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

This MD&A is expected to provide our investors with a view of BancShares'
financial condition and results of operations from our management's perspective.
This discussion and analysis should be read in conjunction with the unaudited
consolidated financial statements and related notes presented within this
Quarterly Report on Form 10-Q along with our financial statements and related
MD&A of financial condition and results of operations included in our Annual
Report on Form 10-K for the year ended December 31, 2021 ("2021 Annual Report").
Intercompany accounts and transactions have been eliminated. Although certain
amounts for prior years have been reclassified to conform to statement
presentations for 2022, the reclassifications had no effect on stockholders'
equity or net income as previously reported.

Throughout this MD&A we reference specific "Notes" to our financial statements.
These are Notes to the consolidated financial statements in Part One, Item 1.
Financial Statements.

Management uses certain non-GAAP financial measures in its analysis of the financial condition and results of operations of BancShares. See "Non-GAAP Financial Measurements" for a reconciliation of these financial measures to the most directly comparable financial measures in accordance with GAAP.



On January 3, 2022, BancShares completed its largest acquisition to date with
the merger with CIT Group Inc. ("CIT") and its subsidiary CIT Bank, N.A., a
national banking association ("CIT Bank"), pursuant to the terms and subject to
the conditions set forth in the Agreement and Plan of Merger (as amended, the
"Merger Agreement") (such acquisition, the CIT Merger). CIT had consolidated
total assets of approximately $53.2 billion as of December 31, 2021. The CIT
Merger is described further below and in Note 2 - Business Combinations.
Financial data for periods prior to the CIT Merger do not include any CIT
related data, and therefore are not directly comparable to the three months
ended March 31, 2022.

EXECUTIVE OVERVIEW

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

BancShares' earnings and cash flows are primarily derived from its commercial
and retail banking activities. We expanded our products and services with the
CIT Merger, and now have leased assets, primarily rail-related, and offer
factoring services. We gather deposits from retail and commercial customers and
also secure funding through various non-deposit sources. We invest the liquidity
generated from these funding sources in interest-earning assets, including loans
and leases, investment securities and interest-earning deposits at banks. We
also invest in bank premises, hardware, software, furniture and equipment used
to conduct our commercial and retail banking business. We provide treasury
services products, cardholder and merchant services, wealth management services
and various other products and services typically offered by banks. The fees and
service charges generated from these products and services are primary sources
of noninterest income, which is an essential component of our total revenue.

We are focused on expanding our position in legacy and target markets through organic growth and strategic acquisitions. We believe our franchise is positioned for continued growth as a result of our client centric banking principles, disciplined lending standards, and our people.

Refer to our 2021 Annual Report for further discussion of our strategy.







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Significant Events in 2022
As discussed in detail in Note 2 - Business Combinations, the CIT Merger closed
on January 3, 2022.

Significant items related to the CIT Merger are as follows:
•The fair value of total assets acquired was $53.8 billion, which mainly
consisted of approximately $32.7 billion of loans, $7.8 billion of operating
lease equipment and approximately $6.6 billion of investment securities. Loans
consisted of commercial and industrial loans, commercial real estate loans and
finance leases, which are included in our Commercial Banking segment, and
consumer loans (primarily residential mortgages), which are in our General
Banking segment, as further discussed below. Acquired rail assets were mostly
operating lease equipment that are in the new Rail segment.
•The fair value of deposits acquired was $39.4 billion that included deposits
derived from online banking and HOA deposits related to CAB, and commercial
deposits. The transaction also included approximately 80 bank branches, about 60
of which were in Southern California and the remaining primarily in the
Southwest, Midwest and Southeast.
•FCB recorded a preliminary gain on acquisition of $431 million, representing
the excess of the net assets acquired over the purchase price, and recorded a
$143 million core deposit intangible and a $52 million intangible liability for
net below market lessor lease contract rental rates related to the rail
portfolio.

Segment Updates
As of December 31, 2021, BancShares managed its business and reported its
financial results as a single segment. BancShares began reporting multiple
segments during the first quarter of 2022. BancShares now has three operating
segments: General Banking, Commercial Banking, and Rail, and a non-operating
segment, Corporate. BancShares conformed the comparative prior periods presented
to reflect the new segments. The substantial majority of BancShares' operations
for historical periods prior to completion of the CIT Merger are included in the
General Banking segment. The Commercial Banking and Rail segments primarily
relate to operations acquired in the CIT Merger.

Information about our segments is included Note 22 - Business Segment Information and in Results by Business Segments, later in this MD&A.



Financial Performance Summary
The following table summarizes the BancShares' results in accordance with U.S.
GAAP, unless otherwise noted. Refer to the Non-GAAP Financial Measurements
section at the end of the MD&A for a reconciliation of non-GAAP measures to the
most directly comparable GAAP measures. Additionally, due to the CIT Merger,
current quarter ending and average balances are not comparable to the prior
periods. Further discussions are included in the remaining sections of this
MD&A.
                                       65
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Table 1
Selected Quarterly Data
                                                                             Three Months Ended March 31,
dollars in millions, except share data                                        2022                   2021
SUMMARY OF OPERATIONS
Interest income                                                         $         710           $       355
Interest expense                                                                   61                    15
Net interest income                                                               649                   340
Provision (benefit) for credit losses                                             464                   (11)
Net interest income after provision for credit losses                             185                   351
Noninterest income                                                                850                   137
Noninterest expense                                                               810                   297
Income before income taxes                                                        225                   191
Income taxes                                                                      (46)                   44
Net income                                                                        271                   147
Preferred stock dividends                                                           7                     4
Net income available to common stockholders                             $         264           $       143

PER COMMON SHARE DATA
Average diluted common shares                                              15,779,153             9,816,405
Net income available to common stockholders (diluted)                   $       16.70           $     14.53

Book value per common share                                                    605.48                405.59

KEY PERFORMANCE METRICS
Return on average assets (ROA)                                                   1.00   %              1.16  %

Return on average common stockholders' equity (ROE)                             11.18   %             14.70  %

Net interest margin (NIM)(1)                                                     2.73   %              2.79  %

SELECTED QUARTERLY AVERAGE BALANCES
Total investments                                                       $      19,492           $     9,757
Total loans and leases(2)                                                      64,144                33,087
Total operating lease equipment (net)                                           7,924                     -
Total assets                                                                  109,234                51,409
Total deposits                                                                 91,574                44,858
Total common stockholders' equity                                               9,560                 3,935

SELECTED QUARTER-END BALANCES
Total investments                                                       $      19,469           $    10,222
Total loans and leases                                                         65,524                33,181
Total operating lease equipment (net)                                           7,972                     -
Total assets                                                                  108,597                53,909
Total deposits                                                                 91,597                47,331
Total common stockholders' equity                                               9,689                 4,321

Loan to deposit ratio                                                           71.53   %             70.10  %
Noninterest-bearing deposits to total deposits                                  28.27   %             43.34  %

CAPITAL RATIOS
Common equity tier 1 ratio                                                      11.34   %             12.02  %
Tier 1 risk-based capital ratio                                                 12.39   %             14.14  %
Total risk-based capital ratio                                                  14.47   %             11.00  %
Tier 1 leverage capital ratio                                                    9.55   %              7.84  %

ASSET QUALITY
Ratio of nonaccrual loans to total loans                                         0.82   %              0.59  %
Allowance for credit losses to loans ratio                                       1.29   %              0.63  %
Net charge off ratio                                                             0.09   %              0.03  %


(1)See "Non-GAAP Financial Measures" section for reconciliation of NIM presented
to unadjusted NIM (GAAP).
(2)Average loan balances include held for sale and non-accrual loans.



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First Quarter Highlights
•Net income for the first quarter of 2022 was $271 million, an increase of
$124 million, or 84% compared to the same quarter in 2021. Net income available
to common stockholders totaled $264 million for the first quarter of 2022, an
increase of $121 million, or 85% compared to the same quarter in 2021. Net
income per common share increased $2.17, or 15%, to $16.70 in the first quarter
of 2022, from $14.53 per share during the same quarter in 2021. The increases
are primarily attributed to the CIT Merger.
•Certain notable items and approximate after-tax amounts and impacts on earnings
per share included:
•Current expected credit losses ("CECL") day 2 provision for loans and leases
and unfunded commitments of $513 million ($387 million after tax, $24.50 per
common share).
•Preliminary gain on acquisition of $431 million (non-taxable, $27.34 per common
share) in other noninterest income, representing the excess of the fair value of
net assets acquired over the purchase price.
•Gain on debt redemptions in other noninterest income of $6 million ($5 million
after tax, $0.29 per common share) from approximately $2.9 billion of borrowings
assumed in the CIT Merger.
•Merger related expenses of $135 million ($102 million after tax, $6.45 per
common share) in other noninterest expenses.
•A reduction in other noninterest expenses of approximately $27 million ($20
million after tax, $1.28 per common share) related to the termination of certain
healthcare and life insurance plans of legacy CIT, reflecting amounts previously
accrued.
•Return on average assets for the first quarter of 2022 was 1.00%, compared to
1.16% in the first quarter of 2021.
•Net interest income ("NII") was $649 million for the first quarter of 2022, an
increase of $309 million, or 91% compared to the same quarter in 2021. This was
primarily due to the CIT Merger, partially offset by lower interest and fee
income on SBA-PPP loans. The net interest margin ("NIM") was 2.73% for the first
quarter of 2022, a decrease of 6 bps from 2.79% for the first quarter in 2021.
•Provision for credit losses was $464 million for the first quarter of 2022
compared to a benefit of $11 million for the same quarter in 2021. While still
low, net charge-off ratio was 0.09% for the first quarter of 2022, up from 0.03%
for the first quarter of 2021.
•Noninterest income was $850 million for the first quarter of 2022, compared to
$137 million for the same quarter of 2021, benefiting from the CIT Merger. The
current quarter includes a preliminary gain on acquisition of $431 million and
rental income on operating leases of $208 million. The remaining increase was
driven by the added activity due to the CIT Merger.
•Noninterest expense was $810 million for the first quarter of 2022, compared to
$297 million in the same quarter of 2021. The increase is primarily associated
with the CIT Merger, reflecting higher salaries and benefit costs of
$168 million due to the increase in employees, $124 million of depreciation and
maintenance costs associated with the operating lease portfolio and higher
merger costs of $128 million.
•Total loans and leases of $65.5 billion increased $32.5 billion from
December 31, 2021, reflecting the addition of $32.7 billion from the CIT Merger.
•Total deposits of $91.6 billion increased $40.2 billion from December 31, 2021,
reflecting the addition of $39.4 billion from the CIT Merger.
•At March 31, 2022, BancShares remained well capitalized with a total risk-based
capital ratio of 14.47%, a Tier 1 risk-based capital of 12.39%, a common equity
Tier 1 ratio of 11.34% and a leverage ratio of 9.55%.


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RESULTS OF OPERATIONS

NET INTEREST INCOME AND NET INTEREST MARGIN

NII reflects our interest income less interest expense and is included as a line item on the Consolidated Statements of Income. NII was $649 million for the three months ended March 31, 2022, up from $340 million in the year-ago quarter.



The following table presents the average balance sheet and related rates, along
with disaggregated quarter-over-quarter changes in NII between volume (level of
lending or borrowing) and rate (rates charged to customers or incurred on
borrowings). Volume change is calculated as change in volume times the previous
rate, while rate change is calculated as change in rate times the previous
volume. The rate/volume change, change in rate times change in volume, is
allocated between volume change and rate change. Tax equivalent net interest
income was not materially different from NII, therefore we present NII in our
analysis.

Table 2
Average Balances and Rates
                                                                              Three Months Ended
                                                   March 31, 2022                                            March 31, 2021                                          Change in NII Due to:
                                   Average            Income /            Yield /            Average           Income /            Yield /            Volume(1)           Yield /Rate(1)           Total

dollars in millions                Balance            Expense              Rate              Balance           Expense              Rate                                                           Change
Loans and leases (1)(2)          $  64,144          $     621                3.88  %       $ 33,087          $     323                3.92  %       $      301          $            (3)         $   298

Total investment securities         19,492                 83                1.71             9,757                 31                1.27                  26                       26               52

Interest-earning deposits at
banks                               11,476                  6                0.19             5,871                  1                0.10                   4                        1                5
Total adjusted interest earning
assets(2)                        $  95,112          $     710                2.99  %       $ 48,715          $     355                2.92  %       $      331          $            24          $   355

Operating lease equipment, net
(including held for sale)            7,924                                                        -
Cash and due from banks                536                                                      333
Allowance for credit losses           (907)                                                    (224)
All other noninterest bearing
assets                               6,569                                                    2,585
Total assets                     $ 109,234                                                 $ 51,409

Interest-bearing deposits:
Checking with interest           $  16,605          $       5                0.10  %       $ 10,746          $       1                0.05  %       $        3          $             1          $     4
Money market                        26,199                 15                0.24             9,008                  3                0.11                   9                        3               12
Savings                             13,659                  9                0.26             3,462                  -                0.04                   7                        2                9
Time deposits                        9,794                 10                0.43             2,805                  5                0.66                   7                       (2)               5
Total interest-bearing deposits     66,257                 39                0.24            26,021                  9                0.14                  26                        4               30
Securities sold under customer
repurchase agreements                  600                  -                0.16               641                  -                0.21                   -                        -                -
Borrowings:
Federal Home Loan Bank
borrowings                             641                  2                1.27               651                  2                1.28                   -                        -                -
Senior unsecured borrowings          2,719                 12                1.71                 -                  -                   -                  12                        -               12
Subordinated debt                    1,060                  8                2.96               497                  4                3.37                   4                        -                4
Other borrowings                        85                  -                1.95                88                  -                1.22                   -                        -                -
Total borrowings                     4,505                 22                1.95             1,236                  6                2.12                  16                        -               16
Total interest-bearing
liabilities                      $  71,362          $      61                0.35  %       $ 27,898          $      15                0.23  %       $       42          $             4          $    46

Noninterest-bearing deposits        25,317                                                   18,837
Other noninterest-bearing
liabilities                          2,132                                                      399
Stockholders' equity                10,423                                                    4,275
Total liabilities and
stockholders' equity             $ 109,234                                                 $ 51,409

Interest rate spread (2)                                                     2.64  %                                                  2.69  %
Net interest income and net
yield on interest-earning assets
(2)                                                 $     649                2.73  %                         $     340                2.79  %


(1)Loans and leases include non-PCD and PCD loans, nonaccrual loans and held for
sale. Interest income on loans and leases includes accretion income and loan
fees.
(2)The balance and rate presented is calculated net of average credit balances
of factoring clients. See "Non-GAAP Financial Measures" section for description
of adjusted interest earning assets and why these balances are shown net of
credit balances of factoring clients.


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First Quarter 2022 compared to First Quarter 2021
•NII was $649 million for the three months ended March 31, 2022, an increase of
$309 million compared to the first quarter of 2021, primarily due to the CIT
Merger, as well as loan growth absent the decline in SBA-PPP loans, partially
offset by a decline in interest and fee income on SBA-PPP loans and lower yields
on other interest-earning assets.
•Interest income earned on loans and leases was $621 million for the three
months ended March 31, 2022, an increase of $298 million compared to 2021. The
increase was primarily due to the addition of $32.7 billion of loans acquired in
the CIT Merger along with growth in loans, excluding SBA-PPP loans. Partially
offsetting was lower SBA-PPP interest and fee income. SBA-PPP loans contributed
$9 million in interest and fee income during the first quarter of 2022 compared
to $31 million in the first quarter of 2021.
•Interest income earned on investment securities was $83 million for the three
months ended March 31, 2022, an increase of $53 million compared to 2021. The
increase was primarily due to the addition of $6.6 billion of securities
acquired in the CIT Merger and higher portfolio yield, reflecting the mix of
acquired investments and a higher rate environment.
•Interest expense on interest-bearing deposits was $39 million for the three
months ended March 31, 2022, an increase of $30 million compared to 2021. The
increase was primarily due to the additional interest-bearing deposits acquired
in the CIT Merger, which also carried a higher average rate. Interest expense on
borrowings was $22 million for the three months ended March 31, 2022, an
increase of $16 million compared to 2021. The increase was primarily due to the
assumed borrowings in the CIT Merger. Utilizing excess cash, we redeemed
approximately $2.9 billion of the $4.5 billion assumed debt during the quarter.
•NIM was 2.73% in the first quarter of 2022, a decrease of 6 bps from the
comparable quarter in the prior year. The margin decline reflected higher yield
on our investment portfolio, offset by lower SBA-PPP income and purchase
accounting accretion, which reduced the loan portfolio yield, and higher rates
on deposits.
•Average interest-earning assets increased to $95.1 billion for the first
quarter of 2022, compared to $48.7 billion in the first quarter of 2021. The
primary driver for this change was the added assets from the CIT Merger. The
following table details the average interest earning asset by category.

Table 3
Average Interest-earning Asset Mix
                                           % of Total Interest-earning Assets
                                                   Three months ended
                                           March 31, 2022                March 31, 2021
Loans and leases                                               67  %               68  %
Investment securities                                          21  %               20  %

Interest-bearing cash                                          12  %               12  %
Total interest earning assets                                 100  %        

100 %





•Average interest-bearing liabilities increased to $71.4 billion compared to
$27.9 billion the first quarter of 2021, reflecting the addition of deposits and
borrowings from the CIT Merger. The following table shows our average funding
mix.

Table 4
Average Funding Mix
                                                                          %

of Total Interest-bearing Liabilities

Three months ended


                                                                           March 31, 2022             March 31, 2021
Total interest-bearing deposits                                                           93  %                 93  %
Securities sold under customer repurchase agreements                                       1  %                  2  %

Long-term borrowings                                                                       6  %                  5  %
                                                                                         100  %                100  %


•Rates on interest-bearing liabilities increased by 12 bps to 0.35%, primarily due to the higher rates on the deposits and borrowings acquired in the CIT Merger.







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PROVISION FOR CREDIT LOSSES



The provision for credit losses was $464 million for the first quarter of 2022,
compared to a benefit of $11 million for the same quarter in 2021. The increase
of $475 million was primarily due to the impact of the CIT Merger. The initial
ACL for Non-Purchased Credit Deteriorated ("Non-PCD") loans and leases acquired
in the CIT Merger was established through a corresponding increase of $454
million to the provision for credit losses (the "Initial Non-PCD Provision").
The provision for credit losses for unfunded commitments increased to $63
million for the first quarter of 2022 compared to a benefit of $1 million for
the first quarter of 2021. The increase of $64 million was primarily due to the
$59 million provision for unfunded commitments recognized on the Merger Date
related to off balance sheet exposures acquired in the CIT Merger. The noted
increases to the provision for credit losses of $513 million related to the CIT
Merger were partially offset by a benefit of $53 million, primarily related to
improvements in the most significant economic factors used to determine the ACL
as of March 31, 2022 compared to the economic factors used to determine the ACL
as of the Merger Date. The ACL is further discussed in Risk Management - Credit
Risk Management below.

NONINTEREST INCOME

Table 5
Noninterest Income
                                                                             Three Months Ended
                                                                     March 31,
dollars in millions                                                    2022              March 31, 2021
Rental income on operating leases                                  $      208          $             -
Other noninterest income
Fee income and other revenue                                               33                        9
Wealth management services                                                 35                       32
Gains on leasing equipment, net                                             6                        -
Service charges on deposit accounts                                        28                       22
Factoring commissions                                                      27                        -
Cardholder services, net                                                   25                       20
Merchant services, net                                                     10                        9
Realized gains on investment securities available for sale, net             -                        9
Marketable equity securities gains, net                                     3                       16
Gain on acquisition                                                       431                        -
Gain (loss) on extinguishment of debt                                       6                        -
Other noninterest income                                                   38                       20
Total other noninterest income                                     $      642          $           137



Noninterest Income
Noninterest income is an essential component of our total revenue. The primary
sources of noninterest income consist of rental income on operating leases,
wealth management services, fees and service charges generated from deposit
accounts, cardholder and merchant services, factoring commissions and mortgage
lending and servicing. A primary driver of the increases from the first quarter
of 2021 to the first quarter of 2022 was the addition of income related to the
CIT Merger.

Rental income from equipment we lease is generated primarily in the Rail segment
and to a lesser extent, in the Commercial Banking segment. Revenue is generally
dictated by the size of the portfolio, re-pricing of equipment upon lease
maturities and pricing on new equipment leases. Re-pricing refers to the rental
rate in the renewed equipment contract compared to the prior contract. Refer to
the Rail discussion in the Results by Business Segment section for further
details.

Other noninterest income for the first quarter of 2022 was $642 million,
compared to $137 million for the same period in 2021. The increase for the
comparable period was primarily due to the preliminary estimated gain on
acquisition related to the CIT Merger. See Note 2 - Business Combinations for
details. The remaining increase was primarily due to the following:
•Fee income and other revenue, consisting of items such as capital
market-related fees, fees on lines and letters of credit, agent and advisory
fees, servicing and insurance fees, increased by $24 million, reflecting the
added CIT activity.
•Factoring commissions totaled $27 million during the quarter on factoring
volume of $6.4 billion. See Results By Business Segment - Commercial Banking
below for a brief discussion on the factoring business.
•Cardholder services and merchant services increased by $6 million primarily due
to an increase in the volume of transactions processed.
•Service charges on deposit accounts increased by $6 million, primarily due to
additional customer deposit balances acquired in the CIT Merger. In January, we
announced our intent to eliminate our NSF fees and significantly lower our
overdraft fees from $36 to $10 on consumer accounts beginning mid-year 2022.
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•Wealth management services increased by $3 million, primarily due to increases
in advisory and transactions fees, assets under management and annuity fees.
•Gains on equipment sales were $6 million during the quarter and are recognized
on operating lease equipment sold, primarily related to rail equipment.
•During the quarter, we redeemed approximately $2.9 billion of borrowings
assumed in the CIT Merger, resulting in a $6 million gain in debt
extinguishment.
•Realized gains on sales of investment securities declined by $9 million.
•The fair market value adjustment on marketable equity securities declined by
$13 million.
•Other noninterest income increased by $18 million and primarily consisted of
insurance commissions, bank owned life insurance ("BOLI") income, gain on sales
of loans and OREO. Other noninterest income also includes derivative-related
gains and losses, ATM fees, and other various income items.

NONINTEREST EXPENSE

Table 6
Noninterest Expense
                                                            Three Months Ended
dollars in millions                                 March 31, 2022        March 31, 2021
Depreciation on operating lease equipment        $       81              $             -
Maintenance and other operating lease expenses           43                            -
Operating expenses
Salaries and benefits                                   352                          184
Net occupancy expense                                    49                           30
Equipment expense                                        52                           30
Third-party processing fees                              24                           14
FDIC insurance expense                                   12                            3
Merger-related expenses                                 135                            7
Intangible asset amortization                             6                            3
Other                                                    56                           26
Total operating expenses                         $      686              $           297



Depreciation on Operating Lease Equipment
Depreciation expense is driven by rail equipment and small and large ticket
equipment we own and lease to others. Operating lease activity is in the Rail
and Commercial Banking segments. The useful lives of rail equipment is generally
longer in duration, 40-50 years, whereas small and large ticket equipment is
generally 3-10 years. Refer to the Rail discussion in the Results by Business
Segments section for further details.

Maintenance and Other Operating Lease Expenses
Maintenance and other operating lease expenses of $43 million for the three
months ended March 31, 2022 related to equipment ownership and leasing costs
associated with the Rail portfolio and tend to be variable. Rail provides
railcars primarily pursuant to full-service lease contracts under which Rail as
lessor is responsible for railcar maintenance and repair. Refer to the Rail
discussion in the Results by Business Segment section for further details.

Operating Expenses
The primary components of operating expenses are salaries and related employee
benefits, occupancy and equipment expense.

Operating expenses were $686 million during the first quarter of 2022. The
increase compared to the same quarter in 2021 was primarily driven by the CIT
Merger. The most significant components of the change were as follows:
•Salaries and benefits, which includes salaries, wages and employee benefits,
were up $168 million, primarily reflecting the added headcount.
•Net occupancy expense includes rent expense on leased office space and
depreciation on buildings we own. The $19 million increase reflects the added
branches and office space from the CIT Merger.
•Equipment expense increased $22 million, reflecting the additional costs for
the IT systems from the CIT Merger.
•Third-party processing fees increased $10 million as a result of the CIT Merger
and our continued investments in digital and technology to support
revenue-generating businesses and improve internal processes.
•Merger-related expenses increased by $128 million, driven by expenses related
to the CIT Merger, including severance, retention, consulting and legal costs.
•The $9 million increase in FDIC insurance expense reflects the additional
deposits acquired in the CIT Merger.
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•Intangible amortization was up $3 million, reflecting the additional
amortization on the core deposit intangible asset recorded in the CIT Merger.
See Note 2 - Business Combinations for additional information.
•Other expense increased by $30 million and consisted of other insurance and
taxes (other than income tax), foreclosure, collection and other OREO-related
expenses, advertising, consulting, telecommunications and other miscellaneous
expenses including travel, postage, supplies, and appraisal expense. The first
quarter of 2022 included a $27 million reversal of an accrual related to legacy
CIT postretirement plans that were terminated after the acquisition date. See
Note 21 - Employee Benefit Plans.

INCOME TAXES

Table 7
Income Tax Data
                                          Three Months Ended
dollars in millions            March 31, 2022            March 31, 2021
Income before income taxes    $        225              $         191
Income taxes                           (46)                        44
Effective tax rate                   (20.4)  %                   23.0  %



The effective tax rate ("ETR") was (20.4)% in the current quarter, compared to
23.0% in the year-ago quarter. The effective rate for the three months ended
March 31, 2022 was primarily driven by the non-taxable nature of the preliminary
bargain purchase gain arising from the CIT Merger.

The ETR each quarter is impacted by a number of factors, including the relative
mix of domestic and international earnings, effects of changes in enacted tax
laws, adjustments to valuation allowances, and discrete items. The future
period's ETR may vary from the actual 2022 ETR due to changes in these factors.

We monitor and evaluate the potential impact of current events on the estimates
used to establish income tax expense and income tax liabilities. On a periodic
basis, we evaluate our income tax positions based on current tax law, positions
taken by various tax auditors within the jurisdictions where BancShares is
required to file income tax returns, as well as potential or pending audits or
assessments by tax auditors.

See Note 20 - Income Taxes for additional information.

RESULTS BY BUSINESS SEGMENT



Prior to the CIT Merger, BancShares operated with centralized management and
combined reporting, thus, BancShares operated as one consolidated reportable
segment. Due to the CIT Merger, we made changes to reflect the inclusion of CIT
operations and to reflect how we manage the combined business. As summarized in
the sections below, BancShares now reports financial results in three operating
segments: General Banking, Commercial Banking, and Rail, and a non-operating
segment, Corporate. We conformed prior period comparisons to this new segment
presentation. Based on the approach for segment disclosures, the substantial
majority of BancShares' operations for historical periods prior to the CIT
Merger are reflected in the General Banking segment. See Note 22 - Business
Segments for related disclosures on the segments.

Results in our business segments reflect our funds transfer policy and allocation of expenses. Unallocated balances and, when applicable, certain notable items, are reflected in Corporate.



General Banking
General Banking delivers services to individuals and businesses through an
extensive branch network, digital banking, telephone banking and various ATM
networks, including a full suite of deposit products, loans (primarily
residential mortgages and commercial loans), and various fee-based services.
General Banking also provides: a variety of wealth management products and
services to individuals and institutional clients, including brokerage,
investment advisory, and trust services; and deposit, cash management and
lending to homeowner associations and property management companies. As part of
the CIT Merger, CAB products were added that will drive the associated HOA
deposit channel. Revenue is primarily generated from interest earned on
residential mortgages, small business loans and fees for banking services.

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Table 8
General Banking: Financial Data and Metrics
dollars in millions                                                  Three Months Ended March 31,
Earnings Summary                                                        2022              2021
Net interest income                                                 $     437          $    344
Benefit for credit losses                                                 (15)              (11)
Net interest income after benefit for credit losses                       452               355
Noninterest income                                                        123               110
Noninterest expense                                                       409               290
Segment income before income taxes                                        166               175
Provision for income taxes                                                 40                40
Segment net income                                                  $     126          $    135
Select Period End Balances
Loans and leases                                                    $  38,778          $ 32,580
Deposits                                                               85,469            47,277



Results for the quarter reflect the additional activity from the CIT Merger,
driving the increase in NII. Noninterest income is driven by fees from services
we provide to our customers, such as wealth management and cardholder, plus
service charges on deposits. Noninterest expense was higher, primarily due to
the additional costs associated with the larger business and additional
employees. The results for the three months ended March 31, 2021 reflect the
vast majority of the historic operating activity for BancShares only.

Loans and leases increased, reflecting the additional residential mortgages and
consumer loans acquired in the CIT Merger, partially offset by run-off of
SBA-PPP loans. Deposits include deposits from the branch, online and community
association banking channels, most of which were acquired in the CIT Merger. See
discussions in Net Interest Income and Deposits sections. The additional
branches acquired in the CIT Merger were mostly in California.

Commercial Banking
Commercial Banking provides lending, leasing and other financial and advisory
services, primarily to small and middle-market companies across industries.
Commercial Banking also provides asset-based lending, factoring, receivables
management products and supply chain financing. Revenue is primarily generated
from interest earned on loans, rents on equipment leased, fees and other revenue
from lending and leasing activities and banking services, along with capital
markets transactions and commissions earned on factoring and related activities.

We provide factoring, receivable management, and secured financing to businesses
(our clients, who are generally manufacturers or importers of goods) that
operate in several industries, including apparel, textile, furniture, home
furnishings and consumer electronics. Factoring entails the assumption of credit
risk with respect to trade accounts receivable arising from the sale of goods by
our clients to their customers (generally retailers) that have been factored
(i.e., sold or assigned to the factor).

Table 9
Commercial Banking: Financial Data and Metrics
dollars in millions                                                  Three Months Ended March 31,
Earnings Summary                                                        2022               2021
Net interest income                                                 $      207          $      4
Benefit for credit losses                                                  (34)                -
Net interest income after benefit for credit losses                        241                 4
Noninterest income                                                         112                 -
Noninterest expense                                                        191                 1
Segment income before income taxes                                         162                 3
Provision for income taxes                                                  41                 1
Segment net income                                                  $      121          $      2
Select Period End Balances
Loans and leases                                                    $   26,672          $    601
Deposits                                                                 4,687                54
Factoring volume                                                         6,433                 -



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Results for the current quarter primarily reflect activity from the former CIT
businesses which are not included in the year-ago activity. Noninterest income
primarily includes rental income on operating lease equipment of $49 million and
factoring commissions of $27 million, plus other fee and income items.
Noninterest expense reflects normal operating costs and includes depreciation on
operating lease equipment of $40 million.

The increase in loans and leases and deposits for the three months ended March 31, 2022 reflect those acquired in the CIT Merger.

Rail


Rail offers customized leasing and financing solutions on a fleet of railcars
and locomotives to railroads and shippers throughout North America. Railcar
types include covered hopper cars used to ship grain and agricultural products,
plastic pellets, sand, and cement; tank cars for energy products and chemicals;
gondolas for coal, steel coil and mill service products; open hopper cars for
coal and aggregates; boxcars for paper and auto parts, and centerbeams and flat
cars for lumber. Revenues are primarily generated from operating lease income.

Table 10
Rail: Financial Data and Metrics
dollars in millions                                                   Three Months Ended March 31,
Earnings Summary                                                        2022                2021
Rental income on operating leases                                  $       159          $        -
Depreciation on operating lease equipment                                   41                   -
Maintenance and other operating lease expenses                              43                   -
Net revenue on operating leases(1)                                          75                   -
Interest expense, net                                                       19                   -
Noninterest income                                                           3                   -
Noninterest expense                                                         16                   -
Segment income before income taxes                                          43                   -
Provision for income taxes                                                  11                   -
Segment net income                                                 $        32          $        -
Select Period End Balances
Operating lease equipment, net                                     $     

7,251 $ -

(1)Net revenue on operating leases is a non-GAAP measure. See the "Non-GAAP Financial Measures" section for a reconciliation from the GAAP measure (segment net income) to the non-GAAP measure (net revenue on operating leases).



Net income and net revenue on operating leases are utilized to measure the
profitability of our Rail segment. Net revenue on operating leases reflects
rental income on operating lease equipment less depreciation on operating lease
equipment and maintenance and other operating lease expenses. Due to the nature
of our portfolio, which is essentially all operating lease equipment, certain
financial measures commonly used by banks, such as NII, are not as meaningful
for this business. NII is not used because it includes the impact of debt costs
of our operating lease assets but excludes the associated rental income.

Net income and net revenue on operating leases for the three months ended March 31, 2022, were $32 million and $75 million, respectively. Our fleet is diverse and pricing on new leases averaged 108% of the previous rate, strengthened by various railcar types during the quarter. Our railcar utilization, including commitments to lease, was 95.5% at March 31, 2022, representing improvement in many railcar types.



Depreciation is recognized on railcars. Maintenance and other operating lease
expenses tend to be variable. Maintenance costs relate to freight and storage
costs, reflecting railcars returned, and costs to put cars back on lease.

Portfolio


Rail customers include all of the U.S. and Canadian Class I railroads (i.e.,
railroads with annual revenues of approximately $500 million and greater), other
railroads, as well as manufacturers and commodity shippers. At March 31, 2022
our total operating lease fleet consisted of approximately 119,600 railcars. The
following table reflects the proportion of railcars by type based on units and
net investment, respectively:
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Table 11
Operating lease Railcar Portfolio by Type as of March 31, 2022 (units and net
investment)
                                                   Total Owned
                           Total Owned           Fleet - % Total
Railcar Type          Fleet - % Total Units      Net Investment
Covered Hoppers                        42  %                40  %
Tank Cars                              30  %                41  %
Mill/Coil Gondolas                      8  %                 6  %
Coal                                    8  %                 1  %
Boxcars                                 6  %                 7  %
Other                                   6  %                 5  %
Total                                 100  %               100  %


Table 12 Rail Operating Lease Equipment by Obligor Industry dollars in millions

                       March 31, 2022
Manufacturing                       $       2,879        40  %
Rail                                        2,306        32  %
Wholesale                                     945        13  %
Oil and gas extraction / services             447         6  %
Energy and utilities                          224         3  %
Other                                         450         6  %
Total                               $       7,251       100  %



Corporate
Certain items are not allocated to operating segments and are included in the
Corporate segment. Some of the more significant and recurring items include
interest income on investment securities, a portion of interest expense
primarily related to corporate funding costs (including brokered deposits),
income on BOLI (other noninterest income), merger-related costs, as well as
certain unallocated costs and intangible asset amortization expense (operating
expenses). Corporate also includes certain significant items that are
infrequent, such as: the Initial Non-PCD Provision for loans and leases and
unfunded commitments; and the preliminary gain on acquisition, each of which are
related to the CIT Merger.

Table 13
Corporate: Financial Data and Metrics
dollars in millions                                                  Three Months Ended March 31,
Earnings Summary                                                        2022                  2021
Net interest income (expense)                                    $            24          $      (8)
Provision for credit losses                                                  513                  -
Net interest expense after provision for credit losses                      (489)                (8)
Noninterest income                                                           453                 27
Noninterest expense                                                          110                  6
Segment (loss) income before income taxes                                   (146)                13
(Benefit) provision for income taxes                                        (138)                 3
Segment net (loss) income                                        $            (8)         $      10



Results for the three months ended March 31, 2022 were driven by impacts from
the CIT Merger. Results in the current quarter included notable items of
$513 million related to the Initial Non-PCD Provision, a preliminary gain on
acquisition of $431 million (noninterest income) and $135 million of merger
related expenses.
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BALANCE SHEET ANALYSIS

Interest-earning Assets
Interest-earning assets include interest-bearing cash, investment securities,
loans and leases, and loans and leases held for sale, all of which reflect
varying interest rates based on the risk level and repricing characteristics of
the underlying asset. Higher risk investments typically carry a higher interest
rate but expose us to higher levels of market and/or credit risk. We strive to
maintain a high level of interest-earning assets relative to total assets, while
keeping non-earning assets at a minimum.

Interest-earning Deposits at Banks
Interest-bearing cash totaled $9.3 billion at March 31, 2022, up from
$9.1 billion at December 31, 2021, reflecting lending and deposit levels, and
the timing of investment maturities. While the CIT Merger added nearly $2.9
billion at the time of the merger, that was offset by the use of cash for the
redemption of approximately $2.9 billion of assumed debt.

Investment Securities
The primary objective of the investment portfolio is to generate incremental
income by deploying excess funds into securities that have minimal liquidity
risk and low to moderate interest rate risk and credit risk. Other objectives
include acting as a stable source of liquidity, serving as a tool for asset and
liability management and maintaining an interest rate risk profile compatible
with BancShares' objectives. Additionally, purchases of equities and corporate
bonds in other financial institutions have been made largely under a long-term
earnings optimization strategy. Changes in the total balance of our investment
securities portfolio result from trends in balance sheet funding and market
performance. Generally, when inflows arising from deposit and treasury services
products exceed loan and lease demand, we invest excess funds into the
securities portfolio or into overnight investments. Conversely, when loan demand
exceeds growth in deposits and short-term borrowings, we allow any overnight
investments to decline and use proceeds from maturing securities and prepayments
to fund loan demand. See Note 1 - Accounting Policies and Basis of Presentation,
and Note 3 - Investments, for additional disclosures regarding investment
securities.

The carrying value of investment securities totaled $19.5 billion at March 31,
2022, an increase of $6.4 billion compared to December 31, 2021, primarily
reflecting the CIT Merger, which added $6.6 billion at the time of the merger.
The remaining activity in the portfolio included investment securities purchases
of $0.8 billion, partially offset by maturities and paydowns of $0.6 billion.

Available for sale securities are reported at fair value and unrealized gains
and losses are included as a component of AOCI, net of deferred taxes. As of
March 31, 2022, investment securities available for sale had a net pre-tax
unrealized loss of $431 million, compared to a net pre-tax unrealized loss of
$12 million as of December 31, 2021. Management evaluated the available for sale
securities in an unrealized loss position and concluded that the unrealized
losses related to changes in interest rates relative to when the securities were
purchased, and therefore, no ACL was needed at March 31, 2022.

BancShares' portfolio of held to maturity debt securities consists of
mortgage-backed securities issued by government agencies and government
sponsored entities, US Treasury notes, unsecured bonds issued by government
agencies and government sponsored entities, securities issued by the World Bank
and FDIC guaranteed CDs with other financial institutions. Given the
consistently strong credit rating of the U.S. Treasury, the World Bank and the
long history of no credit losses on debt securities issued by government
agencies and government sponsored entities, no ACL was needed at March 31, 2022
and December 31, 2021.
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Table 14 presents the investment securities portfolio at March 31, 2022 and December 31, 2021, segregated by major category.



Table 14
Investment Securities
                                                             March 31, 2022                                                   December 31, 2021
                                                                     Amortized            Fair                                          Amortized            Fair
dollars in millions                       Composition(1)                cost              value              Composition(1)                cost              value
Investment securities available for
sale
U.S. Treasury                                         10.2  %       $   2,014          $  1,931                          15.4  %       $   2,007          $  2,005
Government agency                                      1.1  %             206               206                           1.7  %             221               222
Residential mortgage-backed
securities                                            26.8  %           5,340             5,052                          36.2  %           4,757             4,728
Commercial mortgage-backed securities                  8.1  %           1,584             1,520                          12.6  %           1,648             1,640
Corporate bonds                                        3.1  %             582               586                           4.7  %             582               608

Total investment securities available
for sale                                              49.3  %       $   9,726          $  9,295                          70.6  %       $   9,215          $  9,203
Investment in marketable equity
securities                                             0.5  %       $      73          $    100                           0.7  %       $      73          $     98
Investment securities held to
maturity
U.S. Treasury                                          2.4  %       $     471          $    447                             -  %       $       -          $      -
Government agency                                      7.8  %           1,541             1,463                             -  %               -                 -
Residential mortgage-backed
securities                                            23.6  %           4,776             4,461                          17.7  %           2,323             2,307
Commercial mortgage-backed securities                 14.9  %           2,988             2,805                          11.0  %           1,485             1,451
Supranational securities                               1.5  %             294               277                             -  %               -                 -
Other investments                                        -  %               4                 4                             -  %               2                 2
Total investment securities held to
maturity                                              50.2  %       $  10,074          $  9,457                          28.7  %       $   3,810          $  3,760
Total investment securities                            100  %       $  19,873          $ 18,852                           100  %       $  13,098

$ 13,061 (1) Calculated as a percent of the total fair value of investment securities.





Table 15 presents the weighted average yields for investment securities
available for sale and held to maturity at March 31, 2022, segregated by major
category with ranges of contractual maturities. The weighted average yield on
the portfolio is calculated using security-level annualized yields.

Table 15
Weighted Average Yield on Investment Securities
                                                                                          March 31, 2022
                                             Within                  One to Five                Five to 10
                                            One Year                    Years                      Years              After 10 Years             Total
Investment securities available for
sale
U.S. Treasury                                      0.11  %                    0.96  %                      -  %                  -  %               0.96  %
Government agency                                     -  %                    3.44  %                   2.78  %               2.81  %               2.79  %
Residential mortgage-backed securities             1.70  %                    1.84  %                   2.18  %               1.50  %               1.51  %
Commercial mortgage-backed securities                 -  %                    3.16  %                   4.02  %               2.17  %               2.20  %
Corporate bonds                                    3.54  %                    5.88  %                   5.43  %               5.28  %               5.46  %

Total investment securities available
for sale                                           0.19  %                    1.12  %                   4.52  %               1.66  %               

1.77 %



Investment securities held to maturity
U.S. Treasury                                         -  %                    1.19  %                   1.44  %                  -  %               1.38  %
Government agency                                     -  %                    1.26  %                   1.70  %                  -  %               1.49  %
Residential mortgage-backed
securities(1)                                         -  %                    3.36  %                   7.67  %               1.74  %               1.74  %
Commercial mortgage-backed
securities(1)                                         -  %                       -  %                   2.37  %               1.84  %               1.84  %
Supranational Securities                              -  %                    1.23  %                   1.64  %                  -  %               1.56  %
Other investments                                  0.59  %                       -  %                      -  %                  -  %               0.59  %
Total investment securities held to
maturity                                           0.59  %                    1.25  %                   1.63  %               1.78  %               1.71  %


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

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Assets Held for Sale
Assets held for sale were $83 million at March 31, 2022, of which $81 million
related to loans and remainder to non-interest earning operating lease
equipment. The decrease since December 31, 2021 is primarily due to loan sales,
partially offset by assets acquired in the CIT Merger and originations.

Certain residential real estate loans and commercial loans are originated to be
sold to investors or lenders, respectively, and are recorded in assets held for
sale at fair value. In addition, BancShares may change its strategy for certain
portfolio loans and decide to sell them in the secondary market. At that time,
portfolio loans are transferred to loans held for sale at fair value.

Loans and Leases
Loans and leases held for investment were $65.5 billion at March 31, 2022, an
increase of $32.5 billion since December 31, 2021, primarily related to the
$32.7 billion of loans acquired as part of the CIT Merger and partially offset
by a reduction in SBA-PPP loans.

Upon completion of the CIT Merger, we re-evaluated our loan classes to reflect
the risk characteristics of the combined portfolio. BancShares reports its
commercial loan portfolio in the following classes: commercial construction,
owner occupied commercial mortgage, non-owner occupied commercial mortgage,
commercial and industrial, and leases. The consumer portfolio reflects
residential mortgage, revolving mortgage, consumer auto and consumer other.
Commercial loans at March 31, 2022 were $50.1 billion compared to $22.6 billion
at December 31, 2021, representing 76% and 70% of total loans and leases,
respectively. Consumer loans at March 31, 2022 were $15.4 billion, compared to
$9.8 billion at December 31, 2021, representing 24% and 30% of total loans and
leases, respectively.

Table 16
Loans and Leases
dollars in millions                        March 31, 2022       December 31, 2021
Commercial:
Commercial construction                   $         2,633      $            1,238
Owner occupied commercial mortgage                 13,553                  

12,099


Non-owner occupied commercial mortgage              9,293                   3,041
Commercial and industrial                          22,402                   5,937
Leases                                              2,220                     271
Total commercial                          $        50,101      $           22,586
Consumer:
Residential mortgage                               11,711                   6,088
Revolving mortgage                                  1,840                   1,818
Consumer auto                                       1,320                   1,332
Consumer other                                        552                     548
Total consumer                            $        15,423      $            9,786
Total loans and leases                             65,524                  32,372
Less allowance for credit losses                      848                     178
Net loans and leases                      $        64,676      $           32,194



Non-PCD and PCD loans were $62.1 billion and $3.4 billion at March 31, 2022,
respectively, compared to $32.0 billion and $0.3 billion at December 31, 2021,
respectively. The discount related to acquired non-PCD loans was $74.7 million
and $11.4 million at March 31, 2022 and December 31, 2021, respectively. The
discount related to PCD loans was $66.9 million and $29.0 million at March 31,
2022 and December 31, 2021, respectively.

OPERATING LEASE EQUIPMENT, NET

As detailed in the following table, our operating lease portfolio is mostly comprised of rail assets. See the Rail segment section for further details on the rail portfolio.



Table 17
Operating Lease Equipment
dollars in millions         March 31, 2022
Railcars and locomotives   $        7,251
Other equipment                       721
Total(1)                   $        7,972

(1)Includes off-lease Rail equipment of $504 million.


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INTEREST-BEARING LIABILITIES



Interest-bearing liabilities include interest-bearing deposits, securities sold
under customer repurchase agreements, FHLB borrowings, subordinated debt, and
other borrowings. Interest-bearing liabilities totaled $69.0 billion at
March 31, 2022, compared to $31.8 billion at December 31, 2021. The increase was
mostly due to deposits and borrowings from the CIT Merger, partially offset by
the redemption of assumed debt during the quarter. See Note 2 - Business
Combinations for details on deposits and borrowings associated with the CIT
Merger.

Deposits


At March 31, 2022, total deposits were $91.6 billion, an increase of
$40.2 billion since December 31, 2021, driven by the $39.4 billion of deposits
from the CIT Merger. As part of the CIT Merger, we acquired CIT's online banking
platform and a leading HOA deposit channel.

Table 18
Deposits
dollars in millions       March 31, 2022       December 31, 2021
Demand                   $        25,898      $           21,405
Checking with interest            16,702                  12,694
Money market                      26,249                  10,590
Savings                           13,506                   4,236
Time                               9,242                   2,481
Total deposits           $        91,597      $           51,406



We strive to maintain a strong liquidity position, and therefore a focus on core
deposit retention remains a key business objective. We believe traditional bank
deposit products remain an attractive option for many customers, as evidenced by
the significant deposit growth the industry has experienced over the past 18
months. As economic conditions improve, we recognize that our liquidity position
could be adversely affected as bank deposits are withdrawn. Our ability to fund
future loan growth is significantly dependent on our success in retaining
existing deposits and generating new deposits at a reasonable cost.

We estimate total uninsured deposits were $31.3 billion and $23.0 billion at
March 31, 2022 and December 31, 2021, respectively. Table 20 provides the
expected maturity of time deposits in excess of $250,000, the FDIC insurance
limit, as of March 31, 2022.

Table 19
Maturities of Time Deposits In Excess of $250,000
dollars in millions                     March 31, 2022
Time deposits maturing in:
Three months or less                   $          470
Over three months through six months              346
Over six months through 12 months                 456
More than 12 months                               319
Total                                  $        1,591



Borrowings
At March 31, 2022, total borrowings were $3.3 billion compared to $1.8 billion
at December 31, 2021. The $1.5 billion increase was due to the $4.5 billion debt
assumed in the CIT Merger. As part of liability management and to reduce higher
debt costs, on February 24, 2022, BancShares redeemed approximately $2.9 billion
of senior unsecured notes that were assumed in the CIT Merger. This included all
of the outstanding approximately $1.1 billion aggregate principal amount of the
5.000% Senior Unsecured Notes due 2022, $750 million aggregate principal amount
of the 5.000% Senior Unsecured Notes due 2023, $500 million aggregate principal
amount of the 4.750% Senior Unsecured Notes due 2024, and $500 million aggregate
principal amount of the 5.250% Senior Unsecured Notes due 2025.


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Table 20 presents borrowings, including the respective unamortized purchase accounting adjustments and issuance costs.



Table 20
Borrowings
dollars in millions                                               March 31, 2022           December 31, 2021
Securities sold under customer repurchase agreements             $          616          $              589
Federal Home Loan Bank borrowings                                           639                         645
Senior Unsecured Borrowings
3.929% fixed-to-floating rate notes due June 2024(1)                        513                           -
2.969% fixed-to-floating rate notes due September 2025(1)                   322                           -
    6.000% fixed rate notes due April 2036(1)                                60                           -
Subordinated debt
SCB Capital Trust I - floating rate debenture due April 2034                 10                          11
FCB/SC Capital Trust II - floating rate debenture due June 2034              18                          18
FCB/NC Capital Trust III - floating rate debenture due June 2036             88                          88
Macon Capital Trust I - floating rate debenture due March 2034               14                          14
3.375 % fixed-to-floating rate notes due March 2030                         347                         347
6.125% fixed rate notes due March 2028(1)                                   478                           -
4.125% fixed-to-fixed rate notes due November 2029(1)                       103                           -
Total subordinated debt                                                   1,058                         478
Other borrowings                                                             84                          72
Total borrowings                                                 $        3,292          $            1,784

(1)Debt assumed in the CIT Merger.

BancShares owns four special purpose entities - SCB Capital Trust I, FCB/SC Capital Trust II, FCB/NC Capital Trust III, and Macon Capital Trust I (the "Trusts"), which mature in 2034, 2034, 2036, and 2034, respectively. Subordinated debt included junior subordinated debentures representing obligations to the Trusts, which may be redeemed at par in whole or in part at any time. BancShares has guaranteed all obligations of SCB Capital Trust I, FCB/SC Capital Trust II, FCB/NC Capital Trust III, and Macon Capital Trust I.

RISK MANAGEMENT



BancShares provided detail risk management information in our 2021 Form 10-K.
The following is a summary of those disclosures or updates to those disclosures,
primarily due to the CIT Merger.

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

The Board Risk Committee structure is designed to allow for information flow,
effective challenge and timely escalation of risk-related issues. The Board Risk
Committee is directed to monitor and advise the full Board regarding risk
exposures, including Credit, Market, Capital, Liquidity, Operational,
Compliance, Asset, Strategic and Reputational risks; review, approve, and
monitor adherence to the Risk Appetite Statement and supporting risk tolerance
levels via a series of established metrics; and evaluate, monitor and oversee
the adequacy and effectiveness of the Risk Management Framework and Risk
Appetite Framework. The Board Risk Committee also reviews: reports of
examination by and communications from regulatory agencies; the results of
internal and third party testing and qualitative and quantitative assessments
related to risk management; and any other matters within the scope of the Board
Risk Committee's oversight responsibilities. The Board Risk Committee monitors
management's response to certain risk-related regulatory and audit issues. In
addition, the Board Risk Committee may coordinate with the Audit Committee and
the Compensation, Nominations and Governance Committee for the review of
financial statements and related risks, compensation risk management and other
areas of joint responsibility.

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



BancShares is subject to a variety of risks that may arise through its business
activities. As identified in our 2021 Form 10-K, our primary risks are credit,
market, capital, liquidity, operational, compliance, strategic and reputational
risks.

Given several factors including but not limited to positive internal and
external trends, positive risk metrics, effective incident, oversight and
monitoring, the Company returned to business as usual operations and lifted
internal COVID-19 related restrictions in early April. BancShares will continue
to comply with any state and local orders that are in place. Monitoring of
associated credit and operational risks has now been integrating into normal
risk monitoring activities.

Since the filing of our 2021 Annual Report on Form 10-K, BancShares has been
assessing the emerging impacts of the rising international tensions that could
impact the economy and exacerbate headwinds of rising inflation, global supply
chain disruptions, and recessionary pressures as well as operational risks such
as those associated with potential cyber-attacks for FCB and third parties upon
whom it relies. Assessments have not identified material impacts to date but
those assessments will remain ongoing as the condition continues to exist.

Due to the CIT Merger, we included additional information on added risks, Asset
Risk (due to the operating lease portfolio) and Counterparty Risk (due to the
increased use of derivatives).

CREDIT RISK MANAGEMENT



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

Commercial Lending and Leasing
Commercial loans and leases acquired in the CIT Merger, which are primarily
within the Commercial Banking segment, are graded according to a rating system
that was used by CIT prior to the merger with respect to probability of obligor
default ("PD") and loss given default (severity) based on various risk factors.
The PD and severity are derived through historical observations of default and
subsequent losses within each risk grading. When these loans and leases were
graded at underwriting, or when updated periodically, a model is run to generate
a preliminary risk rating. The model incorporates both internal and external
historical default and loss data to develop loss rates for each risk rating. The
preliminary risk rating assigned by the model can be adjusted as a result of
borrower specific facts that in management's judgment warrant a modification of
the modeled risk rating to arrive at the final approved risk ratings.

For small-ticket lending and leasing portfolio acquired in the CIT Merger,
automated credit scoring models for origination (scorecards) and re-grading
(auto re-grade algorithms) are also employed. These are supplemented by business
rules and expert judgment. Adjustments to credit scorecards, auto re-grading
algorithms, business rules and lending programs may be made periodically based
on these evaluations. A credit approval hierarchy is enforced to ensure that an
underwriter with the appropriate level of authority reviews applications.

Consumer Lending
Consumer lending begins with an evaluation of a consumer borrower's credit
profile against published standards. Credit decisions are made after analyzing
quantitative and qualitative factors, including borrower's ability to repay the
loan, collateral values, and considering the transaction from a judgmental
perspective.

Consumer products use traditional and measurable standards to document and
assess the creditworthiness of a loan applicant. Credit standards follow
industry standard documentation requirements. Performance is largely evaluated
based on an acceptable pay history along with a quarterly assessment which
incorporates current market conditions. Non-traditional loans may also be
monitored by way of a quarterly review of the borrower's refreshed credit score.
Loans are placed on non-accrual status at 90 days past due or more, except for
government guaranteed loans. When warranted an additional review of the
underlying collateral's loan-to-value may be conducted.
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Allowance for Credit Losses
The ACL was $848 million at March 31, 2022, compared to $178 million at
December 31, 2021. The ACL as a percentage of total loans and leases was 1.29%
at March 31, 2022, compared to 0.55% at December 31, 2021. The increase in the
ACL was primarily due to the impact of the CIT Merger. The initial ACL for PCD
loans and leases acquired in the CIT Merger (the "Initial PCD ACL") was $284
million. The Initial PCD ACL was established through the PCD Gross-Up and there
was no corresponding increase to the provision for credit losses. The PCD
Gross-Up is discussed further in Note 2 - Business Combinations. The initial ACL
for Non-PCD loans and leases acquired in the CIT Merger was established through
a corresponding increase of $454 million to the provision for credit losses for
the "Initial Non-PCD Provision".

The ACL is calculated using a variety of factors, including, but not limited to,
charge-off and recovery activity, loan growth, changes in macroeconomic factors,
collateral type, estimated loan life and changes in credit quality. For the
period ended March 31, 2022, the ACL increase since December 31, 2021 was
primarily driven by the Initial PCD ACL and Initial Non-PCD ACL discussed above,
partially offset by improvements in macroeconomic factors. Forecasted economic
conditions are developed using third party macroeconomic scenarios and may be
adjusted based on management's expectations over the life of the portfolio.
Significant macroeconomic factors used in estimating the expected losses include
unemployment, GDP, home price index, commercial real estate index, corporate
profits, and credit spreads. The March 31, 2022 ACL forecast was calculated
using scenario weighting of a range of economic scenarios, including a baseline,
an upside, and a downside scenario. The scenarios showed improvements in the
most significant economic factors compared to what was used to generate the
December 31, 2021 ACL and estimate the Initial PCD ACL and Initial Non-PCD
Provision at the Merger Date. These loss estimates were also influenced by
BancShares' strong credit quality and low net charge-offs. BancShares determined
that an ACL of $848 million was appropriate as of March 31, 2022. In the three
months ended March 31, 2022, the ACL on commercial portfolios increased
$663 million and the ACL on consumer portfolios increased $7 million, reflecting
the CIT Merger.

While management utilizes its best judgment and information available, the ACL
is dependent upon factors that are inherently difficult to predict, the most
significant being the factors in the economic scenarios. ACL estimates in these
scenarios ranged from approximately $625 million to approximately $1.1 billion.
BancShares determined that an ACL of $848 million was appropriate as of
March 31, 2022.

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Table 21
Allowance for Credit Losses
                                                                Three months ended March 31, 2022
dollars in millions                                    Commercial             Consumer              Total
Balance at December 31, 2021                         $        80           $        98          $      178
Initial PCD ACL(1)                                           270                    14                 284
Initial Non-PCD Provision                                    432                    22                 454
Benefit for credit losses - loans and leases                 (23)                  (30)                (53)
Total provision (benefit) for credit losses- loans
and leases                                           $       409           $        (8)         $      401
Charge-offs(1)                                               (28)                   (5)                (33)
Recoveries                                                    12                     6                  18

Balance at March 31, 2022                            $       743           $       105          $      848
Annualized net charge-off ratio                                                                       0.09  %
Net charge-offs (recoveries)                         $        16           $        (1)         $       15
Average loans                                                                                   $   65,182
Percent of loans in each category to total loans              76   %                24  %              100  %

                                                                Three months ended March 31, 2021
dollars in millions                                    Commercial             Consumer              Total
Balance at December 31, 2020                         $        92           $       133          $      225
Benefit for credit losses - loans and leases                  (3)                   (8)                (11)
Charge-offs                                                   (4)                   (5)                 (9)
Recoveries                                                     2                     4                   6

Balance at March 31, 2021                            $        87           $       124          $      211
Annualized net charge-off ratio                                                                       0.03  %
Net charge-offs                                      $         2           $         1          $        3
Average loans                                                                                   $   32,970
Percent of loans in each category to total loans              70   %                30  %              100  %


(1)The Initial PCD ACL related to the CIT Merger was $284 million, net of an
additional $243 million for loans that CIT charged-off prior to the Merger Date
(whether full or partial) which met BancShares' charge-off policy at the Merger
Date.

Net charge-offs were $15 million during the first quarter of 2022, compared to
$3 million during the first quarter of 2021. On an annualized basis, total net
charge-offs as a percentage of total average loans and leases was 0.09% and
0.03% for the first quarter of 2022 and 2021, respectively.

The following table provides trends in the ACL ratios.



Table 22
Allowance for Credit Losses Ratios
dollars in millions                                            March 31, 2022         December 31, 2021
Allowance for credit losses to total loans and leases:                 1.29  %                   0.55  %
Allowance for credit losses                                   $         848          $            178
Total loans and leases                                        $      65,524          $         32,372
Commercial Loans:
Commercial allowance for credit losses to commercial loans
and leases:                                                            1.48  %                   0.35  %
Allowance for credit losses - commercial                      $         743          $             80
Commercial loans and leases                                   $      50,101          $         22,586
Consumer Loans:
Consumer allowance for credit losses to consumer loans and
leases:                                                                0.69  %                   1.01  %
Allowance for credit losses - consumer                        $         105          $             98
Consumer loans and leases                                     $      15,423          $          9,786



The reserve for unfunded loan commitments was $75 million and $12 million at
March 31, 2022 and December 31, 2021, respectively. The increase was driven by
the additional commitments from the CIT Merger. The additional off-balance sheet
commitments primarily reflect loan commitments or lines of credit and DPAs. See
Note 23 - Commitments and Contingencies for information relating to off-balance
sheet commitments and Note 1 - Accounting Policies and Basis of Presentation for
discussion on the ACL for unfunded commitments.


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Credit Metrics
Non-performing Assets
Nonperforming assets include non-accrual loans and leases and OREO. At March 31,
2022, BancShares' nonperforming assets totaled $581 million, an increase of
$420 million since December 31, 2021, reflecting the added balances of the CIT
Merger portfolio.

The following table presents total nonperforming assets.



Table 23
Non-Performing Assets
dollars in millions                                              March 31, 2022         December 31, 2021
Non-accrual loans:
Commercial loans                                                $         426          $            45
Consumer loans                                                            112                       76
Total non-accrual loans                                         $         538          $           121
Other real estate owned                                                    43                       40
Total non-performing assets                                     $         581          $           161

Allowance for credit losses to total loans and leases:                   1.29  %                  0.55    %

Ratio of total nonperforming assets to total loans, leases and other real estate owned

                                                  0.89  %                  0.49    %

Ratio of non-accrual loans and leases to total loans and leases 0.82 %

                  0.37    %
Ratio of allowance for credit losses to non-accrual loans and
leases                                                                 157.55  %                148.37    %



Non-accrual loans and leases at March 31, 2022 were $538 million, reflecting an
increase of $417 million since December 31, 2021. Non-accrual loans and leases
as a percentage of total loans and leases was 0.82% and 0.37% at March 31, 2022
and December 31, 2021, respectively. The increases were driven by the CIT
Merger. The increase in consumer non-accrual loans primarily reflects the
addition of a legacy CIT single family residential loan portfolio. At March 31,
2022, OREO totaled $43 million, representing an increase of $3 million since
December 31, 2021. Nonperforming assets as a percentage of total loans, leases
and OREO was 0.89% as of March 31, 2022 compared to 0.49% as of December 31,
2021.

Past Due Accounts
The percentage of loans 30 days or more past due was 0.81% of loans at March 31,
2022 and 0.43% at December 31, 2021. Delinquency status of loans is presented in
Note 4 - Loans and Leases

Troubled Debt Restructurings
We selectively agree to modify existing loan terms to provide relief to
customers who are experiencing financial difficulties or other circumstances
that could affect their ability to meet debt obligations. Typical modifications
include short-term deferral of interest or modification of payment terms. TDRs
not accruing interest at the time of restructure are included as nonperforming
loans. TDRs accruing at the time of restructure and continuing to perform based
on the restructured terms are considered performing loans.

The Interagency Statement on Loan Modifications and Reporting for Financial
Institutions Working with Customers Affected by the Coronavirus was published by
banking regulators in April 2020 to clarify accounting and reporting
expectations for loan modifications in determining TDR designation for borrowers
experiencing COVID-19-related financial difficulty. BancShares applied this
regulatory guidance during its TDR identification process for short-term loan
forbearance agreements as a result of COVID-19, and in most cases, is not
recording these as TDRs.

Table 24
Troubled Debt Restructurings
                                   March 31, 2022                          December 31, 2021
dollars in millions      Commercial      Consumer      Total      Commercial      Consumer      Total
Accruing TDRs           $      103      $     48      $ 151      $    97         $     49      $ 146
Nonaccruing TDRs                28            24         52           21               25         46
Total TDRs              $      131      $     72      $ 203      $   118         $     74      $ 192



Concentration Risk
We maintain a well-diversified loan portfolio and seek to minimize the risks
associated with large concentrations within specific geographic areas,
collateral types or industries.

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Commercial Concentrations
Geographic Concentrations
The following table summarizes state concentrations greater than 5.0% of our
loans. Data is based on obligor location unless secured by real estate, then
data based on property location.

Table 25
Commercial Loans - Geography
dollars in millions            March 31, 2022                  December 31, 2021
State
California              $       8,701        17.4  %    $          3,163        14.0  %
North Carolina                  7,973        15.9  %               7,181        31.8  %
Texas                           3,235         6.5  %                 879         3.9  %

Florida                         3,020         6.0  %               1,496         6.6  %
South Carolina                  2,969         5.9  %               2,855        12.6  %
All other states               22,784        45.5  %               7,012        31.1  %
Total U.S.              $      48,682        97.2  %    $         22,586       100.0  %

Total International             1,419         2.8  %                   -           -  %
Total                   $      50,101       100.0  %    $         22,586       100.0  %



Industry Concentrations
The following table represents loans by industry of obligor:

Table 26
Commercial Loans - Industry
dollars in millions                                           March 31, 2022                         December 31, 2021

Real Estate                                         $      11,233               22.4  %       $   4,279               18.9  %
Healthcare                                                  8,311               16.6  %           6,997               31.0  %
Transportation, communication, gas, utilities               4,156                8.3  %             774                3.4  %
Manufacturing                                               4,092                8.2  %           1,347                6.0  %

Business Services                                           4,053                8.1  %           2,307               10.2  %
Retail                                                      3,832                7.6  %           1,301                5.8  %

Finance and insurance                                       3,228                6.4  %           1,361                6.0  %
Service industries                                          3,199                6.4  %             722                3.2  %
Wholesale                                                   2,198                4.4  %             882                3.9  %

Other                                                       5,799               11.6  %           2,615               11.6  %
Total                                               $      50,101              100.0  %       $  22,585              100.0  %



Consumer Concentrations
Loan concentrations may exist when multiple borrowers could be similarly
impacted by economic or other conditions. The following table summarizes state
concentrations greater than 5.0% based upon property address.

Table 27
Consumer Loans Geographic Concentrations
                               March 31, 2022                  December 31, 2021
                              Net            % of              Net              % of
dollars in millions       Investment         Total          Investment          Total
State
North Carolina          $       5,013        32.5  %    $          4,931        50.4  %
California                      3,616        23.4  %                 161         1.6  %
South Carolina                  2,682        17.4  %               2,626        26.9  %

Other states                    4,112        26.7  %               2,068        21.1  %
Total loans             $      15,423       100.0  %    $          9,786       100.0  %



Counterparty Risk
We enter into interest rate derivatives and foreign exchange forward contracts
as part of our overall risk management practices and also on behalf of our
clients. We establish risk metrics and evaluate and manage the counterparty risk
associated with these derivative instruments in accordance with the
comprehensive Risk Management Framework and Risk Appetite Framework.
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Counterparty credit exposure or counterparty risk is a primary risk of
derivative instruments, relating to the ability of a counterparty to perform its
financial obligations under the derivative contract. We seek to control credit
risk of derivative agreements through counterparty credit approvals,
pre-established exposure limits and monitoring procedures, which are integrated
with our cash and issuer related credit processes.

The Chief Credit Officer, or delegate, approves each counterparty and
establishes exposure limits based on credit analysis of each counterparty.
Derivative agreements for BancShares' risk management purposes and for the
hedging of client transactions are executed with major financial institutions
and are settled through the major clearing exchanges, which are rated investment
grade by nationally recognized statistical rating agencies. Credit exposure is
mitigated via the exchange of collateral between the counterparties covering
mark-to-market valuations. Client related derivative transactions, which are
primarily related to lending activities, are incorporated into our loan
underwriting and reporting processes.

ASSET RISK



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

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

MARKET RISK

Interest rate risk management



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

Interest rate risk can arise from many of the BancShares' business activities,
such as lending, leasing, investing, deposit taking, derivatives, and funding
activities. We evaluate and monitor interest rate risk primarily through two
metrics.
•Net Interest Income Sensitivity ("NII Sensitivity") measures the net impact of
hypothetical changes in interest rates on forecasted NII; and
•Economic Value of Equity ("EVE Sensitivity") measures the net impact of these
hypothetical changes on the value of equity by assessing the economic value of
assets, liabilities and off-balance sheet instruments.

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

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

The composition of our interest rate sensitive assets and liabilities generally
results in a net asset-sensitive position for NII Sensitivity, whereby our
assets will reprice faster than our liabilities, which is generally concentrated
at the short end of the yield curve.
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Our funding sources consist primarily of non-maturity deposits and time deposits. We also support our funding needs through wholesale funding sources (including unsecured and secured borrowings).



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

Table 28 below summarizes the results of 12-month NII Sensitivity simulations
produced our asset/liability management system. These simulations assume static
balance sheet replacement with like products and implied forward market rates,
but also incorporates additional assumptions, such as, but not limited to
prepayment estimates, pricing estimates and deposit behaviors. The below
simulations assume an immediate 25, 100 and 200 bps parallel increase and 25 and
100 bps decrease from the market-based forward curve for March 31, 2022 and
December 2021.

Table 28
Net Interest Income Sensitivity Simulation Analysis
                                                            Estimated (decrease) increase in net interest income
Change in interest rate (basis points)                          March 31, 2022              December 31, 2021
-100                                                                       (6.10) %                     (5.77) %
-25                                                                        (1.50) %                     (1.15) %
+25                                                                         1.60  %                      1.05  %
+100                                                                        6.10  %                      3.21  %
+200                                                                       12.20  %                      6.30  %



NII Sensitivity metrics at March 31, 2022, compared to December 31, 2021, were
primarily affected by the addition of CIT assets and liabilities, and subsequent
debt redemptions. BancShares continues to have an asset sensitive interest rate
risk profile. The potential upside to forecasted earnings is largely driven by
the composition of the balance sheet (primarily due to floating rate commercial
loans and cash), as well as modest estimates of future deposit betas.
Approximately 45% of our loans have floating contractual reference rates,
indexed primarily to 1-month LIBOR, 3-month LIBOR, Prime and Secured Overnight
Financing Rate ("SOFR"). Deposit betas for the combined company are modeled and
have a portfolio average of 20%-25%, which blends the lower beta deposits of
legacy FCB with the higher betas from legacy CIT. Impacts to NII Sensitivity may
change due to actual results differing from modeled expectations.

As noted above, EVE Sensitivity supplements NII simulations as it estimates risk
exposures beyond a twelve-month horizon. EVE Sensitivity measures the change in
value of the economic value of equity driven by changes in assets, liabilities,
and off-balance sheet instruments in response to a change in interest rates. EVE
Sensitivity is calculated by estimating the change in the net present value of
assets, liabilities, and off balance sheet items under various rate movements.

Table 29 presents the EVE profile as of March 31, 2022 and December 31, 2021.



Table 29
Economic Value Of Equity Modeling Analysis
                                                                      Estimated (decrease) increase in EVE
Change in interest rate (basis points)                             March 31, 2022            December 31, 2021
-100                                                                         (7.90) %                  (13.68) %
-25                                                                          (1.80) %                       -  %
+100                                                                          6.40  %                    6.10  %
+200                                                                          8.40  %                    5.93  %



The economic value of equity metrics at March 31, 2022 compared to December 31,
2021, were primarily affected by the CIT Merger, coupled with increasing market
interest rates.

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

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

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

Table 30 provides loan maturity distribution information.



Table 30
Loan Maturity Distribution
                                                                       At March 31, 2022, maturing
                                          Within            One to Five           Five to 15          After 15
dollars in millions                      One Year              Years                Years               years             Total
Commercial
Commercial construction                 $    563          $      1,368

$ 605 $ 97 $ 2,633 Owner occupied commercial mortgage

           549                 3,886                8,623               496            13,554
Non-owner occupied commercial mortgage     2,133                 4,966                1,934               259             9,292
Commercial and industrial                  6,550                12,362                3,373               117            22,402
Leases                                       742                 1,427                   51                 -             2,220
Total commercial                        $ 10,537          $     24,009          $    14,586          $    969          $ 50,101
Consumer
Residential mortgage                         275                 1,085                3,456             6,895            11,711
Revolving mortgage                           114                   222                   95             1,410             1,841
Consumer auto                                 10                   627                  683                 -             1,320
Consumer other                               296                   129                   88                38               551
Total consumer                          $    695          $      2,063          $     4,322          $  8,343          $ 15,423
Total loans and leases                  $ 11,232          $     26,072          $    18,908          $  9,312          $ 65,524

Table 31 provides information regarding the sensitivity of loans and leases to changes in interest rates.



Table 31
Loan Interest Rate Sensitivity
                                                              Loans 

maturing one year or after with


                                                             Fixed interest         Variable interest
dollars in millions                                               rates                   rates
Commercial
Commercial construction                                     $          853          $        1,217
Owner occupied commercial mortgage                                  11,353                   1,592
Non-owner occupied commercial mortgage                               2,608                   4,552
Commercial and industrial                                            6,933                   8,979
Leases                                                               1,477                       -
Total commercial                                            $       23,224          $       16,340
Consumer
Residential mortgage                                                 6,912                   4,524
Revolving mortgage                                                      38                   1,688
Consumer auto                                                        1,311                       -
Consumer other                                                         215                      40
Total consumer                                              $        8,476          $        6,252
Total loans and leases                                      $       31,700          $       22,592



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Reference Rate Reform
The administrator of LIBOR has announced that publication of the most commonly
used U.S. Dollar LIBOR will cease to be provided or cease to be representative
after June 30, 2023. The publication of all other LIBOR settings ceased to be
provided or ceased to be representative on December 31, 2021. The U.S. federal
banking agencies had also issued guidance strongly encouraging banking
organizations to cease using the U.S. Dollar LIBOR as a reference rate in "new"
contracts by December 31, 2021 at the latest. As a result, prior to the CIT
Merger, FCB and CIT had ceased originating new products using LIBOR by the end
of 2021.

In April 2018, the FRB of New York commenced publication of SOFR, which has been
recommended as an alternative to U.S. Dollar LIBOR by the Alternative Reference
Rates Committee, a group of market and official sector participants. However,
uncertainty remains as to the transition process and acceptance of SOFR as the
primary alternative to LIBOR.

BancShares holds instruments such as loans, investments, derivative products,
and other financial instruments that use LIBOR as a benchmark rate. However,
BancShares' LIBOR exposure is primarily to tenures other than one week and
two-month USD LIBOR.

LIBOR is a benchmark interest rate for most of our floating rate loans, as well
as certain liabilities and off-balance sheet exposures. We continue to monitor
industry and regulatory developments and have a well-established transition
program in place to manage the implementation of alternative reference rates as
the market transitions away from LIBOR. Coordination is being handled by a
cross-functional project team governed by executive sponsors. Its mission is to
work with our businesses to ensure a smooth transition for BancShares and its
customers to an appropriate LIBOR alternative. Certain financial markets and
products have already migrated to alternatives. The project team ensures that
BancShares is ready to move quickly and efficiently as consensus around LIBOR
alternatives emerge. BancShares has processes in place to complete its review of
the population of legal contracts impacted by the LIBOR transition, and updates
to our operational systems and processes are substantially in place.

BancShares is utilizing SOFR as our preferred replacement index for LIBOR. However, we are positioned to accommodate other alternative reference rates (e.g. credit sensitive rates) in response to how the market evolves.

LIQUIDITY RISK MANAGEMENT



Our liquidity risk management and monitoring process is designed to ensure the
availability of adequate cash and collateral resources and funding capacity to
meet our obligations. Our overall liquidity management strategy is intended to
ensure appropriate liquidity to meet expected and contingent funding needs under
both normal and stressed environments. Consistent with this strategy, we
maintain significant amounts of Available Cash and High-Quality Liquid
Securities. Additional sources of liquidity include FHLB borrowing capacity,
committed credit facilities, repurchase agreements, Brokered CD issuances,
unsecured debt issuances, and cash collections generated by portfolio asset
sales to third parties.

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

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

Liquidity includes Available Cash and High Quality Liquid Securities. At March 31, 2022 we had $21.5 billion of total Liquid Assets (20% of total assets) and $17.5 billion of contingent liquidity sources available.


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Table 32
Liquidity
dollars in millions                           March 31, 2022
Available Cash                               $         9,075
High Quality Liquid Securities                        12,457
Liquid Assets                                $        21,532

FHLB capacity(1)                             $        13,143
FRB capacity                                           4,242
Line of credit with bank                                  75
Total contingent sources                     $        17,460

Total Liquid Assets and contingent sources $ 38,992

(1)See Table 33 for additional details.



We fund our operations through deposits and borrowings. Our primary source of
liquidity is our branch-generated deposit portfolio due to the generally stable
balances and low cost. Deposits totaled $91.6 billion and $51.4 billion at
March 31, 2022 and December 31, 2021, respectively. Borrowings totaled
$3.3 billion and $1.8 billion at March 31, 2022 and December 31, 2021,
respectively. Borrowings consist of long-term debt, FHLB advances and securities
sold under customer repurchase agreements.

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

FHLB Advances
Table 33
FHLB Balances
                                                 March 31, 2022      December 31, 2021
dollars in millions                                  Total                 Total
Total borrowing capacity                        $      13,782       $          9,564
Less:
Advances                                                  639                    645
Available capacity                              $      13,143       $          8,919

Pledged non-PCD loans (contractual balance) $ 19,889 $


  14,507
Weighted Average Rate                                    1.27  %                1.28  %


Under borrowing arrangements with the FRB of Richmond, FCB has access to an additional $4.2 billion on a secured basis. There were no outstanding borrowings with the FRB Discount Window at March 31, 2022 and December 31, 2021.



Commitments and Contractual Obligations
Table 34 identifies significant obligations and commitments as of March 31,
2022, representing required and potential cash outflows. See Note 23 -
Commitments and Contingencies, for additional information regarding commitments.
Financing commitments, letters of credit and deferred purchase commitments are
presented at contractual amounts and do not necessarily reflect future cash
outflows as many are expected to expire unused or partially used.
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Table 34
Commitments and Contractual Obligations
            Type of obligation                                                   Payments due by period
dollars in millions                         Less than 1 year           1-3 years           4-5 years           Thereafter            Total
Contractual obligations:
Time deposits                              $          6,765          $    1,918          $      436          $       123          $  9,242
Short-term borrowings                                   616                   -                   -                    -               616
Long-term obligations                                    94                 683                 347                1,552             2,676
Total contractual obligations              $          7,475          $    2,601          $      783          $     1,675          $ 12,534
Commitments:
Financing commitments                      $         11,051          $    4,724          $    1,983          $     4,049          $ 21,807
Letters of credit                                       169                  98                  76                   23               366
Deferred purchase agreements                          2,097                   -                   -                    -             2,097
Lessor commitments                                      513                   -                   -                    -               513
Affordable housing partnerships(1)                       84                 137                  14                    7               242
Total commitments                          $         13,914          $    4,959          $    2,073          $     4,079          $ 25,025

(1)On-balance sheet commitments, included in other liabilities.

CAPITAL

Capital requirements applicable to BancShares' are discussed in Item 1. Business - Regulation, subsections "Regulatory Considerations" of our 2021 Annual Report.



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

Capital Composition and Ratios
In connection with the consummation of the CIT Merger, the Parent Company issued
approximately 6.1 million shares of its Class A Common Stock. Additionally, CIT
Series A and B Preferred Stock was converted into the rights to receive
BancShares Series B and C Preferred Stock, respectively. In connection with the
consummation of the CIT Merger, the Parent Company issued (a) 325,000 shares of
BancShares Series B Preferred Stock with a liquidation preference of $1,000 per
share, resulting in a total liquidation preference of $325 million, and (b)
8 million shares of BancShares Series C Preferred Stock with a liquidation
preference of $25 per share, resulting in a total liquidation preference of
$200 million.

The table below shows activities that caused the change in outstanding Class A Common Stock for the quarter.



Table 35
Changes in Shares of Class A Common Stock Outstanding
                                                                           

Three months ended March 31,


                                                                                       2022
Class A shares outstanding at beginning of period                                           8,811,220
Share issuance in conjunction with the CIT Merger                                           6,140,010
Restricted stock units vested, net of shares held to cover taxes                               45,095
Class A shares outstanding at end of period                                                14,996,325



We also had 1,005,185 Class B Common Stock outstanding at March 31, 2022 and December 31, 2021.



We are committed to effectively managing our capital to protect our depositors,
creditors and stockholders. We continually monitor the capital levels and ratios
for BancShares and FCB to ensure they exceed the minimum requirements imposed by
regulatory authorities and to ensure they are appropriate given growth
projections, risk profile and potential changes in the regulatory or external
environment. Failure to meet certain capital requirements may result in actions
by regulatory agencies that could have a material impact on our consolidated
financial statements.

In accordance with GAAP, the unrealized gains and losses on certain assets and
liabilities, net of deferred taxes, are included in accumulated other
comprehensive loss within stockholders' equity. These amounts are excluded from
regulatory in the calculation of our regulatory capital ratios under current
regulatory guidelines.
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Table 36
Analysis of Capital Adequacy
                                                Requirements to be                       March 31, 2022                             December 31, 2021
dollars in millions                              Well-Capitalized                 Amount                 Ratio                Amount                Ratio
BancShares
Risk-based capital ratios
Total risk-based capital                                      10.00  %       $      12,117                  14.47  %       $    5,042                  14.35  %
Tier 1 risk-based capital                                      8.00  %              10,377                  12.39  %            4,380                  12.47  %
Common equity Tier 1                                           6.50  %               9,496                  11.34  %            4,041                  11.50  %
Tier 1 leverage ratio                                          5.00  %              10,377                   9.55  %            4,380                   7.59  %

FCB
Risk-based capital ratios
Total risk-based capital                                      10.00  %       $      11,925                  14.25  %       $    4,858                  13.85  %
Tier 1 risk-based capital                                      8.00  %              10,641                  12.71  %            4,651                  13.26  %
Common equity Tier 1                                           6.50  %              10,641                  12.71  %            4,651                  13.26  %
Tier 1 leverage ratio                                          5.00  %              10,641                   9.81  %            4,651                   8.07  %



As of March 31, 2022, BancShares and FCB continued to exceed minimum capital
standards and remained well-capitalized under Basel III guidelines. At March 31,
2022, BancShares and FCB had total risk-based capital ratio conservation buffers
of 6.47% and 6.25%, respectively, which are in excess of the fully phased in
Basel III conservation buffer of 2.50%. At December 31, 2021, BancShares and FCB
had total risk-based capital ratio conservation buffers were 6.35% and 5.85%.
The capital ratio conservation buffers represent the excess of the regulatory
capital ratio as of March 31, 2022 and December 31, 2021 over the Basel III
minimum. Additional Tier 1 capital for BancShares includes perpetual preferred
stock. Additional Tier 2 capital for BancShares and FCB primarily consists of
qualifying ACL and qualifying subordinated debt.
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CRITICAL ACCOUNTING ESTIMATES

Accounting policies related to the ACL are considered critical accounting estimates as described in our 2021 Annual Report. The ACL as of March 31, 2022 is discussed in Note 5 - Allowance for credit Losses and the Credit Risk Management section of Item II in this Quarterly Report on Form 10-Q.



Fair values of loans acquired in and the core deposit intangibles associated
with the CIT Merger are considered critical accounting estimates. The
determination of estimated fair values required management to make certain
estimates about discount rates, future expected cash flows, market conditions at
the time of the merger and other future events that are highly subjective in
nature and may require adjustments. The fair values for these items are further
discussed in Note 2 - Business Combinations.

RECENT ACCOUNTING PRONOUNCEMENTS



The following accounting pronouncements were issued by the FASB but are not yet
effective for BancShares.
Standard                  Summary of Guidance                         

Effect on BancShares' Financial

Statements


ASU 2020-04, Reference    The amendments in these updates apply only  The amendments are effective for all
Rate Reform (Topic 848)   to contracts, hedging relationships, and    entities at issuance date of March 12,
Facilitation of the       other transactions that reference LIBOR or  2020, and once adopted will apply to
Effects of Reference Rate another reference rate expected to be       contract modifications made and hedging
Reform on Financial       discontinued because of reference rate      relationships entered into on or before
Reporting                 reform.                                     

December 31, 2022. BancShares is in the Issued March 2020 Allows entities to prospectively apply process of evaluating the optional


                          certain optional expedients for contract    expedients as applicable for eligible
ASU 2021-01 - Reference   modifications and removes the requirements  contract modifications and any hedge
Rate Reform (Topic 848):  to remeasure contract modifications or      relationships. However, we do not expect
Scope                     de-designate hedging relationships. In      to 

have a material impact on the


                          addition, potential sources of              financial statements.
Issued January 2021       ineffectiveness as a result of reference
                          rate reform may be disregarded when
                          performing certain effectiveness
                          assessments.
                          ASU 2021-01 refines the scope of ASC 848
                          and clarifies which optional expedients may
                          be applied to derivative instruments that
                          do not reference LIBOR or a reference rate
                          that is expected to be discontinued, but
                          that are being modified in connection with
                          the market-wide transition to new reference
                          rates.
                          Guidance in these ASUs are effective as of
                          March 12, 2020 through December 31, 2022.
ASU 2022-01, Fair Value   The amendments in this Update allows        Effective for BancShares as of January 1,
Hedging - Portfolio Layer entities to designate multiple hedged       2023. Early adoption is permitted.
Method                    layers of a single closed portfolio, and    The 

guidance on hedging multiple layers Issued March 2022 expands the scope of the portfolio layer in a closed portfolio is applied


                          method to include non-prepayable financial  

prospectively. The guidance on the


                          assets.                                     

accounting for fair value basis


                          Provides additional guidance on the         

adjustments is applied on a modified


                          accounting for and disclosure of hedge      

retrospective basis.


                          basis adjustments under the portfolio layer 

BancShares is currently evaluating timing


                          method.                                     of 

adoption of this guidance and the


                          In addition, as of the adoption date the    

impact of the guidance on its


                          Update permits reclassification of debt     

consolidated financial statements and


                          securities from the held-to-maturity        disclosures.
                          category to the available-for-sale category
                          if the entity intends to include those
                          securities in a portfolio designated in a
                          portfolio layer method hedge.
                          Also provides 30 days post adoption to
                          reclassify securities and include them in a
                          hedged closed portfolio.


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ASU No. 2022-02, Troubled   The amendments in this ASU eliminates the Effective for BancShares as of January 1,
Debt Restructurings and     recognition and measurement guidance for  2023. Early adoption is permitted.
Vintage Disclosures         TDRs for creditors that have adopted the  Provides the option to early adopt the
Issued March 2022           CECL model and enhances disclosure        amendments related to TDRs separately from
Issued March 2022           requirements for loan refinancings and    the 

amendments related to vintage


                            restructurings made with borrowers        

disclosures.


                            experiencing financial difficulty.        

Allows adoption using either a prospective


                                                                      or 

modified retrospective transition


                            The guidance also requires disclosure of  

methods. Under prospective method,


                            current-period gross write-offs by year   

entities are permitted to apply this


                            of origination in the vintage disclosure. 

guidance to modifications occurring after


                                                                      the 

first day of the fiscal year of

adoption. If the modified retrospective

transition method is elected, a cumulative

effect adjustment to retained earnings is

recorded in the period of adoption to

recognize any change in the allowance for

credit losses that had been recognized for

receivables previously modified in a TDR.

BancShares is currently evaluating the

transition methods and timing of adoption,


                                                                      along 

with the impact on its consolidated

financial statements and disclosures.








GLOSSARY OF KEY TERMS

To assist the users of this document, we have added the following Glossary of key terms:



Adjusted Interest-Earnings Assets is a non-GAAP measure that is the sum of loans
and leases (as defined below, less the credit balances of factoring clients),
loans and leases held for sale, interest-bearing cash, investment securities,
and securities purchased under agreements to resell.

Allowance for Credit Losses ("ACL") reflects the estimated credit losses over
the full remaining expected life of the portfolio. See CECL below.
Assets Held for Sale include loans and operating lease equipment that we no
longer have the intent or ability to hold until maturity. As applicable, assets
held for sale could also include a component of goodwill associated with
portfolios or businesses held for sale.

Available Cash consists of the unrestricted portions of 'Cash and due from banks' and 'Interest-bearing deposits at banks', excluding cash not accessible for liquidity, such as vault cash and deposits in transit.

Available for sale is a classification that pertains to debt securities. We classify debt securities as available for sale when they are not considered trading securities, securities carried at fair value, or held-to-maturity securities. Available for sale securities are included in investment securities in the balance sheet.



Average Interest-Earning Assets is a non-GAAP measure that is computed using
daily balances of Interest-Earning Assets. We use this average for certain key
profitability ratios, including NIM (as defined below) for the respective
period.

Average Loans and Leases is computed using daily balances and is used to measure the rate of return on loans and leases (finance leases) and the rate of net charge-offs, for the respective period.



Capital Conservation Buffer ("CCB") is the excess 2.5% of each of the capital
tiers that banks are required to hold in accordance with Basel III rules, above
the minimum CET 1 Capital, Tier 1 capital and Total capital requirements,
designed to absorb losses during periods of economic stress.

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Common Equity Tier 1 ("CET1"), Additional Tier 1 Capital, Tier 1 Capital, Tier 2
Capital, and Total Capital are regulatory capital measures as defined in the
capital adequacy guidelines issued by the Federal Reserve. CET1 is common
stockholders' equity reduced by capital deductions such as goodwill, intangible
assets and DTAs that arise from net operating loss and tax credit carryforwards
and adjusted by elements of other comprehensive income and other items. Tier 1
Capital is Common Equity Tier 1 Capital plus other Additional Tier 1 Capital
instruments, including non-cumulative preferred stock. Total Capital consists of
Tier 1 Capital and Tier 2 Capital, which includes subordinated debt, and
qualifying allowance for credit losses and other reserves.

Current Expected Credit Losses ("CECL") is a forward-looking "expected loss"
model used to estimate credit losses over the full remaining expected life of
the portfolio. Estimates under the CECL model are based on relevant information
about past events, current conditions, and reasonable and supportable forecasts
regarding the collectability of reported amounts. Generally, the model requires
that an ACL be estimated and recognized for financial assets measured at
amortized cost within its scope.

Delinquent Loan categorization occurs when payment is not received when contractually due. Delinquent loan trends are used as a gauge of potential portfolio degradation or improvement.



Derivative Contract is a contract whose value is derived from a specified asset
or an index, such as an interest rate or a foreign currency exchange rate. As
the value of that asset or index changes, so does the value of the derivative
contract.

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

High Quality Liquid Securities ("HQLS") consist of readily-marketable, unpledged
securities, as well as securities pledged but not drawn against at the FHLB and
available for sale, and generally is comprised of Treasury and Agency securities
held outright or via reverse repurchase agreements.

Impaired Loan is a loan for which, based on current information and events, it
is probable that BancShares will be unable to collect all amounts due according
to the contractual terms of the loan.
Interest income includes interest earned on loans, interest-bearing cash
balances, debt investments and dividends on investments.

Lease - finance is an agreement in which the party who owns the property
(lessor), which is BancShares as part of our finance business, permits another
party (lessee), which is our customer, to use the property with substantially
all of the economic benefits and risks of asset ownership passed to the lessee.
Finance leases are commonly known as sales-type leases and direct finance
leases.

Lease - operating is a lease in which BancShares retains ownership of the asset (operating lease equipment, net), collects rental payments, recognizes depreciation on the asset, and retains the risks of ownership, including obsolescence.

Liquid Assets includes Available Cash and HQLS.

Loans and Leases include loans, finance lease receivables, and factoring receivables, and do not include amounts contained within assets held for sale (unless otherwise noted) or operating leases.



Loan-to-Value Ratio ("LTV") is a calculation of a loan's collateral coverage
that is used in underwriting and assessing risk in our lending portfolio. LTV is
calculated as the total loan obligations (unpaid principal balance) secured by
collateral divided by the fair value of the collateral.

Net Interest Income ("NII") reflects interest and fees on loans, interest on
interest-bearing cash, and interest/dividends on investments less interest
expense on deposits and borrowings. When divided by average adjusted interest
earning assets, the quotient is defined as Net Interest Margin ("NIM").

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



Net Operating Loss Carryforward / Carryback ("NOLs") is a tax concept, whereby
tax losses in one year can be used to offset taxable income in other years. The
rules pertaining to the number of years allowed for the carryback or
carryforward of an NOL varies by jurisdiction.

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Non-accrual Loans include loans greater than or equal to $500,000 that are
individually evaluated and determined to be impaired, as well as loans less than
$500,000 that are delinquent (generally for 90 days or more), unless it is both
well secured and in the process of collection. Non-accrual loans also include
loans with revenue recognition on a cash basis because of deterioration in the
financial position of the borrower.

Non-performing Assets include Non-accrual Loans, OREO, and repossessed assets.



Other Noninterest Income includes (1) fee income and other revenue, (2) wealth
management services, (3) gains and losses on leasing equipment, net, (4) Service
charges on deposit accounts, (5) factoring commissions, (6) cardholder services,
net, (7) merchant services, (8) realized gains and losses on investment
securities available for sale, net, (9) marketable equity securities gains and
losses, net, (10) gain on acquisition, (11) gain and losses on extinguishments
of debt, and (12) other income.

Other Real Estate Owned ("OREO") is a term applied to real estate properties owned by a financial institution and are considered non-performing assets.



Pledged Assets are those required under the collateral maintenance requirement
in connection with borrowing availability at the FHLB, which are comprised
primarily of consumer and commercial real estate loans and also include certain
HQL securities that are available for secured funding at the FHLB.

Purchase Accounting Adjustments ("PAA") reflect the fair value adjustments to acquired assets and liabilities assumed in a business combination.



Purchased Credit Deteriorated ("PCD") financial assets are acquired individual
financial assets (or acquired groups of financial assets with similar risk
characteristics) that as of the date of acquisition, have experienced a
more-than-insignificant deterioration in credit quality since origination, as
determined by an acquirer's assessment.

Regulatory Credit Classifications used by BancShares are as follows:
•Pass - A pass rated asset is not adversely classified because it does not
display any of the characteristics for adverse classification;
•Special Mention - A special mention asset has potential weaknesses which
deserve management's close attention. If left uncorrected, such potential
weaknesses may result in deterioration of the repayment prospects or collateral
position at some future date. Special mention assets are not adversely
classified and do not warrant adverse classification;
•Substandard - A substandard asset is inadequately protected by the current net
worth and paying capacity of the borrower or of the collateral pledged, if any.
Assets classified as substandard generally have a well-defined weakness, or
weaknesses, that jeopardize the liquidation of the debt. These assets are
characterized by the distinct possibility of loss if the deficiencies are not
corrected;
•Doubtful - An asset classified as doubtful has all the weaknesses inherent in
an asset classified substandard with the added characteristic that the
weaknesses make collection or liquidation in full highly questionable and
improbable on the basis of currently existing facts, conditions and values; and
•Loss - Assets classified as loss are considered uncollectible and of such
little value it is inappropriate to be carried as an asset. This classification
is not necessarily equivalent to any potential for recovery or salvage value,
but rather it is not appropriate to defer a full charge-off even though partial
recovery may be affected in the future.

Classified assets are rated as substandard, doubtful or loss based on the criteria outlined above. Classified assets can be accruing or on non-accrual depending on the evaluation of the relevant factors. Classified loans plus special mention loans are considered criticized loans.



Residual Values for finance leases represent the estimated value of equipment at
the end of its lease term. For operating lease equipment, it is the value to
which the asset is depreciated at the end of lease term or at the end of
estimated useful life.

Right of Use Asset ("ROU Asset") represents our right, as lessee, to use underlying assets for the lease term, and lease liabilities represent our obligation to make lease payments arising from the leases.



Risk Weighted Assets ("RWA") is the denominator to which CET1, Tier 1 Capital
and Total Capital is compared to derive the respective risk based regulatory
ratios. RWA is comprised of both on-balance sheet assets and certain off-balance
sheet items (for example loan commitments, purchase commitments or derivative
contracts). RWA items are adjusted by certain risk-weightings as defined by the
regulators, which are based upon, among other things, the relative credit risk
of the counterparty.

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Troubled Debt Restructuring ("TDR") occurs when a lender, for economic or legal
reasons, grants a concession to the borrower related to the borrower's financial
difficulties that it would not otherwise consider.

Variable Interest Entity ("VIE") is a corporation, partnership, limited
liability company, or any other legal structure used to conduct activities or
hold assets. These entities: lack sufficient equity investment at risk to permit
the entity to finance its activities without additional subordinated financial
support from other parties; have equity owners who either do not have voting
rights or lack the ability to make significant decisions affecting the entity's
operations; and/or have equity owners that do not have an obligation to absorb
the entity's losses or the right to receive the entity's returns.

Yield-related Fees are collected in connection with our assumption of
underwriting risk in certain transactions in addition to interest income. We
recognize yield-related origination fees in interest income over the life of the
lending transaction and recognize yield-related prepayment fees when the loan is
prepaid.

NON-GAAP FINANCIAL MEASUREMENTS



BancShares provides certain non-GAAP information in reporting its financial
results to give investors additional data to evaluate its operations. A non-GAAP
financial measure is a numerical measure of a company's historical or future
financial performance or financial position that may either exclude or include
amounts or is adjusted in some way to the effect of including or excluding
amounts, as compared to the most directly comparable measure calculated and
presented in accordance with GAAP financial statements. BancShares believes that
non-GAAP financial measures, when reviewed in conjunction with GAAP financial
information, can provide transparency about, or an alternate means of assessing,
its operating results and financial position to its investors, analysts and
management. These non-GAAP measures should be considered in addition to, and not
superior to or a substitute for, GAAP measures presented in BancShares'
consolidated financial statements and other publicly filed reports. In addition,
our non-GAAP measures may be different from or inconsistent with non-GAAP
financial measures used by other institutions.

Whenever we refer to a non-GAAP financial measure we will generally define and
present the most directly comparable financial measure calculated and presented
in accordance with U.S. GAAP, along with a reconciliation between the U.S. GAAP
financial measure and the non-GAAP financial measure. We describe each of these
measures below and explain why we believe the measure to be useful.

The following tables provide: (1) a reconciliation of net income (GAAP) to net revenue on operating leases (non-GAAP) for the Rail Segment, and (2) a computation of adjusted interest-earning assets (non-GAAP).



Net Revenue on Operating Leases for Rail Segment
Net revenue on operating leases within the Rail segment is calculated as gross
revenue earned on rail car leases less depreciation and maintenance. This metric
allows us to monitor the performance and profitability of the rail leases after
deducting direct expenses.

The table below presents a reconciliation of net income to net revenue on
operating leases.
                                                                     Three Months Ended March 31,
dollars in millions                                                   2022                    2021
Net income (GAAP measure)                                      $             32          $         -
Plus: Provision for income taxes                                             11                    -
Plus: Noninterest expense                                                    16                    -
Less: Noninterest income                                                      3                    -
Plus: Interest expense, net                                                  19                    -
Net revenue on operating leases (non-GAAP measure)             $            

75 $ -


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Adjusted Interest-earning Assets
Interest-earning assets (period end balances) (GAAP) displayed in the table
below are directly derived from the following line items in the Consolidated
Balance Sheets or footnotes thereto: (i) interest-earning deposits at banks;
(ii) investment securities; (iii) assets held for sale; and (iv) loans and
leases. These represent interest income generating assets and the average of
which provides a basis for management performance calculations, such as NII and
NIM. We net the liabilities related to the factoring clients as the correlating
receivable, which is included in loans and leases, generate commission income,
which is noninterest income.
                                                                Three 

Months Ended March 31, 2022


                                                                  Average             Period End
dollars in millions                                               Balance               Balance
Interest earning assets (GAAP measure)                        $     96,272          $     94,361
Less: credit balances for factoring clients                         (1,160)               (1,150)

Adjusted interest earning assets, net of credit balances of $ 95,112

         $     93,211
factoring clients (non-GAAP measure)


                                                                    Three 

Months Ended March 31, 2022


                                                  Yield on Interest           Interest Rate          Net Interest Margin
dollars in millions                                 Earning Assets          

Spread


Unadjusted (GAAP measure)                                    2.95  %                   2.60  %                   2.69  %
Impact of credit balances for factoring clients              0.04  %                   0.04  %                   0.04  %
Adjusted (non-GAAP measure)                                  2.99  %                   2.64  %                   2.73  %



Forward-Looking Statements
Statements in this Quarterly Report on Form 10-Q may contain "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 regarding the financial condition, results of operations, business plans
and future performance of BancShares. Words such as "anticipates," "believes,"
"estimates," "expects," "forecasts," "intends," "plans," "projects," "targets,"
"designed," "could," "may," "should," "will" or other similar words and
expressions are intended to identify these forward-looking statements. These
forward-looking statements are based on BancShares' current expectations and
assumptions regarding BancShares' business, the economy, and other future
conditions.

Because forward-looking statements relate to future results and occurrences,
they are subject to inherent risks, uncertainties, changes in circumstances and
other factors that are difficult to predict. Many possible events or factors
could affect BancShares' future financial results and performance and could
cause the actual results, performance or achievements of BancShares to differ
materially from any anticipated results expressed or implied by such
forward-looking statements. Such risks and uncertainties include, among others,
general competitive, economic, political, geopolitical events (including the
military conflict between Russia and Ukraine) and market conditions, the impacts
of the global COVID-19 pandemic on BancShares' business, and customers, the
financial success or changing conditions or strategies of BancShares' customers
or vendors, fluctuations in interest rates, rising inflation, actions of
government regulators, the availability of capital and personnel, the failure to
realize the anticipated benefits of BancShares' previously announced acquisition
transaction(s), including the recently-completed transaction with CIT, which
acquisition risks include (1) disruption from the transaction, or recently
completed mergers, with customer, supplier or employee relationships, (2) the
possibility that the amount of the costs, fees, expenses and charges related to
the transaction may be greater than anticipated, including as a result of
unexpected or unknown factors, events or liabilities, (3) reputational risk and
the reaction of the parties' customers to the transaction, (4) the risk that the
cost savings and any revenue synergies from the transaction may not be realized
or take longer than anticipated to be realized, and (5) difficulties experienced
in the integration of the businesses. Except to the extent required by
applicable law or regulation, BancShares disclaims any obligation to update such
factors or to publicly announce the results of any revisions to any of the
forward-looking statements included herein to reflect future events or
developments. Additional factors which could affect the forward-looking
statements can be found in BancShares' Annual Report on Form 10-K for the fiscal
year ended December 31, 2021 and its other filings with the Securities and
Exchange Commission.

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