BankUnited, Inc.

Previous wording

The following discussion and analysis is intended to focus on significant matters impacting and changes in the financial condition and results of operations of the Company during the three and six months ended June 30, 2026 and should be read in conjunction with the consolidated financial statements and notes hereto included in this Quarterly Report on Form 10-Q and BKU's 2025 Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Annual Report on Form 10-K").

Current wording

The following discussion and analysis is intended to focus on significant matters impacting and changes in the financial condition and results of operations of the Company during the three and nine months ended September 30, 2026 and should be read in conjunction with the consolidated financial statements and notes hereto included in this Quarterly Report on Form 10-Q and BKU's 2025 Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Annual Report on Form 10-K").

Previous wording

In evaluating our financial performance, we consider (i) the funding mix and the composition of interest earning assets; (ii) the level of and trends in net interest income and the net interest margin; (iii) the cost of deposits, trends in non-interest income and non-interest expense; (iv) performance ratios such as the return on average equity and return on average assets and trends in those metrics; and (v) asset quality metrics, including the level of criticized and classified assets, the ratios of non-performing loans to total loans and non-performing assets to total assets, delinquency and net charge-off rates, as well as trends in those metrics. We analyze these ratios and trends against our own historical performance, our expected performance, our risk appetite and the financial condition and performance of comparable financial institutions.

Current wording

In evaluating our financial performance, we consider (i) the funding mix and the composition of interest earning assets; (ii) the level of and trends in net interest income and the net interest margin; (iii) the cost of deposits; (iv) trends in non-interest income and non-interest expense; (v) performance ratios such as the return on average equity and return on average assets and trends in those metrics; and (vi) asset quality metrics, including the level of criticized and classified assets, the ratios of non-performing loans to total loans and non-performing assets to total assets, delinquency and net charge-off rates, as well as trends in those metrics. We analyze these ratios and trends against our own historical performance, our expected performance, our risk appetite and the financial condition and performance of comparable financial institutions.

Previous wording

Second quarter 2026 results compared to first quarter 2026:

Current wording

Third quarter 2026 results compared to second quarter 2026:

Previous wording

•Net income was $70.7 million, or $0.97 per diluted share, up from $61.9 million, or $0.83, per diluted share.

Current wording

•Net income was $72.2 million, or $1.01 per diluted EPS, up from $70.7 million, or $0.97 per diluted EPS.

Previous wording

•Annualized ROAA increased to 0.81% from 0.72% and annualized ROAE improved to 9.3% from 8.1%.

Current wording

•Annualized ROAA increased to 0.82% from 0.81% and annualized ROAE improved to 9.6% from 9.3%.

Previous wording

•The net interest margin, calculated on a tax-equivalent basis, expanded to 3.06%, up 0.07%, from 2.99%.

Current wording

•The net interest margin, calculated on a tax-equivalent basis, expanded to 3.16%, up 0.10%, from 3.06%.

Previous wording

•Total loans declined by $206 million due to continued purposeful runoff in non-core loans. Average core loans increased by $195 million.

Current wording

•Total loans declined by $114 million, primarily due to continued purposeful runoff in non-core loans, including a $70 million decrease in residential loans, consistent with our balance sheet repositioning strategy. Core loans decreased modestly by $32 million during the quarter.

Previous wording

•Total criticized and classified loans increased by $7 million, or 1%, while non-performing loans declined by $51 million, or 19%. The NPA ratio improved to 0.66%, down 0.13%; the annualized net charge-off ratio was 0.11%, down 0.50%.

Current wording

•Total criticized and classified loans decreased by $10 million, while non-performing loans increased by $40 million, or 18%. The annualized net charge-off ratio remained low at 0.11% in both the current and prior quarter.

Previous wording

•The ratio of the ACL to total loans increased to 0.91% from 0.87%; the ratio of the ACL to non-performing loans increased to 97.14% from 75.90%; the provision for credit losses was down $9 million.

Current wording

•The ratio of the ACL to total loans increased to 0.93% from 0.91%, and the ratio of the ACL to non-performing loans decreased to 83.96% from 97.14% primarily due to higher non-performing loan balances. The provision for credit losses was down $7 million.

Previous wording

•At June 30, 2026, CET1 was 12.3%; the ratio of tangible common equity to tangible assets was 8.4%.

Current wording

•At September 30, 2026, CET1 was 12.1%; the ratio of tangible common equity to tangible assets was 8.0%.

Previous wording

•Book value and tangible book value per common share were, $41.55 and $40.48, respectively, at June 30, 2026, compared to $41.11 and $40.05, respectively, at March 31, 2026.

Current wording

•Book value and tangible book value per common share were $40.21 and $39.10, respectively, at September 30, 2026, compared to $41.55 and $40.48, respectively, at June 30, 2026.

Previous wording

•The Company repurchased approximately 1.1 million shares of its common stock for an aggregate purchase price of $50.1 million.

Current wording

•The Company repurchased approximately 2.1 million shares of its common stock during the third quarter for an aggregate purchase price of $97.0 million.

Previous wording

Our results for the second quarter of 2026 were driven primarily by continued balance sheet repositioning and improvements in funding mix. Growth in NIDDA and core deposits in general, together with lower brokered deposits and wholesale funding, contributed to lower funding costs and higher net interest margin. Profitability improved during the quarter, as reflected in increases in net income, pre-provision net revenue and returns on average assets and equity. Asset quality metrics also improved, including lower non-performing loan and net charge-off ratios, while capital and tangible book value metrics remained strong.

Current wording

Our results for the third quarter of 2026 were driven primarily by continued balance sheet repositioning and lower funding costs. Net interest margin improved during the quarter, and profitability increased as reflected in higher net income and returns on average assets and equity. Asset quality metrics remained favorable, including lower criticized and classified loans, and net charge-offs remained low.

Previous wording

The following table presents, for the periods indicated, information about (i) average balances, the total dollar amount of taxable equivalent interest income from earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin. Non-accrual loans are included in the average balances presented in this table; however, interest income foregone on non-accrual loans is not included. Interest income, yields, spread and margin have been calculated on a tax-equivalent basis for loans and investment securities that are exempt from federal income taxes, at a federal tax rate of 21% (dollars in thousands):

Current wording

The following tables present, for the periods indicated, information about (i) average balances, the total dollar amount of taxable equivalent interest income from earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin. Non-accrual loans are included in the average balances presented in this table; however, interest income foregone on non-accrual loans is not included. Interest income, yields, spread and margin have been calculated on a tax-equivalent basis for loans and investment securities that are exempt from federal income taxes, at a federal tax rate of 21% (dollars in thousands):

Previous wording

(1)On a tax-equivalent basis where applicable. The tax-equivalent adjustment for tax-exempt loans was $2.8 million for the three months ended June 30, 2026, and $2.7 million for both the three months ended March 31, 2026 and June 30, 2025. The tax-equivalent adjustment for tax-exempt investment securities was $1.1 million for the three months ended June 30, 2026, and $0.7 million for both the three months ended March 31, 2026 and June 30, 2025.

Current wording

(1)On a tax-equivalent basis where applicable. The tax-equivalent adjustment for tax-exempt loans was $2.9 million for the three months ended September 30, 2026, $2.8 million for the three months ended June 30, 2026 and $2.9 million for the three months ended September 30, 2025. The tax-equivalent adjustment for tax-exempt investment securities was $1.2 million for the three months ended September 30, 2026, $1.1 million for the three months ended June 30, 2026 and $0.7 million for the three months ended September 30, 2025.

Previous wording

(1)On a tax-equivalent basis where applicable. The tax-equivalent adjustment for tax-exempt loans was $5.4 million for the six months ended June 30, 2026 and 2025. The tax-equivalent adjustment for tax-exempt investment securities was $1.8 million and $1.4 million for the six months ended June 30, 2026 and 2025, respectively.

Current wording

(1)On a tax-equivalent basis where applicable. The tax-equivalent adjustment for tax-exempt loans was $8.3 million for both the nine months ended September 30, 2026 and 2025. The tax-equivalent adjustment for tax-exempt investment securities was $2.9 million and $2.1 million for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Net interest income on a taxable-equivalent basis was $259.2 million for the three months ended June 30, 2026, compared to $252.4 million for the three months ended March 31, 2026, an increase of $6.8 million, or 2.7%. The increase was driven by a $4.8 million increase in interest income and a $2.0 million decrease in interest expense.

Current wording

Net interest income on a taxable-equivalent basis was $264.7 million for the three months ended September 30, 2026, compared to $259.2 million for the three months ended June 30, 2026, an increase of $5.5 million, or 2.1%. The increase was driven by a $3.7 million increase in interest income and a $1.8 million decrease in interest expense.

Previous wording

The net interest margin calculated on a tax-equivalent basis, increased to 3.06% for the three months ended June 30, 2026, compared to 2.99% for the immediately preceding three months ended March 31, 2026. Factors impacting the net interest margin for the three months ended June 30, 2026 compared to the three months ended March 31, 2026 included:

Current wording

The net interest margin calculated on a tax-equivalent basis, increased to 3.16% for the three months ended September 30, 2026, compared to 3.06% for the immediately preceding three months ended June 30, 2026. Factors impacting the net interest margin for the three months ended September 30, 2026 compared to the three months ended June 30, 2026 included:

Previous wording

•The tax-equivalent yield on investments increased to 4.64% for the three months ended June 30, 2026, from 4.55% for the three months ended March 31, 2026, primarily due to the benefit of securities purchased during the period when spreads widened and there was market volatility.

Current wording

•The tax-equivalent yield on investments increased to 4.76% for the three months ended September 30, 2026, from 4.64% for the three months ended June 30, 2026, primarily due to the benefit from the strategic sale of lower-yielding, short-duration securities and reinvestment into higher-yielding securities.

Previous wording

•The average rate paid on FHLB advances increased to 3.75% for the three months ended June 30, 2026 compared to 3.68% for the three months ended March 31, 2026 primarily due to the maturities of some cash flow hedges.

Current wording

•The average rate paid on FHLB advances increased to 3.83% for the three months ended September 30, 2026 compared to 3.75% for the three months ended June 30, 2026 primarily due to the maturities of some cash flow hedges.

Previous wording

Net interest income, calculated on a tax-equivalent basis, increased by $10 million and $25 million for the three and six months ended June 30, 2026, respectively. The increase from the prior year for both periods is primarily due to continued improvement in funding mix. Strong growth in NIDDA supported reductions in higher-cost wholesale funding, including brokered deposits and FHLB advances, lowering overall funding costs and improving margin. These benefits were partially offset by lower yields on loans and investments and to a lesser extent lower average balances of interest-earning assets.

Current wording

Net interest income, calculated on a tax-equivalent basis, increased by $11 million and $36 million for the three and nine months ended September 30, 2026, respectively. The increase from the prior year for both periods is primarily due to continued improvement in funding mix. Strong growth in NIDDA supported reductions in higher-cost wholesale funding, including brokered deposits and FHLB advances, lowering overall funding costs and improving margin. These benefits were partially offset by lower yields on loans and investments and to a lesser extent lower average balances of interest-earning assets.

Previous wording

The net interest margin, calculated on a tax-equivalent basis, expanded to 3.06% and 3.03% for the three and six months ended June 30, 2026, respectively, from 2.93% and 2.87% for the three and six months ended June 30, 2025, respectively. The increase in the net interest margin for both periods was primarily a result of balance sheet repositioning and particularly an improved funding mix.

Current wording

The net interest margin, calculated on a tax-equivalent basis, expanded to 3.16% and 3.08% for the three and nine months ended September 30, 2026, respectively, from 3.00% and 2.92% for the three and nine months ended September 30, 2025, respectively. The increase in the net interest margin for both periods was primarily a result of balance sheet repositioning and particularly an improved funding mix.

Previous wording

For the three and six months ended June 30, 2026 compared to same periods in the prior year, average NIDDA grew by $1.0 billion while average interest bearing liabilities declined by $1.1 billion. Deposit pricing continued to improve, contributing to lower funding costs. The average cost of deposits declined to 2.05% and 2.08% from 2.47% and 2.52% for the three and six months ended June 30, 2026 and 2025, respectively, reflecting the maturity of higher-rate time deposits, reductions in higher cost brokered deposits and the continued execution of targeted deposit repricing initiatives. Partially offsetting these improvements was a decrease in tax-equivalent yields on investment securities and loans as variable rate assets repriced faster than continued improvement in funding cost and funding mix dynamics due to lower SOFR/Fed funds basis.

Current wording

For the three and nine months ended September 30, 2026 compared to same periods in the prior year, average NIDDA grew by $824 million and $1.0 billion, respectively, while average interest bearing liabilities declined by $1.0 billion and $1.1 billion, respectively. Deposit pricing continued to improve, contributing to lower funding costs. The average cost of deposits declined to 1.99% and 2.05% from 2.38% and 2.48% for the three and nine months ended September 30, 2026 and 2025, respectively, reflecting broad-based benefits from reduced rates paid on interest-bearing deposits, as well as reductions in higher cost time deposits. Partially offsetting these improvements was a decline in tax-equivalent yields on investment securities and loans, reflecting changes in earning asset composition and repricing dynamics that compressed asset yields.

Previous wording

The most significant factors impacting the provision for credit losses for the three months ended June 30, 2026 was an increase in specific reserves, changes in the economic forecast, lower net charge-offs and improved asset quality. The most significant factors impacting the provision for credit losses for the six months ended June 30, 2026 was higher net charge-offs and an increase in specific reserves.

Current wording

The most significant factors impacting the provision for credit losses for the three months ended September 30, 2026 were increases in qualitative reserves driven by economic uncertainty, risk rating migrations, net charge-offs and changes in portfolio composition. The most significant factors impacting the provision for credit losses for the nine months ended September 30, 2026 were higher net charge-offs and increases in specific reserves and qualitative reserves.

Previous wording

The more significant items included in other non-interest income in the table above typically include commercial card revenue, lending related fees other than origination fees, and BOLI income. Non-interest income increased for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily as a result of higher deposit service charges and capital markets revenue. For the six months ended June 30, 2026, the increase was primarily due to higher deposit service charges and gains on investment securities, partially offset by decrease in lease financing revenue attributable to the continuing decline in the size of the operating lease equipment portfolio.

Current wording

The more significant items included in other non-interest income in the table above typically include commercial card revenue, lending related fees other than origination fees, and BOLI income. For the three months ended September 30, 2026 compared to the three months ended September 30, 2025, non-interest income decreased primarily as a result of realized losses on the sale of investment securities and lower lease financing income primarily due to a loss on equipment disposition recognized. Other non-interest income also decreased, primarily attributed to lower BOLI income driven by less favorable market performance impacting returns on one policy. These decreases were partially offset by an increase in deposit service charges and fees due to product penetration across treasury service businesses.

Previous wording

For the three months ended June 30, 2026, the increase in employee compensation and benefits was primarily attributable to increased head count as we invest in the growth of the franchise. In addition, in other non-interest expense were higher deposit related costs of $3.8 million, a loss associated with a single real estate owned asset disposition of $1.1 million and elevated operational losses of $1.3 million.

Current wording

For the three months ended September 30, 2026, the increase in employee compensation and benefits was primarily attributable to increased headcount as we invest in the growth of the franchise. In addition, deposit related costs increased by $4.4 million primarily due to higher costs associated with deposit gathering activities resulting from increased competition for commercial deposits.

Previous wording

For the six months ended June 30, 2026, higher employee compensation and benefits was primarily due to routine salary increases and increased employee headcount. The decrease in deposit insurance expense was primarily attributable to a $6.7 million release of FDIC special assessment accrual during the six months ended June 30, 2026. A lower base assessment rate for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, also contributed to the decline in deposit insurance expense. In addition, included in other non-interest expense was $6.3 million in higher deposit related costs and higher operational losses of $1.1 million.

Current wording

For the nine months ended September 30, 2026, the increase in employee compensation and benefits was primarily due to routine salary increases and increased employee headcount. The decrease in deposit insurance expense was primarily attributable to a $6.7 million release of FDIC special assessment accrual and a lower base assessment rate for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. Deposit-related costs increased primarily due to higher costs associated with deposit gathering activities resulting from increased competition for commercial deposits. Additionally, other non-interest expense increased primarily due to increases to professional fee expenses and digital advertising costs.

Previous wording

We have continued to execute on our organic balance sheet transformation strategy, focused on improving both the funding profile and asset mix. For the six months ended June 30, 2026, NIDDA increased by $825 million from 31% to 34% of total deposits, while non-brokered deposits increased by $1.4 billion over the same period. Year-over-year, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, average NIDDA increased by $1.0 billion, consistent with continued progress in improving our funding profile. Wholesale funding, including FHLB advances, brokered deposits, and federal funds purchased, declined by $1.5 billion for the six months ended June 30, 2026.

Current wording

We have continued to execute on our organic balance sheet transformation strategy, focused on improving both the funding profile and asset mix. For the nine months ended September 30, 2026, wholesale funding, including FHLB advances, brokered deposits and federal funds purchased, declined by $117 million. NIDDA represented 32% of total deposits at September 30, 2026, compared to 31% at December 31, 2025, and average NIDDA increased by $319 million during the nine months ended September 30, 2026, reflecting continued progress in strengthening our funding portfolio.

Previous wording

Total loans declined by $345 million for the six months ended June 30, 2026, primarily due to continued runoff of non-core loans. Core loans increased by $14 million while the residential and franchise and equipment finance portfolios declined by a combined $358 million, consistent with our balance sheet repositioning strategy. The loan-to-deposit ratio was 82.9% at June 30, 2026 compared to 82.7% at December 31, 2025. The securities portfolio grew by $54 million for the six months ended June 30, 2026.

Current wording

Total loans declined by $458 million for the nine months ended September 30, 2026, primarily due to continued runoff of non-core loans. The residential and franchise and equipment finance portfolios declined by a combined $441 million, consistent with our balance sheet repositioning strategy and accounted for substantially all of the decrease in total loans. Core commercial portfolio segments comprised 72.2% of total loans at September 30, 2026, up from 70.8% at December 31, 2025, while residential loans decreased to 27.6% of total loans from 28.8% over the same period. The loan-to-deposit ratio was 84.1% at September 30, 2026 compared to 82.7% at December 31, 2025.

Previous wording

Our investment strategy is focused on ensuring adequate liquidity, maintaining a suitable balance of high credit quality, diverse assets, managing interest rate risk, and generating acceptable returns given our established risk parameters. We have sought to maintain liquidity by investing a significant portion of the portfolio in high quality liquid securities including U.S. Treasury and U.S. Government Agency and sponsored enterprise securities. We have also invested in highly-rated structured products, including private-label commercial and residential MBS, CLOs, single family real estate-backed securities and non-mortgage asset-backed securities that, while somewhat less liquid, are generally pledgeable at either the FHLB or the FRB and provide us with attractive yields. Investment grade municipal securities provide liquidity and attractive tax-equivalent yields. We remain committed to keeping the duration of our securities portfolio short; relatively short effective portfolio duration helps mitigate interest rate risk. The estimated effective duration of the investment portfolio was 2.02 years andthe estimated weighted average life of the portfolio was 5.4 yearsas of June 30, 2026. Approximately 65% of the securities portfolio was floating rate at June 30, 2026.

Current wording

Our investment strategy is focused on ensuring adequate liquidity, maintaining a suitable balance of high credit quality, diverse assets, managing interest rate risk, and generating acceptable returns given our established risk parameters. We have sought to maintain liquidity by investing a significant portion of the portfolio in high quality liquid securities including U.S. Treasury and U.S. Government Agency and sponsored enterprise securities. We have also invested in highly-rated structured products, including private-label commercial and residential MBS, CLOs, single family real estate-backed securities and non-mortgage asset-backed securities that, while somewhat less liquid, are generally pledgeable at either the FHLB or the FRB and provide us with attractive yields. Investment grade municipal securities provide liquidity and attractive tax-equivalent yields. We remain committed to keeping the duration of our securities portfolio short; relatively short effective portfolio duration helps mitigate interest rate risk. The estimated effective duration of the investment portfolio was 2.58 years andthe estimated weighted average life of the portfolio was 6.1 yearsas of September 30, 2026. Approximately 60% of the securities portfolio was floating rate at September 30, 2026.

Previous wording

The investment securities AFS portfolio was in a net unrealized loss position of $282.3 million at June 30, 2026, increasing by $15.2 million compared to a net unrealized loss position of $267.1 million at December 31, 2025. Net unrealized losses at June 30, 2026 included $22.1 million of gross unrealized gains and $304.4 million of gross unrealized losses. Investment securities available for sale in unrealized loss positions at June 30, 2026 had an aggregate fair value of $5.2 billion. The unrealized losses resulted primarily from a sustained period of higher interest rates, and in some cases, wider spreads compared to the levels at which securities were purchased. None of the unrealized losses were attributable to credit loss impairments.

Current wording

The investment securities AFS portfolio was in a net unrealized loss position of $453.1 million at September 30, 2026, increasing by $186 million compared to a net unrealized loss position of $267.1 million at December 31, 2025. Net unrealized losses at September 30, 2026 included $7.7 million of gross unrealized gains and $460.8 million of gross unrealized losses. Investment securities available for sale in unrealized loss positions at September 30, 2026 had an aggregate fair value of $6.3 billion. The unrealized losses resulted primarily from a sustained period of higher interest rates, and in some cases, wider spreads compared to the levels at which securities were purchased. None of the unrealized losses were attributable to credit loss impairments.

Previous wording

We have not sold, and do not anticipate the need to sell, securities in unrealized loss positions to generate liquidity. At June 30, 2026, the Company did not have an intent to sell securities that were in significant unrealized loss positions, and it was not more likely than not that the Company would be required to sell these securities before recovery of the amortized cost basis, which may be at maturity. The substantial majority of our investment securities are eligible to be pledged at either the FHLB or FRB.

Current wording

During the third quarter of 2026, we sold approximately $1.0 billion of lower-yielding securities and recognized related realized losses. The sales were executed to take advantage of market conditions and reinvest proceeds into higher-yielding securities with longer durations to enhance the earnings profile of the investment portfolio. At September 30, 2026, the Company did not have an intent to sell securities that were in significant unrealized loss positions, and it was not more likely than not that the Company would be required to sell these securities before recovery of the amortized cost basis, which may be at maturity. The substantial majority of our investment securities are eligible to be pledged at either the FHLB or FRB.

Previous wording

Included in New York tri-state multifamily loans in the tables above is approximately $99 million of rent regulated exposure as of June 30, 2026.

Current wording

Included in New York tri-state multifamily loans in the tables above is approximately $79 million of rent regulated exposure as of September 30, 2026.

Previous wording

The following table presents information about CRE loans maturing in the next 12 months by property type at June 30, 2026 (dollars in thousands). 13% of the total CRE portfolio, with a weighted average coupon rate of 4.29%, is fixed rate to the borrower and maturing in the next 12 months.

Current wording

The following table presents information about CRE loans maturing in the next 12 months by property type at September 30, 2026 (dollars in thousands). 11% of the total CRE portfolio, with a weighted average coupon rate of 4.25%, is fixed rate to the borrower and maturing in the next 12 months.

Previous wording

Non-performing CRE loans, excluding SBA loans, totaled $30 million at June 30, 2026 and were entirely comprised of office exposure. Also see the section entitled "Asset Quality" below.

Current wording

Non-performing CRE loans, excluding SBA loans, totaled $29 million at September 30, 2026 and were entirely comprised of office exposure. Also see the section entitled "Asset Quality" below.

Previous wording

(1) Includes $2.0 billion of owner occupied real estate.

Current wording

(1) Includes $2.1 billion of owner occupied real estate.

Previous wording

The Pinnacle portfolio consists of essential-use equipment financing to state and local governmental entities on a national basis directly and through vendor programs and alliances, with financing structures including equipment lease purchase agreements, direct (private placement) bond re-fundings and loan agreements.

Current wording

The Pinnacle portfolio consists of essential-use equipment financing to state and local governmental entities on a national basis directly and through vendor programs and alliances, with financing structures including equipment lease purchase agreements, direct (private placement) bond re-fundings and loan agreements. Credit quality within the portfolio remained strong, as the entire portfolio is pass-rated.

Previous wording

The Company acquires non-performing FHA and VA insured mortgages from third parties who have exercised their right to purchase these loans out of GNMA securitizations upon default ("Buyout Loans"). Buyout Loans that re-perform, either through modification or self-cure, may be eligible for re-securitization. The balance of Buyout Loans totaled $814 million at June 30, 2026.

Current wording

The Company acquires non-performing FHA and VA insured mortgages from third parties who have exercised their right to purchase these loans out of GNMA securitizations upon default ("Buyout Loans"). Buyout Loans that re-perform, either through modification or self-cure, may be eligible for re-securitization. The balance of Buyout Loans totaled $779 million at September 30, 2026.

Previous wording

Operating lease equipment, net totaled $157 million and $171 million at June 30, 2026 and December 31, 2025, respectively, consisting primarily of railcars and other transportation equipment. We expect the balance of operating lease equipment to continue to decline as this product offering is no longer considered core to our business strategy.

Current wording

Operating lease equipment, net totaled $152 million and $171 million at September 30, 2026 and December 31, 2025, respectively, consisting primarily of railcars and other transportation equipment. We expect the balance of operating lease equipment to continue to decline as this product offering is no longer considered core to our business strategy.

Previous wording

Total criticized and classified loans decreased by $139 million for the six months ended June 30, 2026, while total criticized and classified CRE loans declined by $184 million for the same period. Non-accrual loans declined by $149 million, or 40%, for the six months ended June 30, 2026.

Current wording

Total criticized and classified loans decreased by $149 million for the nine months ended September 30, 2026, while total criticized and classified CRE loans declined by $238 million for the same period. Non-accrual loans declined by $138 million, or 37%, for the nine months ended September 30, 2026.