, and better reflect the economics of hedging activities. | | Fiscal years beginning after December 15, 2026, including interim periods within those annual reporting periods. Early adoption is permitted.
| | The Company is currently evaluating the impact of this ASU on the Company's consolidated financial statements. |
ASU No. 2025-08 Financial Instruments—Credit Losses (Topic 326): Purchased Loans | | The amendments update the accounting for purchased loans under ASC 326 by eliminating the distinction between purchased credit-deteriorated (PCD) and non-PCD loans. All purchased loans will now follow a single model that records an allowance for credit losses at acquisition without recognizing a day-one loss in earnings. The guidance also introduces clearer rules for measuring expected credit losses and simplifies disclosures related to purchased financial assets. These changes aim to reduce complexity, improve comparability, and better reflect the economics of loan acquisitions. | | Fiscal years beginning after December 15, 2026, including interim periods within those annual reporting periods. Early adoption is permitted. | | The Company is currently evaluating the impact of this ASU on the Company's consolidated financial statements. |
| | | | | | | | | | | | | | | | | | | | |
| Standard | | Description | | Effective Date | | Effect on the Financial Statements or Other Significant Matters |
ASU No. 2025-07 Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share Based Noncash Consideration from a Customer in a Revenue Contract | | The amendments refine the scope of derivative accounting under ASC 815 by introducing a scope exception for certain contracts linked to the operations or activities of one of the parties to the contract. It also clarifies the guidance in ASC 606 regarding share-based noncash consideration (e.g., warrants or shares) received from a customer in exchange for goods or services.
These changes aim to reduce complexity, improve consistency in application, and better reflect the economics of such arrangements. | | Fiscal years beginning after December 2026, including interim periods within those annual reporting periods. Early adoption is permitted. | | The Company is currently evaluating the impact of this ASU on the Company's consolidated financial statements. |
ASU No. 2025-06 Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software | | The amendments modernize the accounting for internal-use software under ASC 350-40 by removing references to software development project stages and introducing a "probable-to-complete" recognition threshold. Entities may begin capitalizing costs once management has authorized and committed to funding the project and it is probable the software will be completed and used as intended. The amendment also consolidates guidance on website development costs into ASC 350-40. | | Fiscal years beginning after December 15, 2027, including interim periods within those annual reporting periods. Early adoption is permitted. | | The Company is currently evaluating the impact of this ASU on the Company's consolidated financial statements. |
ASU No. 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses | | These amendments are aimed to enhance the transparency and usefulness of financial information by requiring entities to break down significant expense categories in the notes to the financial statements. The amendments focus on the disaggregation of income statement expenses and specifically address the need for more detailed disclosures about expense categories. | | Fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. Early adoption is permitted. | | The Company is currently evaluating the impact of this ASU on the Company's consolidated financial statements. |
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Note 2 – Business Combinations
Acquisition of Pacific Premier
On August 31, 2025, Columbia completed its acquisition of Pacific Premier, which was wholly acquired in an all-stock transaction valued at $2.4 billion. On September 1, 2025, Pacific Premier's wholly owned banking subsidiary, Pacific Premier Bank, merged with and into Columbia Bank. Pursuant to the acquisition agreement, each share of Pacific Premier common stock was exchanged for 0.9150 of a share of Columbia common stock.
The assets acquired and liabilities assumed have been accounted for under the acquisition method of accounting. Fair value estimates were based on information available as of the acquisition date. As of December 31, 2025, the initial accounting for deferred taxes remains preliminary, as the tax returns have not yet been finalized. Accordingly, the deferred taxes recognized in the financial statements have been provisionally determined and may be adjusted during the measurement period, which ends no later than one year from the acquisition date.
Fair value determinations required significant estimates and assumptions, including discount rates, expected cash flows, and market conditions and are inherently subjective. Management believes the preliminary estimates are reasonable; however, refinements may occur as additional information becomes available.
| | | | | |
(in millions, shares in thousands) | |
| Shares of Columbia common stock issued to Pacific Premier Stockholders | 87,632 | |
| Columbia's market price per common share (in dollars) as of August 31, 2025 | $ | 26.77 | |
Fair value of purchase price consideration transferred | $ | 2,346 | |
| Fair value of restricted stock exchanged | $ | 9 | |
| |
| Purchase price consideration | $ | 2,355 | |
| |
The following summarizes the allocation of purchase price consideration to the estimated fair values of assets acquired and liabilities and equity assumed from Pacific Premier as of August 31, 2025.
| | | | | | | | | | | | | | |
| (in millions) | August 31, 2025 |
| Purchase price consideration | | | |
| | | | |
| | | | |
| Total purchase price consideration | | | $ | 2,355 | |
| Fair value of assets acquired: | | | |
| Cash and due from banks | $ | 874 | | | |
| Investment securities | 2,828 | | | |
| Loans held for sale | 1 | | | |
| Loans and leases | 11,381 | | | |
| Restricted equity securities | 98 | | | |
| Premises and equipment | 53 | | | |
| | | | |
| Other intangible assets | 355 | | | |
| | | | |
| | | | |
| Other assets | 1,021 | | | |
| Total assets acquired | $ | 16,611 | | | |
| Fair value of liabilities assumed: | | | |
| Deposits | $ | 14,541 | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| Other liabilities | 168 | | | |
| Total liabilities assumed | $ | 14,709 | | | |
| Net assets acquired | | | $ | 1,902 | |
| Goodwill | | | $ | 453 | |
| | | | |
In connection with the acquisition of Pacific Premier, the Company recorded approximately $453 million of goodwill, representing the excess of purchase price consideration over the fair value of net assets acquired. Goodwill primarily reflects expected synergies, expanded market opportunities, and the value of the assembled workforce. None of the goodwill is deductible for tax purposes. Additional details on goodwill and intangible assets are provided in Note 9 – Goodwill and Other Intangible Assets.
The following is a description of the methods used to determine the fair values of significant assets and liabilities presented above.
Cash and due from banks: Carrying amounts approximate fair value due to the short-term nature.
Investment Securities: Fair values were based on quoted prices when available or, when not observable, on market-based inputs and valuation models using discounted cash flows.
Loans held for sale: Fair value was based on indicative quotes or bids from third party investors.
Loans and leases: A third-party valuation was performed to estimate the fair value of the loans held for investment. The portfolio was segmented into performing PCD loans, non-performing PCD loans, and non-PCD loans. Loans were further pooled by type and risk rating. Each loan was valued individually using a discounted cash flow approach, incorporating contractual terms, expected credit losses, prepayment assumptions, and market-based discount rates. Discount rates reflected loan type, credit risk, liquidity, and prevailing market conditions. The present value of expected cash flows, adjusted for credit loss expectations, was used to determine fair value.
The Company is required to record PCD assets, defined as a more-than-insignificant deterioration in credit quality since origination or issuance, at the purchase price plus the ACL expected at the acquisition date. Under this method, no credit loss expense is recognized in net income at acquisition. Subsequent changes in expected credit losses are recognized in the provision for credit losses (or recapture) in future periods. Any non-credit discount or premium resulting from the acquisition is allocated to the individual assets and accreted to interest income using the effective interest method. At the acquisition date, the initial ACL determined on a collective basis is allocated to individual assets to appropriately adjust the non-credit discount or premium.
Of the $11.4 billion in net loans acquired, $404 million in net loans were identified as PCD assets at the acquisition date. The following summarizes these PCD loans as of the acquisition date:
| | | | | |
| (in millions) | August 31, 2025 |
| Principal of PCD loans acquired | $ | 463 | |
| PCD ACL at acquisition | (5) | |
| Non-credit discount on PCD loans | (54) | |
| Fair value of PCD loans | $ | 404 | |
Premises and equipment: Fair values were determined using a market approach, supported by third-party appraisals and broker opinions of value for land, office buildings, and branch facilities.
Core deposit intangibles: Core deposit intangibles represent the value of certain acquired deposit relationships. Fair value was estimated using a discounted cash flow methodology based on the present value of expected cost savings from utilizing core deposit funding compared to alternative funding sources. Key assumptions included expected customer attrition rates, net maintenance costs of the deposit base, alternative cost of funds, and interest costs associated with customer deposits. The resulting intangible assets are amortized over 10 years using the sum-of-years-digits method, reflecting the pattern of expected economic benefits.
Deposits: Fair values for demand and savings deposits were estimated to equal the amounts payable on demand at the acquisition date. Fair values for time deposits were determined using a discounted cash flow approach that applied current market interest rates to the contractual terms of the deposits.
The Company's operating results for the year ended December 31, 2025 include the results of Pacific Premier's operations subsequent to August 31, 2025, the date of the acquisition. Disclosure of Pacific Premier's revenue and net income (excluding integration costs) included in the Consolidated Statements of Income is impracticable due to the integration of systems and operations following the acquisition.
The following summarizes the impact of acquisition-related expenses related to the acquisition of Pacific Premier for the period presented:
| | | | | | | | | | | | |
| | | | Year Ended |
| (in millions) | | | | | | December 31, 2025 | | |
Legal and professional services | | | | | | $ | 52 | | | |
Salaries and employee benefits | | | | | | 50 | | | |
| | | | | | | | |
| Charitable contributions | | | | | | 6 | | | |
| | | | | | | | |
| | | | | | | | |
Occupancy and equipment | | | | | | 6 | | | |
| Other | | | | | | 4 | | | |
Total acquisition-related expenses | | | | | | $ | 118 | | | |
The following presents unaudited pro forma financial information as if the acquisition had occurred on January 1, 2024. Pro forma adjustments reflect changes in interest income from the accretion of discounts and premiums on acquired loans and leases, changes in interest expense from the amortization or accretion of fair value adjustments on interest-bearing deposits, and the amortization of core deposit intangibles as if the deposits had been acquired on January 1, 2024.
This pro forma information is provided for illustrative purposes only and is not necessarily indicative of the results that would have occurred had the acquisition been completed at the beginning of the prior year. The amounts do not reflect anticipated operating cost savings, revenue enhancements, or other synergies expected to result from the acquisition. Actual results may differ from the unaudited pro forma information presented.
| | | | | | | | | | | | | | | |
| | | | | Unaudited Pro Forma for the |
| | | Year Ended |
| (in millions) | | | | | December 31, 2025 | | December 31, 2024 |
| Net interest income | | | | | $ | 2,474 | | | $ | 2,493 | |
| Non-interest income | | | | | 349 | | | 294 | |
Net income (1) | | | | | 866 | | | 635 | |
| | | | | | | |
| | | | | | | |
(1) Pro forma net income for the year ended December 31, 2025 was adjusted to exclude acquisition-related costs of $190 million, including historical Pacific Premier acquisition-related costs incurred during this period. Pro forma net income for the year ended December 31, 2024 was adjusted to include acquisition-related costs of $190 million. The pro forma assumes acquisition-related costs were incurred in the first quarter of 2024.
Umpqua Holdings Corporation Merger
On February 28, 2023, UHC merged with and into Columbia, with Columbia continuing as the surviving legal corporation and Columbia Bank (previously Umpqua Bank) as the surviving bank subsidiary. The transaction was accounted for as a reverse merger using the acquisition method of accounting, with UHC as the accounting acquirer.
The Company's merger with UHC was effectively an all-stock transaction and was accounted for as a business combination. Each holder of UHC common stock received 0.5958 of a share of Columbia's common stock for each share of UHC common stock; Columbia shares were unaffected.
As of December 31, 2023, the Company finalized its valuation of all assets acquired and liabilities assumed in connection with its merger with UHC. The Company recorded approximately $1.0 billion of goodwill. Goodwill represents the excess of the purchase price over the fair value of the assets acquired, net of fair value of liabilities assumed. Goodwill is not deductible for tax purposes.
During years ended December 31, 2025, 2024 and 2023, there were $14 million, $11 million, and $172 million in merger-related expenses, respectively.
The following table presents unaudited pro forma information as if the Company's merger with UHC had occurred on January 1, 2022:
| | | | | | | |
| | | Unaudited Pro Forma for the |
| | | Year Ended |
| (in millions) | | | 12/31/2023 |
| Net interest income | | | $ | 1,952 | |
| Non-interest income | | | 238 | |
Net income (1) | | | 634 | |
(1) The 2023 pro forma net income excludes $200 million of merger-related costs, inclusive of historical Columbia merger-related costs, incurred in 2023.
Note 3 – Cash and Cash Equivalents
The Company had restricted cash included in cash and due from banks on the Consolidated Balance Sheets of $4 million and $1 million as of December 31, 2025 and 2024, respectively, relating mostly to collateral required on interest rate swaps as discussed in Note 17 – Derivatives. As of December 31, 2025 and 2024, there was $12 million and $6 million, respectively, in restricted cash included in cash and due from banks on the Consolidated Balance Sheets, relating to collateral requirements for derivatives for mortgage banking activities.
Note 4 – Debt Securities
The following tables present the amortized cost, gross unrealized gains and losses, and estimated fair values of debt securities as of the dates presented:
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2025 |
(in millions) | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value |
| Available for sale: | | | | | | | |
| U.S. Treasury and agencies | $ | 1,332 | | | $ | 6 | | | $ | (38) | | | $ | 1,300 | |
| Obligations of states and political subdivisions | 1,597 | | | 47 | | | (15) | | | 1,629 | |
Mortgage-backed securities and collateralized mortgage obligations | 8,447 | | | 63 | | | (327) | | | 8,183 | |
| Total available for sale securities | $ | 11,376 | | | $ | 116 | | | $ | (380) | | | $ | 11,112 | |
| Held to maturity: | | | | | | | |
Corporate and other securities | $ | 18 | | | $ | 1 | | | $ | — | | | $ | 19 | |
| Total held to maturity securities | $ | 18 | | | $ | 1 | | | $ | — | | | $ | 19 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2024 |
(in millions) | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value |
| Available for sale: | | | | | | | |
| U.S. Treasury and agencies | $ | 1,496 | | | $ | 1 | | | $ | (74) | | | $ | 1,423 | |
| Obligations of states and political subdivisions | 1,055 | | | 3 | | | (32) | | | 1,026 | |
Mortgage-backed securities and collateralized mortgage obligations | 6,307 | | | 4 | | | (485) | | | 5,826 | |
| Total available for sale securities | $ | 8,858 | | | $ | 8 | | | $ | (591) | | | $ | 8,275 | |
| Held to maturity: | | | | | | | |
Corporate and other securities | $ | 2 | | | $ | 1 | | | $ | — | | | $ | 3 | |
| Total held to maturity securities | $ | 2 | | | $ | 1 | | | $ | — | | | $ | 3 | |
The Company elected to exclude accrued interest receivable from the amortized cost basis of debt securities disclosed throughout this note. Interest accrued on investment securities totaled $46 million and $33 million as of December 31, 2025 and December 31, 2024, respectively, and is included in other assets on the Consolidated Balance Sheets. There were no gross realized gains or losses from sales of AFS debt securities for the years ended December 31, 2025, 2024, and 2023.
The following tables present debt securities that were in an unrealized loss position as of the dates presented, based on the length of time individual securities have been in an unrealized loss position: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2025 |
| Less than 12 Months | | 12 Months or Longer | | Total |
(in millions) | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
| Available for sale: | | | | | | | | | | | |
| U.S. Treasury and agencies | $ | 50 | | | $ | — | | | $ | 778 | | | $ | (38) | | | $ | 828 | | | $ | (38) | |
Obligations of states and political subdivisions | 29 | | | — | | | 219 | | | (15) | | | 248 | | | (15) | |
Mortgage-backed securities and collateralized mortgage obligations | 1,287 | | | (9) | | | 2,374 | | | (318) | | | 3,661 | | | (327) | |
| Total temporarily impaired securities | $ | 1,366 | | | $ | (9) | | | $ | 3,371 | | | $ | (371) | | | $ | 4,737 | | | $ | (380) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2024 |
| Less than 12 Months | | 12 Months or Longer | | Total |
(in millions) | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
| Available for sale: | | | | | | | | | | | |
| U.S. Treasury and agencies | $ | 185 | | | $ | (3) | | | $ | 795 | | | $ | (71) | | | $ | 980 | | | $ | (74) | |
Obligations of states and political subdivisions | 539 | | | (8) | | | 225 | | | (24) | | | 764 | | | (32) | |
Mortgage-backed securities and collateralized mortgage obligations | 3,399 | | | (79) | | | 1,830 | | | (406) | | | 5,229 | | | (485) | |
| Total temporarily impaired securities | $ | 4,123 | | | $ | (90) | | | $ | 2,850 | | | $ | (501) | | | $ | 6,973 | | | $ | (591) | |
The number of individual debt securities in an unrealized loss position in the tables above decreased to 592 as of December 31, 2025, as compared to 1,210 at December 31, 2024. The unrealized losses on the Company's debt securities are attributable to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities, rather than deterioration in the credit quality of the issuers. Management actively monitors the published credit ratings of the issuers of the debt securities for any material changes in rating or outlook. As the decline in fair value of the debt securities is attributable to changes in interest rates or widening market spreads and not credit quality, these investments do not carry an ACL as of December 31, 2025.
The following table presents the contractual maturities of debt securities as of December 31, 2025. Expected maturities will differ from contractual maturities because some securities may be called or prepaid with or without call or prepayment penalties.
| | | | | | | | | | | | | | | | | | | | | | | |
| Available For Sale | | Held To Maturity |
(in millions) | Amortized Cost | | Fair Value | | Amortized Cost | | Fair Value |
| Due within one year | $ | 370 | | | $ | 370 | | | $ | — | | | $ | — | |
| Due after one year through five years | 2,806 | | | 2,797 | | | — | | | — | |
| Due after five years through ten years | 1,725 | | | 1,705 | | | 1 | | | 1 | |
| Due after ten years | 6,475 | | | 6,240 | | | 17 | | | 18 | |
| Total debt securities | $ | 11,376 | | | $ | 11,112 | | | $ | 18 | | | $ | 19 | |
As of December 31, 2025 and December 31, 2024, debt securities with carrying amounts of $6.8 billion and $5.7 billion, respectively, and fair values of $6.5 billion and $5.2 billion, respectively, were pledged to secure borrowing capacity, public deposits, repurchase agreements, and for other purposes as required or permitted by law.
Note 5 – Loans and Leases
The following table presents the major types of loans and leases, net of deferred fees and costs, as of the dates presented:
| | | | | | | | | | | |
| (in millions) | December 31, 2025 | | December 31, 2024 |
| Commercial real estate | | | |
| Non-owner occupied term | $ | 8,206 | | | $ | 6,278 | |
| Owner occupied term | 7,314 | | | 5,270 | |
| Multifamily | 10,281 | | | 5,804 | |
| Construction & development | 1,707 | | | 1,983 | |
| Residential development | 362 | | | 232 | |
| Commercial | | | |
| Term | 6,713 | | | 5,538 | |
| Lines of credit & other | 3,643 | | | 2,770 | |
| Leases & equipment finance | 1,599 | | | 1,661 | |
| Residential | | | |
| Mortgage | 5,624 | | | 5,933 | |
| Home equity loans & lines | 2,149 | | | 2,032 | |
| Consumer & other | 178 | | | 180 | |
| Total loans and leases, net of deferred fees and costs | $ | 47,776 | | | $ | 37,681 | |
The Company elected to exclude accrued interest receivable from the amortized cost basis of loans and leases disclosed throughout this note. Interest accrued on loans and leases totaled $186 million and $148 million as of December 31, 2025 and December 31, 2024, respectively, and is included in other assets on the Consolidated Balance Sheets. As of December 31, 2025, loans totaling $30.6 billion were pledged to secure borrowings and available lines of credit, compared to $22.0 billion as of December 31, 2024.
As of December 31, 2025 and December 31, 2024, the net deferred fees and costs were $54 million and $62 million, respectively. Originated loans and leases are reported at the principal amount outstanding, net of deferred fees and costs, any partial charge-offs recorded, and interest applied to principal. Total loans and leases also include discounts on acquired loans of $707 million and $439 million as of December 31, 2025 and December 31, 2024, respectively.
Purchased loans are recorded at fair value at the date of purchase. The Company evaluates purchased loans for more-than-insignificant deterioration at the date of purchase. Purchased loans that have experienced more-than-insignificant deterioration from origination are considered PCD loans. All other purchased loans are considered non-PCD loans. The outstanding contractual unpaid principal balance of PCD loans, excluding acquisition accounting adjustments, was $473 million and $200 million as of December 31, 2025 and December 31, 2024, respectively. The carrying balance of PCD loans was $416 million and $179 million as of December 31, 2025 and December 31, 2024, respectively.
The Bank, through its commercial equipment leasing subsidiary, FinPac, is a provider of commercial equipment leasing and financing. Direct finance leases are included within the leases and equipment finance segment within the loans and leases, net line item. These direct financing leases typically have terms of three years to five years. Interest income recognized on these leases was $23 million for the year ended December 31, 2025, as compared to $21 million for the year ended December 31, 2024.
Residual values on leases are established at the time equipment is leased based on an estimate of the value of the leased equipment when the Company expects to dispose of the equipment, typically at the termination of the lease. An annual evaluation is also performed each fiscal year by an independent valuation specialist and equipment residuals are confirmed or adjusted in conjunction with such evaluation.
The following table presents the net investment in direct financing leases as of the dates presented:
| | | | | | | | | | | |
| (in millions) | December 31, 2025 | | December 31, 2024 |
| Minimum lease payments receivable | $ | 322 | | | $ | 365 | |
| Estimated guaranteed & unguaranteed residual value | 60 | | | 69 | |
| Initial direct costs - net of accumulated amortization | 4 | | | 4 | |
| Unearned income | (48) | | | (52) | |
| Net investment in direct financing leases | $ | 338 | | | $ | 386 | |
The following table presents the scheduled minimum lease payments receivable as of December 31, 2025: | | | | | |
| (in millions) | |
| Year | Amount |
| 2026 | $ | 108 | |
| 2027 | 88 | |
| 2028 | 62 | |
| 2029 | 32 | |
| 2030 | 13 | |
| Thereafter | 19 | |
| Total minimum lease payments receivable | $ | 322 | |
In the course of managing the loan and lease portfolio, at certain times, management may decide to sell pools of loans and leases. For the years ended December 31, 2025 and 2024, the Bank sold a total of $150 million and $149 million, respectively, in loans from its portfolio.
In connection with the Pacific Premier acquisition, the Company initially obtained Freddie Mac guaranteed pass-through certificates from a multifamily loan securitization. The Company performed sub-servicing and reimbursement obligations until November 2025, when it repurchased the underlying loans and terminated these responsibilities.
Note 6 – Allowance for Credit Losses
The ACL represents management's estimate of lifetime credit losses for assets within its scope, specifically loans and leases and unfunded commitments. For more information about the Company's ACL methodology, refer to Note 1 – Summary of Significant Accounting Policies, for a description of the ACL methodology.
At December 31, 2025, the ACL was $485 million, an increase of $44 million from the December 31, 2024 balance of $441 million. The change in the total ACL reflects credit migration trends, changes in the economic assumptions, and a recalibration of the CRE, residential mortgage, and home equity line of credit CECL models in the first quarter of 2025, and the initial provision booked for the acquired Pacific Premier loan portfolio. To calculate the ACL, management uses models to estimate PD and LGD for loans and leases, incorporating forecasted economic conditions and macroeconomic variables. The Bank considers the current financial environment and various economic scenarios, selecting the most probable scenario at each measurement date. Forecasts for each variable are updated and incorporated into the ACL calculation. Projected macroeconomic variables over the forecast period can materially impact the ACL, with projections becoming less certain over time.
The Bank opted to use Moody's Analytics' November 2025 consensus economic forecast for estimating the ACL as of December 31, 2025. The forecast used to calculate the ACL as of December 31, 2025 is projecting higher GDP growth, lower unemployment rates, and average federal funds rates trending lower. This is compared to the December 31, 2024 ACL calculation, which used Moody’s Analytics’ November 2024 consensus economic forecast to forecast the variables used in the models.
In the consensus scenario, the probability that the economy will perform better than this consensus is equal to the probability that it will perform worse and includes the following variables:
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| 2026 | | 2027 | | 2028 | | 2029 |
| U.S. real GDP average annualized growth | 1.8 | % | | 2.0 | % | | 2.1 | % | | 2.0 | % |
| U.S. unemployment rate average | 4.4 | % | | 4.3 | % | | 4.1 | % | | 4.0 | % |
| Forecasted average federal funds rate | 3.2 | % | | 3.1 | % | | 3.2 | % | | 3.2 | % |
The Bank uses an additional scenario with the same economic variables, but with varying severity, to assess ACL sensitivity and inform qualitative adjustments. For this analysis, the Bank selected Moody's Analytics' November 2025 S2 scenario (the "S2 Scenario"), which predicts a 75% probability of better economic performance and a 25% probability of worse performance. The S2 Scenario includes the following variables:
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| 2026 | | 2027 | | 2028 | | 2029 |
| U.S. real GDP average annualized growth | 0.1 | % | | 1.2 | % | | 2.5 | % | | 2.6 | % |
| U.S. unemployment rate average | 6.6 | % | | 6.0 | % | | 4.4 | % | | 4.2 | % |
| Forecasted average federal funds rate | 3.0 | % | | 2.1 | % | | 2.3 | % | | 2.9 | % |
Management reviewed the results derived from the economic scenarios and subsequent changes in macroeconomic variables for sensitivity analysis, considering these factors when evaluating qualitative adjustments. Along with the quantitative factors produced by the above models, management also considers prepayment speeds and qualitative factors when determining the ACL. As of December 31, 2025, the Company evaluated qualitative factors and applied a net upward adjustment to the quantitative results for the ACL, which is directionally consistent with the upward adjustments made as of December 31, 2024. These overlays primarily focus on the CRE and commercial loan portfolios and are intended to align the portfolios more closely with the S2 Scenario. This approach helps ensure that the allowance remains appropriately resilient and responsive to emerging risks, thereby supporting the resilience of the Bank's credit portfolio. By incorporating these targeted overlays, we aim to enhance the accuracy and robustness of our risk management strategy, providing a more comprehensive and adaptive approach to potential economic shifts.
Management believes that the ACL was adequate as of December 31, 2025. There is, however, no assurance that future loan losses will not exceed the levels provided for in the ACL and could possibly result in additional charges to the provision for credit losses.
The following tables summarize activity related to the ACL by portfolio segment for the periods indicated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | Year Ended December 31, 2025 |
(in millions) | | Commercial Real Estate | | Commercial | | Residential | | Consumer & Other | | Total |
| Allowance for credit losses on loans and leases | | | | | | |
| Balance, beginning of period | | $ | 154 | | | $ | 219 | | | $ | 45 | | | $ | 7 | | | $ | 425 | |
Initial ACL on PCD loans acquired during the period | | 4 | | | 1 | | | — | | | — | | | 5 | |
Provision (recapture) for credit losses on loans and leases | | 51 | | | 101 | | | (9) | | | 4 | | | 147 | |
| Charge-offs | | (11) | | | (111) | | | (2) | | | (5) | | | (129) | |
| Recoveries | | — | | | 16 | | | — | | | 2 | | | 18 | |
| Net charge-offs | | (11) | | | (95) | | | (2) | | | (3) | | | (111) | |
| Balance, end of period | | $ | 198 | | | $ | 226 | | | $ | 34 | | | $ | 8 | | | $ | 466 | |
| Reserve for unfunded commitments | | | | | | | | | | |
| Balance, beginning of period | | $ | 6 | | | $ | 7 | | | $ | 2 | | | $ | 1 | | | $ | 16 | |
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| Provision (recapture) for credit losses on unfunded commitments | | 4 | | | — | | | (1) | | | — | | | 3 | |
| Balance, end of period | | 10 | | | 7 | | | 1 | | | 1 | | | 19 | |
| Total allowance for credit losses | | $ | 208 | | | $ | 233 | | | $ | 35 | | | $ | 9 | | | $ | 485 | |
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| | Year Ended December 31, 2024 |
| (in millions) | | Commercial Real Estate | | Commercial | | Residential | | Consumer & Other | | Total |
| Allowance for credit losses on loans and leases | | | | | | | | |
| Balance, beginning of period | | $ | 126 | | | $ | 245 | | | $ | 62 | | | $ | 8 | | | $ | 441 | |
Provision (recapture) for credit losses on loans and leases | | 31 | | | 95 | | | (16) | | | 3 | | | 113 | |
| Charge-offs | | (4) | | | (139) | | | (2) | | | (6) | | | (151) | |
| Recoveries | | 1 | | | 18 | | | 1 | | | 2 | | | 22 | |
| Net charge-offs | | (3) | | | (121) | | | (1) | | | (4) | | | (129) | |
| Balance, end of period | | $ | 154 | | | $ | 219 | | | $ | 45 | | | $ | 7 | | | $ | 425 | |
| Reserve for unfunded commitments | | | | | | | | | | |
| Balance, beginning of period | | $ | 11 | | | $ | 8 | | | $ | 3 | | | $ | 1 | | | $ | 23 | |
| Recapture for credit losses on unfunded commitments | | (5) | | | (1) | | | (1) | | | — | | | (7) | |
| Balance, end of period | | 6 | | | 7 | | | 2 | | | 1 | | | 16 | |
| Total allowance for credit losses | | $ | 160 | | | $ | 226 | | | $ | 47 | | | $ | 8 | | | $ | 441 | |
Asset Quality and Non-Performing Loans and Leases
The Bank actively manages asset quality and controls credit risk through diversification of the loan and lease portfolio and the application of policies designed to promote sound underwriting and loan and lease monitoring practices. The Bank's Credit Quality Administration department is charged with monitoring asset quality, establishing credit policies and procedures, and enforcing the consistent application of these policies and procedures across the Bank. The Bank conducts ongoing reviews of non-performing, past due loans and leases and larger credits, designed to identify potential charges to the ACL, and to determine the adequacy of the ACL. These reviews incorporate a variety of factors, including the financial strength of borrowers, collateral valuations, loan and lease loss experience, estimated loan and lease losses, growth in the loan and lease portfolio, prevailing economic conditions, and other relevant factors.
Loans and Leases Past Due and Non-Accrual Loans and Leases
Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management's opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. As of December 31, 2025 and December 31, 2024, loans and leases on non-accrual status with no related ACL were $2 million and $4 million, respectively, excluding collateral-dependent loans and leases that have been written down to net realizable value without an associated ACL of $67 million and $59 million, respectively. The remaining balance of non-accrual loans are substantially covered by government guarantees. The Company recognized no interest income on non-accrual loans and leases during the years ended December 31, 2025 and 2024.
The following tables present the carrying value of the loans and leases past due, by loan and lease class, as of the dates presented: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2025 |
| (in millions) | Greater than 30 to 59 Days Past Due | | 60 to 89 Days Past Due | | 90 Days or More and Accruing (2) | | Total Past Due | | Non-Accrual (2) | | Current and Other | | Total Loans and Leases |
| Commercial real estate | | | | | | | | | | | | | |
| Non-owner occupied term | $ | 2 | | | $ | — | | | $ | — | | | $ | 2 | | | $ | 29 | | | $ | 8,175 | | | $ | 8,206 | |
| Owner occupied term | 6 | | | 5 | | | 1 | | | 12 | | | 21 | | | 7,281 | | | 7,314 | |
| Multifamily | — | | | 1 | | | 1 | | | 2 | | | — | | | 10,279 | | | 10,281 | |
| Construction & development | — | | | — | | | — | | | — | | | — | | | 1,707 | | | 1,707 | |
| Residential development | — | | | — | | | — | | | — | | | — | | | 362 | | | 362 | |
| Commercial | | | | | | | | | | | | | |
| Term | 2 | | | 7 | | | 2 | | | 11 | | | 25 | | | 6,677 | | | 6,713 | |
| Lines of credit & other | 4 | | | 3 | | | 1 | | | 8 | | | 22 | | | 3,613 | | | 3,643 | |
| Leases & equipment finance | 17 | | | 18 | | | 5 | | | 40 | | | 19 | | | 1,540 | | | 1,599 | |
| Residential | | | | | | | | | | | | | |
Mortgage (1) | — | | | 16 | | | 66 | | | 82 | | | — | | | 5,542 | | | 5,624 | |
| Home equity loans & lines | 8 | | | 5 | | | 9 | | | 22 | | | — | | | 2,127 | | | 2,149 | |
| Consumer & other | — | | | — | | | — | | | — | | | — | | | 178 | | | 178 | |
| Total, net of deferred fees and costs | $ | 39 | | | $ | 55 | | | $ | 85 | | | $ | 179 | | | $ | 116 | | | $ | 47,481 | | | $ | 47,776 | |
(1) Includes government guaranteed mortgage loans that the Bank has the right but not the obligation to repurchase that are past due 90 days or more, totaling $3 million at December 31, 2025.
(2) Includes government guaranteed portion of $41 million and $38 million for 90 days or more and non-accrual loans, respectively.
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| December 31, 2024 |
(in millions) | Greater than 30 to 59 Days Past Due | | 60 to 89 Days Past Due | | 90 Days or More and Accruing (2) | | Total Past Due | | Non-Accrual (2) | | Current and Other | | Total Loans and Leases |
| Commercial real estate | | | | | | | | | | | | | |
| Non-owner occupied term | $ | 28 | | | $ | — | | | $ | — | | | $ | 28 | | | $ | 14 | | | $ | 6,236 | | | $ | 6,278 | |
| Owner occupied term | 1 | | | — | | | — | | | 1 | | | 25 | | | 5,244 | | | 5,270 | |
| Multifamily | — | | | — | | | — | | | — | | | — | | | 5,804 | | | 5,804 | |
| Construction & development | — | | | — | | | — | | | — | | | — | | | 1,983 | | | 1,983 | |
| Residential development | — | | | — | | | — | | | — | | | — | | | 232 | | | 232 | |
| Commercial | | | | | | | | | | | | | |
| Term | 2 | | | 1 | | | — | | | 3 | | | 29 | | | 5,506 | | | 5,538 | |
| Lines of credit & other | 5 | | | 6 | | | — | | | 11 | | | 7 | | | 2,752 | | | 2,770 | |
| Leases & equipment finance | 15 | | | 17 | | | 5 | | | 37 | | | 21 | | | 1,603 | | | 1,661 | |
| Residential | | | | | | | | | | | | | |
Mortgage (1) | — | | | 18 | | | 61 | | | 79 | | | — | | | 5,854 | | | 5,933 | |
| Home equity loans & lines | 6 | | | 5 | | | 7 | | | 18 | | | — | | | 2,014 | | | 2,032 | |
| Consumer & other | 1 | | | — | | | — | | | 1 | | | — | | | 179 | | | 180 | |
| Total, net of deferred fees and costs | $ | 58 | | | $ | 47 | | | $ | 73 | | | $ | 178 | | | $ | 96 | | | $ | 37,407 | | | $ | 37,681 | |
(1) Includes government guaranteed mortgage loans the Bank has the right but not the obligation to repurchase that are past due 90 days or more, totaling $2 million at December 31, 2024.
(2) Includes government guaranteed portion of $32 million and $42 million for 90 days or more and non-accrual loans, respectively.
Collateral-Dependent Loans and Leases
Loans and leases are classified as collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following tables summarize the amortized cost basis of the collateral-dependent loans and leases by the type of collateral securing the assets as of the periods indicated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2025 |
| (in millions) | | Residential Real Estate | | Commercial Real Estate | | General Business Assets | | | | Total |
| Commercial real estate | | | | | | | | | | |
| Non-owner occupied term | | $ | — | | | $ | 26 | | | $ | — | | | | | $ | 26 | |
| Owner occupied term | | — | | | 17 | | | — | | | | | 17 | |
| Multifamily | | — | | | 6 | | | — | | | | | 6 | |
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| Commercial | | | | | | | | | | |
| Term | | — | | | 1 | | | 16 | | | | | 17 | |
| Lines of credit & other | | — | | | 1 | | | 19 | | | | | 20 | |
| Leases & equipment finance | | — | | | — | | | 19 | | | | | 19 | |
| Residential | | | | | | | | | | |
Mortgage | | 70 | | | — | | | — | | | | | 70 | |
| Home equity loans & lines | | 2 | | | — | | | — | | | | | 2 | |
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| Total, net of deferred fees and costs | | $ | 72 | | | $ | 51 | | | $ | 54 | | | | | $ | 177 | |
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| | December 31, 2024 |
| (in millions) | | Residential Real Estate | | Commercial Real Estate | | General Business Assets | | | | Total |
| Commercial real estate | | | | | | | | | | |
| Non-owner occupied term | | $ | — | | | $ | 13 | | | $ | — | | | | | $ | 13 | |
| Owner occupied term | | — | | | 20 | | | — | | | | | 20 | |
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| Commercial | | | | | | | | | | |
| Term | | 2 | | | 3 | | | 16 | | | | | 21 | |
| Lines of credit & other | | — | | | 1 | | | 4 | | | | | 5 | |
| Leases & equipment finance | | — | | | — | | | 21 | | | | | 21 | |
| Residential | | | | | | | | | | |
Mortgage | | 80 | | | — | | | — | | | | | 80 | |
| Home equity loans & lines | | 2 | | | — | | | — | | | | | 2 | |
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| Total, net of deferred fees and costs | | $ | 84 | | | $ | 37 | | | $ | 41 | | | | | $ | 162 | |
Loan and Lease Modifications Made to Borrowers Experiencing Financial Difficulty
The ACL on modified loans or leases is measured using the same credit loss estimation methods used to determine the ACL for all other loans and leases held for investment. These methods incorporate the post-modification loan or lease terms, as well as defaults and charge-offs associated with the modified loans and leases.
The following tables present the amortized cost basis of loans and leases that were both experiencing financial difficulty and modified during the years ended December 31, 2025 and 2024, by class and type of modification. The percentage of the amortized cost basis of loans and leases to borrowers in financial distress that were modified as compared to the amortized cost basis of each class of financing receivable is also presented below.
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| | | | | Year Ended December 31, 2025 |
| (in millions) | | | | | Term Extension | | Other -Than-Insignificant Payment Delay | | Combo - Interest Rate Reduction and Term Extension | | | | Combo - Term Extension and Other than Insignificant Payment Delay | | Combo - Interest Rate Reduction and Other -Than-Insignificant Payment Delay | | Total | | % of Total Class of Financing Receivable |
| Commercial real estate | | | | | | | | | | | | | | | | | | | |
| Non-owner occupied term | | | | | $ | 4 | | | $ | — | | | $ | 21 | | | | | $ | — | | | $ | — | | | $ | 25 | | | 0.30 | % |
| Owner occupied term | | | | | 11 | | | 1 | | | 1 | | | | | — | | | — | | | 13 | | | 0.18 | % |
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| Construction & development | | | | | 3 | | | — | | | 38 | | | | | — | | | — | | | 41 | | | 2.40 | % |
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| Commercial | | | | | | | | | | | | | | | | | | | |
| Term | | | | | 32 | | | 8 | | | 13 | | | | | — | | | 1 | | | 54 | | | 0.80 | % |
| Lines of credit & other | | | | | 29 | | | — | | | — | | | | | — | | | — | | | 29 | | | 0.80 | % |
| Leases & equipment finance | | | | | 3 | | | — | | | — | | | | | — | | | — | | | 3 | | | 0.19 | % |
| Residential | | | | | | | | | | | | | | | | | | | |
Mortgage | | | | | 1 | | | 20 | | | — | | | | | 7 | | | — | | | 28 | | | 0.50 | % |
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| Total modified loans and leases experiencing financial difficulty | | | | | $ | 83 | | | $ | 29 | | | $ | 73 | | | | | $ | 7 | | | $ | 1 | | | $ | 193 | | | 0.40 | % |
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| | Year Ended December 31, 2024 |
| (in millions) | | Interest Rate Reduction | | | | Term Extension | | Other -Than-Insignificant Payment Delay | | Combination - Interest Rate Reduction and Term Extension | | | | | | Combo - Interest Rate Reduction and Other -Than-Insignificant Payment Delay | | Total | | % of Total Class of Financing Receivable |
| Commercial real estate | | | | | | | | | | | | | | | | | | | | |
| Non-owner occupied term | | $ | — | | | | | $ | — | | | $ | 7 | | | $ | — | | | | | | | $ | — | | | $ | 7 | | | 0.12 | % |
| Owner occupied term | | 4 | | | | | — | | | 1 | | | — | | | | | | | — | | | 5 | | | 0.09 | % |
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| Construction & development | | — | | | | | — | | | — | | | 2 | | | | | | | — | | | 2 | | | 0.10 | % |
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| Commercial | | | | | | | | | | | | | | | | | | | | |
| Term | | — | | | | | 4 | | | 4 | | | — | | | | | | | 3 | | | 11 | | | 0.20 | % |
| Lines of credit & other | | 1 | | | | | 23 | | | — | | | 31 | | | | | | | — | | | 55 | | | 2.00 | % |
| Leases & equipment finance | | — | | | | | 2 | | | — | | | — | | | | | | | — | | | 2 | | | 0.14 | % |
| Residential | | | | | | | | | | | | | | | | | | | | |
Mortgage | | — | | | | | 8 | | | 19 | | | 1 | | | | | | | — | | | 28 | | | 0.47 | % |
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| Total modified loans and leases experiencing financial difficulty | | $ | 5 | | | | | $ | 37 | | | $ | 31 | | | $ | 34 | | | | | | | $ | 3 | | | $ | 110 | | | 0.29 | % |
The following tables present the financial effect of loan modifications made to borrowers experiencing financial difficulty during the periods presented: | | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, 2025 |
| | Interest Rate Modification | | Term Extension | | Other-Than-Insignificant Payment Delay |
(in millions) | | Weighted-Average Interest Rate Reduction | | Weighted-Average Term Extension | | Deferral Amount |
| Commercial real estate | | | | | | |
| Non-owner occupied term | | 3.54 | % | | 1.7 years | | — | |
| Owner occupied term | | 0.80 | % | | 3.1 years | | $ | 1 | |
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| Construction & development | | 0.21 | % | | 4 months | | — | |
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| Commercial | | | | | | |
| Term | | 3.98 | % | | 1.2 years | | $ | 1 | |
| Lines of credit & other | | — | | | 10 months | | $ | — | |
| Leases & equipment finance | | — | | | 1.1 years | | — | |
| Residential | | | | | | |
Mortgage | | — | | | 11.0 years | | $ | 2 | |
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| | Year Ended December 31, 2024 |
| | Interest Rate Modification | | Term Extension | | Other-Than-Insignificant Payment Delay |
(in millions) | | Weighted-Average Interest Rate Reduction | | Weighted-Average Term Extension | | Deferral Amount |
| Commercial real estate | | | | | | |
Non-owner occupied term | | — | | | 6 months | | $ | 2 | |
| Owner occupied term | | 3.71 | % | | 2.9 years | | — | |
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| Construction & development | | 1.00 | % | | 7 months | | — | |
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| Commercial | | | | | | |
| Term | | 2.52 | % | | 11 months | | $ | 1 | |
| Lines of credit & other | | 7.59 | % | | 9 months | | — | |
| Leases & equipment finance | | — | | | 11 months | | — | |
| Residential | | | | | | |
Mortgage | | 7.54 | % | | 7.0 years | | $ | 2 | |
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The Company closely monitors the performance of loans and leases to borrowers experiencing financial difficulty that are modified to understand the effectiveness of its modification efforts. Loans and leases are considered to be in payment default at 90 or more days past due. The following tables present the amortized cost basis of modified loans that, within twelve months of the modification date, experienced a subsequent default during the periods presented: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Year Ended December 31, 2025 |
| (in millions) | | | | | | Term Extension | | Other-Than-Insignificant Payment Delay | | | | | | Combo - Term Extension and Other-than-Insignificant Payment Delay | | | | | | Total |
| Commercial real estate | | | | | | | | | | | | | | | | | | | | |
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| Owner occupied term | | | | | | $ | — | | | $ | 1 | | | | | | | $ | — | | | | | | | $ | 1 | |
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| Commercial | | | | | | | | | | | | | | | | | | | | |
| Term | | | | | | — | | | 1 | | | | | | | — | | | | | | | 1 | |
| Lines of credit & other | | | | | | 4 | | | — | | | | | | | — | | | | | | | 4 | |
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| Residential | | | | | | | | | | | | | | | | | | | | |
Mortgage | | | | | | — | | | 6 | | | | | | | 1 | | | | | | | 7 | |
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| Total loans and leases experiencing financial difficulty with a subsequent default | | | | | | $ | 4 | | | $ | 8 | | | | | | | $ | 1 | | | | | | | $ | 13 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, 2024 |
| (in millions) | | Interest Rate Reduction | | | | Term Extension | | Other-Than-Insignificant Payment Delay | | Combination - Interest Rate Reduction and Term Extension | | | | Combination - Term Extension and Other-than-Insignificant Payment Delay | | | | Combination - Rate Reduction and Other-than-Insignificant Payment Delay | | Total |
| Commercial real estate | | | | | | | | | | | | | | | | | | | | |
| Non-owner occupied term | | $ | — | | | | | $ | — | | | $ | — | | | $ | 1 | | | | | $ | — | | | | | $ | — | | | $ | 1 | |
| Owner occupied term | | 3 | | | | | — | | | — | | | — | | | | | — | | | | | — | | | 3 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Commercial | | | | | | | | | | | | | | | | | | | | |
| Term | | — | | | | | — | | | — | | | — | | | | | — | | | | | 2 | | | 2 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Residential | | | | | | | | | | | | | | | | | | | | |
Mortgage | | — | | | | | 1 | | | 10 | | | — | | | | | 2 | | | | | — | | | 13 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Total loans and leases experiencing financial difficulty with a subsequent default | | $ | 3 | | | | | $ | 1 | | | $ | 10 | | | $ | 1 | | | | | $ | 2 | | | | | $ | 2 | | | $ | 19 | |
The following tables present an age analysis of loans and leases as of December 31, 2025 and 2024 that have been modified within the prior twelve months: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2025 |
(in millions) | | Current | | Greater than 30 to 59 Days Past Due | | 60 to 89 Days Past Due | | 90 Days or Greater Past Due | | Nonaccrual | | Total |
| Commercial real estate | | | | | | | | | | | | |
| Non-owner occupied term | | $ | 25 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 25 | |
| Owner occupied term | | 7 | | | 4 | | | — | | | — | | | 2 | | | 13 | |
| | | | | | | | | | | | |
| Construction & development | | 41 | | | — | | | — | | | — | | | — | | | 41 | |
| | | | | | | | | | | | |
| Commercial | | | | | | | | | | | | |
| Term | | 49 | | | — | | | 4 | | | — | | | 1 | | | 54 | |
| Lines of credit & other | | 23 | | | — | | | 2 | | | — | | | 4 | | | 29 | |
| Leases & equipment finance | | 2 | | | 1 | | | — | | | — | | | — | | | 3 | |
| Residential | | | | | | | | | | | | |
Mortgage | | 18 | | | — | | | 3 | | | 7 | | | — | | | 28 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Total loans and leases modified | | $ | 165 | | | $ | 5 | | | $ | 9 | | | $ | 7 | | | $ | 7 | | | $ | 193 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2024 |
| (in millions) | | Current | | Greater than 30 to 59 Days Past Due | | 60 to 89 Days Past Due | | 90 Days or Greater Past Due | | Nonaccrual | | Total |
| Commercial real estate | | | | | | | | | | | | |
| Non-owner occupied term | | $ | 7 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 7 | |
| Owner occupied term | | 1 | | | — | | | — | | | — | | | 4 | | | 5 | |
| | | | | | | | | | | | |
| Construction & development | | 2 | | | — | | | — | | | — | | | — | | | 2 | |
| | | | | | | | | | | | |
| Commercial | | | | | | | | | | | | |
| Term | | 6 | | | — | | | — | | | — | | | 5 | | | 11 | |
| Lines of credit & other | | 52 | | | 2 | | | 1 | | | — | | | — | | | 55 | |
| Leases & equipment finance | | 2 | | | — | | | — | | | — | | | — | | | 2 | |
| Residential | | | | | | | | | | | | |
Mortgage | | 22 | | | — | | | 2 | | | 4 | | | — | | | 28 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Total loans and leases modified | | $ | 92 | | | $ | 2 | | | $ | 3 | | | $ | 4 | | | $ | 9 | | | $ | 110 | |
| | | | | | | | | | | | |
Credit Quality Indicators
Management regularly reviews loans and leases in the portfolio to assess credit quality indicators and to determine appropriate loan classification and grading. The Bank differentiates its lending portfolios into homogeneous and non-homogeneous loans and leases. Homogeneous loans and leases are initially risk rated on a single risk rating scale based on the past due status of the loan or lease. Homogeneous loans and leases that have risk-based modifications or forbearances enter into an alternative elevated risk rating scale that freezes the elevated risk rating and requires six consecutive months of scheduled payments without delinquency before the loan or lease can return to the delinquency-based risk rating scale.
The Bank's risk rating methodology for its non-homogeneous loans and leases uses a dual risk rating approach to assess the credit risk. Certain acquired non‑homogeneous loans are in the process of being incorporated and are not yet fully reflected within the dual risk rating framework. This approach uses two scales to provide a comprehensive assessment of credit default risk and recovery risk. The PD scale measures a borrower's credit default risk using risk ratings ranging from 1 to 16, where a higher rating represents higher risk. For non-homogeneous loans and leases, PD ratings of 1 through 9 are "pass" grades, while PD ratings of 10 and 11 are "watch" grades. PD ratings of 12-16 correspond to the regulatory-defined categories of special mention (12), substandard (13-14), doubtful (15), and loss (16). The loss given default scale measures the amount of loss that may not be recovered in the event of a default, using six alphabetic ratings from A-F, where a higher rating represents higher risk. The LGD scale quantifies recovery risk associated with an event of default and predicts the amount of loss that would be incurred on a loan or lease if a borrower were to experience a major default and includes variables that may be external to the borrower, such as industry, geographic location, and credit cycle stage. It could also include variables specific to the loan or lease, including collateral valuation, covenant structure and debt type. The product of the borrower's PD and a loan or lease LGD is the loan or lease expected loss, expressed as a percentage. This provides a common language of credit risk across different loans.
The PD scale estimates the likelihood that a borrower will experience a major default on any of its debt obligations within a specified time period. Examples of major defaults include payments 90 days or more past due, non-accrual classification, bankruptcy filing, or a full or partial charge-off of a loan or lease. As such, the PD scale represents the credit quality indicator for non-homogeneous loans and leases.
The credit quality indicator rating categories follow regulatory classification and can be generally described by the following groupings for loans and leases:
Pass/Watch—A pass loan or lease is a loan or lease with a credit risk level acceptable to the Bank for extending credit and maintaining normal credit monitoring. A watch loan or lease is considered pass rated but has a heightened level of unacceptable default risk due to an emerging risk element or declining performance trend. Watch ratings are expected to be temporary, with issues resolved or manifested to the extent that a higher or lower risk rating would be appropriate within a short period of time.
Special Mention—A special mention loan or lease has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution's credit position at some future date. These borrowers have an elevated probability of default but not to the point of a substandard classification.
Substandard—A substandard loan or lease is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans and leases classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.
Doubtful—Loans or leases classified as doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing facts, conditions, and values, highly questionable and improbable.
Loss—Loans or leases classified as loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted.
The following tables present the amortized cost basis of the loans and leases by credit classification and vintage year by loan and lease class of financing receivable, as well as gross charge-offs for the dates presented: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Term Loans Amortized Cost Basis by Origination Year | | Revolving Loans Amortized Cost Basis | | Revolving to Non-Revolving Loans Amortized Cost | | | |
| December 31, 2025 | | 2025 | | 2024 | | 2023 | | 2022 | | 2021 | | Prior | | | | Total | |
| Commercial real estate: | | | | | | | | | | | | | | | | | | | |
| Non-owner occupied term | | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 815 | | | $ | 280 | | | $ | 506 | | | $ | 1,694 | | | $ | 1,603 | | | $ | 3,033 | | | $ | 35 | | | $ | 13 | | | $ | 7,979 | | |
| Special mention | | 2 | | | 6 | | | — | | | 10 | | | 20 | | | 71 | | | — | | | — | | | 109 | | |
| Substandard | | 27 | | | — | | | — | | | 22 | | | 12 | | | 55 | | | — | | | — | | | 116 | | |
| | | | | | | | | | | | | | | | | | | | |
| Loss | | — | | | — | | | — | | | — | | | 1 | | | 1 | | | — | | | — | | | 2 | | |
| Total non-owner occupied term | | $ | 844 | | | $ | 286 | | | $ | 506 | | | $ | 1,726 | | | $ | 1,636 | | | $ | 3,160 | | | $ | 35 | | | $ | 13 | | | $ | 8,206 | | |
| Current YTD period: | | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | — | | | $ | — | | | $ | 1 | | | $ | — | | | $ | — | | | $ | 9 | | | $ | — | | | $ | — | | | $ | 10 | | |
| Owner occupied term | | | | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 921 | | | $ | 510 | | | $ | 466 | | | $ | 1,326 | | | $ | 1,325 | | | $ | 2,363 | | | $ | 24 | | | $ | 51 | | | $ | 6,986 | | |
| Special mention | | 20 | | | 32 | | | 6 | | | 55 | | | 22 | | | 41 | | | — | | | — | | | 176 | | |
| Substandard | | 4 | | | 29 | | | 2 | | | 12 | | | 41 | | | 46 | | | — | | | 9 | | | 143 | | |
| Doubtful | | — | | | 3 | | | — | | | 3 | | | — | | | — | | | — | | | — | | | 6 | | |
| Loss | | — | | | — | | | — | | | — | | | 1 | | | 2 | | | — | | | — | | | 3 | | |
| Total owner occupied term | | $ | 945 | | | $ | 574 | | | $ | 474 | | | $ | 1,396 | | | $ | 1,389 | | | $ | 2,452 | | | $ | 24 | | | $ | 60 | | | $ | 7,314 | | |
| Current YTD period: | | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | — | | | $ | — | | | $ | — | | | $ | 1 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 1 | | |
| Multifamily | | | | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 455 | | | $ | 348 | | | $ | 367 | | | $ | 2,787 | | | $ | 3,195 | | | $ | 2,958 | | | $ | 118 | | | $ | — | | | $ | 10,228 | | |
| Special mention | | — | | | — | | | 14 | | | 9 | | | — | | | 22 | | | — | | | — | | | 45 | | |
| Substandard | | — | | | — | | | — | | | 3 | | | 2 | | | 3 | | | — | | | — | | | 8 | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Total multifamily | | $ | 455 | | | $ | 348 | | | $ | 381 | | | $ | 2,799 | | | $ | 3,197 | | | $ | 2,983 | | | $ | 118 | | | $ | — | | | $ | 10,281 | | |
| Current YTD period: | | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | |
| Construction & development | | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 345 | | | $ | 407 | | | $ | 391 | | | $ | 241 | | | $ | 98 | | | $ | 92 | | | $ | 28 | | | $ | 2 | | | $ | 1,604 | | |
| Special mention | | 12 | | | 12 | | | 32 | | | 1 | | | — | | | — | | | — | | | 8 | | | 65 | | |
| Substandard | | 38 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 38 | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Total construction & development | | $ | 395 | | | $ | 419 | | | $ | 423 | | | $ | 242 | | | $ | 98 | | | $ | 92 | | | $ | 28 | | | $ | 10 | | | $ | 1,707 | | |
| Current YTD period: | | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | |
| Residential development | | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 99 | | | $ | 57 | | | $ | 2 | | | $ | 8 | | | $ | — | | | $ | — | | | $ | 194 | | | $ | 2 | | | $ | 362 | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Total residential development | | $ | 99 | | | $ | 57 | | | $ | 2 | | | $ | 8 | | | $ | — | | | $ | — | | | $ | 194 | | | $ | 2 | | | $ | 362 | | |
| Current YTD period: | | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | |
| | | | | | | | | | | | | | | | | | | | |
| Total commercial real estate | | $ | 2,738 | | | $ | 1,684 | | | $ | 1,786 | | | $ | 6,171 | | | $ | 6,320 | | | $ | 8,687 | | | $ | 399 | | | $ | 85 | | | $ | 27,870 | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Term Loans Amortized Cost Basis by Origination Year | | Revolving Loans Amortized Cost Basis | | Revolving to Non-Revolving Loans Amortized Cost | | | |
| December 31, 2025 | | 2025 | | 2024 | | 2023 | | 2022 | | 2021 | | Prior | | Revolving Loans Amortized Cost Basis | | Revolving to Non-Revolving Loans Amortized Cost | | Total | |
| Commercial: | | | | | | | | | | | | | | | | | | | |
| Term | | | | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 1,571 | | | $ | 701 | | | $ | 395 | | | $ | 800 | | | $ | 763 | | | $ | 851 | | | $ | 1,328 | | | $ | 21 | | | $ | 6,430 | | |
| Special mention | | 13 | | | 22 | | | 49 | | | 53 | | | 23 | | | 2 | | | 11 | | | — | | | 173 | | |
| Substandard | | 25 | | | 12 | | | 2 | | | 43 | | | 5 | | | 4 | | | 3 | | | 2 | | | 96 | | |
| Doubtful | | 2 | | | — | | | — | | | 4 | | | 1 | | | 2 | | | — | | | — | | | 9 | | |
| Loss | | — | | | — | | | — | | | — | | | 2 | | | 3 | | | — | | | — | | | 5 | | |
| Total term | | $ | 1,611 | | | $ | 735 | | | $ | 446 | | | $ | 900 | | | $ | 794 | | | $ | 862 | | | $ | 1,342 | | | $ | 23 | | | $ | 6,713 | | |
| Current YTD period: | | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | — | | | $ | 1 | | | $ | 1 | | | $ | 1 | | | $ | 1 | | | $ | 2 | | | $ | — | | | $ | — | | | $ | 6 | | |
| Lines of credit & other | | | | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 119 | | | $ | 70 | | | $ | 28 | | | $ | 42 | | | $ | 10 | | | $ | 18 | | | $ | 3,052 | | | $ | 106 | | | $ | 3,445 | | |
| Special mention | | 1 | | | — | | | — | | | — | | | — | | | — | | | 74 | | | 5 | | | 80 | | |
| Substandard | | 4 | | | 15 | | | — | | | 1 | | | — | | | — | | | 80 | | | 15 | | | 115 | | |
| Doubtful | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 1 | | | 1 | | |
| Loss | | — | | | — | | | — | | | — | | | — | | | — | | | 1 | | | 1 | | | 2 | | |
| Total lines of credit & other | | $ | 124 | | | $ | 85 | | | $ | 28 | | | $ | 43 | | | $ | 10 | | | $ | 18 | | | $ | 3,207 | | | $ | 128 | | | $ | 3,643 | | |
| Current YTD period: | | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | — | | | $ | 17 | | | $ | — | | | $ | 1 | | | $ | — | | | $ | 1 | | | $ | 8 | | | $ | 5 | | | $ | 32 | | |
| Leases & equipment finance | | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 585 | | | $ | 399 | | | $ | 268 | | | $ | 160 | | | $ | 35 | | | $ | 34 | | | $ | — | | | $ | — | | | $ | 1,481 | | |
| Special mention | | 3 | | | 16 | | | 8 | | | 3 | | | 1 | | | — | | | — | | | — | | | 31 | | |
| Substandard | | 6 | | | 7 | | | 32 | | | 7 | | | 1 | | | — | | | — | | | — | | | 53 | | |
| Doubtful | | 5 | | | 9 | | | 9 | | | 7 | | | 2 | | | — | | | — | | | — | | | 32 | | |
| Loss | | — | | | 1 | | | 1 | | | — | | | — | | | — | | | — | | | — | | | 2 | | |
| Total leases & equipment finance | | $ | 599 | | | $ | 432 | | | $ | 318 | | | $ | 177 | | | $ | 39 | | | $ | 34 | | | $ | — | | | $ | — | | | $ | 1,599 | | |
| Current YTD period: | | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | 2 | | | $ | 16 | | | $ | 22 | | | $ | 22 | | | $ | 8 | | | $ | 3 | | | $ | — | | | $ | — | | | $ | 73 | | |
| | | | | | | | | | | | | | | | | | | | |
| Total commercial | | $ | 2,334 | | | $ | 1,252 | | | $ | 792 | | | $ | 1,120 | | | $ | 843 | | | $ | 914 | | | $ | 4,549 | | | $ | 151 | | | $ | 11,955 | | |
| | | | | | | | | | | | | | | | | | | | |
| Residential: | | | | | | | | | | | | | | | | | | | |
| Mortgage | | | | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 242 | | | $ | 230 | | | $ | 174 | | | $ | 1,645 | | | $ | 1,828 | | | $ | 1,425 | | | $ | — | | | $ | — | | | $ | 5,544 | | |
| Special mention | | 3 | | | — | | | 2 | | | 3 | | | 3 | | | 5 | | | — | | | — | | | 16 | | |
| Substandard | | 2 | | | 2 | | | 1 | | | 5 | | | 8 | | | 8 | | | — | | | — | | | 26 | | |
| | | | | | | | | | | | | | | | | | | | |
| Loss | | 6 | | | 6 | | | 3 | | | 4 | | | 7 | | | 12 | | | — | | | — | | | 38 | | |
| Total mortgage | | $ | 253 | | | $ | 238 | | | $ | 180 | | | $ | 1,657 | | | $ | 1,846 | | | $ | 1,450 | | | $ | — | | | $ | — | | | $ | 5,624 | | |
| Current YTD period: | | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 1 | | | $ | — | | | $ | — | | | $ | — | | | $ | 1 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Term Loans Amortized Cost Basis by Origination Year | | Revolving Loans Amortized Cost Basis | | Revolving to Non-Revolving Loans Amortized Cost | | | |
| December 31, 2025 | | 2025 | | 2024 | | 2023 | | 2022 | | 2021 | | Prior | | Revolving Loans Amortized Cost Basis | | Revolving to Non-Revolving Loans Amortized Cost | | Total | |
| Home equity loans & lines | | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 1 | | | $ | 1 | | | $ | 2 | | | $ | 6 | | | $ | 2 | | | $ | 45 | | | $ | 2,032 | | | $ | 39 | | | $ | 2,128 | | |
| Special mention | | — | | | — | | | — | | | — | | | — | | | 2 | | | 8 | | | 2 | | | 12 | | |
| Substandard | | — | | | — | | | — | | | — | | | — | | | — | | | 1 | | | 1 | | | 2 | | |
| | | | | | | | | | | | | | | | | | | | |
| Loss | | — | | | — | | | — | | | 1 | | | — | | | 1 | | | 1 | | | 4 | | | 7 | | |
| Total home equity loans & lines | | $ | 1 | | | $ | 1 | | | $ | 2 | | | $ | 7 | | | $ | 2 | | | $ | 48 | | | $ | 2,042 | | | $ | 46 | | | $ | 2,149 | | |
| Current YTD period: | | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | — | | | $ | — | | | $ | — | | | $ | 1 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 1 | | |
| | | | | | | | | | | | | | | | | | | |
| Total residential | | $ | 254 | | | $ | 239 | | | $ | 182 | | | $ | 1,664 | | | $ | 1,848 | | | $ | 1,498 | | | $ | 2,042 | | | $ | 46 | | | $ | 7,773 | | |
| | | | | | | | | | | | | | | | | | | | |
| Consumer & other: | | | | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 18 | | | $ | 6 | | | $ | 10 | | | $ | 6 | | | $ | 3 | | | $ | 6 | | | $ | 128 | | | $ | — | | | $ | 177 | | |
| Special mention | | — | | | — | | | — | | | — | | | — | | | — | | | 1 | | | — | | | 1 | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Total consumer & other | | $ | 18 | | | $ | 6 | | | $ | 10 | | | $ | 6 | | | $ | 3 | | | $ | 6 | | | $ | 129 | | | $ | — | | | $ | 178 | | |
| Current YTD period: | | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | 2 | | | $ | 1 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 2 | | | $ | — | | | $ | 5 | | |
| | | | | | | | | | | | | | | | | | | | |
| Grand total | | $ | 5,344 | | | $ | 3,181 | | | $ | 2,770 | | | $ | 8,961 | | | $ | 9,014 | | | $ | 11,105 | | | $ | 7,119 | | | $ | 282 | | | $ | 47,776 | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Term Loans Amortized Cost Basis by Origination Year | | Revolving Loans Amortized Cost Basis | | Revolving to Non-Revolving Loans Amortized Cost | | |
| December 31, 2024 | | 2024 | | 2023 | | 2022 | | 2021 | | 2020 | | Prior | | | | Total |
| Commercial real estate: | | | | | | | | | | | | | | | | | | |
| Non-owner occupied term | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 290 | | | $ | 564 | | | $ | 1,246 | | | $ | 1,132 | | | $ | 569 | | | $ | 2,289 | | | $ | 26 | | | $ | 12 | | | $ | 6,128 | |
| Special mention | | — | | | — | | | 9 | | | 1 | | | — | | | 21 | | | — | | | — | | | 31 | |
| Substandard | | 7 | | | 31 | | | 21 | | | — | | | — | | | 56 | | | — | | | — | | | 115 | |
| Doubtful | | — | | | — | | | 2 | | | 1 | | | — | | | 1 | | | — | | | — | | | 4 | |
| | | | | | | | | | | | | | | | | | | |
| Total non-owner occupied term | | $ | 297 | | | $ | 595 | | | $ | 1,278 | | | $ | 1,134 | | | $ | 569 | | | $ | 2,367 | | | $ | 26 | | | $ | 12 | | | $ | 6,278 | |
| Prior Year End period: | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 3 | | | $ | — | | | $ | — | | | $ | 3 | |
| Owner occupied term | | | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 526 | | | $ | 499 | | | $ | 1,015 | | | $ | 867 | | | $ | 398 | | | $ | 1,639 | | | $ | 79 | | | $ | 5 | | | $ | 5,028 | |
| Special mention | | — | | | 1 | | | 23 | | | 81 | | | 18 | | | 39 | | | 2 | | | — | | | 164 | |
| Substandard | | 4 | | | 8 | | | 8 | | | 4 | | | 20 | | | 25 | | | — | | | — | | | 69 | |
| Doubtful | | 3 | | | — | | | 3 | | | — | | | — | | | 1 | | | — | | | — | | | 7 | |
| Loss | | — | | | — | | | 1 | | | — | | | — | | | 1 | | | — | | | — | | | 2 | |
| Total owner occupied term | | $ | 533 | | | $ | 508 | | | $ | 1,050 | | | $ | 952 | | | $ | 436 | | | $ | 1,705 | | | $ | 81 | | | $ | 5 | | | $ | 5,270 | |
| Prior Year End period: | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | — | | | $ | — | | | $ | 1 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 1 | |
| Multifamily | | | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 169 | | | $ | 254 | | | $ | 1,995 | | | $ | 1,634 | | | $ | 406 | | | $ | 1,224 | | | $ | 93 | | | $ | — | | | $ | 5,775 | |
| Special mention | | — | | | — | | | 4 | | | 7 | | | — | | | 12 | | | — | | | — | | | 23 | |
| Substandard | | — | | | — | | | 3 | | | 2 | | | — | | | 1 | | | — | | | — | | | 6 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Total multifamily | | $ | 169 | | | $ | 254 | | | $ | 2,002 | | | $ | 1,643 | | | $ | 406 | | | $ | 1,237 | | | $ | 93 | | | $ | — | | | $ | 5,804 | |
| Prior Year End period: | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Construction & development | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 473 | | | $ | 504 | | | $ | 747 | | | $ | 129 | | | $ | 79 | | | $ | 19 | | | $ | 14 | | | $ | — | | | $ | 1,965 | |
| Special mention | | 2 | | | — | | | 1 | | | 15 | | | — | | | — | | | — | | | — | | | 18 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Total construction & development | | $ | 475 | | | $ | 504 | | | $ | 748 | | | $ | 144 | | | $ | 79 | | | $ | 19 | | | $ | 14 | | | $ | — | | | $ | 1,983 | |
| Prior Year End period: | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Residential development | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 62 | | | $ | 6 | | | $ | 5 | | | $ | 1 | | | $ | — | | | $ | 1 | | | $ | 154 | | | $ | 3 | | | $ | 232 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Total residential development | | $ | 62 | | | $ | 6 | | | $ | 5 | | | $ | 1 | | | $ | — | | | $ | 1 | | | $ | 154 | | | $ | 3 | | | $ | 232 | |
| Prior Year End period: | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | | | | |
| Total commercial real estate | | $ | 1,536 | | | $ | 1,867 | | | $ | 5,083 | | | $ | 3,874 | | | $ | 1,490 | | | $ | 5,329 | | | $ | 368 | | | $ | 20 | | | $ | 19,567 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Term Loans Amortized Cost Basis by Origination Year | | Revolving Loans Amortized Cost Basis | | Revolving to Non-Revolving Loans Amortized Cost | | |
| December 31, 2024 | | 2024 | | 2023 | | 2022 | | 2021 | | 2020 | | Prior | | Revolving Loans Amortized Cost Basis | | Revolving to Non-Revolving Loans Amortized Cost | | Total |
| Commercial: | | | | | | | | | | | | | | | | | | |
| Term | | | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 827 | | | $ | 650 | | | $ | 1,047 | | | $ | 789 | | | $ | 297 | | | $ | 619 | | | $ | 1,080 | | | $ | 21 | | | $ | 5,330 | |
| Special mention | | 2 | | | 48 | | | 26 | | | 8 | | | — | | | 14 | | | 37 | | | — | | | 135 | |
| Substandard | | 25 | | | 2 | | | 10 | | | 5 | | | 3 | | | 10 | | | — | | | — | | | 55 | |
| Doubtful | | 1 | | | 1 | | | 4 | | | 4 | | | 1 | | | 2 | | | — | | | — | | | 13 | |
| Loss | | — | | | — | | | 1 | | | 1 | | | 1 | | | 2 | | | — | | | — | | | 5 | |
| Total term | | $ | 855 | | | $ | 701 | | | $ | 1,088 | | | $ | 807 | | | $ | 302 | | | $ | 647 | | | $ | 1,117 | | | $ | 21 | | | $ | 5,538 | |
| Prior Year End period: | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | 1 | | | $ | 3 | | | $ | 2 | | | $ | 1 | | | $ | 1 | | | $ | 1 | | | $ | 4 | | | $ | — | | | $ | 13 | |
| Lines of credit & other | | | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 99 | | | $ | 42 | | | $ | 55 | | | $ | 19 | | | $ | 9 | | | $ | 10 | | | $ | 2,382 | | | $ | 16 | | | $ | 2,632 | |
| Special mention | | — | | | 2 | | | 1 | | | — | | | — | | | — | | | 31 | | | 4 | | | 38 | |
| Substandard | | 34 | | | 2 | | | 1 | | | — | | | — | | | — | | | 54 | | | 9 | | | 100 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Total lines of credit & other | | $ | 133 | | | $ | 46 | | | $ | 57 | | | $ | 19 | | | $ | 9 | | | $ | 10 | | | $ | 2,467 | | | $ | 29 | | | $ | 2,770 | |
| Prior Year End period: | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | — | | | $ | 1 | | | $ | — | | | $ | — | | | $ | — | | | $ | 1 | | | $ | 20 | | | $ | 3 | | | $ | 25 | |
| Leases & equipment finance | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 603 | | | $ | 457 | | | $ | 296 | | | $ | 102 | | | $ | 32 | | | $ | 46 | | | $ | — | | | $ | — | | | $ | 1,536 | |
| Special mention | | 10 | | | 39 | | | 9 | | | 2 | | | 1 | | | — | | | — | | | — | | | 61 | |
| Substandard | | 5 | | | 9 | | | 9 | | | 3 | | | 1 | | | 1 | | | — | | | — | | | 28 | |
| Doubtful | | 4 | | | 10 | | | 14 | | | 5 | | | 1 | | | — | | | — | | | — | | | 34 | |
| Loss | | — | | | 1 | | | 1 | | | — | | | — | | | — | | | — | | | — | | | 2 | |
| Total leases & equipment finance | | $ | 622 | | | $ | 516 | | | $ | 329 | | | $ | 112 | | | $ | 35 | | | $ | 47 | | | $ | — | | | $ | — | | | $ | 1,661 | |
| Prior Year End period: | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | 2 | | | $ | 23 | | | $ | 49 | | | $ | 19 | | | $ | 5 | | | $ | 3 | | | $ | — | | | $ | — | | | $ | 101 | |
| | | | | | | | | | | | | | | | | | | |
| Total commercial | | $ | 1,610 | | | $ | 1,263 | | | $ | 1,474 | | | $ | 938 | | | $ | 346 | | | $ | 704 | | | $ | 3,584 | | | $ | 50 | | | $ | 9,969 | |
| | | | | | | | | | | | | | | | | | | |
| Residential: | | | | | | | | | | | | | | | | | | |
| Mortgage | | | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 236 | | | $ | 232 | | | $ | 1,777 | | | $ | 2,097 | | | $ | 473 | | | $ | 1,042 | | | $ | — | | | $ | — | | | $ | 5,857 | |
| Special mention | | 2 | | | 3 | | | 2 | | | 3 | | | 1 | | | 8 | | | — | | | — | | | 19 | |
| Substandard | | 3 | | | 5 | | | 5 | | | 11 | | | 2 | | | 16 | | | — | | | — | | | 42 | |
| | | | | | | | | | | | | | | | | | | |
| Loss | | 1 | | | 2 | | | 4 | | | 4 | | | 1 | | | 3 | | | — | | | — | | | 15 | |
| Total mortgage | | $ | 242 | | | $ | 242 | | | $ | 1,788 | | | $ | 2,115 | | | $ | 477 | | | $ | 1,069 | | | $ | — | | | $ | — | | | $ | 5,933 | |
| Prior Year End period: | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | — | | | $ | — | | | $ | 1 | | | $ | — | | | $ | — | | | $ | 1 | | | $ | — | | | $ | — | | | $ | 2 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Term Loans Amortized Cost Basis by Origination Year | | Revolving Loans Amortized Cost Basis | | Revolving to Non-Revolving Loans Amortized Cost | | |
| December 31, 2024 | | 2024 | | 2023 | | 2022 | | 2021 | | 2020 | | Prior | | Revolving Loans Amortized Cost Basis | | Revolving to Non-Revolving Loans Amortized Cost | | Total |
| Home equity loans & lines | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 1 | | | $ | 1 | | | $ | 2 | | | $ | 1 | | | $ | 1 | | | $ | 38 | | | $ | 1,941 | | | $ | 30 | | | $ | 2,015 | |
| Special mention | | — | | | — | | | — | | | — | | | — | | | 1 | | | 8 | | | 1 | | | 10 | |
| Substandard | | — | | | — | | | — | | | — | | | — | | | — | | | 1 | | | 1 | | | 2 | |
| | | | | | | | | | | | | | | | | | | |
| Loss | | — | | | — | | | — | | | — | | | — | | | 1 | | | 2 | | | 2 | | | 5 | |
| Total home equity loans & lines | | $ | 1 | | | $ | 1 | | | $ | 2 | | | $ | 1 | | | $ | 1 | | | $ | 40 | | | $ | 1,952 | | | $ | 34 | | | $ | 2,032 | |
| Prior Year End period: | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | | | | |
| Total residential | | $ | 243 | | | $ | 243 | | | $ | 1,790 | | | $ | 2,116 | | | $ | 478 | | | $ | 1,109 | | | $ | 1,952 | | | $ | 34 | | | $ | 7,965 | |
| | | | | | | | | | | | | | | | | | | |
| Consumer & other: | | | | | | | | | | | | | | | | | | |
| Credit quality indicator: | | | | | | | | | | | | | | | | | | |
| Pass/Watch | | $ | 22 | | | $ | 16 | | | $ | 10 | | | $ | 5 | | | $ | 3 | | | $ | 5 | | | $ | 117 | | | $ | 1 | | | $ | 179 | |
| Special mention | | — | | | — | | | — | | | — | | | — | | | — | | | 1 | | | — | | | 1 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Total consumer & other | | $ | 22 | | | $ | 16 | | | $ | 10 | | | $ | 5 | | | $ | 3 | | | $ | 5 | | | $ | 118 | | | $ | 1 | | | $ | 180 | |
| Prior Year End period: | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | — | | | $ | 3 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 2 | | | $ | 1 | | | $ | 6 | |
| | | | | | | | | | | | | | | | | | | |
| Grand total | | $ | 3,411 | | | $ | 3,389 | | | $ | 8,357 | | | $ | 6,933 | | | $ | 2,317 | | | $ | 7,147 | | | $ | 6,022 | | | $ | 105 | | | $ | 37,681 | |
| | | | | | | | | | | | | | | | | | | |
Note 7 – Premises and Equipment
The following table presents the major components of premises and equipment as of December 31, 2025 and 2024: | | | | | | | | | | | | | | | | | |
| (in millions) | December 31, 2025 | | December 31, 2024 | | Estimated useful life |
| Land | $ | 106 | | | $ | 91 | | | |
| Buildings and improvements | 345 | | | 294 | | | 7 - 39 years |
| Furniture, fixtures, and equipment | 176 | | | 141 | | | 4 - 20 years |
| Software | 113 | | | 111 | | | 3 - 7 years |
| Construction in progress and other | 25 | | | 43 | | | |
| Total premises and equipment | 765 | | | 680 | | | |
| Less: Accumulated depreciation and amortization | (343) | | | (331) | | | |
| Premises and equipment, net | $ | 422 | | | $ | 349 | | | |
Depreciation and amortization expense related to premises and equipment totaled $30 million, $28 million, and $29 million for the years ended December 31, 2025, 2024, and 2023, respectively, and is included in occupancy and equipment, net on the Consolidated Statements of Income.
Note 8 – Operating Leases
The Company leases branch locations, corporate office space, and equipment under non-cancelable operating leases. Liabilities to make future lease payments are recorded in other liabilities, while right-of-use assets are recorded in other assets on the Company's Consolidated Balance Sheets.
The following table presents the balance sheet information related to leases as of December 31, 2025 and 2024: | | | | | | | | | | | | | | |
| (in millions) | | December 31, 2025 | | December 31, 2024 |
| Leases | | |
| Operating lease right-of-use assets | | $ | 154 | | | $ | 111 | |
| Operating lease liabilities | | $ | 166 | | | $ | 126 | |
The following table presents the weighted-average operating lease term and weighted-average discount rate as of December 31, 2025 and 2024: | | | | | | | | | | | | | | |
| | December 31, 2025 | | December 31, 2024 |
| Weighted-average remaining lease term (years) | | 5.4 | | 5.8 |
| Weighted-average discount rate | | 4.17 | % | | 4.23 | % |
The following table presents the components of lease expense for the years ended December 31, 2025, 2024, and 2023: | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | | | | | |
| Lease Costs | | 2025 | | 2024 | | 2023 |
| Operating lease costs | | $ | 37 | | | $ | 33 | | | $ | 37 | |
| Short-term lease costs | | 1 | | | 1 | | | 1 | |
| | | | | | |
| Sublease income | | (2) | | | (3) | | | (3) | |
| Net lease costs | | $ | 36 | | | $ | 31 | | | $ | 35 | |
The Company performs impairment assessments for ROU assets when events or changes in circumstances indicate that their carrying values may not be recoverable. For the years ended December 31, 2025 and 2024, there were no ROU asset impairments. For the year ended December 31, 2023, there were $3 million in ROU asset impairments recorded in other expenses. The impairments were due to the closures or consolidations of leased locations.
The following table presents the supplemental cash flow information related to leases for the years ended December 31, 2025, 2024, and 2023:
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | | | | | |
Cash Flows | | 2025 | | 2024 | | 2023 |
| Cash paid for amounts included in the measurement of lease liabilities: | | | | | | |
| Operating cash flows from operating leases | | $ | 38 | | | $ | 33 | | | $ | 38 | |
| Right of use assets obtained in exchange for new operating lease liabilities | | $ | 72 | | | $ | 23 | | | $ | 73 | |
The following table presents the maturities of lease liabilities as of December 31, 2025: | | | | | |
| (in millions) | Operating |
| Year | Leases |
| 2026 | $ | 47 | |
| 2027 | 38 | |
| 2028 | 32 | |
| 2029 | 24 | |
| 2030 | 16 | |
| Thereafter | 30 | |
| Total lease payments | 187 | |
| Less: imputed interest | (21) | |
| Present value of lease liabilities | $ | 166 | |
Note 9 – Goodwill and Other Intangible Assets
Goodwill represents the excess of the total acquisition price paid over the fair value of the assets acquired, net of fair value of liabilities assumed in connection with mergers and acquisitions. In 2025, the Company recorded $453 million of goodwill associated with the acquisition of Pacific Premier. Additional information on the acquisition and purchase price allocations is provided in Note 2 – Business Combinations.
The Company performed its annual impairment assessment as of October 31 and concluded that there was no impairment. As of December 31, 2025, 2024, and 2023, it was determined there were no events or circumstances which would more likely than not reduce the fair value of our reporting unit below its carrying amount.
The following table presents the changes in the carrying amount of goodwill:
| | | | | | | | | |
| (in millions) | | | | | Goodwill |
Balance, December 31, 2024 | | | | | $ | 1,029 | |
| Acquisitions and adjustments | | | | | 453 | |
Balance, December 31, 2025 | | | | | $ | 1,482 | |
| | | | | |
Core deposit intangible assets values were determined based on the present value of the expected cost savings attributable to the core deposit funding relative to an alternative source of funding. In 2025, the Company recorded $355 million of core deposit intangibles associated with the acquisition of Pacific Premier.
The intangible assets are being amortized on an accelerated basis over a period of 10 years. No impairment losses have been recognized in the periods presented.
The following table summarizes other intangible assets as of the dates presented:
| | | | | | | | | | | | | | | | | |
| (in millions) | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount |
December 31, 2025 | $ | 1,065 | | | $ | (353) | | | $ | 712 | |
| December 31, 2024 | $ | 710 | | | $ | (226) | | | $ | 484 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Amortization expense recognized on intangible assets was $127 million, $119 million, and $111 million for the years ended December 31, 2025, 2024, 2023, respectively.
The table below presents the forecasted amortization expense for intangible assets as of December 31, 2025: | | | | | |
| (in millions) | |
| Year | Expected Amortization |
2026 | $ | 155 | |
| 2027 | 136 | |
| 2028 | 116 | |
| 2029 | 97 | |
| 2030 | 77 | |
| Thereafter | 131 | |
| Total intangible assets | $ | 712 | |
Note 10 – Residential Mortgage Servicing Rights
The Company measures its MSR asset at fair value with changes in fair value reported in residential mortgage banking revenue, net. MSR assets are recorded in other assets on the Consolidated Balance Sheets.
The following table presents the changes in the Company's residential MSR for the years ended December 31, 2025, 2024, and 2023:
| | | | | | | | | | | | | | | | | | | | | |
| | | |
| (in millions) | | | | | 2025 | | 2024 | | 2023 |
| | | | | | | | | |
| Balance, beginning of period | | | | | $ | 108 | | | $ | 109 | | | $ | 185 | |
| Additions for new MSR capitalized | | | | | 7 | | | 6 | | | 5 | |
| Sale of MSR assets | | | | | — | | | — | | | (57) | |
| Changes in fair value: | | | | | | | | | |
| Changes due to collection/realization of expected cash flows over time | | | | | (12) | | | (12) | | | (18) | |
Changes due to valuation inputs or assumptions (1) | | | | | (4) | | | 5 | | | (6) | |
| Balance, end of period | | | | | $ | 99 | | | $ | 108 | | | $ | 109 | |
(1) The change in valuation inputs and assumptions principally reflect changes in discount rates and prepayment speeds, which are primarily affected by changes in interest rates.
Information related to the serviced loan portfolio as of the dates presented is as follows:
| | | | | | | | | | | | | | | | | |
| (in millions) | December 31, 2025 | | December 31, 2024 | | December 31, 2023 |
| Balance of loans serviced for others | $ | 7,755 | | | $ | 7,939 | | | $ | 8,176 | |
| MSR as a percentage of serviced loans | 1.28 | % | | 1.36 | % | | 1.34 | % |
The amount of contractually specified servicing fees, late fees, and ancillary fees earned, which is recorded in residential mortgage banking revenue, were $23 million, $24 million, and $33 million, for the years ended December 31, 2025, 2024, and 2023, respectively.
Key assumptions used in measuring the fair value of MSR as of December 31, 2025, 2024, and 2023 were as follows: | | | | | | | | | | | | | | | | | |
| | December 31, 2025 | | December 31, 2024 | | December 31, 2023 |
| Constant prepayment rate | 8.26 | % | | 6.92 | % | | 6.78 | % |
| Discount rate | 10.20 | % | | 10.23 | % | | 10.25 | % |
| Weighted average life (years) | 7.6 | | 8.2 | | 8.3 |
A sensitivity analysis of the current fair value to changes in discount and prepayment speed assumptions as of December 31, 2025, 2024, and 2023 is as follows: | | | | | | | | | | | | | | | | | |
| (in millions) | December 31, 2025 | | December 31, 2024 | | December 31, 2023 |
| Constant prepayment rate | | | | | |
| Effect on fair value of a 10% adverse change | $ | (3) | | | $ | (3) | | | $ | (3) | |
| Effect on fair value of a 20% adverse change | $ | (5) | | | $ | (5) | | | $ | (6) | |
| | | | | |
| Discount rate | | | | | |
| Effect on fair value of a 100 basis point adverse change | $ | (4) | | | $ | (5) | | | $ | (5) | |
| Effect on fair value of a 200 basis point adverse change | $ | (8) | | | $ | (9) | | | $ | (9) | |
The sensitivity analysis presents the hypothetical effect on fair value of the MSR, due to the change in assumptions. The effect of such hypothetical change in assumptions generally cannot be extrapolated because the relationship of the change in an assumption to the change in fair value is not linear. Additionally, in the analysis, the impact of an adverse change in one assumption is calculated independent of any impact on other assumptions. In reality, changes in one assumption may change another assumption. The Company has entered into a fair value hedge by purchasing interest rate futures and forward settling mortgage-backed securities to hedge the interest rate risk of MSRs. Refer to Note 17 – Derivatives for further information.
Note 11 – Deposits
The following table presents the major types of deposits as of December 31, 2025 and 2024: | | | | | | | | | | | |
| (in millions) | December 31, 2025 | | December 31, 2024 |
| Non-interest-bearing demand | $ | 17,419 | | | $ | 13,308 | |
| Interest-bearing deposits: | | | |
| Interest-bearing demand | 10,763 | | | 8,476 | |
| Money market | 17,013 | | | 11,475 | |
| Savings | 2,442 | | | 2,360 | |
| Time, $250,000 or less | 4,893 | | | 4,900 | |
| Time, greater than $250,000 | 1,681 | | | 1,202 | |
| Total deposits | $ | 54,211 | | | $ | 41,721 | |
Approximately $6.5 billion in time deposits are scheduled to mature in 2026, including $1.7 billion in brokered time deposits. As of December 31, 2025, brokered time deposits had a weighted average interest rate of 4.03% compared to the weighted average interest rate on all other time deposits that mature in 2026 and thereafter of 3.23%.
The following table presents the scheduled maturities of all time deposits as of December 31, 2025: | | | | | | | | | | | | |
| (in millions) | | | Weighted Average Interest Rate | |
| Year | Amount | | |
| 2026 | $ | 6,465 | | | 3.46 | % | |
| 2027 | 80 | | | 0.86 | % | |
| 2028 | 10 | | | 0.12 | % | |
| 2029 | 7 | | | 0.35 | % | |
| 2030 | 11 | | | 0.13 | % | |
| Thereafter | 1 | | | 0.46 | % | |
| Total time deposits | $ | 6,574 | | | 3.42 | % | |
Note 12 – Securities Sold Under Agreements to Repurchase
The following table presents information regarding securities sold under agreements to repurchase as of December 31, 2025 and 2024: | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | Repurchase Amount | | Weighted Average Interest Rate | | Carrying Value of Underlying Assets | | Market Value of Underlying Assets |
| December 31, 2025 | $ | 207 | | | 1.98 | % | | $ | 278 | | | $ | 278 | |
| December 31, 2024 | $ | 237 | | | 2.02 | % | | $ | 252 | | | $ | 252 | |
The securities underlying agreements to repurchase entered into by the Bank are for the same securities originally sold, which are U.S. agencies, obligations of states and political subdivisions, and mortgage-backed securities and collateralized mortgage obligations, with a one-day maturity. In all cases, the Bank maintains control over the securities. Investment securities are pledged as collateral in an amount equal to or greater than the repurchase agreements.
The following table presents the average and maximum balances for the years ended December 31, 2025 and 2024:
| | | | | | | | | | | | | | | | |
| (in millions) | | 2025 | | 2024 | | |
| Average balance during the period | | $ | 183 | | | $ | 204 | | | |
| Maximum month end balance during period | | $ | 229 | | | $ | 249 | | | |
Note 13 – Borrowings
The Company had secured advances from the FHLB as of December 31, 2025 and 2024 with carrying values of $3.2 billion and $3.1 billion, respectively.
The following table presents selected information for outstanding borrowings for the years ended December 31, 2025 and 2024:
| | | | | | | | | | | | | | |
(in millions) | | 2025 | | 2024 |
| FHLB Advances | | | | |
| Balance at end of period | | $ | 3,200 | | | $ | 3,100 | |
| Average balance during period | | $ | 2,830 | | | $ | 2,431 | |
| Maximum month end balance during period | | $ | 3,375 | | | $ | 3,100 | |
| Weighted average rate at December 31 | | 4.0 | % | | 5.0 | % |
| Weighted average rate during period | | 4.4 | % | | 5.2 | % |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
The FHLB advances have fixed rates ranging from 3.85% to 4.06% and are set to mature in 2026. The FHLB requires the Bank to maintain a required level of investment in FHLB and sufficient collateral to qualify for secured advances. The Bank has pledged as collateral for these secured advances all FHLB stock, all funds on deposit with the FHLB, investment and CRE portfolios, accounts, general intangibles, equipment and other property in which a security interest can be granted by the Bank to the FHLB. Total value of loans and securities pledged to the FHLB were $27.0 billion as of December 31, 2025.
Prior to March 2024, the Bank had access to borrowings under the FRB BTFP, which was subject to certain collateral requirements, namely the amount of pledged investment securities. For the year ended December 31, 2024, the maximum outstanding month end balance of borrowings under the FRB BTFP was $1.6 billion and the average outstanding was $1.3 billion. We fully repaid borrowings under the FRB BTFP during the fourth quarter of 2024. The weighted average interest rate on the borrowings was 4.8% in 2024. There were no securities pledged to the FRB as of December 31, 2025 and 2024.
At December 31, 2025 and 2024, the Company had no outstanding federal funds purchased balances. The Bank had available lines of credit with the FHLB totaling $13.8 billion as of December 31, 2025, subject to certain collateral requirements. The Bank had available Discount Window line of credit with the Federal Reserve totaling $6.5 billion subject to certain collateral requirements, namely the amount of certain pledged loans and securities as of December 31, 2025. The Bank had uncommitted federal funds line of credit agreements with additional financial institutions totaling $700 million as of December 31, 2025. Availability of the lines is subject to federal funds balances available for loan and continued borrower eligibility and are reviewed and renewed periodically throughout the year. These lines are intended to support short-term liquidity needs, and the agreements may restrict consecutive day usage.
Note 14 – Junior and Other Subordinated Debentures
Following is information about the Company's wholly-owned Trusts as of December 31, 2025:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (dollars in millions) | | | | | | | | | | | | |
| Trust Name | | Issue Date | | Issued Amount | | Carrying Value (1) | | Rate (2) | | Effective Rate (3) | | Maturity Date |
| AT FAIR VALUE: | | | | | | | | | | | | |
| Umpqua Statutory Trust II | | October 2002 | | $ | 21 | | | $ | 20 | | | Floating rate, SOFR + 0.26161% plus 3.35%, adjusted quarterly | | 7.59 | % | | October 2032 |
| Umpqua Statutory Trust III | | October 2002 | | 31 | | | 30 | | | Floating rate, SOFR + 0.26161% plus 3.45%, adjusted quarterly | | 7.67 | % | | November 2032 |
| Umpqua Statutory Trust IV | | December 2003 | | 10 | | | 10 | | | Floating rate, SOFR + 0.26161% plus 2.85%, adjusted quarterly | | 7.37 | % | | January 2034 |
| Umpqua Statutory Trust V | | December 2003 | | 10 | | | 10 | | | Floating rate, SOFR + 0.26161% plus 2.85%, adjusted quarterly | | 7.27 | % | | March 2034 |
| Umpqua Master Trust I | | August 2007 | | 41 | | | 33 | | | Floating rate, SOFR + 0.26161% plus 1.35%, adjusted quarterly | | 6.62 | % | | September 2037 |
| Umpqua Master Trust IB | | September 2007 | | 21 | | | 19 | | | Floating rate, SOFR + 0.26161% plus 2.75%, adjusted quarterly | | 7.38 | % | | December 2037 |
| Sterling Capital Trust III | | April 2003 | | 14 | | | 14 | | | Floating rate, SOFR + 0.26161% plus 3.25%, adjusted quarterly | | 7.51 | % | | April 2033 |
| Sterling Capital Trust IV | | May 2003 | | 10 | | | 10 | | | Floating rate, SOFR + 0.26161% plus 3.15%, adjusted quarterly | | 7.52 | % | | May 2033 |
| Sterling Capital Statutory Trust V | | May 2003 | | 21 | | | 20 | | | Floating rate, SOFR + 0.26161% plus 3.25%, adjusted quarterly | | 7.46 | % | | June 2033 |
| Sterling Capital Trust VI | | June 2003 | | 10 | | | 10 | | | Floating rate, SOFR + 0.26161% plus 3.20%, adjusted quarterly | | 7.50 | % | | September 2033 |
| Sterling Capital Trust VII | | June 2006 | | 57 | | | 47 | | | Floating rate, SOFR + 0.26161% plus 1.53%, adjusted quarterly | | 6.62 | % | | June 2036 |
| Sterling Capital Trust VIII | | September 2006 | | 52 | | | 43 | | | Floating rate, SOFR + 0.26161% plus 1.63%, adjusted quarterly | | 6.73 | % | | December 2036 |
| Sterling Capital Trust IX | | July 2007 | | 46 | | | 38 | | | Floating rate, SOFR + 0.26161% plus 1.40%, adjusted quarterly | | 6.88 | % | | October 2037 |
| Lynnwood Financial Statutory Trust I | | March 2003 | | 9 | | | 9 | | | Floating rate, SOFR + 0.26161% plus 3.15%, adjusted quarterly | | 7.41 | % | | March 2033 |
| Lynnwood Financial Statutory Trust II | | June 2005 | | 10 | | | 9 | | | Floating rate, SOFR + 0.26161% plus 1.80%, adjusted quarterly | | 6.72 | % | | June 2035 |
| Klamath First Capital Trust I | | July 2001 | | 16 | | | 16 | | | Floating rate, SOFR + 0.42826% plus 3.75%, adjusted semiannually | | 8.17 | % | | July 2031 |
| Total junior subordinated debentures, at fair value | | 379 | | | 338 | | | | | | | |
| AT AMORTIZED COST: | | | | | | | | | | | | |
| Humboldt Bancorp Statutory Trust II | | December 2001 | | 10 | | | 11 | | | Floating rate, SOFR + 0.26161% plus 3.60%, adjusted quarterly | | 6.83 | % | | December 2031 |
| Humboldt Bancorp Statutory Trust III | | September 2003 | | 28 | | | 29 | | | Floating rate, SOFR + 0.26161% plus 2.95%, adjusted quarterly | | 6.24 | % | | September 2033 |
| CIB Capital Trust | | November 2002 | | 10 | | | 11 | | | Floating rate, SOFR + 0.26161% plus 3.45%, adjusted quarterly | | 6.94 | % | | November 2032 |
| Western Sierra Statutory Trust I | | July 2001 | | 6 | | | 6 | | | Floating rate, SOFR + 0.26161% plus 3.58%, adjusted quarterly | | 7.68 | % | | July 2031 |
| Western Sierra Statutory Trust II | | December 2001 | | 10 | | | 10 | | | Floating rate, SOFR + 0.26161% plus 3.60%, adjusted quarterly | | 7.56 | % | | December 2031 |
| Western Sierra Statutory Trust III | | September 2003 | | 10 | | | 10 | | | Floating rate, SOFR + 0.26161% plus 2.90%, adjusted quarterly | | 7.07 | % | | September 2033 |
| Western Sierra Statutory Trust IV | | September 2003 | | 10 | | | 10 | | | Floating rate, SOFR + 0.26161% plus 2.90%, adjusted quarterly | | 7.07 | % | | September 2033 |
| Bank of Commerce Holdings Trust II | | July 2005 | | 10 | | | 10 | | | Floating rate, SOFR + 0.26161% plus 1.58%, adjusted quarterly | | 5.56 | % | | September 2035 |
| Total junior subordinated debentures, at amortized cost | | 94 | | | 97 | | | | | | | |
| Total junior subordinated debentures | | | | $ | 473 | | | $ | 435 | | | | | | | |
(1)Includes acquisition accounting adjustments, net of accumulated amortization, for junior subordinated debentures assumed in connection with previous mergers as well as fair value adjustments related to trusts recorded at fair value.
(2)Contractual interest rate of junior subordinated debentures.
(3)Effective interest rate based upon the carrying value as of December 31, 2025.
As of December 31, 2024, the Company had $10 million in aggregate principal amount of fixed-to-floating rate subordinated debentures, which matured on December 10, 2025.
The Company's wholly-owned trusts were formed to issue trust preferred securities and related common securities of the Trusts. The Company has not consolidated the accounts of the Trusts in its consolidated financial statements as they are considered to be variable interest entities for which the Company is not a primary beneficiary. As a result, the junior subordinated debentures issued by the Company to the Trusts are reflected on the Company's Consolidated Balance Sheet as junior subordinated debentures. The Trusts are reflected as junior subordinated debentures, either at fair value or at amortized cost. The common stock issued by the Trusts is recorded in other assets and totaled $14 million as of both December 31, 2025 and 2024. As of December 31, 2025, all of the junior subordinated debentures were redeemable at par, at their applicable quarterly or semiannual interest payment dates.
The Company selected the fair value measurement option for junior subordinated debentures originally issued by UHC prior to the Company's merger with UHC (the Umpqua Statutory Trusts) and for junior subordinated debentures acquired by UHC from Sterling Financial Corporation prior to the Company's merger with UHC. The fair value of the junior subordinated debentures increased during the year due to movements in the spot curve and forward rates. A loss of $7 million for the year ended December 31, 2025, as compared to a loss of $15 million for the year ended December 31, 2024, was recorded in other comprehensive income.
Note 15 – Employee Benefit Plans
Employee Savings Plan
Substantially all of the Company's employees are eligible to participate in the Columbia Bank 401(k) and Profit Sharing Plan, a defined contribution and profit sharing plan sponsored by the Company. Employees may elect to contribute a portion of their salary to the plan in accordance with Section 401(k) of the Internal Revenue Code. At the discretion of the Board of Directors, the Company may make matching and/or profit sharing contributions based on profits of the Bank. In 2025, in connection with the Company's acquisition of Pacific Premier, the Company assumed a 401(k) plan covering former employees of Pacific Premier. At December 31, 2025, the 401(k) plan was active but closed to new participants and will be merged with the Columbia Bank 401(k) and Profit Sharing Plan in 2026. The Company's contributions to the Columbia Bank 401(k) and Profit Sharing Plan and the 401(k) plan acquired in connection with the acquisition of Pacific Premier charged to expense amounted to $14 million, $14 million, and $21 million for the years ended December 31, 2025, 2024, and 2023, respectively.
Employee Stock Purchase Plan
The Company maintains an ESPP in which substantially all employees are eligible to participate in 2025, except for employees who joined through the Pacific Premier acquisition. Employees who joined through the Pacific Premier acquisition will become eligible to enroll in the ESPP beginning with the 2026 plan year. The ESPP provides participants the opportunity to purchase the Company's common stock at a discounted price. Under the ESPP, participants may purchase shares at 90% of the lesser of the fair market value of the stock on the first or last day of each six month offering period, which runs from January 1st through June 30th and July 1st through December 31st of each calendar year. The 10% discount is recognized by the Company as compensation expense and does not have a material impact on net income or earnings per common share. Participants in the ESPP purchased 158,000 shares for $3 million in 2025, completed no purchases during 2024, and purchased 59,000 shares for $1 million in 2023. At December 31, 2025, there were 720,000 shares available for purchase under the ESPP.
Supplemental Retirement/Deferred Compensation Plans
The Company has established a Supplemental Retirement & Deferred Compensation Plan (SRP/DCP), a nonqualified deferred compensation plan designed to supplement the retirement income of certain highly compensated executives selected by resolution of the Board. Eligible officers may elect to defer up to 50% of their salary into a plan account. The balance of the SRP/DCP was $17 million and $15 million as of December 31, 2025 and 2024, respectively.
Additionally, the Company has established an SRP for a former CEO. The balance for this plan was $7 million and $8 million as of December 31, 2025 and 2024, respectively. In connection with the closing of the Company's merger with UHC, which was completed in 2023, the Company established a DCP for certain executives. The balances for this plan were $10 million and $12 million as of December 31, 2025 and 2024, respectively. For the years ended December 31, 2025, 2024, and 2023, expense recorded for these benefits totaled $1 million for each year.
Supplemental Executive Retirement Plan
In connection with the closing of the Company's merger with UHC, which was completed in 2023, the Company assumed a SERP, which is unsecured and unfunded with no program assets. The SERP's projected benefit obligation, representing the vested net present value of future payments to individuals under the plan, is accrued over the estimated remaining term of employment of the participants and was determined by actuarial valuation using a discount rate of 5.45% for 2025, 5.60% for 2024, and 5.02% for 2023. Additional assumptions and features of the plan include a normal retirement age of 65 and a 2% annual cost of living benefit adjustment. The projected benefit obligation of $19 million for 2025 and $18 million for 2024 is included in other liabilities on the Consolidated Balance Sheets.
Acquired Plans
In connection with prior acquisitions, the Bank assumed liability for certain salary continuation, supplemental retirement, and deferred compensation plans for key employees, retired employees, and directors of acquired institutions. No additional contributions have been made to these plans since the effective date of the acquisitions. These unfunded plans provide for the payment of a specified amount on a monthly basis for a specified period (generally 10 to 20 years) after retirement. In the event of a participant employee's death prior to or during retirement, the Bank may be obligated to pay the designated beneficiary the benefits outlined in the plans. As of December 31, 2025 and 2024, liabilities recorded for the estimated present value of future plan benefits totaled $52 million and $47 million, respectively, and are recorded in other liabilities on the Consolidated Balance Sheets. For the years ended December 31, 2025, 2024, and 2023, expense recorded for these benefits totaled $5 million, $4 million, and $5 million, respectively.
Rabbi Trusts
The Bank has established irrevocable rabbi trusts for the SRP/DCP plan and sponsors similar trusts for certain deferred compensation plans assumed from prior acquisitions. The trust assets, generally trading assets, are consolidated in the Company's balance sheets with the associated liabilities, equal to the asset balances, included in other liabilities on the Consolidated Balance Sheets. As of December 31, 2025 and 2024 the asset and liability balances related to these trusts were $19 million and $16 million, respectively.
Bank-Owned Life Insurance
The Bank has purchased, or acquired through mergers, life insurance policies in connection with certain executive supplemental income, salary continuation and deferred compensation retirement plans. These policies, for which the Bank is the owner and sole or partial beneficiary, provide protection against the adverse financial effects of a key employee's death and offer tax-exempt income to offset plan expenses. As of December 31, 2025, and 2024, the cash surrender value of these policies was $1.2 billion and $694 million, respectively. Additionally, the Bank had liabilities of $6 million as of both December 31, 2025, and 2024, for post-retirement benefits payable to other partial beneficiaries under some of these life insurance policies. The Bank is exposed to credit risk if an insurance company cannot fulfill its financial obligations under a policy. To mitigate this risk, the Bank uses a variety of insurance companies and regularly monitors their financial condition.
Note 16 – Commitments and Contingencies and Related-Party Transactions
Financial Instruments with Off-Balance-Sheet Risk — The Company's financial statements do not reflect various commitments and contingent liabilities that arise in the normal course of the Bank's business and involve elements of credit, liquidity, and interest rate risk.
The following table presents a summary of the Bank's commitments and contingent liabilities:
| | | | | | | | | | | |
(in millions) | December 31, 2025 | | December 31, 2024 |
| Commitments to extend credit | $ | 11,927 | | | $ | 10,078 | |
| Forward sales commitments | $ | 74 | | | $ | 77 | |
| Commitments to originate residential mortgage loans held for sale | $ | 39 | | | $ | 46 | |
| Standby letters of credit | $ | 427 | | | $ | 216 | |
The Bank is a party to financial instruments with off-balance sheet credit risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve elements of credit and interest-rate risk similar to the risk involved in on-balance sheet items. The contract or notional amounts of these instruments reflect the extent of the Bank's exposure in particular classes of financial instruments.
The Bank's exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit and standby letters of credit, and financial guarantees written, is represented by the contractual notional amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any covenant or condition established in the applicable contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. While most standby letters of credit are not utilized, a significant portion of such utilization is on an immediate payment basis. The Bank evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if it is deemed necessary by the Bank upon extension of credit, is based on management's credit evaluation of the counterparty. Collateral varies but may include cash, accounts receivable, inventory, premises and equipment and income-producing commercial properties.
Standby letters of credit and written financial guarantees are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support public and private borrowing arrangements, including international trade finance, commercial paper, bond financing, insured premium financing, and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank holds cash, marketable securities, or real estate as collateral supporting those commitments for which collateral is deemed necessary. There were no financial guarantees in connection with standby letters of credit that the Bank was required to perform on during the years ended December 31, 2025 and 2024. As of December 31, 2025, approximately $400 million of standby letters of credit expire within one year, and $27 million expire thereafter. During the years ended December 31, 2025 and 2024, the Bank recorded approximately $5 million and $3 million, respectively, in fees associated with standby letters of credit.
Residential mortgage loans sold into the secondary market are sold with limited recourse against the Company, meaning that the Company may be obligated to repurchase or otherwise reimburse the investor for incurred losses on any loans that suffer an early payment default, are not underwritten in accordance with investor guidelines or are determined to have pre-closing borrower misrepresentations.
Legal Proceedings and Regulatory Matters—The Company is subject to litigation in court and arbitral proceedings, as well as proceedings, investigations, examinations, and other actions brought or considered by governmental and self-regulatory agencies. The Company is party to various pending and threatened claims and legal proceedings arising in the normal course of business activities, some of which involve claims for substantial or uncertain amounts.
In September 2023, 34 related real estate investment entities (the "iCap Entities") that maintained their primary deposit accounts with the Bank filed jointly-administered Chapter 11 bankruptcies in the United States Bankruptcy Court for the Eastern District of Washington. In pleadings filed in the Bankruptcy Court for the Eastern District of Washington on behalf of investors who claimed losses of approximately $290 million, the Bank was identified as a party against which claims may be brought in connection with the iCap Entities' alleged operation of a Ponzi scheme prior to the bankruptcy proceedings described above. On September 26, 2025, the co-trustees of the iCap Trust, a liquidating trust created by the Second Modified Second Amended Joint Chapter 11 Plan of Liquidation of the iCap Entities, filed suit in the United States District Court for the Western District of Washington alleging aiding and abetting claims against the Bank associated with the provision of banking services to the bankrupt iCap Entities. The suit was filed on behalf of 488 investors with claims totaling approximately $90 million. Remaining investors may pursue their claims separately. The Bank intends to vigorously defend against any and all claims.
As previously disclosed, in 2023 the Bank was informed by one of its technology service providers (the "Vendor") that a widely reported security incident involving MOVEit, a filesharing software used globally by government agencies, enterprise corporations, and financial institutions, resulted in the unauthorized acquisition by a third party of the names and social security numbers or tax identification numbers of certain of the Bank's consumer and small business customers (the "Vendor Incident"). On behalf of the Bank, the Vendor notified affected customers (approximately 429,000), and the Bank and Vendor notified applicable federal and state regulators regarding the Vendor Incident. Subsequently, the Bank was named in a number of putative class action lawsuits related to the Vendor Incident. The lawsuits collectively allege claims for negligence, negligence per se, breach of contract, breach of implied contract, breach of third-party beneficiary contract, breach of fiduciary duty, invasion of privacy, breach of the covenant of good faith and fair dealing, unjust enrichment, and violation of certain state statutes. Given the large number of federal cases throughout the United States (including those involving the Bank), on October 4, 2023 the United States Judicial Panel on Multidistrict Litigation initiated a multidistrict litigation ("MDL") to consolidate such cases – In Re: MOVEit Customer Data Security Breach Litigation, MDL No. 3083 – in the United States District Court for the District of Massachusetts (MDL No. 1:23-md-03083-ADB-PGL). The Bank has engaged defense counsel and intends to vigorously defend against these lawsuits and any similar or related lawsuits or claims. The Bank has notified relevant insurance carriers and business counterparties and continues to reserve all of its relevant rights to indemnity, defense, contribution, and other relief in connection with these matters.
At least quarterly, liabilities and contingencies are assessed in connection with all outstanding or new legal matters, utilizing the most recent information available. If it is determined that a loss from a matter is probable and that the amount of the loss can be reasonably estimated, an accrual for the loss is established. Once established, each accrual is adjusted as appropriate to reflect any subsequent developments in the specific legal matter. It is inherently difficult to determine whether any loss is probable or even possible. It is also inherently difficult to estimate the amount of any loss and there may be matters for which a loss is probable or reasonably possible but not currently estimable. Actual losses may be in excess of any established accrual or the range of reasonably possible loss. Management's estimate will change from time to time. For matters where a loss is not probable, or the amount of the loss cannot be estimated, no accrual is established. The Company has $1 million accrued related to legal matters as of December 31, 2025, which is recorded as a component of other liabilities on the Consolidated Balance Sheets.
The resolution and the outcome of legal claims are unpredictable, exacerbated by factors including the following: damages sought are unsubstantiated or indeterminate; it is unclear whether a case brought as a class action will be allowed to proceed on that basis; discovery or motion practice is not complete; the proceeding is not yet in its final stages; the matters present legal uncertainties; there are significant facts in dispute; there are a large number of parties, including multiple defendants; or there is a wide range of potential results. Any estimate or determination relating to the future resolution of legal and regulatory matters is uncertain and involves significant judgment. The Company is usually unable to determine whether a favorable or unfavorable outcome is remote, reasonably likely or probable, or to estimate the amount or range of a probable or reasonably likely loss until relatively late in the process.
Although there can be no assurance as to the ultimate outcome of a specific legal matter, the Company believes it has meritorious defenses to the claims asserted against us in our currently outstanding legal matters, and the Company intends to continue to vigorously defend ourselves. The Company will consider settlement of legal matters when, in management's judgment, it is in the best interests of the Company and its shareholders.
Based on information currently available, advice of counsel, available insurance coverage, and established reserves, the Company believes that the eventual outcome of the actions against us will not have a material adverse effect on the Company's consolidated financial statements. However, it is possible that the ultimate resolution of a matter, if unfavorable, may be material to the Company's results of operations for any particular reporting period.
Concentrations of Credit Risk—The Bank grants real estate mortgage, real estate construction, commercial, agricultural and installment loans and leases to customers in Arizona, California, Colorado, Idaho, Nevada, Oregon, Utah, and Washington. In management's judgment, a concentration exists in real estate-related loans, which represented approximately 76% and 75% of the Bank's loan and lease portfolio as of December 31, 2025 and December 31, 2024, respectively. CRE concentrations are managed to ensure geographic and business diversity, primarily in our footprint. The multifamily portfolio, including construction, represented approximately 24% and 19% of the total loan portfolio as of December 31, 2025 and December 31, 2024, respectively. The office portfolio represented approximately 8% of the total loan portfolio as of both December 31, 2025 and December 31, 2024. Although management believes such concentrations have no more than the normal risk of collectability, a substantial decline in the economy in general, material increases in interest rates, changes in tax policies, tightening credit or refinancing markets, or a decline in real estate values in the Bank's primary market areas in particular, could have an adverse impact on the repayment of these loans. Personal and business incomes, proceeds from the sale of real property, or proceeds from refinancing represent the primary sources of repayment for a majority of these loans.
The Bank recognizes the credit risks inherent in dealing with other depository institutions. Accordingly, to prevent excessive exposure to any single correspondent, the Bank has established general standards for selecting correspondent banks as well as internal limits for allowable exposure to any single correspondent. In addition, the Bank has an investment policy that sets forth limitations that apply to all investments with respect to credit rating and concentrations with an issuer.
Related-Party Transactions— In the ordinary course of business, the Bank has made loans to related parties, including its directors and executive officers (and their associated and affiliated companies). All such loans have been made in accordance with regulatory requirements, are on substantially the same terms and underwriting as those prevailing at the time for comparable transactions with unrelated persons, and do not involve higher than normal risk of collectability. As of December 31, 2025, the Bank had $1 million in related-party loans outstanding. As of December 31, 2024, the Bank had no material related-party transactions requiring disclosure.
Note 17 – Derivatives
The Company is exposed to certain risks arising from both its business and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of its assets and liabilities as well as the use of derivative financial instruments. Specifically, the Company enters into interest rate-based derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s loan portfolio. These derivative financial instruments are not designated as accounting hedges and are recorded at fair value, with changes recognized in earnings.
Interest Rate Swaps
The Company’s primary derivative activity consists of interest rate swaps executed with commercial borrowers to facilitate their risk management strategies. These swaps are economically hedged through offsetting swaps with third parties, minimizing net exposure. As of December 31, 2025, the Company had interest rate swap assets and liabilities with notional amounts of $4.5 billion each related to this program, compared to notional amounts of $4.3 billion and $4.4 billion, respectively, as of December 31, 2024. Collateral posted under these arrangements for initial margins with its clearing houses and is required to post collateral against its obligations under these interest rate swaps totaled $93 million and $87 million at December 31, 2025 and 2024, respectively. Centrally cleared swaps are cleared through the Chicago Mercantile Exchange and London Clearing House, with variation margin treated as settlement of mark-to-market exposure. Variation margin netting adjustments were $98 million and $174 million at December 31, 2025 and 2024, respectively. The Company also enters into bilateral Term SOFR swaps that are not clearable; these require daily cash collateral exchanges but no initial margin.
Forward Delivery Contracts
To hedge interest rate risk on mortgage loans held for sale and interest rate lock commitments, the Company enters into forward delivery contracts to sell residential mortgage loans or mortgage-backed securities at specified prices and dates. Credit risk is limited to the replacement cost of contracts in a gain position, and no counterparty defaults occurred in the years ended December 31, 2025 and 2024. Market risk is managed by monitoring positions and offsetting differences between customer commitments and broker-dealer contracts. If commitments exceed available loans, the Company settles by paying or receiving a fee equal to the change in market value. As of December 31, 2025 and December 31, 2024, mortgage loan origination commitments totaled $39 million and $46 million, and forward sales commitments totaled $74 million and $77 million, respectively.
Other Derivative Contracts
The Company uses interest rate futures and forward-settling mortgage-backed securities to hedge interest rate risk on mortgage servicing rights. As of December 31, 2025, the Bank had $211 million notional of interest rate futures contracts and $34 million of mortgage-backed securities, compared to $187 million and $12 million, respectively, as of December 31, 2024. The Company also provides foreign currency hedging services to customers, offsetting these positions with third-party banks to limit risk exposure.
The Company's derivatives are included in other assets or other liabilities on the Consolidated Balance Sheets and measured at fair value. The following table summarizes the types of derivatives, separately by assets and liabilities, and the fair values of such derivatives as of the dates presented:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
(in millions) | | Asset Derivatives | | Liability Derivatives |
| Derivatives not designated as hedging instrument | | December 31, 2025 | | December 31, 2024 | | December 31, 2025 | | December 31, 2024 |
| | | | | | | | |
| Interest rate futures | | $ | — | | | $ | — | | | $ | — | | | $ | 3 | |
| Interest rate forward sales commitments | | — | | | 1 | | | — | | | — | |
| Interest rate swaps | | 84 | | | 107 | | | 179 | | | 277 | |
| Foreign currency derivatives | | — | | | 1 | | | — | | | 1 | |
| Total derivative assets and liabilities | | $ | 84 | | | $ | 109 | | | $ | 179 | | | $ | 281 | |
The gains and losses on the Company's interest rate futures and forward sales commitment derivatives are included in residential mortgage banking revenue. The gains and losses on the Company's interest rate swaps and foreign currency derivatives are included in other income. The following table summarizes the types of derivatives and the gains (losses) recorded for the years ended December 31, 2025, 2024, and 2023:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
| | | | | | | | | | |
| | | | | | | | | | |
(in millions) | | | | | | | | | | |
| Derivatives not designated as hedging instrument | | | | | | 2025 | | 2024 | | 2023 |
| | | | | | | | | | |
| Interest rate futures | | | | | | $ | 4 | | | $ | (9) | | | $ | (5) | |
| Interest rate forward sales commitments | | | | | | (2) | | | 1 | | | — | |
| Interest rate swaps | | | | | | (2) | | | 2 | | | (4) | |
| Foreign currency derivatives | | | | | | 1 | | | — | | | — | |
| Total derivative gains (losses) | | | | | | $ | 1 | | | $ | (6) | | | $ | (9) | |
The Company is party to interest rate swap contracts that are subject to enforceable master netting arrangements or similar agreements. Under these agreements, the Company may have the right to net settle multiple contracts with the same counterparty.
The following table shows the gross interest rate swaps in the Consolidated Balance Sheets and the respective collateral received or pledged in the form of cash or other financial instruments. The collateral amounts are limited to the outstanding balances of the related asset or liability. Therefore, instances of over collateralization are not shown.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Gross Amounts Not Offset in the Consolidated Balance Sheets |
| (in millions) | Gross Amounts of Recognized Assets/Liabilities | | Gross Amounts Offset in the Consolidated Balance Sheets | | Net Amounts of Assets/Liabilities Presented in the Consolidated Balance Sheets | | Financial Instruments | | Collateral Received/Posted | | Net Amount |
December 31, 2025 | | | | | | | | | | | |
| Derivative Assets | | | | | | | | | | | |
| Interest rate swaps | $ | 84 | | | $ | — | | | $ | 84 | | | $ | 26 | | | $ | 35 | | | $ | 23 | |
| Derivative Liabilities | | | | | | | | | | | |
| Interest rate swaps | $ | 179 | | | $ | — | | | $ | 179 | | | $ | 26 | | | $ | — | | | $ | 153 | |
| | | | | | | | | | | |
December 31, 2024 | | | | | | | | | | | |
| Derivative Assets | | | | | | | | | | | |
| Interest rate swaps | $ | 107 | | | $ | — | | | $ | 107 | | | $ | 6 | | | $ | 97 | | | $ | 4 | |
| Derivative Liabilities | | | | | | | | | | | |
| Interest rate swaps | $ | 277 | | | $ | — | | | $ | 277 | | | $ | 6 | | | $ | — | | | $ | 271 | |
Note 18 – Stock Compensation
Stock-based awards are eligible for issuance under the Company’s Incentive Compensation Plan to executives, directors, and key employees. The 2024 Equity Incentive Plan was approved by shareholders and authorized the issuance of up to 7.5 million shares as equity compensation. The 2024 plan replaced the 2018 Equity Incentive Plan, which ceased to grant awards as of that date. The plan authorizes the issuance of RSAs, RSUs, and performance unit awards. As of December 31, 2025, there were 5.9 million shares available for future issuance.
Total compensation cost related to restricted shares of Company stock granted to employees is included in salaries and employee benefits on the Consolidated Statements of Income and the income tax benefit or deficiency related to the vesting of RSUs and RSAs is recorded as income tax expense or benefit in the period the shares are vested. The following table presents such share-based compensation expense and tax benefit for the years ended December 31, 2025, 2024, and 2023:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
| (in millions) | | | | | | 2025 | | 2024 | | 2023 |
| Share-based compensation expense | | | | | | $ | 32 | | | $ | 18 | | | $ | 14 | |
| Tax benefit | | | | | | $ | 7 | | | $ | 4 | | | $ | 4 | |
The Company's restricted stock plans provide for the payment of withholding taxes by tendering previously owned or recently vested shares. Restricted shares cancelled to pay withholding taxes totaled 378,000, 285,000, and 261,000 shares during the years ended December 31, 2025, 2024, and 2023, respectively.
In connection with the Pacific Premier acquisition, all outstanding equity awards under Pacific Premier’s equity plans were converted into corresponding Columbia equity awards, adjusted based on the exchange ratio in the acquisition of 0.9150 and generally subject to the same terms and conditions as the applicable equity awards before the acquisition. Performance-based restricted stock units were converted at target (100%) performance into service-based units, retaining the original vesting schedule. The fair value of these awards is recognized as compensation expense over the applicable service or performance period.
Restricted Stock Units
The Company grants RSUs periodically to employees and directors and assumed restricted stock units in connection with the Pacific Premier acquisition. RSUs provide for an interest in Company common stock to the recipient, with such units held in escrow until certain conditions are met. RSUs provide for vesting requirements that include time-based, performance-based, or market-based conditions. RSUs generally vest over three years, subject to time or time plus performance vesting conditions. Recipients of RSUs do not pay any cash consideration to the Company for the units and the holders of the restricted units do not have voting rights; however, the holder accrues dividends, which are paid out when the shares vest. In connection with the Pacific Premier acquisition, former holders of performance-based restricted stock units of Pacific Premier that were converted into restricted stock units of Columbia pursuant to the terms of the merger agreement are credited with dividend equivalents during the vesting period commensurate with dividends declared and paid on the Company’s common stock and are paid at the time of vesting. The fair value of time-based and performance-based units is equal to the fair market value of the Company’s common stock on the grant date. The fair value of market-based units is estimated on the grant date using the Monte Carlo simulation model, which incorporates assumptions as to stock price volatility, the expected life of awards, a risk-free interest rate and dividend yield.
The following table summarizes information about nonvested RSU activity for the year ended December 31, 2025:
| | | | | | | | | | | | | | | | | | | |
| | | | | |
| (shares in thousands) | RSUs Outstanding | | Weighted Average Grant Date Fair Value | | | | | | | | |
| Balance, beginning of period | 1,301 | | | $ | 23.92 | | | | | | | | | |
| Assumed | 45 | | | $ | 26.77 | | | | | | | | | |
| Granted | 552 | | | $ | 27.27 | | | | | | | | | |
| Vested/released | (479) | | | $ | 27.54 | | | | | | | | | |
| Forfeited/expired | (18) | | | $ | 30.75 | | | | | | | | | |
| Balance, end of period | 1,401 | | | $ | 24.00 | | | | | | | | | |
The compensation cost related to RSUs in Company stock granted to employees and included in salaries and employee benefits on the Consolidated Statements of Income was $12 million, $14 million, and $14 million for the years ended December 31, 2025, 2024, and 2023, respectively. In addition, for the year ended December 31, 2025, $6 million of RSU-related compensation cost was included in merger and restructuring expense.
The total fair value of RSUs vested and released was $13 million, $16 million, and $14 million, for the years ended December 31, 2025, 2024, and 2023, respectively.
As of December 31, 2025, there was $14 million of total unrecognized compensation cost related to nonvested RSUs which is expected to be recognized over a weighted-average period of 1.02 years, assuming expected performance conditions are met for certain units.
Restricted Stock Awards
Restricted stock awards provide for the immediate issuance of shares of Company common stock to the recipient, with such shares held in escrow until certain conditions are met. RSAs provide for vesting requirements that are time-based, generally vesting over three years. Recipients of RSAs do not pay any cash consideration to the Company for the shares and the holders of the restricted shares have voting rights and the holder accrues dividends, which are paid out when the shares vest. The fair value of time-based share awards is equal to the fair market value of the Company’s common stock on the grant date.
In connection with the Pacific Premier acquisition, former holders of performance-based restricted stock units of Pacific Premier that were converted into restricted stock units of Columbia pursuant to the terms of the merger agreement are entitled to receive cash dividends. As these converted restricted stock awards contain rights to receive non-forfeitable dividends prior to the awards being vested, such awards are considered participating securities.
The following table summarizes information about unvested RSA activity for the year ended December 31, 2025:
| | | | | | | | | | | | | | |
| | |
| (shares in thousands) | RSAs Outstanding | | Weighted Average Grant Date Fair Value | | | |
| Balance, beginning of period | 985 | | | $ | 21.16 | | | | |
| Assumed | 1,236 | | | $ | 26.77 | | | | |
| Granted | 559 | | | $ | 26.24 | | | | |
| Vested/released | (572) | | | $ | 23.53 | | | | |
| Forfeited/expired | (119) | | | $ | 22.65 | | | | |
| Balance, end of period | 2,089 | | | $ | 25.10 | | | | |
The compensation cost related to RSAs in Company stock granted to employees and included in salaries and employee benefits on the Consolidated Statements of Income was $11 million and $4 million for the years ended December 31, 2025 and 2024, respectively. In addition, for the year ended December 31, 2025, $3 million of RSA-related compensation cost was included in merger and restructuring expense. As of December 31, 2023, there was no compensation cost related to RSAs.
The total fair value of RSAs vested and released was $13 million, $7 million, and $3 million for the years ended December 31, 2025, 2024, and 2023, respectively.
As of December 31, 2025 there was $33 million of total unrecognized compensation cost related to nonvested RSAs which is expected to be recognized over a weighted-average period of 1.14 years, assuming expected performance conditions are met.
Note 19 – Regulatory Capital
The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a material effect on the Company and the Bank's operations and financial statements. Under capital adequacy guidelines, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classifications are also subject to qualitative judgments by the regulators about risk components, asset risk weighting, and other factors.
As permitted by the regulatory capital rules, the Company and the Bank elected the CECL transition option that delayed the estimated impact on regulatory capital resulting from the adoption of CECL over a five-year transition period ending December 31, 2024. The full effect of CECL is reflected in regulatory capital as of January 1, 2025.
Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total capital, Tier 1 capital, and Tier 1 common to risk-weighted assets (as defined in the applicable regulations), and of Tier 1 capital to average assets (as defined in the applicable regulations). Basel III also requires banking organizations to maintain a capital conservation buffer above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, stock repurchases, and discretionary bonus payments to executive officers. The capital conservation buffer is exclusively comprised of CET1 capital, and it applies to each of the three risk-based capital ratios but not to the leverage ratio. The capital conservation buffer is fully phased-in at 2.5%, such that the CET1, Tier 1, and total capital ratio minimums inclusive of the capital conservation buffers were 7%, 8.5%, and 10.5%. Management believes, as of December 31, 2025, that the Company meets all capital adequacy requirements to which it is subject.
The following table shows the Company's consolidated and the Bank's capital adequacy ratios compared to the regulatory minimum capital ratio and the regulatory minimum capital ratio needed to qualify as a "well-capitalized" institution, as calculated under regulatory guidelines of Basel III as of December 31, 2025 and 2024:
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Actual | | | | For Capital Adequacy Purposes | | | | To be Well Capitalized |
| (in millions) | Amount | | Ratio | | | | Ratio | | | | Ratio |
| December 31, 2025 | | | | | | | | | | | |
| Total Capital (to Risk Weighted Assets) | | | | | | | | | | | |
| Consolidated | $ | 7,012 | | | 13.63 | % | | | | 8.00 | % | | | | 10.00 | % |
| Bank | $ | 6,819 | | | 13.26 | % | | | | 8.00 | % | | | | 10.00 | % |
| Tier 1 Capital (to Risk Weighted Assets) | | | | | | | | | | | |
| Consolidated | $ | 6,070 | | | 11.80 | % | | | | 6.00 | % | | | | 8.00 | % |
| Bank | $ | 6,339 | | | 12.32 | % | | | | 6.00 | % | | | | 8.00 | % |
| Tier 1 Common (to Risk Weighted Assets) | | | | | | | | | | | |
| Consolidated | $ | 6,070 | | | 11.80 | % | | | | 4.50 | % | | | | 6.50 | % |
| Bank | $ | 6,339 | | | 12.32 | % | | | | 4.50 | % | | | | 6.50 | % |
| Tier 1 Capital (to Average Assets) | | | | | | | | | | | |
| Consolidated | $ | 6,070 | | | 9.29 | % | | | | 4.00 | % | | | | 5.00 | % |
| Bank | $ | 6,339 | | | 9.70 | % | | | | 4.00 | % | | | | 5.00 | % |
| December 31, 2024 | | | | | | | | | | | |
| Total Capital (to Risk Weighted Assets) | | | | | | | | | | | |
| Consolidated | $ | 5,082 | | | 12.75 | % | | | | 8.00 | % | | | | 10.00 | % |
| Bank | $ | 4,951 | | | 12.42 | % | | | | 8.00 | % | | | | 10.00 | % |
| Tier 1 Capital (to Risk Weighted Assets) | | | | | | | | | | | |
| Consolidated | $ | 4,201 | | | 10.54 | % | | | | 6.00 | % | | | | 8.00 | % |
| Bank | $ | 4,531 | | | 11.37 | % | | | | 6.00 | % | | | | 8.00 | % |
| Tier 1 Common (to Risk Weighted Assets) | | | | | | | | | | | |
Consolidated | $ | 4,201 | | | 10.54 | % | | | | 4.50 | % | | | | 6.50 | % |
Bank | $ | 4,531 | | | 11.37 | % | | | | 4.50 | % | | | | 6.50 | % |
| Tier 1 Capital (to Average Assets) | | | | | | | | | | | |
| Consolidated | $ | 4,201 | | | 8.31 | % | | | | 4.00 | % | | | | 5.00 | % |
| Bank | $ | 4,531 | | | 8.97 | % | | | | 4.00 | % | | | | 5.00 | % |
Note 20 – Shareholders' Equity
Dividends
The following summarizes the dividend activity for the year ended December 31, 2025:
| | | | | | | | | | | | | | | | | | | | |
| Declared | | Regular Cash Dividends Per Common Share | | Record Date | | Paid Date |
| February 14, 2025 | | $ | 0.36 | | | February 28, 2025 | | March 17, 2025 |
| May 16, 2025 | | $ | 0.36 | | | May 30, 2025 | | June 16, 2025 |
| August 15, 2025 | | $ | 0.36 | | | August 29, 2025 | | September 15, 2025 |
| November 14, 2025 | | $ | 0.37 | | | November 28, 2025 | | December 15, 2025 |
Subsequent to year-end, on February 13, 2026, the Company declared a regular quarterly cash dividend of $0.37 per common share payable on March 16, 2026 to shareholders of record at the close of business on February 27, 2026.
The payment of cash dividends is subject to federal regulatory requirements for capital levels and other restrictions. In addition, the cash dividends paid by the Bank to the Company are subject to both federal and state regulatory requirements.
Note 21 – Earnings Per Common Share
The Company applies the two-class method of computing basic and diluted EPS. Under the two-class method, net income is allocated between common stock and participating securities based on dividend rights and participation in undistributed earnings. In connection with the Pacific Premier acquisition, the Company issued certain RSAs under share-based compensation plans that qualify as participating securities.
Basic EPS is calculated by dividing net income allocable to common shareholders by the weighted‑average common shares outstanding, excluding participating securities. Diluted EPS reflects the weighted‑average common shares adjusted for potential dilutive shares, excluding participating securities and any anti‑dilutive instruments.
The following is a computation of basic and diluted earnings per common share for the years ended December 31, 2025, 2024, and 2023:
| | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended |
| | | | | | | | | |
| (in millions, except per share amounts, shares in thousands) | | | | | 2025 | | 2024 | | 2023 |
| Net income | | | | | $ | 550 | | | $ | 534 | | | $ | 349 | |
| Less: dividends and undistributed earnings allocated to participating securities | | | | | 1 | | | — | | | — | |
| Net income allocated to common shares | | | | | $ | 549 | | | $ | 534 | | | $ | 349 | |
| | | | | | | | | |
Weighted average number of common shares outstanding - basic | | | | | 238,022 | | | 208,463 | | | 195,304 | |
Dilutive effect of share-based compensation | | | | | 1,099 | | | 874 | | | 567 | |
Weighted average number of common shares outstanding - diluted | | | | | 239,121 | | | 209,337 | | | 195,871 | |
| Earnings per common share: | | | | | | | | | |
Basic | | | | | $ | 2.31 | | | $ | 2.56 | | | $ | 1.79 | |
Diluted | | | | | $ | 2.30 | | | $ | 2.55 | | | $ | 1.78 | |
The following table represents the weighted average outstanding restricted stock awards and restricted stock units that were not included in the computation of diluted earnings per share because their effect would be anti-dilutive for the years ended December 31, 2025, 2024, and 2023:
| | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended |
| | | | | | | | | |
| (shares in thousands) | | | | | 2025 | | 2024 | | 2023 |
| Restricted stock awards and units | | | | | 129 | | 227 | | 727 |
Note 22 – Fair Value Measurement
The following table presents estimated fair values of the Company's financial instruments as of the dates presented, whether or not recognized or recorded at fair value on a recurring basis in the Consolidated Balance Sheets:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 31, 2025 | | December 31, 2024 |
(in millions) | Level | | Carrying Value | | Fair Value | | Carrying Value | | Fair Value |
| Financial assets: | | | | | | | | | |
| Cash and cash equivalents | 1 | | $ | 2,380 | | | $ | 2,380 | | | $ | 1,878 | | | $ | 1,878 | |
Equity and other investment securities (1) | 1,2 | | 82 | | | 82 | | | 78 | | | 78 | |
| Investment securities available for sale | 1,2 | | 11,112 | | | 11,112 | | | 8,275 | | | 8,275 | |
| Investment securities held to maturity | 3 | | 18 | | | 19 | | | 2 | | | 3 | |
| Loans held for sale | 2 | | 262 | | | 262 | | | 72 | | | 72 | |
Loans and leases, net (2) | 2,3 | | 47,310 | | | 47,126 | | | 37,256 | | | 35,690 | |
| | | | | | | | | |
| Residential mortgage servicing rights | 3 | | 99 | | | 99 | | | 108 | | | 108 | |
| | | | | | | | | |
| Derivatives | 2 | | 84 | | | 84 | | | 109 | | | 109 | |
| Financial liabilities: | | | | | | | | | |
| | | | | | | | | |
| Deposits | 2 | | 54,211 | | | 54,197 | | | 41,721 | | | 41,707 | |
| Securities sold under agreements to repurchase | 2 | | 207 | | | 207 | | | 237 | | | 237 | |
| Borrowings | 2 | | 3,200 | | | 3,201 | | | 3,100 | | | 3,102 | |
| Junior subordinated debentures, at fair value | 3 | | 338 | | | 338 | | | 331 | | | 331 | |
| Junior and other subordinated debentures, at amortized cost | 3 | | 97 | | | 100 | | | 108 | | | 104 | |
| Derivatives | 2 | | 179 | | | 179 | | | 281 | | | 281 | |
(1) Excludes equity investments of $31 million that are measured at fair value using the net asset value per share (or its equivalent) practical expedient as of December 31, 2025.
(2) Loans and leases, net are classified as level 3, with the exception of loans originated as held for sale and transferred into loans held for investment of $78 million and $169 million as of December 31, 2025 and December 31, 2024, respectively, which are classified as level 2.
Fair Value of Assets and Liabilities Measured on a Recurring Basis
The following tables present information about the Company's assets and liabilities measured at fair value on a recurring basis as of the periods presented:
| | | | | | | | | | | | | | | | | | | | | | | |
(in millions) | December 31, 2025 |
| Description | Total | | Level 1 | | Level 2 | | Level 3 |
| Financial assets: | | | | | | | |
| Equity and other investment securities | | | | | | | |
| Investments in mutual funds and other securities | $ | 63 | | | $ | 63 | | | $ | — | | | $ | — | |
| Equity securities held in rabbi trusts | 19 | | | 19 | | | — | | | — | |
| Investment securities available for sale | | | | | | | |
| U.S. Treasury and agencies | 1,300 | | | 209 | | | 1,091 | | | — | |
| Obligations of states and political subdivisions | 1,629 | | | — | | | 1,629 | | | — | |
| Mortgage-backed securities and collateralized mortgage obligations | 8,183 | | | — | | | 8,183 | | | — | |
| Loans held for sale, at fair value | 262 | | | — | | | 262 | | | — | |
| Loans and leases, at fair value | 78 | | | — | | | 78 | | | — | |
| Residential mortgage servicing rights, at fair value | 99 | | | — | | | — | | | 99 | |
| Derivatives | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Interest rate swaps | 84 | | | — | | | 84 | | | — | |
| | | | | | | |
| Total assets measured at fair value | $ | 11,717 | | | $ | 291 | | | $ | 11,327 | | | $ | 99 | |
| Financial liabilities: | | | | | | | |
| Junior subordinated debentures, at fair value | $ | 338 | | | $ | — | | | $ | — | | | $ | 338 | |
| Derivatives | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Interest rate swaps | 179 | | | — | | | 179 | | | — | |
| | | | | | | |
| Total liabilities measured at fair value | $ | 517 | | | $ | — | | | $ | 179 | | | $ | 338 | |
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| (in millions) | December 31, 2024 |
| Description | Total | | Level 1 | | Level 2 | | Level 3 |
| Financial assets: | | | | | | | |
| Equity and other investment securities | | | | | | | |
| Investments in mutual funds and other securities | $ | 62 | | | $ | 44 | | | $ | 18 | | | $ | — | |
Equity securities held in rabbi trusts | 16 | | | 16 | | | — | | | — | |
| Investment securities available for sale | | | | | | | |
| U.S. Treasury and agencies | 1,423 | | | 321 | | | 1,102 | | | — | |
| Obligations of states and political subdivisions | 1,026 | | | — | | | 1,026 | | | — | |
| Mortgage-backed securities and collateralized mortgage obligations | 5,826 | | | — | | | 5,826 | | | — | |
| Loans held for sale, at fair value | 72 | | | — | | | 72 | | | — | |
| Loans and leases, at fair value | 169 | | | — | | | 169 | | | — | |
| Residential mortgage servicing rights, at fair value | 108 | | | — | | | — | | | 108 | |
| Derivatives | | | | | | | |
| | | | | | | |
| | | | | | | |
| Interest rate forward sales commitments | 1 | | | — | | | 1 | | | — | |
| Interest rate swaps | 107 | | | — | | | 107 | | | — | |
| Foreign currency derivatives | 1 | | | — | | | 1 | | | — | |
| Total assets measured at fair value | $ | 8,811 | | | $ | 381 | | | $ | 8,322 | | | $ | 108 | |
| Financial liabilities: | | | | | | | |
| Junior subordinated debentures, at fair value | $ | 331 | | | $ | — | | | $ | — | | | $ | 331 | |
| Derivatives | | | | | | | |
| | | | | | | |
| Interest rate futures | 3 | | | — | | | 3 | | | — | |
| | | | | | | |
| Interest rate swaps | 277 | | | — | | | 277 | | | — | |
| Foreign currency derivatives | 1 | | | — | | | 1 | | | — | |
| Total liabilities measured at fair value | $ | 612 | | | $ | — | | | $ | 281 | | | $ | 331 | |
The following methods were used to estimate the fair value of each class of financial instrument that is carried at fair value in the tables above:
Securities— Fair values for investment securities are based on quoted market prices when available or through the use of alternative approaches, such as matrix or model pricing, or broker indicative bids, when market quotes are not readily accessible or available. Management periodically reviews the pricing information received from the third-party pricing service and compares it to a secondary pricing service, evaluating significant price variances between services to determine an appropriate estimate of fair value to report.
Loans Held for Sale— Fair value for residential mortgage loans originated as held for sale is determined based on quoted secondary market prices for similar loans, including the implicit fair value of embedded servicing rights. For loans not originated as held for sale, these loans are accounted for at lower of cost or market, with the fair value estimated based on the expected sales price.
Loans and leases— Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type, including commercial, real estate, and consumer loans. Each loan category is further segregated by fixed and adjustable-rate loans. The fair value of loans is calculated by discounting expected cash flows at rates at which similar loans are currently being made. This model is periodically validated by an independent model validation group. These amounts are discounted further by embedded probable losses expected to be realized in the portfolio. For loans originated as held for sale and transferred into loans held for investment, the fair value is determined based on quoted secondary market prices for similar loans.
Residential Mortgage Servicing Rights— The fair value of MSR is estimated using a DCF model. Assumptions used include market discount rates, anticipated prepayment speeds, delinquency and foreclosure rates, and ancillary fee income net of servicing costs. This model is periodically validated by an independent model validation group. The model assumptions and the MSR fair value estimates are also compared to observable trades of similar portfolios as well as to MSR broker valuations and industry surveys, as available. Management believes the significant inputs utilized are indicative of those that would be used by market participants.
Junior Subordinated Debentures— The fair value of junior subordinated debentures is estimated using an income approach valuation technique. The significant unobservable input utilized in the estimation of fair value of these instruments is the credit risk adjusted spread. The credit risk adjusted spread represents the non-performance risk of the liability, contemplating the inherent risk of the obligation. The Company periodically utilizes a valuation firm to determine or validate the reasonableness of inputs and factors that are used to determine the fair value. The ending carrying (fair) value of the junior subordinated debentures measured at fair value represents the estimated amount that would be paid to transfer these liabilities in an orderly transaction among market participants. Due to credit concerns in the capital markets and inactivity in the trust preferred markets that have limited the observability of market spreads, the Company has classified this as a Level 3 fair value measurement.
Derivative Instruments— Derivatives include interest rate swaps, forward sales commitments, foreign currency derivatives, interest rate futures, and interest rate lock commitments. The fair values of these instruments generally fluctuate with changes in market interest rates. Interest rate swaps, forward sales commitments, and foreign currency derivatives are valued using dealer quotes and secondary market sources and are classified as Level 2 fair value measurements. Interest rate futures are exchange-traded derivatives, valued at fair value using quoted settlement prices from the exchange, and are classified as Level 1. Interest rate lock commitments use a pull-through rate that is considered an unobservable input, so these are classified as Level 3 fair value measurements.
Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3)
The following table provides a description of the valuation technique, significant unobservable inputs, and qualitative information about the unobservable inputs for the Company's assets and liabilities classified as Level 3 and measured at fair value on a recurring basis as of the dates presented:
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| Financial Instrument | | Fair Value (in millions) | | Valuation Technique | | Unobservable Input | | Range of Inputs | | Weighted Average |
| December 31, 2025 | | | | | | | | | | |
| Assets: | | | | | | | | | | |
| Residential mortgage servicing rights | | $ | 99 | | | Discounted cash flow | | Constant prepayment rate | | 5.76% - 30.21% | | 8.26% |
| | | | | | | Discount rate | | 9.50% - 16.30% | | 10.20% |
| | | | | | | | | | |
| Liabilities: | | | | | | | | | | |
| Junior subordinated debentures | | $ | 338 | | | Discounted cash flow | | Credit spread | | 1.82% - 3.97% | | 2.86% |
| | | | | | | | | | |
| Financial Instrument | | Fair Value (in millions) | | Valuation Technique | | Unobservable Input | | Range of Inputs | | Weighted Average |
| December 31, 2024 | | | | | | | | | | |
| Assets: | | | | | | | | | | |
| Residential mortgage servicing rights | | $ | 108 | | | Discounted cash flow | | Constant prepayment rate | | 5.77% - 60.85% | | 6.92% |
| | | | | | Discount rate | | 9.50% - 16.16% | | 10.23% |
| Liabilities: | | | | | | | | | | |
| | | | | | | | | | |
| Junior subordinated debentures | | $ | 331 | | | Discounted cash flow | | Credit spread | | 1.46% - 4.15% | | 3.06% |
Generally, increases in the constant prepayment rate or the discount rate utilized in the fair value measurement of the residential mortgage servicing rights will result in a decrease in fair value. Conversely, decreases in the constant prepayment rate or the discount rate will result in an increase in fair value.
Management believes that the credit risk adjusted spread utilized in the fair value measurement of the junior subordinated debentures carried at fair value is indicative of the non-performance risk premium a willing market participant would require under current market conditions, which is an inactive market. Generally, an increase in the credit spread will result in a decrease in the estimated fair value. Conversely, a decrease in the credit spread will result in an increase in the estimated fair value.
The following table provides a reconciliation of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis for the periods indicated:
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| 2025 | | 2024 |
| (in millions) | Residential Mortgage Servicing Rights | | | | Junior Subordinated Debentures, at Fair Value | | Residential Mortgage Servicing Rights | | | | Junior Subordinated Debentures, at Fair Value |
| Beginning balance | $ | 108 | | | | | $ | (331) | | | $ | 109 | | | | | $ | (316) | |
| Change included in earnings | (16) | | | | | (26) | | | (7) | | | | | (30) | |
| Change in fair values included in comprehensive income/loss | — | | | | | (7) | | | — | | | | | (15) | |
| Purchases and issuances | 7 | | | | | — | | | 6 | | | | | — | |
| Sales and settlements | — | | | | | 26 | | | — | | | | | 30 | |
| Ending balance | $ | 99 | | | | | $ | (338) | | | $ | 108 | | | | | $ | (331) | |
| Change in unrealized gains or losses for the period included in earnings for assets held at end of period | $ | (4) | | | | | $ | (26) | | | $ | 5 | | | | | $ | (30) | |
| Change in unrealized gains or losses for the period included in other comprehensive income for assets held at end of period | $ | — | | | | | $ | (7) | | | $ | — | | | | | $ | (15) | |
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Changes in residential mortgage servicing rights carried at fair value are recorded in residential mortgage banking revenue within non-interest income.
The contractual interest expense on the junior subordinated debentures is recorded on an accrual basis as interest on junior subordinated debentures within interest expense. Settlements related to the junior subordinated debentures represent the payment of accrued interest that is embedded in the fair value of these liabilities. The change in fair value of junior subordinated debentures is attributable to the change in the instrument specific credit risk; accordingly, the unrealized losses of $7 million for the year ended December 31, 2025 were recorded net of tax as other comprehensive losses of $5 million. Comparatively, unrealized losses of $15 million were recorded net of tax as other comprehensive losses of $11 million for the year ended December 31, 2024. The change recorded for the year ended December 31, 2025 was primarily due to a reduction in credit spreads and higher implied forward rates, partially offset by changes in swap rates.
Fair Value of Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
From time to time, certain assets are measured at fair value on a nonrecurring basis. These adjustments to fair value generally result from the application of lower-of-cost-or-market accounting or write-downs of individual assets due to impairment, typically on collateral-dependent loans. The following tables present information about the Company's assets and liabilities measured at fair value on a nonrecurring basis for which a nonrecurring change in fair value was recorded during the reporting period. The amounts disclosed below represent the fair values at the time the nonrecurring fair value measurements were made, and not necessarily the fair value as of the dates reported upon.
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| December 31, 2025 |
| |
(in millions) | Total | | Level 1 | | Level 2 | | Level 3 |
| Loans and leases | $ | 48 | | | $ | — | | | $ | — | | | $ | 48 | |
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| December 31, 2024 |
| |
(in millions) | Total | | Level 1 | | Level 2 | | Level 3 |
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| Loans and leases | $ | 28 | | | $ | — | | | $ | — | | | $ | 28 | |
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The following table presents the losses resulting from nonrecurring fair value adjustments for the years ended December 31, 2025, 2024, and 2023:
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(in millions) | | | | | 2025 | | 2024 | | 2023 |
| Loans and leases | | | | | $ | 105 | | | $ | 109 | | | $ | 104 | |
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The following provides a description of the valuation technique and inputs for the Company's assets and liabilities classified as Level 3 and measured at fair value on a nonrecurring basis. Unobservable inputs and qualitative information about the unobservable inputs are not presented as the fair value is determined by third-party information for loans and leases.
The loans and leases amounts above represent collateral-dependent loans and leases that have been adjusted to fair value. When a loan or non-homogeneous lease is identified as collateral-dependent, the Bank measures the impairment using the current fair value of the collateral, less estimated selling costs. Depending on the characteristics of a loan or lease, the fair value of collateral is generally estimated by obtaining external appraisals, but in some cases the value of the collateral may be estimated as having little to no value. When a homogeneous lease or equipment finance agreement becomes 181 days past due, it is determined that the collateral has little to no value. If it is determined that the value of the collateral-dependent loan or lease is less than its recorded investment, the Bank recognizes this impairment and adjusts the carrying value of the loan or lease to fair value, less costs to sell, through the ACL. The loss represents charge-offs on collateral-dependent loans and leases for fair value adjustments based on the fair value of collateral.
Fair Value Option
The following table presents the difference between the aggregate fair value and the aggregate unpaid principal balance of loans held for sale and loans held for investment accounted for under the fair value option as of the dates presented:
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| December 31, 2025 | | December 31, 2024 |
| (in millions) | Fair Value | | Aggregate Unpaid Principal Balance | | Fair Value Less Aggregate Unpaid Principal Balance | | Fair Value | | Aggregate Unpaid Principal Balance | | Fair Value Less Aggregate Unpaid Principal Balance |
| Loans held for sale | $ | 142 | | | $ | 156 | | | $ | (14) | | | $ | 72 | | | $ | 71 | | | $ | 1 | |
| Loans held for investment | $ | 78 | | | $ | 82 | | | $ | (4) | | | $ | 169 | | | $ | 201 | | | $ | (32) | |
The Bank elected to measure certain residential mortgage loans held for sale under the fair value option, with interest income on these loans held for sale reported in interest and fees on loans and leases on the Consolidated Statements of Income. This reduces certain timing differences and better matches changes in the value of these assets with changes in the value of derivatives used as economic hedges for these assets. Residential mortgage loans held for sale accounted for under the fair value option are measured initially at fair value with subsequent changes in fair value recognized in earnings. Gains and losses from such changes in fair value are reported as a component of residential mortgage banking revenue. For the year ended December 31, 2025, the Company recorded a net decrease in fair value of $15 million. For the years ended December 31, 2024 and 2023, changes in fair value were not significant.
Management's intent to sell certain residential mortgage loans classified as held for sale may change over time due to factors including changes in overall market liquidity or changes in characteristics specific to certain loans held for sale. Consequently, these loans may be reclassified as loans held for investment and maintained in the Bank's loan portfolio. In the event that loans currently classified as held for sale are reclassified as loans held for investment, the loans will continue to be measured at fair value. Gains and losses from changes in fair value for these loans are reported in earnings as a component of other income and interest income on these loans are reported in interest and fees on loans and leases on the Consolidated Statements of Income. For the year ended December 31, 2025, the Company recorded a net increase in fair value of $11 million, as compared to a net decrease in fair value of $10 million for the year ended December 31, 2024.
The Company selected the fair value measurement option for certain junior subordinated debentures originally issued by UHC prior to its merger with Columbia (the Umpqua Statutory Trusts) and for junior subordinated debentures acquired by UHC from Sterling Financial Corporation prior to UHC's merger with Columbia, with changes in fair value recognized as a component of other comprehensive income. The remaining junior subordinated debentures were acquired through business combinations and were measured at fair value at the time of acquisition and subsequently measured at amortized cost.
Note 23 – Parent Company Financial Statements
Summary financial information for Columbia Banking System, Inc. on a standalone basis is as follows:
Condensed Balance Sheets
December 31, 2025 and 2024 | | | | | | | | | | | |
| (in millions) | December 31, 2025 | | December 31, 2024 |
| ASSETS | | | |
| Non-interest-bearing deposits with subsidiary bank | $ | 122 | | | $ | 69 | |
| Investments in: | | | |
| Bank subsidiary | 8,142 | | | 5,478 | |
| Non-bank subsidiaries | 17 | | | 17 | |
| Other assets | 13 | | | 11 | |
| Total assets | $ | 8,294 | | | $ | 5,575 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | |
| Payable to bank subsidiary | $ | 4 | | | $ | — | |
| Other liabilities | 15 | | | 18 | |
| Junior subordinated debentures, at fair value | 338 | | | 331 | |
| Junior and other subordinated debentures, at amortized cost | 97 | | | 108 | |
| Total liabilities | 454 | | | 457 | |
| Shareholders' equity | 7,840 | | | 5,118 | |
| Total liabilities and shareholders' equity | $ | 8,294 | | | $ | 5,575 | |
Condensed Statements of Income
Years Ended December 31, 2025, 2024, and 2023 | | | | | | | | | | | | | | | | | |
| (in millions) | 2025 | | 2024 | | 2023 |
| INCOME | | | | | |
| Dividends from bank subsidiary | $ | 495 | | | $ | 360 | | | $ | 353 | |
| Dividends from non-bank subsidiaries | 3 | | | 3 | | | 10 | |
| Other income | 2 | | | 1 | | | 1 | |
| Total income | 500 | | | 364 | | | 364 | |
| EXPENSE | | | | | |
| Management fees paid to subsidiaries | 1 | | | 1 | | | 2 | |
| Other expenses | 43 | | | 43 | | | 44 | |
| Total expenses | 44 | | | 44 | | | 46 | |
| Income before income tax benefit and equity in undistributed earnings of subsidiaries | 456 | | | 320 | | | 318 | |
| Income tax benefit | (8) | | | (9) | | | (10) | |
| Net income before equity in undistributed earnings of subsidiaries | 464 | | | 329 | | | 328 | |
| Equity in undistributed earnings of subsidiaries | 86 | | | 205 | | | 21 | |
| Net income | $ | 550 | | | $ | 534 | | | $ | 349 | |
Condensed Statements of Cash Flows
Years Ended December 31, 2025, 2024, and 2023 | | | | | | | | | | | | | | | | | |
| (in millions) | 2025 | | 2024 | | 2023 |
| OPERATING ACTIVITIES: | | | | | |
| Net income | $ | 550 | | | $ | 534 | | | $ | 349 | |
Adjustment to reconcile net income to net cash provided by operating activities: | | | | | |
| Equity in undistributed earnings of subsidiaries | (86) | | | (205) | | | (21) | |
| | | | | |
| | | | | |
Net decrease in other assets | (1) | | | (3) | | | — | |
Net (decrease) increase in other liabilities | (5) | | | 3 | | | (6) | |
Net cash provided by operating activities | 458 | | | 329 | | | 322 | |
| INVESTING ACTIVITIES: | | | | | |
Net decrease in advances to subsidiaries | — | | | — | | | (144) | |
Net cash received in acquisition | 42 | | | — | | | — | |
Net cash provided by (used in) investing activities | 42 | | | — | | | (144) | |
| FINANCING ACTIVITIES: | | | | | |
Net increase in advances from subsidiaries | 4 | | | — | | | — | |
| Dividends paid on common stock | (335) | | | (300) | | | (270) | |
| Repurchases and retirement of common stock | (109) | | | (6) | | | (6) | |
| Repayment of subordinated debentures | (10) | | | — | | | — | |
Net proceeds from issuance of common stock under the ESPP | 3 | | | — | | | 1 | |
Net cash used in financing activities | (447) | | | (306) | | | (275) | |
Net increase (decrease) in cash and cash equivalents | 53 | | | 23 | | | (97) | |
| Cash and cash equivalents, beginning of year | 69 | | | 46 | | | 143 | |
| Cash and cash equivalents, end of year | $ | 122 | | | $ | 69 | | | $ | 46 | |
Note 24 – Revenue from Contracts with Customers
The Company records revenue when control of the promised products or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those products or services. All of the Company's revenue from contracts with customers in the scope of ASC 606 is recognized in non-interest income. For additional information, see Note 1 – Summary of Significant Accounting Policies.
The following table presents the Company's sources of non-interest income for the years ended December 31, 2025, 2024, and 2023: | | | | | | | | | | | | | | | | | |
| (in millions) | 2025 | | 2024 | | 2023 |
| Non-interest income: | | | | | |
| Service charges on deposits | | | | | |
| Account maintenance fees | $ | 57 | | | $ | 46 | | | $ | 38 | |
| Transaction-based and overdraft service charges | 27 | | | 26 | | | 28 | |
| Total service charges on deposits | 84 | | | 72 | | | 66 | |
| Card-based fees | 58 | | | 57 | | | 55 | |
| Financial services and trust revenue | 35 | | | 20 | | | 13 | |
| Total revenue from contracts with customers | 177 | | | 149 | | | 134 | |
| Non-interest income within the scope of other GAAP topics | 121 | | | 62 | | | 70 | |
| Total non-interest income | $ | 298 | | | $ | 211 | | | $ | 204 | |
Note 25 – Income Taxes and Investment Tax Credits
The following table presents the components of income tax provision for the years ended December 31, 2025, 2024, and 2023:
| | | | | | | | | | | | | | | | | |
| |
| (in millions) | 2025 | | 2024 | | 2023 |
| Current expense: | | | | | |
| Federal | $ | 91 | | | $ | 115 | | | $ | 72 | |
| State | 33 | | | 39 | | | 37 | |
| Total current tax expense | $ | 124 | | | $ | 154 | | | $ | 109 | |
| Deferred tax expense: | | | | | |
| Federal | $ | 45 | | | $ | 21 | | | $ | 7 | |
| State | 9 | | | 10 | | | 6 | |
| Total deferred tax expense | 54 | | | 31 | | | 13 | |
| Total provision for income taxes | $ | 178 | | | $ | 185 | | | $ | 122 | |
All pretax income from continuing operations for the periods presented was generated in domestic jurisdictions; the Company did not earn any foreign pretax income. As such, the Company had no foreign income tax expense from continuing operations.
Certain income tax disclosures included herein are reflective of the adoption of ASU 2023‑09 and are intended to align with the enhanced transparency requirements of the standard upon adoption. The following table presents a reconciliation of income taxes computed at the federal statutory rate to the actual effective rate for the years ended December 31, 2025, 2024, and 2023:
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| 2025 | | 2024 | | 2023 |
| (in millions) | Amount | | Percent | | Amount | | Percent | | Amount | | Percent |
| US Federal Statutory Tax Rate | $ | 153 | | | 21.0 | % | | $ | 151 | | | 21.0 | % | | $ | 99 | | | 21.0 | % |
State and local income taxes, net of federal income tax effect (1) | 30 | | | 4.1 | % | | 39 | | | 5.4 | % | | 25 | | | 5.4 | % |
Tax credits | (31) | | | (4.2) | % | | (20) | | | (2.7) | % | | (16) | | | (3.5) | % |
Nontaxable or nondeductible items | | | | | | | | | | | |
| Tax-exempt interest income | (12) | | | (1.6) | % | | (9) | | | (1.2) | % | | (10) | | | (2.2) | % |
| Non-deductible FDIC premiums | 7 | | | 1.0 | % | | 7 | | | 1.0 | % | | 8 | | | 1.7 | % |
Other | 6 | | | 0.8 | % | | 1 | | | 0.1 | % | | 4 | | | 0.8 | % |
Other adjustments: | | | | | | | | | | | |
| Proportional amortization | 30 | | | 4.2 | % | | 20 | | | 2.8 | % | | 16 | | | 3.6 | % |
| Other | (5) | | | (0.9) | % | | (4) | | | (0.7) | % | | (4) | | | (0.8) | % |
| Effective income tax rate | $ | 178 | | | 24.4 | % | | $ | 185 | | | 25.7 | % | | $ | 122 | | | 26.0 | % |
(1) State taxes in Oregon and California contributed to the majority of the tax effect in this category.
The following table presents the cash paid for income taxes, net of refunds received, by jurisdiction for the years ended December 31, 2025, 2024, and 2023:
| | | | | | | | | | | | | | | | | |
| (in millions) | 2025 | | 2024 | | 2023 |
| Federal | $ | 79 | | | $ | 70 | | | $ | 90 | |
| State | | | | | |
| California | 22 | | | 15 | | | 18 | |
| Oregon | 18 | | | 10 | | | 18 | |
| Other | 4 | | | 6 | | | 13 | |
| Total | $ | 123 | | | $ | 101 | | | $ | 139 | |
The following table reflects the effects of temporary differences that give rise to the components of the net deferred tax asset, which is included in other assets on the Consolidated Balance Sheets, as of December 31, 2025 and 2024: | | | | | | | | | | | |
| (in millions) | 2025 | | 2024 |
| Deferred tax assets: | | | |
| Net unrealized losses on investment securities | $ | 282 | | | $ | 317 | |
| Acquired loans | 189 | | | 116 | |
| Allowance for credit losses | 125 | | | 111 | |
| Operating lease liabilities | 44 | | | 33 | |
| Accrued severance and deferred compensation | 43 | | | 36 | |
| Other | 56 | | | 48 | |
| Total gross deferred tax assets | 739 | | | 661 | |
| Deferred tax liabilities: | | | |
| Other intangible assets | 189 | | | 125 | |
| Operating lease right-of-use asset | 41 | | | 29 | |
| Deferred loan fees and costs | 36 | | | 34 | |
| Direct financing leases | 30 | | | 36 | |
| Premises and equipment | 29 | | | 19 | |
| | | |
| | | |
| Residential mortgage servicing rights | 28 | | | 29 | |
| Other | 33 | | | 30 | |
| Total gross deferred tax liabilities | 386 | | | 302 | |
| | | |
| Net deferred tax assets | $ | 353 | | | $ | 359 | |
As of December 31, 2025 and 2024, the Company's gross deferred tax assets included $5 million and $2 million, respectively, of NOL carryforwards expiring in tax years 2027-2034. The Company acquired a $94 million net deferred tax asset before purchase accounting adjustments in the acquisition of Pacific Premier, including $3 million of federal and state NOL. The acquisition triggered an “ownership change” as defined in Section 382 of the Internal Revenue Code and the Company is evaluating the effects. However, the Company believes it is more likely than not that it will be able to fully realize the benefit of its federal and state NOL and tax carryforwards. The Company has determined that no valuation allowance for the deferred tax assets is required as management believes it is more likely than not that future taxable income will be sufficient to realize the remaining gross deferred tax assets of $739 million and $661 million at December 31, 2025 and 2024, respectively.
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, as well as the majority of states. The Company is no longer subject to U.S. income tax examinations for years prior to 2022 and is no longer subject to state income tax examinations for years prior to 2021.
The Company periodically reviews its income tax positions based on tax laws and regulations and financial reporting considerations, and records adjustments as appropriate. This review takes into consideration the status of current taxing authorities' examinations of the Company's tax returns, recent positions taken by the taxing authorities on similar transactions, if any, and the overall tax environment.
The Company had no gross unrecognized tax benefits as of December 31, 2025 and 2024. Interest on unrecognized tax benefits is reported by the Company as a component of tax expense. There were no amounts related to interest and penalties recognized for the years ended December 31, 2025 and 2024.
Investment Tax Credits
The Company is involved in various entities that are considered to be variable interest entities, which are primarily related to investments promoting affordable housing and trust preferred securities. The Company is not required to consolidate variable interest entities in which it has concluded it does not have a controlling financial interest, and thus not the primary beneficiary. In such cases, the Company does not have both the power to direct the entities' most significant activities and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the variable interest entity. The maximum exposure to loss in the LIHTC is the amount of equity invested and credit extended by the Company. Refer to Note 14 – Junior and Other Subordinated Debentures for further discussion of junior subordinated debentures.
Affordable Housing Tax Credit Investments
The Company makes certain equity investments in various limited partnerships that sponsor affordable housing projects; the purpose of these investments is to achieve a satisfactory return on capital, to facilitate the sale of additional affordable housing product offerings, and to assist in achieving goals associated with the Community Reinvestment Act. The primary activities of the limited partnerships include the identification, development, and operation of multi-family housing that is leased to qualifying residential tenants.
The Company’s investments in these entities generate a return primarily through the realization of federal income tax credits and other tax benefits, such as tax deductions from operating losses of the investments, over specified time periods. These tax credits and deductions are recognized as a reduction to income tax expense on the Consolidated Statements of Income.
The Company records the investments in affordable housing partnerships as a component of other assets on the Consolidated Balance Sheets and uses the proportional amortization method to account for the investments. Amortization related to these investments is recorded as a component of the provision for income taxes on the Consolidated Statements of Income. The Company's unfunded capital commitments to these investments is included in other liabilities on the Consolidated Balance Sheets.
With its acquisition of Pacific Premier, the Company acquired $75 million of affordable housing partnership assets and $29 million of unfunded capital commitments related to these investments.
The following table presents the Company's tax credit investments, which consisted entirely of affordable housing tax credit investments and related unfunded capital commitments as of December 31, 2025 and 2024: | | | | | | | | | | | |
| (in millions) | December 31, 2025 | | December 31, 2024 |
| Other Assets: | | | |
| Affordable housing tax credit investments | $ | 344 | | | $ | 221 | |
| Other Liabilities: | | | |
| Unfunded affordable housing tax credit commitments | $ | 140 | | | $ | 95 | |
As of December 31, 2025, the Company’s unfunded affordable housing tax credit commitments were estimated to be due as follows:
| | | | | |
| (in millions) | |
| Year | Amount |
| 2026 | $ | 78 | |
| 2027 | 32 | |
| 2028 | 16 | |
| 2029 | 2 | |
| 2030 | 1 | |
| Thereafter | 11 | |
| Total unfunded affordable housing tax credit commitments | $ | 140 | |
The following table presents other information relating to the Company's affordable housing tax credit investments for the years ended December 31, 2025, 2024, and 2023:
| | | | | | | | | | | | | | | | | |
| (in millions) | 2025 | | 2024 | | 2023 |
| Proportional amortization | $ | 30 | | | $ | 20 | | | $ | 17 | |
| Tax credit investment credits and tax benefits | $ | 39 | | | $ | 25 | | | $ | 21 | |
There was no impairment recognized for the years ended December 31, 2025, 2024, and 2023.
Note 26 – Segment Reporting
The Company has one operating and reportable segment based on the products and services offered, primarily banking operations as well as the operations, technology, and administrative functions of the Bank and Holding Company. The Company primarily derives revenue from banking operations by providing consumer and residential real estate loans, commercial lending products, deposit products, and treasury and wealth management services. The Company's primary market areas are in Arizona, California, Colorado, Idaho, Nevada, Oregon, Texas, Utah, and Washington and it manages the business activities on a consolidated basis. The accounting policies of the Bank are the same as those described in Note 1 – Summary of Significant Accounting Policies.
The Company's CODM is the Chief Executive Officer. The CODM evaluates performance and makes decisions regarding the allocation of operating and capital based on consolidated net income, as reported on the Consolidated Statements of Income. The CODM also reviews total consolidated assets, as reported on the Consolidated Balance Sheets, as a measure of segment assets.
The CODM uses consolidated net income to evaluate income generated from segment assets in making decisions about the allocation of operating and capital resources. Consolidated net income is also used by the CODM to monitor budget versus actual results and in competitive analysis by benchmarking to the Company's competitors. The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment and in establishing management’s compensation. The CODM is regularly provided with significant segment expense information at a level consistent with that disclosed in the Company's Consolidated Statements of Income.