Financial Performance Overview

The Company reported strong financial results for the third quarter and first nine months of 2025. Net income for the third quarter was $105.2 million, a significant improvement from the $61.3 million net loss in the same period of 2024. For the first nine months of 2025, net income was $229.6 million, up from $6.5 million in the prior year period.

The improved performance was driven by increases in both net interest income and non-interest income. Net interest income grew 13.1% in the third quarter and 13.5% year-to-date, as the net interest margin expanded to 3.47% and 3.34% respectively. This was due to higher earning asset balances and lower funding costs, which offset a decline in asset yields.

Non-interest income also rebounded, increasing $183.4 million in the third quarter and $190.1 million year-to-date. This was primarily due to the absence of a large securities loss recorded in the prior year period, as well as growth in service charges, trading income and other fee revenue.

On the expense side, non-interest expense declined slightly in the third quarter but increased 0.4% year-to-date. The quarterly decrease was driven by lower salaries, occupancy and marketing costs, while the year-to-date increase was due to higher personnel and technology expenses.

Loans and Asset Quality

Total loans held for investment grew 7.8% from the end of 2024 to $24.2 billion as of September 30, 2025. This was driven by increases in the commercial, mortgage finance and commercial real estate portfolios, partially offset by a decline in consumer loans.

Asset quality metrics remained stable, with non-accrual loans declining to $96.1 million, or 0.40% of total loans, from $111.2 million, or 0.50%, at the end of 2024. The allowance for credit losses was 1.13% of total loans at the end of the third quarter, down from 1.23% at the prior year-end. Net charge-offs were 0.21% of average loans for the first nine months of 2025, up from 0.18% in the same period of 2024.

The provision for credit losses was $44.0 million for the first nine months of 2025, down from $49.0 million in the prior year period. This reflected the growth in the loan portfolio and net charge-offs, partially offset by improvements in criticized loans and non-accruals.

Liquidity and Capital

The Company maintained a strong liquidity position, with interest-bearing cash and cash equivalents of $2.9 billion, or 11.8% of total loans, at the end of the third quarter. The Company also had significant unused borrowing capacity, including $7.3 billion from the FHLB, $1.3 billion in federal funds lines, and $9.4 billion from the Federal Reserve.

Deposits grew 9.0% from year-end 2024 to $27.5 billion, with customer deposits comprising 97.2% of the total. Brokered deposits increased to $766.1 million, or 2.8% of total deposits. Estimated uninsured deposits were 42% of the total.

Stockholders’ equity averaged $3.5 billion for the first nine months of 2025, up from $3.2 billion in the same period of 2024. The Company did not pay any common stock dividends and repurchased $59.2 million of its shares during the first nine months of 2025.

Interest Rate Risk Management

The Company’s balance sheet remained asset sensitive, with a positive cumulative interest rate gap of $11.0 billion as of September 30, 2025. This means the Company’s interest-earning assets will reprice faster than its interest-bearing liabilities as rates change.

The Company’s net interest income is projected to increase 7.7% if interest rates rise 200 basis points and decrease 6.4% if rates fall 100 basis points. These sensitivities reflect the asset-sensitive position and the impact of deposit pricing behaviors and loan/security prepayment assumptions in the various rate environments.

The Company utilizes interest rate derivatives, including cash flow hedges, to manage its interest rate risk exposure. These instruments help offset the potential adverse impacts of rising or falling rates on the net interest margin.

Outlook and Risks

The Company’s strong financial performance in 2025 has positioned it well for the future. The growth in loans, expansion of the net interest margin, and rebound in non-interest income all point to continued momentum. However, the Company faces several risks that could impact its outlook:

• Potential economic slowdown: A significant downturn in economic conditions could lead to higher credit losses and reduced loan demand. The Company’s allowance for credit losses would likely need to be increased in this scenario.

• Interest rate volatility: Further increases in interest rates, beyond what is currently projected, could put pressure on the net interest margin if deposit costs rise faster than asset yields. Conversely, a sharp decline in rates could reduce the Company’s asset sensitivity and net interest income.

• Regulatory changes: New or changing regulations, particularly related to capital, liquidity or consumer protection, could increase compliance costs and operational complexity for the Company.

• Competition: The banking industry remains highly competitive, which could impact the Company’s ability to grow loans and deposits or maintain pricing discipline.

Overall, the Company delivered impressive results in 2025 by effectively managing its balance sheet, controlling expenses, and capitalizing on favorable market conditions. However, vigilance will be required to navigate the potential risks and challenges that lie ahead. The Company’s strong capital and liquidity positions provide a solid foundation to weather any future storms.