Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Western Alliance Bancorporation Reports Fourth Quarter and Full Year 2022 Financial Results By: Western Alliance Bancorporation via Business Wire January 24, 2023 at 16:54 PM EST Western Alliance Bancorporation (NYSE:WAL): FOURTH QUARTER AND FULL YEAR 2022 FINANCIAL RESULTS Fourth Quarter Highlights: Net income Earnings per share PPNR1 Net interest margin Efficiency ratio1 Book value per common share $293.0 million $2.67 $367.8 million 3.98% 46.9% $46.47 $40.251, excluding goodwill and intangibles CEO COMMENTARY: “Western Alliance’s diversified, national commercial business strategy drove the strong momentum that was sustained throughout the year, closing out the fourth quarter with record revenues, earnings and tangible book value as we thoughtfully deployed liquidity into sound organic growth,” said Kenneth A. Vecchione, President and Chief Executive Officer. “We achieved a record $293.0 million in net income and earnings per share of $2.67 for the quarter, an increase of 15.1% from the prior year, while tangible book value per share rose 6.4% year-over-year to $40.25. Quarterly deposits declined $1.9 billion, primarily driven by short-term seasonal tax and insurance escrow deposit outflows in our Mortgage Warehouse Group. These seasonal factors have already reversed since year end, with quarter-to-date 2023 average total deposit balances up more than $2.4 billion from year end.” “Western Alliance’s full year results are a direct reflection of our collaborative culture and flexible business model that strongly position us to sustain our earnings trajectory into 2023, all while continuing our focus on asset quality. Net charge-offs for the year totaled a modest $1.5 million, with a non-performing assets to total assets ratio of 0.14% at the end of the year. Our growing net interest income during the year drove an increase in earnings as PPNR climbed 25.7% over the prior year to $1.4 billion, with net income of $1.1 billion and earnings per share up 11.9% to $9.70.” Acquisition of Digital Disbursements and AmeriHome Mortgage Company: On January 25, 2022, the Company completed its acquisition of Digital Settlement Technologies LLC, doing business as Digital Disbursements, a digital payments platform for the class action legal industry. On April 7, 2021, the Company completed its acquisition of Aris Mortgage Holding Company, LLC, the parent company of AmeriHome Mortgage Company, LLC ("AmeriHome"). The Company's results include the financial results of Digital Disbursements and AmeriHome beginning on the acquisition dates noted. LINKED-QUARTER BASIS FULL YEAR FINANCIAL HIGHLIGHTS: Net income of $293.0 million and earnings per share of $2.67, compared to $264.0 million and $2.42, respectively Net income of $1.1 billion and earnings per share of $9.70, up 17.6% and 11.9%, from $899.2 million and $8.67, respectively Net revenue of $701.2 million, an increase of 5.6%, or $37.3 million, compared to an increase in non-interest expenses of 9.0%, or $27.6 million Net revenue of $2.5 billion, an increase of 30.1%, or $587.9 million, compared to an increase in non-interest expenses of 35.9%, or $305.3 million Pre-provision net revenue1 of $367.8 million, up $9.7 million from $358.1 million Pre-provision net revenue1 of $1.4 billion, up $282.6 million from $1.1 billion Effective tax rate of 19.7%, compared to 19.9% Effective tax rate of 19.7%, compared to 19.9% FINANCIAL POSITION RESULTS: HFI loans of $51.9 billion, down $339 million, or 0.6% Increase in HFI loans of $10.9 billion, or 27.9%, net of EBO loans with a $1.9 billion balance at December 31, 2022 transferred from HFS to HFI during 2022 Total deposits of $53.6 billion, down $1.9 billion, or 3.5% Increase in total deposits of $6.0 billion, or 12.7% Stockholders' equity of $5.4 billion, up $335 million Increase in stockholders' equity of $393 million LOANS AND ASSET QUALITY: Nonperforming assets (nonaccrual loans and repossessed assets) to total assets of 0.14%, compared to 0.15% Nonperforming assets to total assets of 0.14%, compared to 0.15% Annualized net loan charge-offs (recoveries) to average loans outstanding of 0.01%, compared to (0.02)% Net loan charge-offs (recoveries) to average loans outstanding of approximately 0.00%, compared to 0.02% KEY PERFORMANCE METRICS: Net interest margin of 3.98%, compared to 3.78% Net interest margin of 3.67%, compared to 3.41% Return on average assets and on tangible common equity1 of 1.67% and 27.0%, compared to 1.53% and 24.9%, respectively Return on average assets and on tangible common equity1 of 1.62% and 25.4%, compared to 1.83% and 26.2%, respectively Tangible common equity ratio1 of 6.5%, compared to 5.9% Tangible common equity ratio1 of 6.5%, compared to 7.3% CET 1 ratio of 9.3%, compared to 8.7% CET 1 ratio of 9.3%, compared to 9.1% Tangible book value per share1, net of tax, of $40.25, an increase of 8.3% from $37.16 Tangible book value per share1, net of tax, of $40.25, an increase of 6.4% from $37.84 Efficiency ratio1 of 46.9%, compared to 45.5% Efficiency ratio1 of 44.9%, compared to 42.9% 1 See reconciliation of Non-GAAP Financial Measures. Income Statement Net interest income was $639.7 million in the fourth quarter 2022, an increase of $37.6 million from $602.1 million in the third quarter 2022, and an increase of $189.1 million, or 42.0%, compared to the fourth quarter 2021. The increase in net interest income from the third quarter 2022 is due to a higher rate environment, which drove an increase in yields on interest earning assets and also pushed interest rates higher on deposits and short-term borrowings. HFI loan growth and higher yields on HFI loans, partially offset by higher interest rates on deposits and an increase in other borrowings, drove the increase in net interest income from the fourth quarter 2021. The Company recorded a provision for credit losses of $3.1 million in the fourth quarter 2022, a decrease of $25.4 million from $28.5 million in the third quarter 2022, and a decrease of $10.1 million from $13.2 million in the fourth quarter 2021. The provision for credit losses during the fourth quarter 2022 is primarily due to heightened economic uncertainty, offset by a decrease in loans. The Company’s net interest margin in the fourth quarter 2022 was 3.98%, an increase from 3.78% in the third quarter 2022, and an increase from 3.33% in the fourth quarter 2021. The higher rate environment drove an increase in net interest margin, with yields on interest earning assets more than offsetting the increase in rates on deposits and borrowings. The increase in net interest margin from the fourth quarter 2021 was driven by HFI loan growth plus an increase in rates, partially offset by higher deposits and borrowings coupled with higher rates. Non-interest income was $61.5 million for the fourth quarter 2022, compared to $61.8 million for the third quarter 2022, and $110.4 million for the fourth quarter 2021. The $0.3 million decrease in non-interest income from the third quarter 2022 was primarily related to fair value loss adjustments from HFI loans transferred to HFS and sold in the fourth quarter 2022 and a revaluation in the third quarter 2022 of the contingent consideration liability related to the Digital Disbursements acquisition that did not recur. These items were partially offset by a $10.9 million increase in net gain on loan origination and sale activities due to gains from hedging activity, partially offset by a reduction in spreads and production volume. Net loan servicing revenue decreased $1.6 million due to a decrease in the value of MSRs, which was partially offset by an increase in servicing revenue. The $48.9 million decrease from the fourth quarter 2021 was driven by a decrease in net gain on loan origination and sale activities of $47.8 million from lower production volume, partially offset by a $19.1 million increase in loan servicing revenue. Net revenue was $701.2 million for the fourth quarter 2022, an increase of $37.3 million, or 5.6%, compared to $663.9 million for the third quarter 2022, and an increase of $140.2 million, or 25.0%, compared to $561.0 million for the fourth quarter 2021. Non-interest expense was $333.4 million for the fourth quarter 2022, compared to $305.8 million for the third quarter 2022, and $237.8 million for the fourth quarter 2021. The Company’s efficiency ratio1 was 46.9% for the fourth quarter 2022, compared to 45.5% in the third quarter 2022, and 41.8% for the fourth quarter 2021. Non-interest expense increased from the third quarter 2022 due primarily to increased deposit costs. The increase in non-interest expense from the fourth quarter 2021 is also attributable to increased deposit costs. Income tax expense was $71.7 million for the fourth quarter 2022, compared to $65.6 million for the third quarter 2022, and $64.0 million for the fourth quarter 2021. Net income was $293.0 million for the fourth quarter 2022, an increase of $29.0 million from $264.0 million for the third quarter 2022, and an increase of $47.0 million from $246.0 million for the fourth quarter 2021. Earnings per share totaled $2.67 for the fourth quarter 2022, compared to $2.42 for the third quarter 2022, and $2.32 for the fourth quarter 2021. The Company views its pre-provision net revenue1 ("PPNR") as a key metric for assessing the Company’s earnings power, which it defines as net revenue less non-interest expense. For the fourth quarter 2022, the Company’s PPNR1 was $367.8 million, up $9.7 million from $358.1 million in the third quarter 2022, and up $44.6 million from $323.2 million in the fourth quarter 2021. The Company had 3,365 full-time equivalent employees and 56 offices at December 31, 2022, compared to 3,368 employees and 60 offices at September 30, 2022, and 3,139 employees and 58 offices at December 31, 2021. 1 See reconciliation of Non-GAAP Financial Measures. Balance Sheet HFI loans, net of deferred fees totaled $51.9 billion at December 31, 2022, compared to $52.2 billion at September 30, 2022, and $39.1 billion at December 31, 2021. The decrease in HFI loans of $339 million from the prior quarter was driven by a decrease of $1.6 billion in commercial and industrial loans, partially offset by increases of $651 million in CRE non-owner occupied, $392 million in construction and land development, and $254 million in residential real estate loans. From December 31, 2021, HFI loan growth of $10.9 billion (which excludes transfers of government guaranteed early buyout ("EBO") residential loans from HFS to HFI in 2022 with a balance of $1.9 billion at December 31, 2022), was primarily driven by residential real estate, commercial and industrial, and CRE non-owner occupied, loans which increased $4.8 billion, $2.8 billion, and, $2.4 billion respectively. The Company's allowance for credit losses on HFI loans consists of an allowance for funded HFI loans and an allowance for unfunded loan commitments. At December 31, 2022, the allowance for loan losses to funded HFI loans ratio was 0.60%, compared to 0.58% at September 30, 2022, and 0.65% at December 31, 2021. The allowance for credit losses, which includes the allowance for unfunded loan commitments, to funded HFI loans ratio was 0.69% at December 31, 2022, compared to 0.68% at September 30, 2022, and 0.74% at December 31, 2021. The Company is a party to credit linked note transactions, which effectively transfer a portion of the risk of losses on reference pools of loans to the purchasers of the notes. As of December 31, 2022, September 30, 2022, and December 31, 2021, the Company is protected from first credit losses on reference pools of loans totaling $12.0 billion, $10.8 billion, and $6.4 billion, respectively, under these transactions. However, as these note transactions are considered to be free standing credit enhancements, the allowance for credit losses cannot be reduced by the expected credit losses that may be mitigated by these notes. Accordingly, the allowance for loan and credit losses ratios include an allowance of $21.9 million as of December 31, 2022, $19 million as of September 30, 2022, and $7.2 million as of December 31, 2021, related to these pools of loans. The allowance for credit losses to funded HFI loans ratio, adjusted to reduce the HFI loan balance by the amount of loans in covered reference pools, was 0.89% at December 31, 2022, 0.86% at September 30, 2022, and 0.89% at December 31, 2021. Deposits totaled $53.6 billion at December 31, 2022, a decrease of $1.9 billion from $55.6 billion at September 30, 2022, and an increase of $6.0 billion from $47.6 billion at December 31, 2021. By deposit type, the decrease from the prior quarter is attributable to a decrease of $5.2 billion from non-interest bearing demand deposits, partially offset by increases of $1.9 billion from certificates of deposits, $1.2 billion from interest bearing demand deposits, and $195 million from savings and money market accounts. From December 31, 2021, certificates of deposit, interest-bearing demand deposits, and savings and money market accounts increased by $3.0 billion, $2.6 billion, and $2.1 billion, respectively. These increases were partially offset by a decrease in non-interest bearing demand deposits of $1.7 billion. Non-interest bearing deposits were $19.7 billion at December 31, 2022, compared to $24.9 billion at September 30, 2022, and $21.4 billion at December 31, 2021. The table below shows the Company's deposit types as a percentage of total deposits: Dec 31, 2022 Sep 30, 2022 Dec 31, 2021 Non-interest bearing 36.7 % 44.8 % 44.9 % Savings and money market 36.2 34.6 36.3 Interest-bearing demand 17.7 15.0 14.5 Certificates of deposit 9.4 5.6 4.3 The Company’s ratio of HFI loans to deposits was 96.7% at December 31, 2022, compared to 93.9% at September 30, 2022, and 82.1% at December 31, 2021. Borrowings were $6.3 billion at December 31, 2022 and September 30, 2022, and $1.5 billion at December 31, 2021. Borrowings remained flat from September 30, 2022 due primarily to the issuance of $93 million of credit linked notes in the fourth quarter 2022 offset by a decrease in short-term borrowings. The increase in borrowings from December 31, 2021 is due to an increase in short-term borrowings of $4.3 billion and issuance of $579 million of credit linked notes, net of issuance costs, during 2022. Qualifying debt totaled $893 million at December 31, 2022, compared to $889 million at September 30, 2022, and $896 million at December 31, 2021. Stockholders’ equity was $5.4 billion at December 31, 2022, compared to $5.0 billion at September 30, 2022 and December 31, 2021. The increase in stockholders’ equity quarter over quarter was due to net income and unrealized fair value gains of approximately $77 million on the Company's available for sale securities, which are recorded in other comprehensive (loss) income, net of tax, partially offset by dividends to shareholders. A cash dividend of $0.36 per share was paid to common shareholders on December 2, 2022, totaling $39.2 million, and a cash dividend of $0.27 per depository share was paid to preferred shareholders on December 30, 2022, totaling $3.2 million. The increase in stockholders' equity from December 31, 2021 is primarily a function of net income and sales of common stock under the Company's ATM program, partially offset by dividends to shareholders and unrealized fair value losses on available for sale securities. At December 31, 2022, tangible common equity, net of tax1, was 6.5% of tangible assets1 and total capital was 12.1% of risk-weighted assets. The Company’s tangible book value per share1 was $40.25 at December 31, 2022, an increase of 8.3% from $37.16, and up 6.4% from $37.84 at December 31, 2021. The increase in tangible book value per share from September 30, 2022 is attributable to net income and fair value marks on the Company's available for sale securities, which are recorded in other comprehensive (loss) income, net of tax. Total assets decreased 2.1% to $67.7 billion at December 31, 2022, from $69.2 billion at September 30, 2022, and increased 21.0% from $56.0 billion at December 31, 2021. The decrease in total assets from September 30, 2022 and December 31, 2021 was driven by decreases in HFS and HFI loans. 1 See reconciliation of Non-GAAP Financial Measures. Asset Quality Provision for credit losses totaled $3.1 million for the fourth quarter 2022, compared to $28.5 million for the third quarter 2022, and $13.2 million for the fourth quarter 2021. Net loan charge-offs (recoveries) in the fourth quarter 2022 were $1.8 million, or 0.01% of average loans (annualized), compared to $(1.9) million, or (0.02)%, in the third quarter 2022, and $1.4 million, or 0.02%, in the fourth quarter 2021. Nonaccrual loans decreased $5 million to $85 million during the quarter and increased $12 million from December 31, 2021. Loans past due 90 days and still accruing interest were zero (excluding government guaranteed loans of $582 million) at December 31, 2022, compared to zero at September 30, 2022 and December 31, 2021 (excluding government guaranteed loans of $644 million and zero at September 30, 2022 and December 31, 2021, respectively). Loans past due 30-89 days and still accruing interest totaled $70 million (excluding government guaranteed loans of $334 million) at December 31, 2022, an increase from $56 million at September 30, 2022, and an increase from $53 million at December 31, 2021 (excluding government guaranteed loans of $245 million and zero at September 30, 2022 and December 31, 2021, respectively). Repossessed assets totaled $11 million at December 31, 2022, flat from September 30, 2022, and a $1 million decrease from $12 million at December 31, 2021. Classified assets totaled $393 million at December 31, 2022, an increase of $8 million from $385 million at September 30, 2022, and an increase of $92 million from $301 million at December 31, 2021. The ratio of classified assets to Tier 1 capital plus the allowance for credit losses, a common regulatory measure of asset quality, was 6.8% at December 31, 2022, compared to 7.0% at September 30, 2022, and 6.4% at December 31, 2021. 1 See reconciliation of Non-GAAP Financial Measures. Segment Highlights The Company's reportable segments are aggregated with a focus on products and services offered and consist of three reportable segments: Commercial segment: provides commercial banking and treasury management products and services to small and middle-market businesses, specialized banking services to sophisticated commercial institutions and investors within niche industries, as well as financial services to the real estate industry. Consumer Related segment: offers both commercial banking services to enterprises in consumer-related sectors and consumer banking services, such as residential mortgage banking and beginning on January 25, 2022 includes the financial results of Digital Disbursements. Corporate & Other segment: consists of the Company's investment portfolio, Corporate borrowings and other related items, income and expense items not allocated to our other reportable segments, and inter-segment eliminations. Key management metrics for evaluating the performance of the Company's Commercial and Consumer Related segments include loan and deposit growth, asset quality, and pre-tax income. The Commercial segment reported an HFI loan balance of $31.4 billion at December 31, 2022, a decrease of $646 million during the quarter, and an increase of $6.3 billion during the year. Deposits for the Commercial segment totaled $29.5 billion at December 31, 2022, a decrease of $512 million during the quarter, and a decrease of $973 million during the year. Pre-tax income for the Commercial segment was $320.5 million for the three months ended December 31, 2022, an increase of $22.3 million from the three months ended September 30, 2022, and an increase of $82.2 million from the three months ended December 31, 2021. For the year ended December 31, 2022, the Commercial segment reported total pre-tax income of $1.1 billion, an increase of $233.8 million compared to the year ended December 31, 2021. The Consumer Related segment reported an HFI loan balance of $20.4 billion at December 31, 2022, an increase of $307 million during the quarter, and an increase of $6.5 billion during the year. The Consumer Related segment also has loans held for sale of $1.2 billion at December 31, 2022, a decrease of $1.0 billion during the quarter, and a decrease of $4.5 billion during the year. Deposits for the Consumer Related segment totaled $18.5 billion, a decrease of $2.5 billion during the quarter, and an increase of $3.1 billion during the year. Pre-tax income for the Consumer Related segment was $69.8 million for the three months ended December 31, 2022, a decrease of $23.4 million from the three months ended September 30, 2022, and a decrease of $65.2 million from the three months ended December 31, 2021. Pre-tax income for the Consumer Related segment for the year ended December 31, 2022 totaled $450.1 million, a decrease of $46.0 million compared to the year ended December 31, 2021. Conference Call and Webcast Western Alliance Bancorporation will host a conference call and live webcast to discuss its fourth quarter 2022 financial results at 12:00 p.m. ET on Wednesday, January 25, 2023. Participants may access the call by dialing 1-844-200-6205 and using access code 669213 or via live audio webcast using the website link https://events.q4inc.com/attendee/484930167. The webcast is also available via the Company’s website at www.westernalliancebancorporation.com. Participants should log in at least 15 minutes early to receive instructions. The call will be recorded and made available for replay after 3:00 p.m. ET January 25th through 11:00 p.m. ET February 25th by dialing 1-866-813-9403, using access code 597938. Reclassifications Certain amounts in the Consolidated Income Statements for the prior periods have been reclassified to conform to the current presentation. The reclassifications have no effect on net income or stockholders’ equity as previously reported. Use of Non-GAAP Financial Information This press release contains both financial measures based on GAAP and non-GAAP based financial measures, which are used where management believes them to be helpful in understanding the Company’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Cautionary Note Regarding Forward-Looking Statements This release contains forward-looking statements that relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Examples of forward-looking statements include, among others, statements we make regarding our expectations with regard to our business, financial and operating results, future economic performance and dividends. The forward-looking statements contained herein reflect our current views about future events and financial performance and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from historical results and those expressed in any forward-looking statement. Some factors that could cause actual results to differ materially from historical or expected results include, among others: the risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and the Company's subsequent Quarterly Reports on Form 10-Q, each as filed with the Securities and Exchange Commission; the potential adverse effects of unusual and infrequently occurring events such as the COVID-19 pandemic and any governmental or societal responses thereto; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; the impact on financial markets from geopolitical conflicts such as the war between Russia and Ukraine; inflation, interest rate, market and monetary fluctuations; increases in competitive pressures among financial institutions and businesses offering similar products and services; higher defaults on our loan portfolio than we expect; changes in management’s estimate of the adequacy of the allowance for credit losses; legislative or regulatory changes or changes in accounting principles, policies or guidelines; supervisory actions by regulatory agencies which may limit our ability to pursue certain growth opportunities, including expansion through acquisitions; additional regulatory requirements resulting from our continued growth; management’s estimates and projections of interest rates and interest rate policy; the execution of our business plan; and other factors affecting the financial services industry generally or the banking industry in particular. Any forward-looking statement made by us in this release is based only on information currently available to us and speaks only as of the date on which it is made. We do not intend and disclaim any duty or obligation to update or revise any industry information or forward-looking statements, whether written or oral, that may be made from time to time, set forth in this press release to reflect new information, future events or otherwise. About Western Alliance Bancorporation With more than $65 billion in assets, Western Alliance Bancorporation (NYSE:WAL) is one of the country’s top-performing banking companies. Through its primary subsidiary, Western Alliance Bank, Member FDIC, business clients benefit from a full spectrum of tailored banking solutions and outstanding service delivered by industry experts who put customers first. Major accolades include #2 best-performing of the 50 largest public U.S. banks in the S&P Global Market Intelligence listing for 2021, and #1 Best Emerging Regional Bank for 2022 by Bank Director. Serving clients across the country wherever business happens, Western Alliance Bank operates individual, full-service banking and financial brands with offices in key markets nationwide. For more information, visit westernalliancebank.com. Western Alliance Bancorporation and Subsidiaries Summary Consolidated Financial Data Unaudited Selected Balance Sheet Data: As of December 31, 2022 2021 Change % (in millions) Total assets $ 67,734 $ 55,983 21.0 % Loans held for sale 1,184 5,635 (79.0 ) HFI loans, net of deferred fees 51,862 39,075 32.7 Investment securities 8,760 7,541 16.2 Total deposits 53,644 47,612 12.7 Borrowings 6,299 1,502 NM Qualifying debt 893 896 (0.3 ) Stockholders' equity 5,356 4,963 7.9 Tangible common equity, net of tax (1) 4,383 4,035 8.6 Common equity Tier 1 capital 5,073 4,068 24.7 Selected Income Statement Data: For the Three Months Ended December 31, For the Year Ended December 31, 2022 2021 Change % 2022 2021 Change % (in millions, except per share data) (in millions, except per share data) Interest income $ 888.3 $ 483.3 83.8 % $ 2,691.8 $ 1,658.7 62.3 % Interest expense 248.6 32.7 NM 475.5 109.9 NM Net interest income 639.7 450.6 42.0 2,216.3 1,548.8 43.1 Provision for (recovery of) credit losses 3.1 13.2 (76.5 ) 68.1 (21.4 ) NM Net interest income after provision for credit losses 636.6 437.4 45.5 2,148.2 1,570.2 36.8 Non-interest income 61.5 110.4 (44.3 ) 324.6 404.2 (19.7 ) Non-interest expense 333.4 237.8 40.2 1,156.7 851.4 35.9 Income before income taxes 364.7 310.0 17.6 1,316.1 1,123.0 17.2 Income tax expense 71.7 64.0 12.0 258.8 223.8 15.6 Net income 293.0 246.0 19.1 1,057.3 899.2 17.6 Dividends on preferred stock 3.2 3.5 (8.6 ) 12.8 3.5 NM Net income available to common stockholders $ 289.8 $ 242.5 19.5 $ 1,044.5 $ 895.7 16.6 Diluted earnings per common share $ 2.67 $ 2.32 15.1 $ 9.70 $ 8.67 11.9 (1) See Reconciliation of Non-GAAP Financial Measures. NM Changes +/- 100% are not meaningful. Western Alliance Bancorporation and Subsidiaries Summary Consolidated Financial Data Unaudited Common Share Data: At or For the Three Months Ended December 31, For the Year Ended December 31, 2022 2021 Change % 2022 2021 Change % Diluted earnings per common share $ 2.67 $ 2.32 15.1 % $ 9.70 $ 8.67 11.9 % Book value per common share 46.47 43.78 6.1 Tangible book value per common share, net of tax (1) 40.25 37.84 6.4 Average common shares outstanding (in millions): Basic 108.0 103.9 4.0 107.2 102.7 4.4 Diluted 108.4 104.5 3.7 107.6 103.3 4.2 Common shares outstanding 108.9 106.6 2.1 Selected Performance Ratios: Return on average assets (2) 1.67 % 1.69 % (1.2 ) % 1.62 % 1.83 % (11.5 ) % Return on average tangible common equity (1, 2) 27.0 25.8 4.7 25.4 26.2 (3.1 ) Return on average tangible common equity, excluding AOCI (1, 2) 23.1 26.0 (11.2 ) 23.1 26.6 (13.2 ) Net interest margin (2) 3.98 3.33 19.5 3.67 3.41 7.6 Efficiency ratio - tax equivalent basis (1) 46.9 41.8 12.2 44.9 42.9 4.7 Loan to deposit ratio 96.7 82.1 17.8 Asset Quality Ratios: Net charge-offs (recoveries) to average loans outstanding (2) 0.01 % 0.02 % (50.0 ) % 0.00 % 0.02 % NM Nonaccrual loans to funded HFI loans 0.16 0.19 (15.8 ) Nonaccrual loans and repossessed assets to total assets 0.14 0.15 (6.7 ) Allowance for loan losses to funded HFI loans 0.60 0.65 (7.7 ) Allowance for loan losses to nonaccrual HFI loans 364 348 4.6 Capital Ratios: Dec 31, 2022 Sep 30, 2022 Dec 31, 2021 Tangible common equity (1) 6.5 % 5.9 % 7.3 % Common Equity Tier 1 (3) 9.3 8.7 9.1 Tier 1 Leverage ratio (3) 7.8 7.5 7.8 Tier 1 Capital (3) 10.0 9.3 9.9 Total Capital (3) 12.1 11.4 12.3 (1) See Reconciliation of Non-GAAP Financial Measures. (2) Annualized on an actual/actual basis for periods less than 12 months. (3) Capital ratios for December 31, 2022 are preliminary. NM Changes +/- 100% are not meaningful. Western Alliance Bancorporation and Subsidiaries Condensed Consolidated Income Statements Unaudited Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 (dollars in millions, except per share data) Interest income: Loans $ 785.1 $ 438.6 $ 2,393.4 $ 1,488.8 Investment securities 89.4 43.7 272.6 164.7 Other 13.8 1.0 25.8 5.2 Total interest income 888.3 483.3 2,691.8 1,658.7 Interest expense: Deposits 157.6 12.8 276.4 47.5 Qualifying debt 9.1 9.2 35.0 33.1 Borrowings 81.9 10.7 164.1 29.3 Total interest expense 248.6 32.7 475.5 109.9 Net interest income 639.7 450.6 2,216.3 1,548.8 Provision for (recovery of) credit losses 3.1 13.2 68.1 (21.4 ) Net interest income after provision for credit losses 636.6 437.4 2,148.2 1,570.2 Non-interest income: Net gain on loan origination and sale activities 25.4 73.2 104.0 326.2 Net loan servicing revenue (expense) 21.4 2.3 130.9 (16.3 ) Service charges and fees 5.9 7.1 27.0 28.3 Commercial banking related income 5.5 4.9 21.5 17.4 Income from equity investments 4.2 5.2 17.8 22.1 Gain on recovery from credit guarantees 3.0 7.2 14.7 7.2 Gain on sales of investment securities 0.1 8.3 6.8 8.3 Fair value loss adjustments on assets measured at fair value, net (9.2 ) (0.8 ) (28.6 ) (1.3 ) Other 5.2 3.0 30.5 12.3 Total non-interest income 61.5 110.4 324.6 404.2 Non-interest expenses: Salaries and employee benefits 125.7 120.6 539.5 466.7 Deposit costs 82.2 9.1 165.8 29.8 Legal, professional, and directors' fees 26.0 20.8 99.9 58.6 Data processing 23.9 17.9 83.0 58.2 Occupancy 15.8 12.4 55.5 43.8 Loan servicing expenses 14.8 15.6 55.5 53.5 Insurance 8.9 7.1 31.1 23.0 Business development and marketing 7.3 6.1 22.1 13.5 Loan acquisition and origination expenses 4.4 8.6 23.1 28.8 Loss on extinguishment of debt — 5.9 — 5.9 Net gain on sales and valuations of repossessed and other assets (0.3 ) (0.4 ) (0.7 ) (3.5 ) Acquisition and restructure expenses (recoveries) — (3.2 ) 0.4 15.3 Other 24.7 17.3 81.5 57.8 Total non-interest expense 333.4 237.8 1,156.7 851.4 Income before income taxes 364.7 310.0 1,316.1 1,123.0 Income tax expense 71.7 64.0 258.8 223.8 Net income 293.0 246.0 1,057.3 899.2 Dividends on preferred stock 3.2 3.5 12.8 3.5 Net income available to common stockholders $ 289.8 $ 242.5 $ 1,044.5 $ 895.7 Earnings per common share: Diluted shares 108.4 104.5 107.6 103.3 Diluted earnings per share $ 2.67 $ 2.32 $ 9.70 $ 8.67 Western Alliance Bancorporation and Subsidiaries Five Quarter Condensed Consolidated Income Statements Unaudited Three Months Ended Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 (in millions, except per share data) Interest income: Loans $ 785.1 $ 657.0 $ 516.6 $ 434.7 $ 438.6 Investment securities 89.4 75.9 59.3 48.0 43.7 Other 13.8 6.5 3.7 1.8 1.0 Total interest income 888.3 739.4 579.6 484.5 483.3 Interest expense: Deposits 157.6 77.6 27.1 14.1 12.8 Qualifying debt 9.1 8.9 8.6 8.4 9.2 Borrowings 81.9 50.8 18.9 12.5 10.7 Total interest expense 248.6 137.3 54.6 35.0 32.7 Net interest income 639.7 602.1 525.0 449.5 450.6 Provision for credit losses 3.1 28.5 27.5 9.0 13.2 Net interest income after provision for credit losses 636.6 573.6 497.5 440.5 437.4 Non-interest income: Net gain on loan origination and sale activities 25.4 14.5 27.2 36.9 73.2 Net loan servicing revenue 21.4 23.0 45.4 41.1 2.3 Service charges and fees 5.9 6.5 7.6 7.0 7.1 Commercial banking related income 5.5 5.1 5.8 5.1 4.9 Income from equity investments 4.2 4.3 5.2 4.1 5.2 Gain on recovery from credit guarantees 3.0 0.4 9.0 2.3 7.2 Gain (loss) on sales of investment securities 0.1 — (0.2 ) 6.9 8.3 Fair value loss adjustments on assets measured at fair value, net (9.2 ) (2.8 ) (10.0 ) (6.6 ) (0.8 ) Other 5.2 10.8 5.0 9.5 3.0 Total non-interest income 61.5 61.8 95.0 106.3 110.4 Non-interest expenses: Salaries and employee benefits 125.7 136.5 139.0 138.3 120.6 Deposit costs 82.2 56.2 18.1 9.3 9.1 Legal, professional, and directors' fees 26.0 24.8 25.1 24.0 20.8 Data processing 23.9 21.8 19.7 17.6 17.9 Occupancy 15.8 13.9 13.0 12.8 12.4 Loan servicing expenses 14.8 15.2 14.7 10.8 15.6 Insurance 8.9 8.1 6.9 7.2 7.1 Business development and marketing 7.3 5.0 5.4 4.4 6.1 Loan acquisition and origination expenses 4.4 5.8 6.4 6.5 8.6 Net (gain) loss on sales and valuations of repossessed and other assets (0.3 ) (0.2 ) (0.3 ) 0.1 (0.4 ) Loss on extinguishment of debt — — — — 5.9 Acquisition and restructure expenses (recoveries) — — — 0.4 (3.2 ) Other 24.7 18.7 20.9 17.2 17.3 Total non-interest expense 333.4 305.8 268.9 248.6 237.8 Income before income taxes 364.7 329.6 323.6 298.2 310.0 Income tax expense 71.7 65.6 63.4 58.1 64.0 Net income 293.0 264.0 260.2 240.1 246.0 Dividends on preferred stock 3.2 3.2 3.2 3.2 3.5 Net income available to common stockholders $ 289.8 $ 260.8 $ 257.0 $ 236.9 $ 242.5 Earnings per common share: Diluted shares 108.4 107.9 107.7 106.6 104.5 Diluted earnings per share $ 2.67 $ 2.42 $ 2.39 $ 2.22 $ 2.32 Western Alliance Bancorporation and Subsidiaries Five Quarter Condensed Consolidated Balance Sheets Unaudited Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 (in millions) Assets: Cash and due from banks $ 1,043 $ 1,610 $ 1,886 $ 2,602 $ 516 Investment securities 8,760 8,603 8,802 8,277 7,541 Loans held for sale 1,184 2,204 2,803 4,762 5,635 Loans held for investment: Commercial and industrial 20,710 22,318 20,754 17,862 18,297 Commercial real estate - non-owner occupied 9,319 8,668 7,775 6,849 6,526 Commercial real estate - owner occupied 1,818 1,848 1,848 1,805 1,898 Construction and land development 4,013 3,621 3,231 3,278 3,023 Residential real estate 15,928 15,674 14,908 11,270 9,282 Consumer 74 72 56 55 49 Loans HFI, net of deferred fees 51,862 52,201 48,572 41,119 39,075 Allowance for loan losses (310 ) (304 ) (273 ) (258 ) (252 ) Loans HFI, net of deferred fees and allowance 51,552 51,897 48,299 40,861 38,823 Mortgage servicing rights 1,148 1,044 826 950 698 Premises and equipment, net 276 237 210 196 182 Operating lease right-of-use asset 163 131 136 142 133 Other assets acquired through foreclosure, net 11 11 12 12 12 Bank owned life insurance 182 181 180 179 180 Goodwill and other intangibles, net 680 682 695 698 635 Other assets 2,735 2,565 2,206 1,897 1,628 Total assets $ 67,734 $ 69,165 $ 66,055 $ 60,576 $ 55,983 Liabilities and Stockholders' Equity: Liabilities: Deposits Non-interest bearing demand deposits $ 19,691 $ 24,926 $ 23,721 $ 23,520 $ 21,353 Interest bearing: Demand 9,507 8,350 8,387 8,268 6,924 Savings and money market 19,397 19,202 19,026 18,553 17,279 Certificates of deposit 5,049 3,111 2,578 1,818 2,056 Total deposits 53,644 55,589 53,712 52,159 47,612 Borrowings 6,299 6,319 5,210 833 1,502 Qualifying debt 893 889 891 893 896 Operating lease liability 185 149 151 155 143 Accrued interest payable and other liabilities 1,357 1,198 1,132 1,524 867 Total liabilities 62,378 64,144 61,096 55,564 51,020 Stockholders' Equity: Preferred stock 295 295 295 295 295 Common stock and additional paid-in capital 2,058 2,049 1,990 1,979 1,879 Retained earnings 3,664 3,413 3,192 2,973 2,773 Accumulated other comprehensive (loss) income (661 ) (736 ) (518 ) (235 ) 16 Total stockholders' equity 5,356 5,021 4,959 5,012 4,963 Total liabilities and stockholders' equity $ 67,734 $ 69,165 $ 66,055 $ 60,576 $ 55,983 Western Alliance Bancorporation and Subsidiaries Changes in the Allowance For Credit Losses on Loans Unaudited Three Months Ended Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 (in millions) Allowance for loan losses Balance, beginning of period $ 304.1 $ 273.2 $ 257.6 $ 252.5 $ 246.9 Provision for credit losses (1) 7.4 29.0 17.0 5.3 7.0 Recoveries of loans previously charged-off: Commercial and industrial 0.3 3.8 0.8 2.4 1.8 Commercial real estate - non-owner occupied — 0.1 — — 0.3 Commercial real estate - owner occupied 0.1 — 0.1 — — Construction and land development — 0.1 — — — Residential real estate — — 0.1 — 0.4 Consumer — — — — — Total recoveries 0.4 4.0 1.0 2.4 2.5 Loans charged-off: Commercial and industrial 1.1 2.1 2.4 2.6 3.8 Commercial real estate - non-owner occupied — — — — — Commercial real estate - owner occupied 0.5 — — — — Construction and land development 0.6 — — — — Residential real estate — — — — 0.1 Consumer — — — — — Total loans charged-off 2.2 2.1 2.4 2.6 3.9 Net loan charge-offs (recoveries) 1.8 (1.9 ) 1.4 0.2 1.4 Balance, end of period $ 309.7 $ 304.1 $ 273.2 $ 257.6 $ 252.5 Allowance for unfunded loan commitments Balance, beginning of period $ 52.1 $ 53.8 $ 43.3 $ 37.6 $ 32.1 (Recovery of) provision for credit losses (1) (5.1 ) (1.7 ) 10.5 5.7 5.5 Balance, end of period (2) $ 47.0 $ 52.1 $ 53.8 $ 43.3 $ 37.6 Components of the allowance for credit losses on loans Allowance for loan losses $ 309.7 $ 304.1 $ 273.2 $ 257.6 $ 252.5 Allowance for unfunded loan commitments 47.0 52.1 53.8 43.3 37.6 Total allowance for credit losses on loans $ 356.7 $ 356.2 $ 327.0 $ 300.9 $ 290.1 Net charge-offs (recoveries) to average loans - annualized 0.01 % (0.02 ) % 0.01 % 0.00 % 0.02 % Allowance ratios Allowance for loan losses to funded HFI loans (3) 0.60 % 0.58 % 0.56 % 0.63 % 0.65 % Allowance for credit losses to funded HFI loans (3) 0.69 0.68 0.67 0.73 0.74 Allowance for loan losses to nonaccrual HFI loans 364 338 321 283 346 Allowance for credit losses to nonaccrual HFI loans 420 396 385 331 397 (1) The above tables reflect the provision for credit losses on funded and unfunded loans. There was a $0.8 million provision for credit losses on investment securities for the three months ended December 31, 2022. The allowance for credit losses on investment securities totaled $5.2 million as of December 31, 2022. (2) The allowance for unfunded loan commitments is included as part of accrued interest payable and other liabilities on the balance sheet. (3) Ratio includes an allowance for credit losses of $21.9 million as of December 31, 2022 related to a $12.0 billion pool of loans covered under five separate credit linked note transactions. Western Alliance Bancorporation and Subsidiaries Asset Quality Metrics Unaudited Three Months Ended Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 (in millions) Nonaccrual loans and repossessed assets Nonaccrual loans $ 85 $ 90 $ 85 $ 91 $ 73 Nonaccrual loans to funded HFI loans 0.16 % 0.17 % 0.17 % 0.22 % 0.19 % Repossessed assets $ 11 $ 11 $ 12 $ 12 $ 12 Nonaccrual loans and repossessed assets to total assets 0.14 % 0.15 % 0.15 % 0.17 % 0.15 % Loans Past Due Loans past due 90 days, still accruing (1) $ — $ — $ — $ — $ — Loans past due 90 days, still accruing to funded HFI loans — % — % — % — % — % Loans past due 30 to 89 days, still accruing (2) $ 70 $ 56 $ 117 $ 58 $ 53 Loans past due 30 to 89 days, still accruing to funded HFI loans 0.13 % 0.11 % 0.24 % 0.14 % 0.13 % Other credit quality metrics Special mention loans $ 351 $ 312 $ 317 $ 350 $ 331 Special mention loans to funded HFI loans 0.68 % 0.60 % 0.65 % 0.85 % 0.85 % Classified loans on accrual $ 280 $ 268 $ 232 $ 253 $ 216 Classified loans on accrual to funded HFI loans 0.54 % 0.51 % 0.48 % 0.61 % 0.55 % Classified assets $ 393 $ 385 $ 346 $ 365 $ 301 Classified assets to total assets 0.58 % 0.56 % 0.52 % 0.60 % 0.54 % (1) Excludes government guaranteed residential mortgage loans of $582 million, $644 million, and $827 million as of December 31, 2022, September 30, 2022, and June 30, 2022, respectively. (2) Excludes government guaranteed residential mortgage loans of $334 million, $245 million, and $202 million as of December 31, 2022, September 30, 2022, and June 30, 2022, respectively. Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited Three Months Ended December 31, 2022 September 30, 2022 Average Balance Interest Average Yield / Cost Average Balance Interest Average Yield / Cost ($ in millions) ($ in millions) Interest earning assets Loans held for sale $ 2,659 $ 37.8 5.63 % $ 3,993 $ 49.0 4.87 % Loans held for investment: Commercial and industrial 21,654 349.3 6.45 21,551 282.1 5.25 CRE - non-owner occupied 9,077 148.8 6.51 8,128 111.4 5.44 CRE - owner occupied 1,830 24.4 5.39 1,839 23.3 5.12 Construction and land development 3,798 80.2 8.38 3,471 59.5 6.80 Residential real estate 15,803 143.5 3.60 15,125 130.9 3.43 Consumer 71 1.1 6.26 63 0.8 5.32 Total HFI loans (1), (2), (3) 52,233 747.3 5.70 50,177 608.0 4.84 Securities: Securities - taxable 6,397 68.4 4.25 6,680 56.4 3.35 Securities - tax-exempt 2,068 21.0 5.07 2,047 19.5 4.73 Total securities (1) 8,465 89.4 4.45 8,727 75.9 3.66 Cash and other 1,361 13.8 4.02 1,239 6.5 2.07 Total interest earning assets 64,718 888.3 5.50 64,136 739.4 4.62 Non-interest earning assets Cash and due from banks 289 242 Allowance for credit losses (308 ) (282 ) Bank owned life insurance 181 180 Other assets 4,613 4,100 Total assets $ 69,493 $ 68,376 Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 8,754 $ 43.6 1.98 % $ 8,466 $ 24.5 1.15 % Savings and money market 18,651 88.0 1.87 18,515 44.5 0.95 Certificates of deposit 4,260 26.0 2.42 2,843 8.6 1.19 Total interest-bearing deposits 31,665 157.6 1.97 29,824 77.6 1.03 Short-term borrowings 5,440 54.8 3.99 4,136 27.0 2.59 Long-term debt 1,240 27.1 8.68 1,228 23.8 7.69 Qualifying debt 890 9.1 4.08 891 8.9 3.94 Total interest-bearing liabilities 39,235 248.6 2.51 36,079 137.3 1.51 Interest cost of funding earning assets 1.52 0.84 Non-interest-bearing liabilities Non-interest-bearing demand deposits 23,729 25,865 Other liabilities 1,296 1,282 Stockholders’ equity 5,233 5,150 Total liabilities and stockholders' equity $ 69,493 $ 68,376 Net interest income and margin (4) $ 639.7 3.98 % $ 602.1 3.78 % (1) Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $9.0 million and $8.5 million for the three months ended December 31, 2022 and September 30, 2022, respectively. (2) Included in the yield computation are net loan fees of $34.8 million and $31.9 million for the three months ended December 31, 2022 and September 30, 2022, respectively. (3) Includes non-accrual loans. (4) Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis. Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited Three Months Ended December 31, 2022 December 31, 2021 Average Balance Interest Average Yield / Cost Average Balance Interest Average Yield / Cost ($ in millions) ($ in millions) Interest earning assets Loans held for sale $ 2,659 $ 37.8 5.63 % $ 9,159 $ 70.3 3.04 % Loans held for investment: Commercial and industrial 21,654 349.3 6.45 17,087 169.5 4.01 CRE - non-owner-occupied 9,077 148.8 6.51 6,209 70.0 4.48 CRE - owner-occupied 1,830 24.4 5.39 1,971 24.2 4.96 Construction and land development 3,798 80.2 8.38 3,016 43.9 5.78 Residential real estate 15,803 143.5 3.60 8,282 60.3 2.89 Consumer 71 1.1 6.26 44 0.4 3.85 Total HFI loans (1), (2), (3) 52,233 747.3 5.70 36,609 368.3 4.03 Securities: Securities - taxable 6,397 68.4 4.25 5,443 25.6 1.86 Securities - tax-exempt 2,068 21.0 5.07 2,175 18.1 4.12 Total securities (1) 8,465 89.4 4.45 7,618 43.7 2.51 Other 1,361 13.8 4.02 1,274 1.0 0.31 Total interest earning assets 64,718 888.3 5.50 54,660 483.3 3.57 Non-interest earning assets Cash and due from banks 289 253 Allowance for credit losses (308 ) (256 ) Bank owned life insurance 181 179 Other assets 4,613 2,767 Total assets $ 69,493 $ 57,603 Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 8,754 $ 43.6 1.98 % $ 5,918 $ 1.7 0.11 % Savings and money market accounts 18,651 88.0 1.87 17,215 9.1 0.21 Certificates of deposit 4,260 26.0 2.42 2,074 2.0 0.38 Total interest-bearing deposits 31,665 157.6 1.97 25,207 12.8 0.20 Short-term borrowings 5,440 54.8 3.99 2,815 2.4 0.35 Long-term debt 1,240 27.1 8.68 565 8.3 5.81 Qualifying debt 890 9.1 4.08 978 9.2 3.72 Total interest-bearing liabilities 39,235 248.6 2.51 29,565 32.7 0.44 Interest cost of funding earning assets 1.52 0.24 Non-interest-bearing liabilities Non-interest-bearing demand deposits 23,729 22,487 Other liabilities 1,296 913 Stockholders’ equity 5,233 4,638 Total liabilities and stockholders' equity $ 69,493 $ 57,603 Net interest income and margin (4) $ 639.7 3.98 % $ 450.6 3.33 % (1) Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $9.0 million and $8.4 million for the three months ended December 31, 2022 and 2021, respectively. (2) Included in the yield computation are net loan fees of $34.8 million and $35.8 million for the three months ended December 31, 2022 and 2021, respectively. (3) Includes non-accrual loans. (4) Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis. Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited Year Ended December 31, 2022 December 31, 2021 Average Balance Interest Average Yield / Cost Average Balance Interest Average Yield / Cost ($ in millions) ($ in millions) Interest earning assets Loans held for sale $ 4,364 $ 180.3 4.13 % $ 5,476 $ 174.4 3.18 % Loans held for investment: Commercial and industrial 20,082 1,002.8 5.05 14,979 624.8 4.26 CRE - non-owner occupied 7,769 416.4 5.37 5,829 271.3 4.67 CRE - owner occupied 1,841 93.2 5.16 2,030 97.7 4.92 Construction and land development 3,426 229.1 6.69 2,790 160.0 5.74 Residential real estate 13,771 468.5 3.40 5,129 158.9 3.10 Consumer 61 3.1 5.07 39 1.7 4.43 Total HFI loans (1), (2), (3) 46,951 2,213.1 4.74 30,796 1,314.4 4.32 Securities: Securities - taxable 6,324 195.3 3.09 5,284 95.8 1.81 Securities - tax-exempt 2,067 77.3 4.68 2,137 68.9 4.05 Total securities (1) 8,391 272.6 3.48 7,421 164.7 2.46 Other 1,574 25.8 1.64 2,718 5.2 0.19 Total interest earning assets 61,281 2,691.8 4.45 46,411 1,658.7 3.65 Non-interest earning assets Cash and due from banks 260 293 Allowance for credit losses (280 ) (261 ) Bank owned life insurance 180 178 Other assets 3,948 2,487 Total assets $ 65,389 $ 49,108 Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 8,331 $ 78.8 0.95 % $ 4,751 $ 5.9 0.13 % Savings and money market accounts 18,518 158.6 0.86 15,814 33.1 0.21 Certificates of deposit 2,772 39.0 1.40 1,850 8.5 0.46 Total interest-bearing deposits 29,621 276.4 0.93 22,415 47.5 0.21 Short-term borrowings 3,424 92.1 2.69 1,206 8.2 0.68 Long-term debt 1,008 72.0 7.14 373 21.1 5.65 Qualifying debt 893 35.0 3.92 827 33.1 4.00 Total interest-bearing liabilities 34,946 475.5 1.36 24,821 109.9 0.44 Interest cost of funding earning assets 0.78 0.24 Non-interest-bearing liabilities Non-interest-bearing demand deposits 24,133 19,416 Other liabilities 1,211 837 Stockholders’ equity 5,099 4,034 Total liabilities and stockholders' equity $ 65,389 $ 49,108 Net interest income and margin (4) $ 2,216.3 3.67 % $ 1,548.8 3.41 % (1) Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $33.7 million and $33.3 million for the year ended December 31, 2022 and 2021, respectively. (2) Included in the yield computation are net loan fees of $132.2 million and $131.7 million for the year ended December 31, 2022 and 2021, respectively. (3) Includes non-accrual loans. (4) Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis. Western Alliance Bancorporation and Subsidiaries Operating Segment Results Unaudited Balance Sheet: Consolidated Company Commercial Consumer Related Corporate & Other At December 31, 2022: (dollars in millions) Assets: Cash, cash equivalents, and investment securities $ 9,803 $ 12 $ — $ 9,791 Loans held for sale 1,184 — 1,184 — Loans, net of deferred fees and costs 51,862 31,414 20,448 — Less: allowance for credit losses (310 ) (262 ) (48 ) — Total loans 51,552 31,152 20,400 — Other assets acquired through foreclosure, net 11 11 — — Goodwill and other intangible assets, net 680 293 387 — Other assets 4,504 435 2,180 1,889 Total assets $ 67,734 $ 31,903 $ 24,151 $ 11,680 Liabilities: Deposits $ 53,644 $ 29,494 $ 18,492 $ 5,658 Borrowings and qualifying debt 7,192 27 340 6,825 Other liabilities 1,542 83 656 803 Total liabilities 62,378 29,604 19,488 13,286 Allocated equity: 5,356 2,684 1,691 981 Total liabilities and stockholders' equity $ 67,734 $ 32,288 $ 21,179 $ 14,267 Excess funds provided (used) — 385 (2,972 ) 2,587 No. of offices 56 46 8 2 No. of full-time equivalent employees 3,365 671 785 1,909 Income Statement: Three Months Ended December 31, 2022: (in millions) Net interest income $ 639.7 $ 428.0 $ 216.4 $ (4.7 ) Provision for (recovery of) credit losses 3.1 (5.9 ) 8.2 0.8 Net interest income (expense) after provision for credit losses 636.6 433.9 208.2 (5.5 ) Non-interest income 61.5 8.7 49.2 3.6 Non-interest expense 333.4 122.1 187.6 23.7 Income (loss) before income taxes 364.7 320.5 69.8 (25.6 ) Income tax expense (benefit) 71.7 76.1 16.3 (20.7 ) Net income (loss) $ 293.0 $ 244.4 $ 53.5 $ (4.9 ) Year Ended December 31, 2022: (in millions) Net interest income $ 2,216.3 $ 1,546.3 $ 854.1 $ (184.1 ) Provision for (recovery of) credit losses 68.1 47.2 21.1 (0.2 ) Net interest income (expense) after provision for credit losses 2,148.2 1,499.1 833.0 (183.9 ) Non-interest income 324.6 59.7 247.2 17.7 Non-interest expense 1,156.7 463.5 630.1 63.1 Income (loss) before income taxes 1,316.1 1,095.3 450.1 (229.3 ) Income tax expense (benefit) 258.8 260.5 107.1 (108.8 ) Net income (loss) $ 1,057.3 $ 834.8 $ 343.0 $ (120.5 ) Western Alliance Bancorporation and Subsidiaries Operating Segment Results Unaudited Balance Sheet: Consolidated Company Commercial Consumer Related Corporate At December 31, 2021: (dollars in millions) Assets: Cash, cash equivalents, and investment securities $ 8,057 $ 13 $ 82 $ 7,962 Loans held for sale 5,635 — 5,635 — Loans, net of deferred fees and costs 39,075 25,092 13,983 — Less: allowance for credit losses (252 ) (226 ) (26 ) — Total loans 38,823 24,866 13,957 — Other assets acquired through foreclosure, net 12 12 — — Goodwill and other intangible assets, net 635 295 340 — Other assets 2,821 254 1,278 1,289 Total assets $ 55,983 $ 25,440 $ 21,292 $ 9,251 Liabilities: Deposits $ 47,612 $ 30,467 $ 15,363 $ 1,782 Borrowings and qualifying debt 2,398 — 353 2,045 Other liabilities 1,010 233 138 639 Total liabilities 51,020 30,700 15,854 4,466 Allocated equity: 4,963 2,588 1,596 779 Total liabilities and stockholders' equity $ 55,983 $ 33,288 $ 17,450 $ 5,245 Excess funds provided (used) — 7,848 (3,842 ) (4,006 ) No. of offices 58 50 7 1 No. of full-time equivalent employees 3,139 628 1,173 1,338 Income Statement: Three Months Ended December 31, 2021: (in millions) Net interest income $ 450.6 $ 332.8 $ 185.6 $ (67.8 ) Provision for (recovery of) credit losses 13.2 4.9 7.6 0.7 Net interest income (expense) after provision for credit losses 437.4 327.9 178.0 (68.5 ) Non-interest income 110.4 16.9 76.5 17.0 Non-interest expense 237.8 106.5 119.5 11.8 Income (loss) before income taxes 310.0 238.3 135.0 (63.3 ) Income tax expense (benefit) 64.0 56.9 32.6 (25.5 ) Net income (loss) $ 246.0 $ 181.4 $ 102.4 $ (37.8 ) Year Ended December 31, 2021: (in millions) Net interest income $ 1,548.8 $ 1,181.7 $ 603.4 $ (236.3 ) (Recovery of) provision for credit losses (21.4 ) (30.6 ) 11.0 (1.8 ) Net interest income (expense) after provision for credit losses 1,570.2 1,212.3 592.4 (234.5 ) Non-interest income 404.2 65.1 317.6 21.5 Non-interest expense 851.4 415.9 413.9 21.6 Income (loss) before income taxes 1,123.0 861.5 496.1 (234.6 ) Income tax expense (benefit) 223.8 206.6 120.1 (102.9 ) Net income (loss) $ 899.2 $ 654.9 $ 376.0 $ (131.7 ) Western Alliance Bancorporation and Subsidiaries Reconciliation of Non-GAAP Financial Measures Unaudited Pre-Provision Net Revenue by Quarter: Three Months Ended 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 (in millions) Net interest income $ 639.7 $ 602.1 $ 525.0 $ 449.5 $ 450.6 Total non-interest income 61.5 61.8 95.0 106.3 110.4 Net revenue $ 701.2 $ 663.9 $ 620.0 $ 555.8 $ 561.0 Total non-interest expense 333.4 305.8 268.9 248.6 237.8 Pre-provision net revenue (1) $ 367.8 $ 358.1 $ 351.1 $ 307.2 $ 323.2 Less: Provision for credit losses 3.1 28.5 27.5 9.0 13.2 Income tax expense 71.7 65.6 63.4 58.1 64.0 Net income $ 293.0 $ 264.0 $ 260.2 $ 240.1 $ 246.0 Efficiency Ratio by Quarter: Total non-interest expense $ 333.4 $ 305.8 $ 268.9 $ 248.6 $ 237.8 Divided by: Total net interest income 639.7 602.1 525.0 449.5 450.6 Plus: Tax equivalent interest adjustment 9.0 8.5 8.2 8.0 8.4 Total non-interest income 61.5 61.8 95.0 106.3 110.4 $ 710.2 $ 672.4 $ 628.2 $ 563.8 $ 569.4 Efficiency ratio - tax equivalent basis (2) 46.9 % 45.5 % 42.8 % 44.1 % 41.8 % Tangible Common Equity: 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 (dollars and shares in millions) Total stockholders' equity $ 5,356 $ 5,021 $ 4,959 $ 5,012 $ 4,963 Less: Goodwill and intangible assets 680 682 695 698 635 Preferred stock 295 295 295 295 295 Total tangible common equity 4,381 4,044 3,969 4,019 4,033 Plus: deferred tax - attributed to intangible assets 2 3 2 2 2 Total tangible common equity, net of tax $ 4,383 $ 4,047 $ 3,971 $ 4,021 $ 4,035 Total assets $ 67,734 $ 69,165 $ 66,055 $ 60,576 $ 55,983 Less: goodwill and intangible assets, net 680 682 695 698 635 Tangible assets 67,054 68,483 65,360 59,878 55,348 Plus: deferred tax - attributed to intangible assets 2 3 2 2 2 Total tangible assets, net of tax $ 67,056 $ 68,486 $ 65,362 $ 59,880 $ 55,350 Tangible common equity ratio (3) 6.5 % 5.9 % 6.1 % 6.7 % 7.3 % Common shares outstanding 108.9 108.9 108.3 108.3 106.6 Tangible book value per share, net of tax (3) $ 40.25 $ 37.16 $ 36.67 $ 37.13 $ 37.84 Western Alliance Bancorporation and Subsidiaries Reconciliation of Non-GAAP Financial Measures Unaudited Return on Average Tangible Common Equity: Three Months Ended 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 (in millions) Net income available to common shareholders $ 289.8 $ 260.8 $ 257.0 $ 236.9 $ 242.5 Divided by: Average stockholders' equity 5,232.6 5,149.6 5,021.4 4,988.9 4,637.6 Less: Average goodwill and intangible assets (681.3 ) (694.1 ) (697.3 ) (679.3 ) (610.4 ) Average preferred stock (294.5 ) (294.5 ) (294.5 ) (294.5 ) (294.5 ) Average tangible common equity $ 4,256.8 $ 4,161.1 $ 4,029.6 $ 4,015.1 $ 3,732.7 Average accumulated other comprehensive loss (income) ("AOCI") 725.7 483.5 355.7 56.7 (34.4 ) Average tangible common equity, excluding AOCI $ 4,982.5 $ 4,644.6 $ 4,385.4 $ 4,071.8 $ 3,698.3 Return on average tangible common equity (1) 27.0 % 24.9 % 25.6 % 23.9 % 25.8 % Return on average tangible common equity, excluding AOCI (1) 23.1 % 22.3 % 23.5 % 23.6 % 26.0 % Year Ended December 31, 2022 2021 (in millions) Net income available to common shareholders $ 1,044.5 $ 895.7 Divided by: Average stockholders' equity 5,099.0 4,033.8 Less: Average goodwill and intangible assets (688.0 ) (528.6 ) Average preferred stock (294.5 ) (81.5 ) Average tangible common equity $ 4,116.4 $ 3,423.7 Average accumulated other comprehensive loss (income) ("AOCI") 407.5 (56.9 ) Average tangible common equity, excluding AOCI $ 4,523.9 $ 3,366.7 Return on average tangible common equity (1) 25.4 % 26.2 % Return on average tangible common equity, excluding AOCI (1) 23.1 % 26.6 % Non-GAAP Financial Measures Footnotes (1) We believe this non-GAAP measurement is a key indicator of the earnings power of the Company. (2) We believe this non-GAAP ratio provides a useful metric to measure the efficiency of the Company. (3) We believe this non-GAAP metric provides an important metric with which to analyze and evaluate financial condition and capital strength. In addition, we believe that use of tangible equity and tangible assets improves the comparability to other institutions that have not engaged in acquisitions that resulted in recorded goodwill and other intangibles. View source version on businesswire.com: https://www.businesswire.com/news/home/20230123005838/en/Contacts Western Alliance Bancorporation Dale Gibbons, 602-952-5476 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Western Alliance Bancorporation Reports Fourth Quarter and Full Year 2022 Financial Results By: Western Alliance Bancorporation via Business Wire January 24, 2023 at 16:54 PM EST Western Alliance Bancorporation (NYSE:WAL): FOURTH QUARTER AND FULL YEAR 2022 FINANCIAL RESULTS Fourth Quarter Highlights: Net income Earnings per share PPNR1 Net interest margin Efficiency ratio1 Book value per common share $293.0 million $2.67 $367.8 million 3.98% 46.9% $46.47 $40.251, excluding goodwill and intangibles CEO COMMENTARY: “Western Alliance’s diversified, national commercial business strategy drove the strong momentum that was sustained throughout the year, closing out the fourth quarter with record revenues, earnings and tangible book value as we thoughtfully deployed liquidity into sound organic growth,” said Kenneth A. Vecchione, President and Chief Executive Officer. “We achieved a record $293.0 million in net income and earnings per share of $2.67 for the quarter, an increase of 15.1% from the prior year, while tangible book value per share rose 6.4% year-over-year to $40.25. Quarterly deposits declined $1.9 billion, primarily driven by short-term seasonal tax and insurance escrow deposit outflows in our Mortgage Warehouse Group. These seasonal factors have already reversed since year end, with quarter-to-date 2023 average total deposit balances up more than $2.4 billion from year end.” “Western Alliance’s full year results are a direct reflection of our collaborative culture and flexible business model that strongly position us to sustain our earnings trajectory into 2023, all while continuing our focus on asset quality. Net charge-offs for the year totaled a modest $1.5 million, with a non-performing assets to total assets ratio of 0.14% at the end of the year. Our growing net interest income during the year drove an increase in earnings as PPNR climbed 25.7% over the prior year to $1.4 billion, with net income of $1.1 billion and earnings per share up 11.9% to $9.70.” Acquisition of Digital Disbursements and AmeriHome Mortgage Company: On January 25, 2022, the Company completed its acquisition of Digital Settlement Technologies LLC, doing business as Digital Disbursements, a digital payments platform for the class action legal industry. On April 7, 2021, the Company completed its acquisition of Aris Mortgage Holding Company, LLC, the parent company of AmeriHome Mortgage Company, LLC ("AmeriHome"). The Company's results include the financial results of Digital Disbursements and AmeriHome beginning on the acquisition dates noted. LINKED-QUARTER BASIS FULL YEAR FINANCIAL HIGHLIGHTS: Net income of $293.0 million and earnings per share of $2.67, compared to $264.0 million and $2.42, respectively Net income of $1.1 billion and earnings per share of $9.70, up 17.6% and 11.9%, from $899.2 million and $8.67, respectively Net revenue of $701.2 million, an increase of 5.6%, or $37.3 million, compared to an increase in non-interest expenses of 9.0%, or $27.6 million Net revenue of $2.5 billion, an increase of 30.1%, or $587.9 million, compared to an increase in non-interest expenses of 35.9%, or $305.3 million Pre-provision net revenue1 of $367.8 million, up $9.7 million from $358.1 million Pre-provision net revenue1 of $1.4 billion, up $282.6 million from $1.1 billion Effective tax rate of 19.7%, compared to 19.9% Effective tax rate of 19.7%, compared to 19.9% FINANCIAL POSITION RESULTS: HFI loans of $51.9 billion, down $339 million, or 0.6% Increase in HFI loans of $10.9 billion, or 27.9%, net of EBO loans with a $1.9 billion balance at December 31, 2022 transferred from HFS to HFI during 2022 Total deposits of $53.6 billion, down $1.9 billion, or 3.5% Increase in total deposits of $6.0 billion, or 12.7% Stockholders' equity of $5.4 billion, up $335 million Increase in stockholders' equity of $393 million LOANS AND ASSET QUALITY: Nonperforming assets (nonaccrual loans and repossessed assets) to total assets of 0.14%, compared to 0.15% Nonperforming assets to total assets of 0.14%, compared to 0.15% Annualized net loan charge-offs (recoveries) to average loans outstanding of 0.01%, compared to (0.02)% Net loan charge-offs (recoveries) to average loans outstanding of approximately 0.00%, compared to 0.02% KEY PERFORMANCE METRICS: Net interest margin of 3.98%, compared to 3.78% Net interest margin of 3.67%, compared to 3.41% Return on average assets and on tangible common equity1 of 1.67% and 27.0%, compared to 1.53% and 24.9%, respectively Return on average assets and on tangible common equity1 of 1.62% and 25.4%, compared to 1.83% and 26.2%, respectively Tangible common equity ratio1 of 6.5%, compared to 5.9% Tangible common equity ratio1 of 6.5%, compared to 7.3% CET 1 ratio of 9.3%, compared to 8.7% CET 1 ratio of 9.3%, compared to 9.1% Tangible book value per share1, net of tax, of $40.25, an increase of 8.3% from $37.16 Tangible book value per share1, net of tax, of $40.25, an increase of 6.4% from $37.84 Efficiency ratio1 of 46.9%, compared to 45.5% Efficiency ratio1 of 44.9%, compared to 42.9% 1 See reconciliation of Non-GAAP Financial Measures. Income Statement Net interest income was $639.7 million in the fourth quarter 2022, an increase of $37.6 million from $602.1 million in the third quarter 2022, and an increase of $189.1 million, or 42.0%, compared to the fourth quarter 2021. The increase in net interest income from the third quarter 2022 is due to a higher rate environment, which drove an increase in yields on interest earning assets and also pushed interest rates higher on deposits and short-term borrowings. HFI loan growth and higher yields on HFI loans, partially offset by higher interest rates on deposits and an increase in other borrowings, drove the increase in net interest income from the fourth quarter 2021. The Company recorded a provision for credit losses of $3.1 million in the fourth quarter 2022, a decrease of $25.4 million from $28.5 million in the third quarter 2022, and a decrease of $10.1 million from $13.2 million in the fourth quarter 2021. The provision for credit losses during the fourth quarter 2022 is primarily due to heightened economic uncertainty, offset by a decrease in loans. The Company’s net interest margin in the fourth quarter 2022 was 3.98%, an increase from 3.78% in the third quarter 2022, and an increase from 3.33% in the fourth quarter 2021. The higher rate environment drove an increase in net interest margin, with yields on interest earning assets more than offsetting the increase in rates on deposits and borrowings. The increase in net interest margin from the fourth quarter 2021 was driven by HFI loan growth plus an increase in rates, partially offset by higher deposits and borrowings coupled with higher rates. Non-interest income was $61.5 million for the fourth quarter 2022, compared to $61.8 million for the third quarter 2022, and $110.4 million for the fourth quarter 2021. The $0.3 million decrease in non-interest income from the third quarter 2022 was primarily related to fair value loss adjustments from HFI loans transferred to HFS and sold in the fourth quarter 2022 and a revaluation in the third quarter 2022 of the contingent consideration liability related to the Digital Disbursements acquisition that did not recur. These items were partially offset by a $10.9 million increase in net gain on loan origination and sale activities due to gains from hedging activity, partially offset by a reduction in spreads and production volume. Net loan servicing revenue decreased $1.6 million due to a decrease in the value of MSRs, which was partially offset by an increase in servicing revenue. The $48.9 million decrease from the fourth quarter 2021 was driven by a decrease in net gain on loan origination and sale activities of $47.8 million from lower production volume, partially offset by a $19.1 million increase in loan servicing revenue. Net revenue was $701.2 million for the fourth quarter 2022, an increase of $37.3 million, or 5.6%, compared to $663.9 million for the third quarter 2022, and an increase of $140.2 million, or 25.0%, compared to $561.0 million for the fourth quarter 2021. Non-interest expense was $333.4 million for the fourth quarter 2022, compared to $305.8 million for the third quarter 2022, and $237.8 million for the fourth quarter 2021. The Company’s efficiency ratio1 was 46.9% for the fourth quarter 2022, compared to 45.5% in the third quarter 2022, and 41.8% for the fourth quarter 2021. Non-interest expense increased from the third quarter 2022 due primarily to increased deposit costs. The increase in non-interest expense from the fourth quarter 2021 is also attributable to increased deposit costs. Income tax expense was $71.7 million for the fourth quarter 2022, compared to $65.6 million for the third quarter 2022, and $64.0 million for the fourth quarter 2021. Net income was $293.0 million for the fourth quarter 2022, an increase of $29.0 million from $264.0 million for the third quarter 2022, and an increase of $47.0 million from $246.0 million for the fourth quarter 2021. Earnings per share totaled $2.67 for the fourth quarter 2022, compared to $2.42 for the third quarter 2022, and $2.32 for the fourth quarter 2021. The Company views its pre-provision net revenue1 ("PPNR") as a key metric for assessing the Company’s earnings power, which it defines as net revenue less non-interest expense. For the fourth quarter 2022, the Company’s PPNR1 was $367.8 million, up $9.7 million from $358.1 million in the third quarter 2022, and up $44.6 million from $323.2 million in the fourth quarter 2021. The Company had 3,365 full-time equivalent employees and 56 offices at December 31, 2022, compared to 3,368 employees and 60 offices at September 30, 2022, and 3,139 employees and 58 offices at December 31, 2021. 1 See reconciliation of Non-GAAP Financial Measures. Balance Sheet HFI loans, net of deferred fees totaled $51.9 billion at December 31, 2022, compared to $52.2 billion at September 30, 2022, and $39.1 billion at December 31, 2021. The decrease in HFI loans of $339 million from the prior quarter was driven by a decrease of $1.6 billion in commercial and industrial loans, partially offset by increases of $651 million in CRE non-owner occupied, $392 million in construction and land development, and $254 million in residential real estate loans. From December 31, 2021, HFI loan growth of $10.9 billion (which excludes transfers of government guaranteed early buyout ("EBO") residential loans from HFS to HFI in 2022 with a balance of $1.9 billion at December 31, 2022), was primarily driven by residential real estate, commercial and industrial, and CRE non-owner occupied, loans which increased $4.8 billion, $2.8 billion, and, $2.4 billion respectively. The Company's allowance for credit losses on HFI loans consists of an allowance for funded HFI loans and an allowance for unfunded loan commitments. At December 31, 2022, the allowance for loan losses to funded HFI loans ratio was 0.60%, compared to 0.58% at September 30, 2022, and 0.65% at December 31, 2021. The allowance for credit losses, which includes the allowance for unfunded loan commitments, to funded HFI loans ratio was 0.69% at December 31, 2022, compared to 0.68% at September 30, 2022, and 0.74% at December 31, 2021. The Company is a party to credit linked note transactions, which effectively transfer a portion of the risk of losses on reference pools of loans to the purchasers of the notes. As of December 31, 2022, September 30, 2022, and December 31, 2021, the Company is protected from first credit losses on reference pools of loans totaling $12.0 billion, $10.8 billion, and $6.4 billion, respectively, under these transactions. However, as these note transactions are considered to be free standing credit enhancements, the allowance for credit losses cannot be reduced by the expected credit losses that may be mitigated by these notes. Accordingly, the allowance for loan and credit losses ratios include an allowance of $21.9 million as of December 31, 2022, $19 million as of September 30, 2022, and $7.2 million as of December 31, 2021, related to these pools of loans. The allowance for credit losses to funded HFI loans ratio, adjusted to reduce the HFI loan balance by the amount of loans in covered reference pools, was 0.89% at December 31, 2022, 0.86% at September 30, 2022, and 0.89% at December 31, 2021. Deposits totaled $53.6 billion at December 31, 2022, a decrease of $1.9 billion from $55.6 billion at September 30, 2022, and an increase of $6.0 billion from $47.6 billion at December 31, 2021. By deposit type, the decrease from the prior quarter is attributable to a decrease of $5.2 billion from non-interest bearing demand deposits, partially offset by increases of $1.9 billion from certificates of deposits, $1.2 billion from interest bearing demand deposits, and $195 million from savings and money market accounts. From December 31, 2021, certificates of deposit, interest-bearing demand deposits, and savings and money market accounts increased by $3.0 billion, $2.6 billion, and $2.1 billion, respectively. These increases were partially offset by a decrease in non-interest bearing demand deposits of $1.7 billion. Non-interest bearing deposits were $19.7 billion at December 31, 2022, compared to $24.9 billion at September 30, 2022, and $21.4 billion at December 31, 2021. The table below shows the Company's deposit types as a percentage of total deposits: Dec 31, 2022 Sep 30, 2022 Dec 31, 2021 Non-interest bearing 36.7 % 44.8 % 44.9 % Savings and money market 36.2 34.6 36.3 Interest-bearing demand 17.7 15.0 14.5 Certificates of deposit 9.4 5.6 4.3 The Company’s ratio of HFI loans to deposits was 96.7% at December 31, 2022, compared to 93.9% at September 30, 2022, and 82.1% at December 31, 2021. Borrowings were $6.3 billion at December 31, 2022 and September 30, 2022, and $1.5 billion at December 31, 2021. Borrowings remained flat from September 30, 2022 due primarily to the issuance of $93 million of credit linked notes in the fourth quarter 2022 offset by a decrease in short-term borrowings. The increase in borrowings from December 31, 2021 is due to an increase in short-term borrowings of $4.3 billion and issuance of $579 million of credit linked notes, net of issuance costs, during 2022. Qualifying debt totaled $893 million at December 31, 2022, compared to $889 million at September 30, 2022, and $896 million at December 31, 2021. Stockholders’ equity was $5.4 billion at December 31, 2022, compared to $5.0 billion at September 30, 2022 and December 31, 2021. The increase in stockholders’ equity quarter over quarter was due to net income and unrealized fair value gains of approximately $77 million on the Company's available for sale securities, which are recorded in other comprehensive (loss) income, net of tax, partially offset by dividends to shareholders. A cash dividend of $0.36 per share was paid to common shareholders on December 2, 2022, totaling $39.2 million, and a cash dividend of $0.27 per depository share was paid to preferred shareholders on December 30, 2022, totaling $3.2 million. The increase in stockholders' equity from December 31, 2021 is primarily a function of net income and sales of common stock under the Company's ATM program, partially offset by dividends to shareholders and unrealized fair value losses on available for sale securities. At December 31, 2022, tangible common equity, net of tax1, was 6.5% of tangible assets1 and total capital was 12.1% of risk-weighted assets. The Company’s tangible book value per share1 was $40.25 at December 31, 2022, an increase of 8.3% from $37.16, and up 6.4% from $37.84 at December 31, 2021. The increase in tangible book value per share from September 30, 2022 is attributable to net income and fair value marks on the Company's available for sale securities, which are recorded in other comprehensive (loss) income, net of tax. Total assets decreased 2.1% to $67.7 billion at December 31, 2022, from $69.2 billion at September 30, 2022, and increased 21.0% from $56.0 billion at December 31, 2021. The decrease in total assets from September 30, 2022 and December 31, 2021 was driven by decreases in HFS and HFI loans. 1 See reconciliation of Non-GAAP Financial Measures. Asset Quality Provision for credit losses totaled $3.1 million for the fourth quarter 2022, compared to $28.5 million for the third quarter 2022, and $13.2 million for the fourth quarter 2021. Net loan charge-offs (recoveries) in the fourth quarter 2022 were $1.8 million, or 0.01% of average loans (annualized), compared to $(1.9) million, or (0.02)%, in the third quarter 2022, and $1.4 million, or 0.02%, in the fourth quarter 2021. Nonaccrual loans decreased $5 million to $85 million during the quarter and increased $12 million from December 31, 2021. Loans past due 90 days and still accruing interest were zero (excluding government guaranteed loans of $582 million) at December 31, 2022, compared to zero at September 30, 2022 and December 31, 2021 (excluding government guaranteed loans of $644 million and zero at September 30, 2022 and December 31, 2021, respectively). Loans past due 30-89 days and still accruing interest totaled $70 million (excluding government guaranteed loans of $334 million) at December 31, 2022, an increase from $56 million at September 30, 2022, and an increase from $53 million at December 31, 2021 (excluding government guaranteed loans of $245 million and zero at September 30, 2022 and December 31, 2021, respectively). Repossessed assets totaled $11 million at December 31, 2022, flat from September 30, 2022, and a $1 million decrease from $12 million at December 31, 2021. Classified assets totaled $393 million at December 31, 2022, an increase of $8 million from $385 million at September 30, 2022, and an increase of $92 million from $301 million at December 31, 2021. The ratio of classified assets to Tier 1 capital plus the allowance for credit losses, a common regulatory measure of asset quality, was 6.8% at December 31, 2022, compared to 7.0% at September 30, 2022, and 6.4% at December 31, 2021. 1 See reconciliation of Non-GAAP Financial Measures. Segment Highlights The Company's reportable segments are aggregated with a focus on products and services offered and consist of three reportable segments: Commercial segment: provides commercial banking and treasury management products and services to small and middle-market businesses, specialized banking services to sophisticated commercial institutions and investors within niche industries, as well as financial services to the real estate industry. Consumer Related segment: offers both commercial banking services to enterprises in consumer-related sectors and consumer banking services, such as residential mortgage banking and beginning on January 25, 2022 includes the financial results of Digital Disbursements. Corporate & Other segment: consists of the Company's investment portfolio, Corporate borrowings and other related items, income and expense items not allocated to our other reportable segments, and inter-segment eliminations. Key management metrics for evaluating the performance of the Company's Commercial and Consumer Related segments include loan and deposit growth, asset quality, and pre-tax income. The Commercial segment reported an HFI loan balance of $31.4 billion at December 31, 2022, a decrease of $646 million during the quarter, and an increase of $6.3 billion during the year. Deposits for the Commercial segment totaled $29.5 billion at December 31, 2022, a decrease of $512 million during the quarter, and a decrease of $973 million during the year. Pre-tax income for the Commercial segment was $320.5 million for the three months ended December 31, 2022, an increase of $22.3 million from the three months ended September 30, 2022, and an increase of $82.2 million from the three months ended December 31, 2021. For the year ended December 31, 2022, the Commercial segment reported total pre-tax income of $1.1 billion, an increase of $233.8 million compared to the year ended December 31, 2021. The Consumer Related segment reported an HFI loan balance of $20.4 billion at December 31, 2022, an increase of $307 million during the quarter, and an increase of $6.5 billion during the year. The Consumer Related segment also has loans held for sale of $1.2 billion at December 31, 2022, a decrease of $1.0 billion during the quarter, and a decrease of $4.5 billion during the year. Deposits for the Consumer Related segment totaled $18.5 billion, a decrease of $2.5 billion during the quarter, and an increase of $3.1 billion during the year. Pre-tax income for the Consumer Related segment was $69.8 million for the three months ended December 31, 2022, a decrease of $23.4 million from the three months ended September 30, 2022, and a decrease of $65.2 million from the three months ended December 31, 2021. Pre-tax income for the Consumer Related segment for the year ended December 31, 2022 totaled $450.1 million, a decrease of $46.0 million compared to the year ended December 31, 2021. Conference Call and Webcast Western Alliance Bancorporation will host a conference call and live webcast to discuss its fourth quarter 2022 financial results at 12:00 p.m. ET on Wednesday, January 25, 2023. Participants may access the call by dialing 1-844-200-6205 and using access code 669213 or via live audio webcast using the website link https://events.q4inc.com/attendee/484930167. The webcast is also available via the Company’s website at www.westernalliancebancorporation.com. Participants should log in at least 15 minutes early to receive instructions. The call will be recorded and made available for replay after 3:00 p.m. ET January 25th through 11:00 p.m. ET February 25th by dialing 1-866-813-9403, using access code 597938. Reclassifications Certain amounts in the Consolidated Income Statements for the prior periods have been reclassified to conform to the current presentation. The reclassifications have no effect on net income or stockholders’ equity as previously reported. Use of Non-GAAP Financial Information This press release contains both financial measures based on GAAP and non-GAAP based financial measures, which are used where management believes them to be helpful in understanding the Company’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Cautionary Note Regarding Forward-Looking Statements This release contains forward-looking statements that relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Examples of forward-looking statements include, among others, statements we make regarding our expectations with regard to our business, financial and operating results, future economic performance and dividends. The forward-looking statements contained herein reflect our current views about future events and financial performance and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from historical results and those expressed in any forward-looking statement. Some factors that could cause actual results to differ materially from historical or expected results include, among others: the risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and the Company's subsequent Quarterly Reports on Form 10-Q, each as filed with the Securities and Exchange Commission; the potential adverse effects of unusual and infrequently occurring events such as the COVID-19 pandemic and any governmental or societal responses thereto; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; the impact on financial markets from geopolitical conflicts such as the war between Russia and Ukraine; inflation, interest rate, market and monetary fluctuations; increases in competitive pressures among financial institutions and businesses offering similar products and services; higher defaults on our loan portfolio than we expect; changes in management’s estimate of the adequacy of the allowance for credit losses; legislative or regulatory changes or changes in accounting principles, policies or guidelines; supervisory actions by regulatory agencies which may limit our ability to pursue certain growth opportunities, including expansion through acquisitions; additional regulatory requirements resulting from our continued growth; management’s estimates and projections of interest rates and interest rate policy; the execution of our business plan; and other factors affecting the financial services industry generally or the banking industry in particular. Any forward-looking statement made by us in this release is based only on information currently available to us and speaks only as of the date on which it is made. We do not intend and disclaim any duty or obligation to update or revise any industry information or forward-looking statements, whether written or oral, that may be made from time to time, set forth in this press release to reflect new information, future events or otherwise. About Western Alliance Bancorporation With more than $65 billion in assets, Western Alliance Bancorporation (NYSE:WAL) is one of the country’s top-performing banking companies. Through its primary subsidiary, Western Alliance Bank, Member FDIC, business clients benefit from a full spectrum of tailored banking solutions and outstanding service delivered by industry experts who put customers first. Major accolades include #2 best-performing of the 50 largest public U.S. banks in the S&P Global Market Intelligence listing for 2021, and #1 Best Emerging Regional Bank for 2022 by Bank Director. Serving clients across the country wherever business happens, Western Alliance Bank operates individual, full-service banking and financial brands with offices in key markets nationwide. For more information, visit westernalliancebank.com. Western Alliance Bancorporation and Subsidiaries Summary Consolidated Financial Data Unaudited Selected Balance Sheet Data: As of December 31, 2022 2021 Change % (in millions) Total assets $ 67,734 $ 55,983 21.0 % Loans held for sale 1,184 5,635 (79.0 ) HFI loans, net of deferred fees 51,862 39,075 32.7 Investment securities 8,760 7,541 16.2 Total deposits 53,644 47,612 12.7 Borrowings 6,299 1,502 NM Qualifying debt 893 896 (0.3 ) Stockholders' equity 5,356 4,963 7.9 Tangible common equity, net of tax (1) 4,383 4,035 8.6 Common equity Tier 1 capital 5,073 4,068 24.7 Selected Income Statement Data: For the Three Months Ended December 31, For the Year Ended December 31, 2022 2021 Change % 2022 2021 Change % (in millions, except per share data) (in millions, except per share data) Interest income $ 888.3 $ 483.3 83.8 % $ 2,691.8 $ 1,658.7 62.3 % Interest expense 248.6 32.7 NM 475.5 109.9 NM Net interest income 639.7 450.6 42.0 2,216.3 1,548.8 43.1 Provision for (recovery of) credit losses 3.1 13.2 (76.5 ) 68.1 (21.4 ) NM Net interest income after provision for credit losses 636.6 437.4 45.5 2,148.2 1,570.2 36.8 Non-interest income 61.5 110.4 (44.3 ) 324.6 404.2 (19.7 ) Non-interest expense 333.4 237.8 40.2 1,156.7 851.4 35.9 Income before income taxes 364.7 310.0 17.6 1,316.1 1,123.0 17.2 Income tax expense 71.7 64.0 12.0 258.8 223.8 15.6 Net income 293.0 246.0 19.1 1,057.3 899.2 17.6 Dividends on preferred stock 3.2 3.5 (8.6 ) 12.8 3.5 NM Net income available to common stockholders $ 289.8 $ 242.5 19.5 $ 1,044.5 $ 895.7 16.6 Diluted earnings per common share $ 2.67 $ 2.32 15.1 $ 9.70 $ 8.67 11.9 (1) See Reconciliation of Non-GAAP Financial Measures. NM Changes +/- 100% are not meaningful. Western Alliance Bancorporation and Subsidiaries Summary Consolidated Financial Data Unaudited Common Share Data: At or For the Three Months Ended December 31, For the Year Ended December 31, 2022 2021 Change % 2022 2021 Change % Diluted earnings per common share $ 2.67 $ 2.32 15.1 % $ 9.70 $ 8.67 11.9 % Book value per common share 46.47 43.78 6.1 Tangible book value per common share, net of tax (1) 40.25 37.84 6.4 Average common shares outstanding (in millions): Basic 108.0 103.9 4.0 107.2 102.7 4.4 Diluted 108.4 104.5 3.7 107.6 103.3 4.2 Common shares outstanding 108.9 106.6 2.1 Selected Performance Ratios: Return on average assets (2) 1.67 % 1.69 % (1.2 ) % 1.62 % 1.83 % (11.5 ) % Return on average tangible common equity (1, 2) 27.0 25.8 4.7 25.4 26.2 (3.1 ) Return on average tangible common equity, excluding AOCI (1, 2) 23.1 26.0 (11.2 ) 23.1 26.6 (13.2 ) Net interest margin (2) 3.98 3.33 19.5 3.67 3.41 7.6 Efficiency ratio - tax equivalent basis (1) 46.9 41.8 12.2 44.9 42.9 4.7 Loan to deposit ratio 96.7 82.1 17.8 Asset Quality Ratios: Net charge-offs (recoveries) to average loans outstanding (2) 0.01 % 0.02 % (50.0 ) % 0.00 % 0.02 % NM Nonaccrual loans to funded HFI loans 0.16 0.19 (15.8 ) Nonaccrual loans and repossessed assets to total assets 0.14 0.15 (6.7 ) Allowance for loan losses to funded HFI loans 0.60 0.65 (7.7 ) Allowance for loan losses to nonaccrual HFI loans 364 348 4.6 Capital Ratios: Dec 31, 2022 Sep 30, 2022 Dec 31, 2021 Tangible common equity (1) 6.5 % 5.9 % 7.3 % Common Equity Tier 1 (3) 9.3 8.7 9.1 Tier 1 Leverage ratio (3) 7.8 7.5 7.8 Tier 1 Capital (3) 10.0 9.3 9.9 Total Capital (3) 12.1 11.4 12.3 (1) See Reconciliation of Non-GAAP Financial Measures. (2) Annualized on an actual/actual basis for periods less than 12 months. (3) Capital ratios for December 31, 2022 are preliminary. NM Changes +/- 100% are not meaningful. Western Alliance Bancorporation and Subsidiaries Condensed Consolidated Income Statements Unaudited Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 (dollars in millions, except per share data) Interest income: Loans $ 785.1 $ 438.6 $ 2,393.4 $ 1,488.8 Investment securities 89.4 43.7 272.6 164.7 Other 13.8 1.0 25.8 5.2 Total interest income 888.3 483.3 2,691.8 1,658.7 Interest expense: Deposits 157.6 12.8 276.4 47.5 Qualifying debt 9.1 9.2 35.0 33.1 Borrowings 81.9 10.7 164.1 29.3 Total interest expense 248.6 32.7 475.5 109.9 Net interest income 639.7 450.6 2,216.3 1,548.8 Provision for (recovery of) credit losses 3.1 13.2 68.1 (21.4 ) Net interest income after provision for credit losses 636.6 437.4 2,148.2 1,570.2 Non-interest income: Net gain on loan origination and sale activities 25.4 73.2 104.0 326.2 Net loan servicing revenue (expense) 21.4 2.3 130.9 (16.3 ) Service charges and fees 5.9 7.1 27.0 28.3 Commercial banking related income 5.5 4.9 21.5 17.4 Income from equity investments 4.2 5.2 17.8 22.1 Gain on recovery from credit guarantees 3.0 7.2 14.7 7.2 Gain on sales of investment securities 0.1 8.3 6.8 8.3 Fair value loss adjustments on assets measured at fair value, net (9.2 ) (0.8 ) (28.6 ) (1.3 ) Other 5.2 3.0 30.5 12.3 Total non-interest income 61.5 110.4 324.6 404.2 Non-interest expenses: Salaries and employee benefits 125.7 120.6 539.5 466.7 Deposit costs 82.2 9.1 165.8 29.8 Legal, professional, and directors' fees 26.0 20.8 99.9 58.6 Data processing 23.9 17.9 83.0 58.2 Occupancy 15.8 12.4 55.5 43.8 Loan servicing expenses 14.8 15.6 55.5 53.5 Insurance 8.9 7.1 31.1 23.0 Business development and marketing 7.3 6.1 22.1 13.5 Loan acquisition and origination expenses 4.4 8.6 23.1 28.8 Loss on extinguishment of debt — 5.9 — 5.9 Net gain on sales and valuations of repossessed and other assets (0.3 ) (0.4 ) (0.7 ) (3.5 ) Acquisition and restructure expenses (recoveries) — (3.2 ) 0.4 15.3 Other 24.7 17.3 81.5 57.8 Total non-interest expense 333.4 237.8 1,156.7 851.4 Income before income taxes 364.7 310.0 1,316.1 1,123.0 Income tax expense 71.7 64.0 258.8 223.8 Net income 293.0 246.0 1,057.3 899.2 Dividends on preferred stock 3.2 3.5 12.8 3.5 Net income available to common stockholders $ 289.8 $ 242.5 $ 1,044.5 $ 895.7 Earnings per common share: Diluted shares 108.4 104.5 107.6 103.3 Diluted earnings per share $ 2.67 $ 2.32 $ 9.70 $ 8.67 Western Alliance Bancorporation and Subsidiaries Five Quarter Condensed Consolidated Income Statements Unaudited Three Months Ended Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 (in millions, except per share data) Interest income: Loans $ 785.1 $ 657.0 $ 516.6 $ 434.7 $ 438.6 Investment securities 89.4 75.9 59.3 48.0 43.7 Other 13.8 6.5 3.7 1.8 1.0 Total interest income 888.3 739.4 579.6 484.5 483.3 Interest expense: Deposits 157.6 77.6 27.1 14.1 12.8 Qualifying debt 9.1 8.9 8.6 8.4 9.2 Borrowings 81.9 50.8 18.9 12.5 10.7 Total interest expense 248.6 137.3 54.6 35.0 32.7 Net interest income 639.7 602.1 525.0 449.5 450.6 Provision for credit losses 3.1 28.5 27.5 9.0 13.2 Net interest income after provision for credit losses 636.6 573.6 497.5 440.5 437.4 Non-interest income: Net gain on loan origination and sale activities 25.4 14.5 27.2 36.9 73.2 Net loan servicing revenue 21.4 23.0 45.4 41.1 2.3 Service charges and fees 5.9 6.5 7.6 7.0 7.1 Commercial banking related income 5.5 5.1 5.8 5.1 4.9 Income from equity investments 4.2 4.3 5.2 4.1 5.2 Gain on recovery from credit guarantees 3.0 0.4 9.0 2.3 7.2 Gain (loss) on sales of investment securities 0.1 — (0.2 ) 6.9 8.3 Fair value loss adjustments on assets measured at fair value, net (9.2 ) (2.8 ) (10.0 ) (6.6 ) (0.8 ) Other 5.2 10.8 5.0 9.5 3.0 Total non-interest income 61.5 61.8 95.0 106.3 110.4 Non-interest expenses: Salaries and employee benefits 125.7 136.5 139.0 138.3 120.6 Deposit costs 82.2 56.2 18.1 9.3 9.1 Legal, professional, and directors' fees 26.0 24.8 25.1 24.0 20.8 Data processing 23.9 21.8 19.7 17.6 17.9 Occupancy 15.8 13.9 13.0 12.8 12.4 Loan servicing expenses 14.8 15.2 14.7 10.8 15.6 Insurance 8.9 8.1 6.9 7.2 7.1 Business development and marketing 7.3 5.0 5.4 4.4 6.1 Loan acquisition and origination expenses 4.4 5.8 6.4 6.5 8.6 Net (gain) loss on sales and valuations of repossessed and other assets (0.3 ) (0.2 ) (0.3 ) 0.1 (0.4 ) Loss on extinguishment of debt — — — — 5.9 Acquisition and restructure expenses (recoveries) — — — 0.4 (3.2 ) Other 24.7 18.7 20.9 17.2 17.3 Total non-interest expense 333.4 305.8 268.9 248.6 237.8 Income before income taxes 364.7 329.6 323.6 298.2 310.0 Income tax expense 71.7 65.6 63.4 58.1 64.0 Net income 293.0 264.0 260.2 240.1 246.0 Dividends on preferred stock 3.2 3.2 3.2 3.2 3.5 Net income available to common stockholders $ 289.8 $ 260.8 $ 257.0 $ 236.9 $ 242.5 Earnings per common share: Diluted shares 108.4 107.9 107.7 106.6 104.5 Diluted earnings per share $ 2.67 $ 2.42 $ 2.39 $ 2.22 $ 2.32 Western Alliance Bancorporation and Subsidiaries Five Quarter Condensed Consolidated Balance Sheets Unaudited Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 (in millions) Assets: Cash and due from banks $ 1,043 $ 1,610 $ 1,886 $ 2,602 $ 516 Investment securities 8,760 8,603 8,802 8,277 7,541 Loans held for sale 1,184 2,204 2,803 4,762 5,635 Loans held for investment: Commercial and industrial 20,710 22,318 20,754 17,862 18,297 Commercial real estate - non-owner occupied 9,319 8,668 7,775 6,849 6,526 Commercial real estate - owner occupied 1,818 1,848 1,848 1,805 1,898 Construction and land development 4,013 3,621 3,231 3,278 3,023 Residential real estate 15,928 15,674 14,908 11,270 9,282 Consumer 74 72 56 55 49 Loans HFI, net of deferred fees 51,862 52,201 48,572 41,119 39,075 Allowance for loan losses (310 ) (304 ) (273 ) (258 ) (252 ) Loans HFI, net of deferred fees and allowance 51,552 51,897 48,299 40,861 38,823 Mortgage servicing rights 1,148 1,044 826 950 698 Premises and equipment, net 276 237 210 196 182 Operating lease right-of-use asset 163 131 136 142 133 Other assets acquired through foreclosure, net 11 11 12 12 12 Bank owned life insurance 182 181 180 179 180 Goodwill and other intangibles, net 680 682 695 698 635 Other assets 2,735 2,565 2,206 1,897 1,628 Total assets $ 67,734 $ 69,165 $ 66,055 $ 60,576 $ 55,983 Liabilities and Stockholders' Equity: Liabilities: Deposits Non-interest bearing demand deposits $ 19,691 $ 24,926 $ 23,721 $ 23,520 $ 21,353 Interest bearing: Demand 9,507 8,350 8,387 8,268 6,924 Savings and money market 19,397 19,202 19,026 18,553 17,279 Certificates of deposit 5,049 3,111 2,578 1,818 2,056 Total deposits 53,644 55,589 53,712 52,159 47,612 Borrowings 6,299 6,319 5,210 833 1,502 Qualifying debt 893 889 891 893 896 Operating lease liability 185 149 151 155 143 Accrued interest payable and other liabilities 1,357 1,198 1,132 1,524 867 Total liabilities 62,378 64,144 61,096 55,564 51,020 Stockholders' Equity: Preferred stock 295 295 295 295 295 Common stock and additional paid-in capital 2,058 2,049 1,990 1,979 1,879 Retained earnings 3,664 3,413 3,192 2,973 2,773 Accumulated other comprehensive (loss) income (661 ) (736 ) (518 ) (235 ) 16 Total stockholders' equity 5,356 5,021 4,959 5,012 4,963 Total liabilities and stockholders' equity $ 67,734 $ 69,165 $ 66,055 $ 60,576 $ 55,983 Western Alliance Bancorporation and Subsidiaries Changes in the Allowance For Credit Losses on Loans Unaudited Three Months Ended Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 (in millions) Allowance for loan losses Balance, beginning of period $ 304.1 $ 273.2 $ 257.6 $ 252.5 $ 246.9 Provision for credit losses (1) 7.4 29.0 17.0 5.3 7.0 Recoveries of loans previously charged-off: Commercial and industrial 0.3 3.8 0.8 2.4 1.8 Commercial real estate - non-owner occupied — 0.1 — — 0.3 Commercial real estate - owner occupied 0.1 — 0.1 — — Construction and land development — 0.1 — — — Residential real estate — — 0.1 — 0.4 Consumer — — — — — Total recoveries 0.4 4.0 1.0 2.4 2.5 Loans charged-off: Commercial and industrial 1.1 2.1 2.4 2.6 3.8 Commercial real estate - non-owner occupied — — — — — Commercial real estate - owner occupied 0.5 — — — — Construction and land development 0.6 — — — — Residential real estate — — — — 0.1 Consumer — — — — — Total loans charged-off 2.2 2.1 2.4 2.6 3.9 Net loan charge-offs (recoveries) 1.8 (1.9 ) 1.4 0.2 1.4 Balance, end of period $ 309.7 $ 304.1 $ 273.2 $ 257.6 $ 252.5 Allowance for unfunded loan commitments Balance, beginning of period $ 52.1 $ 53.8 $ 43.3 $ 37.6 $ 32.1 (Recovery of) provision for credit losses (1) (5.1 ) (1.7 ) 10.5 5.7 5.5 Balance, end of period (2) $ 47.0 $ 52.1 $ 53.8 $ 43.3 $ 37.6 Components of the allowance for credit losses on loans Allowance for loan losses $ 309.7 $ 304.1 $ 273.2 $ 257.6 $ 252.5 Allowance for unfunded loan commitments 47.0 52.1 53.8 43.3 37.6 Total allowance for credit losses on loans $ 356.7 $ 356.2 $ 327.0 $ 300.9 $ 290.1 Net charge-offs (recoveries) to average loans - annualized 0.01 % (0.02 ) % 0.01 % 0.00 % 0.02 % Allowance ratios Allowance for loan losses to funded HFI loans (3) 0.60 % 0.58 % 0.56 % 0.63 % 0.65 % Allowance for credit losses to funded HFI loans (3) 0.69 0.68 0.67 0.73 0.74 Allowance for loan losses to nonaccrual HFI loans 364 338 321 283 346 Allowance for credit losses to nonaccrual HFI loans 420 396 385 331 397 (1) The above tables reflect the provision for credit losses on funded and unfunded loans. There was a $0.8 million provision for credit losses on investment securities for the three months ended December 31, 2022. The allowance for credit losses on investment securities totaled $5.2 million as of December 31, 2022. (2) The allowance for unfunded loan commitments is included as part of accrued interest payable and other liabilities on the balance sheet. (3) Ratio includes an allowance for credit losses of $21.9 million as of December 31, 2022 related to a $12.0 billion pool of loans covered under five separate credit linked note transactions. Western Alliance Bancorporation and Subsidiaries Asset Quality Metrics Unaudited Three Months Ended Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 (in millions) Nonaccrual loans and repossessed assets Nonaccrual loans $ 85 $ 90 $ 85 $ 91 $ 73 Nonaccrual loans to funded HFI loans 0.16 % 0.17 % 0.17 % 0.22 % 0.19 % Repossessed assets $ 11 $ 11 $ 12 $ 12 $ 12 Nonaccrual loans and repossessed assets to total assets 0.14 % 0.15 % 0.15 % 0.17 % 0.15 % Loans Past Due Loans past due 90 days, still accruing (1) $ — $ — $ — $ — $ — Loans past due 90 days, still accruing to funded HFI loans — % — % — % — % — % Loans past due 30 to 89 days, still accruing (2) $ 70 $ 56 $ 117 $ 58 $ 53 Loans past due 30 to 89 days, still accruing to funded HFI loans 0.13 % 0.11 % 0.24 % 0.14 % 0.13 % Other credit quality metrics Special mention loans $ 351 $ 312 $ 317 $ 350 $ 331 Special mention loans to funded HFI loans 0.68 % 0.60 % 0.65 % 0.85 % 0.85 % Classified loans on accrual $ 280 $ 268 $ 232 $ 253 $ 216 Classified loans on accrual to funded HFI loans 0.54 % 0.51 % 0.48 % 0.61 % 0.55 % Classified assets $ 393 $ 385 $ 346 $ 365 $ 301 Classified assets to total assets 0.58 % 0.56 % 0.52 % 0.60 % 0.54 % (1) Excludes government guaranteed residential mortgage loans of $582 million, $644 million, and $827 million as of December 31, 2022, September 30, 2022, and June 30, 2022, respectively. (2) Excludes government guaranteed residential mortgage loans of $334 million, $245 million, and $202 million as of December 31, 2022, September 30, 2022, and June 30, 2022, respectively. Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited Three Months Ended December 31, 2022 September 30, 2022 Average Balance Interest Average Yield / Cost Average Balance Interest Average Yield / Cost ($ in millions) ($ in millions) Interest earning assets Loans held for sale $ 2,659 $ 37.8 5.63 % $ 3,993 $ 49.0 4.87 % Loans held for investment: Commercial and industrial 21,654 349.3 6.45 21,551 282.1 5.25 CRE - non-owner occupied 9,077 148.8 6.51 8,128 111.4 5.44 CRE - owner occupied 1,830 24.4 5.39 1,839 23.3 5.12 Construction and land development 3,798 80.2 8.38 3,471 59.5 6.80 Residential real estate 15,803 143.5 3.60 15,125 130.9 3.43 Consumer 71 1.1 6.26 63 0.8 5.32 Total HFI loans (1), (2), (3) 52,233 747.3 5.70 50,177 608.0 4.84 Securities: Securities - taxable 6,397 68.4 4.25 6,680 56.4 3.35 Securities - tax-exempt 2,068 21.0 5.07 2,047 19.5 4.73 Total securities (1) 8,465 89.4 4.45 8,727 75.9 3.66 Cash and other 1,361 13.8 4.02 1,239 6.5 2.07 Total interest earning assets 64,718 888.3 5.50 64,136 739.4 4.62 Non-interest earning assets Cash and due from banks 289 242 Allowance for credit losses (308 ) (282 ) Bank owned life insurance 181 180 Other assets 4,613 4,100 Total assets $ 69,493 $ 68,376 Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 8,754 $ 43.6 1.98 % $ 8,466 $ 24.5 1.15 % Savings and money market 18,651 88.0 1.87 18,515 44.5 0.95 Certificates of deposit 4,260 26.0 2.42 2,843 8.6 1.19 Total interest-bearing deposits 31,665 157.6 1.97 29,824 77.6 1.03 Short-term borrowings 5,440 54.8 3.99 4,136 27.0 2.59 Long-term debt 1,240 27.1 8.68 1,228 23.8 7.69 Qualifying debt 890 9.1 4.08 891 8.9 3.94 Total interest-bearing liabilities 39,235 248.6 2.51 36,079 137.3 1.51 Interest cost of funding earning assets 1.52 0.84 Non-interest-bearing liabilities Non-interest-bearing demand deposits 23,729 25,865 Other liabilities 1,296 1,282 Stockholders’ equity 5,233 5,150 Total liabilities and stockholders' equity $ 69,493 $ 68,376 Net interest income and margin (4) $ 639.7 3.98 % $ 602.1 3.78 % (1) Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $9.0 million and $8.5 million for the three months ended December 31, 2022 and September 30, 2022, respectively. (2) Included in the yield computation are net loan fees of $34.8 million and $31.9 million for the three months ended December 31, 2022 and September 30, 2022, respectively. (3) Includes non-accrual loans. (4) Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis. Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited Three Months Ended December 31, 2022 December 31, 2021 Average Balance Interest Average Yield / Cost Average Balance Interest Average Yield / Cost ($ in millions) ($ in millions) Interest earning assets Loans held for sale $ 2,659 $ 37.8 5.63 % $ 9,159 $ 70.3 3.04 % Loans held for investment: Commercial and industrial 21,654 349.3 6.45 17,087 169.5 4.01 CRE - non-owner-occupied 9,077 148.8 6.51 6,209 70.0 4.48 CRE - owner-occupied 1,830 24.4 5.39 1,971 24.2 4.96 Construction and land development 3,798 80.2 8.38 3,016 43.9 5.78 Residential real estate 15,803 143.5 3.60 8,282 60.3 2.89 Consumer 71 1.1 6.26 44 0.4 3.85 Total HFI loans (1), (2), (3) 52,233 747.3 5.70 36,609 368.3 4.03 Securities: Securities - taxable 6,397 68.4 4.25 5,443 25.6 1.86 Securities - tax-exempt 2,068 21.0 5.07 2,175 18.1 4.12 Total securities (1) 8,465 89.4 4.45 7,618 43.7 2.51 Other 1,361 13.8 4.02 1,274 1.0 0.31 Total interest earning assets 64,718 888.3 5.50 54,660 483.3 3.57 Non-interest earning assets Cash and due from banks 289 253 Allowance for credit losses (308 ) (256 ) Bank owned life insurance 181 179 Other assets 4,613 2,767 Total assets $ 69,493 $ 57,603 Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 8,754 $ 43.6 1.98 % $ 5,918 $ 1.7 0.11 % Savings and money market accounts 18,651 88.0 1.87 17,215 9.1 0.21 Certificates of deposit 4,260 26.0 2.42 2,074 2.0 0.38 Total interest-bearing deposits 31,665 157.6 1.97 25,207 12.8 0.20 Short-term borrowings 5,440 54.8 3.99 2,815 2.4 0.35 Long-term debt 1,240 27.1 8.68 565 8.3 5.81 Qualifying debt 890 9.1 4.08 978 9.2 3.72 Total interest-bearing liabilities 39,235 248.6 2.51 29,565 32.7 0.44 Interest cost of funding earning assets 1.52 0.24 Non-interest-bearing liabilities Non-interest-bearing demand deposits 23,729 22,487 Other liabilities 1,296 913 Stockholders’ equity 5,233 4,638 Total liabilities and stockholders' equity $ 69,493 $ 57,603 Net interest income and margin (4) $ 639.7 3.98 % $ 450.6 3.33 % (1) Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $9.0 million and $8.4 million for the three months ended December 31, 2022 and 2021, respectively. (2) Included in the yield computation are net loan fees of $34.8 million and $35.8 million for the three months ended December 31, 2022 and 2021, respectively. (3) Includes non-accrual loans. (4) Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis. Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited Year Ended December 31, 2022 December 31, 2021 Average Balance Interest Average Yield / Cost Average Balance Interest Average Yield / Cost ($ in millions) ($ in millions) Interest earning assets Loans held for sale $ 4,364 $ 180.3 4.13 % $ 5,476 $ 174.4 3.18 % Loans held for investment: Commercial and industrial 20,082 1,002.8 5.05 14,979 624.8 4.26 CRE - non-owner occupied 7,769 416.4 5.37 5,829 271.3 4.67 CRE - owner occupied 1,841 93.2 5.16 2,030 97.7 4.92 Construction and land development 3,426 229.1 6.69 2,790 160.0 5.74 Residential real estate 13,771 468.5 3.40 5,129 158.9 3.10 Consumer 61 3.1 5.07 39 1.7 4.43 Total HFI loans (1), (2), (3) 46,951 2,213.1 4.74 30,796 1,314.4 4.32 Securities: Securities - taxable 6,324 195.3 3.09 5,284 95.8 1.81 Securities - tax-exempt 2,067 77.3 4.68 2,137 68.9 4.05 Total securities (1) 8,391 272.6 3.48 7,421 164.7 2.46 Other 1,574 25.8 1.64 2,718 5.2 0.19 Total interest earning assets 61,281 2,691.8 4.45 46,411 1,658.7 3.65 Non-interest earning assets Cash and due from banks 260 293 Allowance for credit losses (280 ) (261 ) Bank owned life insurance 180 178 Other assets 3,948 2,487 Total assets $ 65,389 $ 49,108 Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 8,331 $ 78.8 0.95 % $ 4,751 $ 5.9 0.13 % Savings and money market accounts 18,518 158.6 0.86 15,814 33.1 0.21 Certificates of deposit 2,772 39.0 1.40 1,850 8.5 0.46 Total interest-bearing deposits 29,621 276.4 0.93 22,415 47.5 0.21 Short-term borrowings 3,424 92.1 2.69 1,206 8.2 0.68 Long-term debt 1,008 72.0 7.14 373 21.1 5.65 Qualifying debt 893 35.0 3.92 827 33.1 4.00 Total interest-bearing liabilities 34,946 475.5 1.36 24,821 109.9 0.44 Interest cost of funding earning assets 0.78 0.24 Non-interest-bearing liabilities Non-interest-bearing demand deposits 24,133 19,416 Other liabilities 1,211 837 Stockholders’ equity 5,099 4,034 Total liabilities and stockholders' equity $ 65,389 $ 49,108 Net interest income and margin (4) $ 2,216.3 3.67 % $ 1,548.8 3.41 % (1) Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $33.7 million and $33.3 million for the year ended December 31, 2022 and 2021, respectively. (2) Included in the yield computation are net loan fees of $132.2 million and $131.7 million for the year ended December 31, 2022 and 2021, respectively. (3) Includes non-accrual loans. (4) Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis. Western Alliance Bancorporation and Subsidiaries Operating Segment Results Unaudited Balance Sheet: Consolidated Company Commercial Consumer Related Corporate & Other At December 31, 2022: (dollars in millions) Assets: Cash, cash equivalents, and investment securities $ 9,803 $ 12 $ — $ 9,791 Loans held for sale 1,184 — 1,184 — Loans, net of deferred fees and costs 51,862 31,414 20,448 — Less: allowance for credit losses (310 ) (262 ) (48 ) — Total loans 51,552 31,152 20,400 — Other assets acquired through foreclosure, net 11 11 — — Goodwill and other intangible assets, net 680 293 387 — Other assets 4,504 435 2,180 1,889 Total assets $ 67,734 $ 31,903 $ 24,151 $ 11,680 Liabilities: Deposits $ 53,644 $ 29,494 $ 18,492 $ 5,658 Borrowings and qualifying debt 7,192 27 340 6,825 Other liabilities 1,542 83 656 803 Total liabilities 62,378 29,604 19,488 13,286 Allocated equity: 5,356 2,684 1,691 981 Total liabilities and stockholders' equity $ 67,734 $ 32,288 $ 21,179 $ 14,267 Excess funds provided (used) — 385 (2,972 ) 2,587 No. of offices 56 46 8 2 No. of full-time equivalent employees 3,365 671 785 1,909 Income Statement: Three Months Ended December 31, 2022: (in millions) Net interest income $ 639.7 $ 428.0 $ 216.4 $ (4.7 ) Provision for (recovery of) credit losses 3.1 (5.9 ) 8.2 0.8 Net interest income (expense) after provision for credit losses 636.6 433.9 208.2 (5.5 ) Non-interest income 61.5 8.7 49.2 3.6 Non-interest expense 333.4 122.1 187.6 23.7 Income (loss) before income taxes 364.7 320.5 69.8 (25.6 ) Income tax expense (benefit) 71.7 76.1 16.3 (20.7 ) Net income (loss) $ 293.0 $ 244.4 $ 53.5 $ (4.9 ) Year Ended December 31, 2022: (in millions) Net interest income $ 2,216.3 $ 1,546.3 $ 854.1 $ (184.1 ) Provision for (recovery of) credit losses 68.1 47.2 21.1 (0.2 ) Net interest income (expense) after provision for credit losses 2,148.2 1,499.1 833.0 (183.9 ) Non-interest income 324.6 59.7 247.2 17.7 Non-interest expense 1,156.7 463.5 630.1 63.1 Income (loss) before income taxes 1,316.1 1,095.3 450.1 (229.3 ) Income tax expense (benefit) 258.8 260.5 107.1 (108.8 ) Net income (loss) $ 1,057.3 $ 834.8 $ 343.0 $ (120.5 ) Western Alliance Bancorporation and Subsidiaries Operating Segment Results Unaudited Balance Sheet: Consolidated Company Commercial Consumer Related Corporate At December 31, 2021: (dollars in millions) Assets: Cash, cash equivalents, and investment securities $ 8,057 $ 13 $ 82 $ 7,962 Loans held for sale 5,635 — 5,635 — Loans, net of deferred fees and costs 39,075 25,092 13,983 — Less: allowance for credit losses (252 ) (226 ) (26 ) — Total loans 38,823 24,866 13,957 — Other assets acquired through foreclosure, net 12 12 — — Goodwill and other intangible assets, net 635 295 340 — Other assets 2,821 254 1,278 1,289 Total assets $ 55,983 $ 25,440 $ 21,292 $ 9,251 Liabilities: Deposits $ 47,612 $ 30,467 $ 15,363 $ 1,782 Borrowings and qualifying debt 2,398 — 353 2,045 Other liabilities 1,010 233 138 639 Total liabilities 51,020 30,700 15,854 4,466 Allocated equity: 4,963 2,588 1,596 779 Total liabilities and stockholders' equity $ 55,983 $ 33,288 $ 17,450 $ 5,245 Excess funds provided (used) — 7,848 (3,842 ) (4,006 ) No. of offices 58 50 7 1 No. of full-time equivalent employees 3,139 628 1,173 1,338 Income Statement: Three Months Ended December 31, 2021: (in millions) Net interest income $ 450.6 $ 332.8 $ 185.6 $ (67.8 ) Provision for (recovery of) credit losses 13.2 4.9 7.6 0.7 Net interest income (expense) after provision for credit losses 437.4 327.9 178.0 (68.5 ) Non-interest income 110.4 16.9 76.5 17.0 Non-interest expense 237.8 106.5 119.5 11.8 Income (loss) before income taxes 310.0 238.3 135.0 (63.3 ) Income tax expense (benefit) 64.0 56.9 32.6 (25.5 ) Net income (loss) $ 246.0 $ 181.4 $ 102.4 $ (37.8 ) Year Ended December 31, 2021: (in millions) Net interest income $ 1,548.8 $ 1,181.7 $ 603.4 $ (236.3 ) (Recovery of) provision for credit losses (21.4 ) (30.6 ) 11.0 (1.8 ) Net interest income (expense) after provision for credit losses 1,570.2 1,212.3 592.4 (234.5 ) Non-interest income 404.2 65.1 317.6 21.5 Non-interest expense 851.4 415.9 413.9 21.6 Income (loss) before income taxes 1,123.0 861.5 496.1 (234.6 ) Income tax expense (benefit) 223.8 206.6 120.1 (102.9 ) Net income (loss) $ 899.2 $ 654.9 $ 376.0 $ (131.7 ) Western Alliance Bancorporation and Subsidiaries Reconciliation of Non-GAAP Financial Measures Unaudited Pre-Provision Net Revenue by Quarter: Three Months Ended 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 (in millions) Net interest income $ 639.7 $ 602.1 $ 525.0 $ 449.5 $ 450.6 Total non-interest income 61.5 61.8 95.0 106.3 110.4 Net revenue $ 701.2 $ 663.9 $ 620.0 $ 555.8 $ 561.0 Total non-interest expense 333.4 305.8 268.9 248.6 237.8 Pre-provision net revenue (1) $ 367.8 $ 358.1 $ 351.1 $ 307.2 $ 323.2 Less: Provision for credit losses 3.1 28.5 27.5 9.0 13.2 Income tax expense 71.7 65.6 63.4 58.1 64.0 Net income $ 293.0 $ 264.0 $ 260.2 $ 240.1 $ 246.0 Efficiency Ratio by Quarter: Total non-interest expense $ 333.4 $ 305.8 $ 268.9 $ 248.6 $ 237.8 Divided by: Total net interest income 639.7 602.1 525.0 449.5 450.6 Plus: Tax equivalent interest adjustment 9.0 8.5 8.2 8.0 8.4 Total non-interest income 61.5 61.8 95.0 106.3 110.4 $ 710.2 $ 672.4 $ 628.2 $ 563.8 $ 569.4 Efficiency ratio - tax equivalent basis (2) 46.9 % 45.5 % 42.8 % 44.1 % 41.8 % Tangible Common Equity: 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 (dollars and shares in millions) Total stockholders' equity $ 5,356 $ 5,021 $ 4,959 $ 5,012 $ 4,963 Less: Goodwill and intangible assets 680 682 695 698 635 Preferred stock 295 295 295 295 295 Total tangible common equity 4,381 4,044 3,969 4,019 4,033 Plus: deferred tax - attributed to intangible assets 2 3 2 2 2 Total tangible common equity, net of tax $ 4,383 $ 4,047 $ 3,971 $ 4,021 $ 4,035 Total assets $ 67,734 $ 69,165 $ 66,055 $ 60,576 $ 55,983 Less: goodwill and intangible assets, net 680 682 695 698 635 Tangible assets 67,054 68,483 65,360 59,878 55,348 Plus: deferred tax - attributed to intangible assets 2 3 2 2 2 Total tangible assets, net of tax $ 67,056 $ 68,486 $ 65,362 $ 59,880 $ 55,350 Tangible common equity ratio (3) 6.5 % 5.9 % 6.1 % 6.7 % 7.3 % Common shares outstanding 108.9 108.9 108.3 108.3 106.6 Tangible book value per share, net of tax (3) $ 40.25 $ 37.16 $ 36.67 $ 37.13 $ 37.84 Western Alliance Bancorporation and Subsidiaries Reconciliation of Non-GAAP Financial Measures Unaudited Return on Average Tangible Common Equity: Three Months Ended 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 (in millions) Net income available to common shareholders $ 289.8 $ 260.8 $ 257.0 $ 236.9 $ 242.5 Divided by: Average stockholders' equity 5,232.6 5,149.6 5,021.4 4,988.9 4,637.6 Less: Average goodwill and intangible assets (681.3 ) (694.1 ) (697.3 ) (679.3 ) (610.4 ) Average preferred stock (294.5 ) (294.5 ) (294.5 ) (294.5 ) (294.5 ) Average tangible common equity $ 4,256.8 $ 4,161.1 $ 4,029.6 $ 4,015.1 $ 3,732.7 Average accumulated other comprehensive loss (income) ("AOCI") 725.7 483.5 355.7 56.7 (34.4 ) Average tangible common equity, excluding AOCI $ 4,982.5 $ 4,644.6 $ 4,385.4 $ 4,071.8 $ 3,698.3 Return on average tangible common equity (1) 27.0 % 24.9 % 25.6 % 23.9 % 25.8 % Return on average tangible common equity, excluding AOCI (1) 23.1 % 22.3 % 23.5 % 23.6 % 26.0 % Year Ended December 31, 2022 2021 (in millions) Net income available to common shareholders $ 1,044.5 $ 895.7 Divided by: Average stockholders' equity 5,099.0 4,033.8 Less: Average goodwill and intangible assets (688.0 ) (528.6 ) Average preferred stock (294.5 ) (81.5 ) Average tangible common equity $ 4,116.4 $ 3,423.7 Average accumulated other comprehensive loss (income) ("AOCI") 407.5 (56.9 ) Average tangible common equity, excluding AOCI $ 4,523.9 $ 3,366.7 Return on average tangible common equity (1) 25.4 % 26.2 % Return on average tangible common equity, excluding AOCI (1) 23.1 % 26.6 % Non-GAAP Financial Measures Footnotes (1) We believe this non-GAAP measurement is a key indicator of the earnings power of the Company. (2) We believe this non-GAAP ratio provides a useful metric to measure the efficiency of the Company. (3) We believe this non-GAAP metric provides an important metric with which to analyze and evaluate financial condition and capital strength. In addition, we believe that use of tangible equity and tangible assets improves the comparability to other institutions that have not engaged in acquisitions that resulted in recorded goodwill and other intangibles. View source version on businesswire.com: https://www.businesswire.com/news/home/20230123005838/en/Contacts Western Alliance Bancorporation Dale Gibbons, 602-952-5476
Western Alliance Bancorporation (NYSE:WAL): FOURTH QUARTER AND FULL YEAR 2022 FINANCIAL RESULTS Fourth Quarter Highlights: Net income Earnings per share PPNR1 Net interest margin Efficiency ratio1 Book value per common share $293.0 million $2.67 $367.8 million 3.98% 46.9% $46.47 $40.251, excluding goodwill and intangibles CEO COMMENTARY: “Western Alliance’s diversified, national commercial business strategy drove the strong momentum that was sustained throughout the year, closing out the fourth quarter with record revenues, earnings and tangible book value as we thoughtfully deployed liquidity into sound organic growth,” said Kenneth A. Vecchione, President and Chief Executive Officer. “We achieved a record $293.0 million in net income and earnings per share of $2.67 for the quarter, an increase of 15.1% from the prior year, while tangible book value per share rose 6.4% year-over-year to $40.25. Quarterly deposits declined $1.9 billion, primarily driven by short-term seasonal tax and insurance escrow deposit outflows in our Mortgage Warehouse Group. These seasonal factors have already reversed since year end, with quarter-to-date 2023 average total deposit balances up more than $2.4 billion from year end.” “Western Alliance’s full year results are a direct reflection of our collaborative culture and flexible business model that strongly position us to sustain our earnings trajectory into 2023, all while continuing our focus on asset quality. Net charge-offs for the year totaled a modest $1.5 million, with a non-performing assets to total assets ratio of 0.14% at the end of the year. Our growing net interest income during the year drove an increase in earnings as PPNR climbed 25.7% over the prior year to $1.4 billion, with net income of $1.1 billion and earnings per share up 11.9% to $9.70.” Acquisition of Digital Disbursements and AmeriHome Mortgage Company: On January 25, 2022, the Company completed its acquisition of Digital Settlement Technologies LLC, doing business as Digital Disbursements, a digital payments platform for the class action legal industry. On April 7, 2021, the Company completed its acquisition of Aris Mortgage Holding Company, LLC, the parent company of AmeriHome Mortgage Company, LLC ("AmeriHome"). The Company's results include the financial results of Digital Disbursements and AmeriHome beginning on the acquisition dates noted. LINKED-QUARTER BASIS FULL YEAR FINANCIAL HIGHLIGHTS: Net income of $293.0 million and earnings per share of $2.67, compared to $264.0 million and $2.42, respectively Net income of $1.1 billion and earnings per share of $9.70, up 17.6% and 11.9%, from $899.2 million and $8.67, respectively Net revenue of $701.2 million, an increase of 5.6%, or $37.3 million, compared to an increase in non-interest expenses of 9.0%, or $27.6 million Net revenue of $2.5 billion, an increase of 30.1%, or $587.9 million, compared to an increase in non-interest expenses of 35.9%, or $305.3 million Pre-provision net revenue1 of $367.8 million, up $9.7 million from $358.1 million Pre-provision net revenue1 of $1.4 billion, up $282.6 million from $1.1 billion Effective tax rate of 19.7%, compared to 19.9% Effective tax rate of 19.7%, compared to 19.9% FINANCIAL POSITION RESULTS: HFI loans of $51.9 billion, down $339 million, or 0.6% Increase in HFI loans of $10.9 billion, or 27.9%, net of EBO loans with a $1.9 billion balance at December 31, 2022 transferred from HFS to HFI during 2022 Total deposits of $53.6 billion, down $1.9 billion, or 3.5% Increase in total deposits of $6.0 billion, or 12.7% Stockholders' equity of $5.4 billion, up $335 million Increase in stockholders' equity of $393 million LOANS AND ASSET QUALITY: Nonperforming assets (nonaccrual loans and repossessed assets) to total assets of 0.14%, compared to 0.15% Nonperforming assets to total assets of 0.14%, compared to 0.15% Annualized net loan charge-offs (recoveries) to average loans outstanding of 0.01%, compared to (0.02)% Net loan charge-offs (recoveries) to average loans outstanding of approximately 0.00%, compared to 0.02% KEY PERFORMANCE METRICS: Net interest margin of 3.98%, compared to 3.78% Net interest margin of 3.67%, compared to 3.41% Return on average assets and on tangible common equity1 of 1.67% and 27.0%, compared to 1.53% and 24.9%, respectively Return on average assets and on tangible common equity1 of 1.62% and 25.4%, compared to 1.83% and 26.2%, respectively Tangible common equity ratio1 of 6.5%, compared to 5.9% Tangible common equity ratio1 of 6.5%, compared to 7.3% CET 1 ratio of 9.3%, compared to 8.7% CET 1 ratio of 9.3%, compared to 9.1% Tangible book value per share1, net of tax, of $40.25, an increase of 8.3% from $37.16 Tangible book value per share1, net of tax, of $40.25, an increase of 6.4% from $37.84 Efficiency ratio1 of 46.9%, compared to 45.5% Efficiency ratio1 of 44.9%, compared to 42.9% 1 See reconciliation of Non-GAAP Financial Measures. Income Statement Net interest income was $639.7 million in the fourth quarter 2022, an increase of $37.6 million from $602.1 million in the third quarter 2022, and an increase of $189.1 million, or 42.0%, compared to the fourth quarter 2021. The increase in net interest income from the third quarter 2022 is due to a higher rate environment, which drove an increase in yields on interest earning assets and also pushed interest rates higher on deposits and short-term borrowings. HFI loan growth and higher yields on HFI loans, partially offset by higher interest rates on deposits and an increase in other borrowings, drove the increase in net interest income from the fourth quarter 2021. The Company recorded a provision for credit losses of $3.1 million in the fourth quarter 2022, a decrease of $25.4 million from $28.5 million in the third quarter 2022, and a decrease of $10.1 million from $13.2 million in the fourth quarter 2021. The provision for credit losses during the fourth quarter 2022 is primarily due to heightened economic uncertainty, offset by a decrease in loans. The Company’s net interest margin in the fourth quarter 2022 was 3.98%, an increase from 3.78% in the third quarter 2022, and an increase from 3.33% in the fourth quarter 2021. The higher rate environment drove an increase in net interest margin, with yields on interest earning assets more than offsetting the increase in rates on deposits and borrowings. The increase in net interest margin from the fourth quarter 2021 was driven by HFI loan growth plus an increase in rates, partially offset by higher deposits and borrowings coupled with higher rates. Non-interest income was $61.5 million for the fourth quarter 2022, compared to $61.8 million for the third quarter 2022, and $110.4 million for the fourth quarter 2021. The $0.3 million decrease in non-interest income from the third quarter 2022 was primarily related to fair value loss adjustments from HFI loans transferred to HFS and sold in the fourth quarter 2022 and a revaluation in the third quarter 2022 of the contingent consideration liability related to the Digital Disbursements acquisition that did not recur. These items were partially offset by a $10.9 million increase in net gain on loan origination and sale activities due to gains from hedging activity, partially offset by a reduction in spreads and production volume. Net loan servicing revenue decreased $1.6 million due to a decrease in the value of MSRs, which was partially offset by an increase in servicing revenue. The $48.9 million decrease from the fourth quarter 2021 was driven by a decrease in net gain on loan origination and sale activities of $47.8 million from lower production volume, partially offset by a $19.1 million increase in loan servicing revenue. Net revenue was $701.2 million for the fourth quarter 2022, an increase of $37.3 million, or 5.6%, compared to $663.9 million for the third quarter 2022, and an increase of $140.2 million, or 25.0%, compared to $561.0 million for the fourth quarter 2021. Non-interest expense was $333.4 million for the fourth quarter 2022, compared to $305.8 million for the third quarter 2022, and $237.8 million for the fourth quarter 2021. The Company’s efficiency ratio1 was 46.9% for the fourth quarter 2022, compared to 45.5% in the third quarter 2022, and 41.8% for the fourth quarter 2021. Non-interest expense increased from the third quarter 2022 due primarily to increased deposit costs. The increase in non-interest expense from the fourth quarter 2021 is also attributable to increased deposit costs. Income tax expense was $71.7 million for the fourth quarter 2022, compared to $65.6 million for the third quarter 2022, and $64.0 million for the fourth quarter 2021. Net income was $293.0 million for the fourth quarter 2022, an increase of $29.0 million from $264.0 million for the third quarter 2022, and an increase of $47.0 million from $246.0 million for the fourth quarter 2021. Earnings per share totaled $2.67 for the fourth quarter 2022, compared to $2.42 for the third quarter 2022, and $2.32 for the fourth quarter 2021. The Company views its pre-provision net revenue1 ("PPNR") as a key metric for assessing the Company’s earnings power, which it defines as net revenue less non-interest expense. For the fourth quarter 2022, the Company’s PPNR1 was $367.8 million, up $9.7 million from $358.1 million in the third quarter 2022, and up $44.6 million from $323.2 million in the fourth quarter 2021. The Company had 3,365 full-time equivalent employees and 56 offices at December 31, 2022, compared to 3,368 employees and 60 offices at September 30, 2022, and 3,139 employees and 58 offices at December 31, 2021. 1 See reconciliation of Non-GAAP Financial Measures. Balance Sheet HFI loans, net of deferred fees totaled $51.9 billion at December 31, 2022, compared to $52.2 billion at September 30, 2022, and $39.1 billion at December 31, 2021. The decrease in HFI loans of $339 million from the prior quarter was driven by a decrease of $1.6 billion in commercial and industrial loans, partially offset by increases of $651 million in CRE non-owner occupied, $392 million in construction and land development, and $254 million in residential real estate loans. From December 31, 2021, HFI loan growth of $10.9 billion (which excludes transfers of government guaranteed early buyout ("EBO") residential loans from HFS to HFI in 2022 with a balance of $1.9 billion at December 31, 2022), was primarily driven by residential real estate, commercial and industrial, and CRE non-owner occupied, loans which increased $4.8 billion, $2.8 billion, and, $2.4 billion respectively. The Company's allowance for credit losses on HFI loans consists of an allowance for funded HFI loans and an allowance for unfunded loan commitments. At December 31, 2022, the allowance for loan losses to funded HFI loans ratio was 0.60%, compared to 0.58% at September 30, 2022, and 0.65% at December 31, 2021. The allowance for credit losses, which includes the allowance for unfunded loan commitments, to funded HFI loans ratio was 0.69% at December 31, 2022, compared to 0.68% at September 30, 2022, and 0.74% at December 31, 2021. The Company is a party to credit linked note transactions, which effectively transfer a portion of the risk of losses on reference pools of loans to the purchasers of the notes. As of December 31, 2022, September 30, 2022, and December 31, 2021, the Company is protected from first credit losses on reference pools of loans totaling $12.0 billion, $10.8 billion, and $6.4 billion, respectively, under these transactions. However, as these note transactions are considered to be free standing credit enhancements, the allowance for credit losses cannot be reduced by the expected credit losses that may be mitigated by these notes. Accordingly, the allowance for loan and credit losses ratios include an allowance of $21.9 million as of December 31, 2022, $19 million as of September 30, 2022, and $7.2 million as of December 31, 2021, related to these pools of loans. The allowance for credit losses to funded HFI loans ratio, adjusted to reduce the HFI loan balance by the amount of loans in covered reference pools, was 0.89% at December 31, 2022, 0.86% at September 30, 2022, and 0.89% at December 31, 2021. Deposits totaled $53.6 billion at December 31, 2022, a decrease of $1.9 billion from $55.6 billion at September 30, 2022, and an increase of $6.0 billion from $47.6 billion at December 31, 2021. By deposit type, the decrease from the prior quarter is attributable to a decrease of $5.2 billion from non-interest bearing demand deposits, partially offset by increases of $1.9 billion from certificates of deposits, $1.2 billion from interest bearing demand deposits, and $195 million from savings and money market accounts. From December 31, 2021, certificates of deposit, interest-bearing demand deposits, and savings and money market accounts increased by $3.0 billion, $2.6 billion, and $2.1 billion, respectively. These increases were partially offset by a decrease in non-interest bearing demand deposits of $1.7 billion. Non-interest bearing deposits were $19.7 billion at December 31, 2022, compared to $24.9 billion at September 30, 2022, and $21.4 billion at December 31, 2021. The table below shows the Company's deposit types as a percentage of total deposits: Dec 31, 2022 Sep 30, 2022 Dec 31, 2021 Non-interest bearing 36.7 % 44.8 % 44.9 % Savings and money market 36.2 34.6 36.3 Interest-bearing demand 17.7 15.0 14.5 Certificates of deposit 9.4 5.6 4.3 The Company’s ratio of HFI loans to deposits was 96.7% at December 31, 2022, compared to 93.9% at September 30, 2022, and 82.1% at December 31, 2021. Borrowings were $6.3 billion at December 31, 2022 and September 30, 2022, and $1.5 billion at December 31, 2021. Borrowings remained flat from September 30, 2022 due primarily to the issuance of $93 million of credit linked notes in the fourth quarter 2022 offset by a decrease in short-term borrowings. The increase in borrowings from December 31, 2021 is due to an increase in short-term borrowings of $4.3 billion and issuance of $579 million of credit linked notes, net of issuance costs, during 2022. Qualifying debt totaled $893 million at December 31, 2022, compared to $889 million at September 30, 2022, and $896 million at December 31, 2021. Stockholders’ equity was $5.4 billion at December 31, 2022, compared to $5.0 billion at September 30, 2022 and December 31, 2021. The increase in stockholders’ equity quarter over quarter was due to net income and unrealized fair value gains of approximately $77 million on the Company's available for sale securities, which are recorded in other comprehensive (loss) income, net of tax, partially offset by dividends to shareholders. A cash dividend of $0.36 per share was paid to common shareholders on December 2, 2022, totaling $39.2 million, and a cash dividend of $0.27 per depository share was paid to preferred shareholders on December 30, 2022, totaling $3.2 million. The increase in stockholders' equity from December 31, 2021 is primarily a function of net income and sales of common stock under the Company's ATM program, partially offset by dividends to shareholders and unrealized fair value losses on available for sale securities. At December 31, 2022, tangible common equity, net of tax1, was 6.5% of tangible assets1 and total capital was 12.1% of risk-weighted assets. The Company’s tangible book value per share1 was $40.25 at December 31, 2022, an increase of 8.3% from $37.16, and up 6.4% from $37.84 at December 31, 2021. The increase in tangible book value per share from September 30, 2022 is attributable to net income and fair value marks on the Company's available for sale securities, which are recorded in other comprehensive (loss) income, net of tax. Total assets decreased 2.1% to $67.7 billion at December 31, 2022, from $69.2 billion at September 30, 2022, and increased 21.0% from $56.0 billion at December 31, 2021. The decrease in total assets from September 30, 2022 and December 31, 2021 was driven by decreases in HFS and HFI loans. 1 See reconciliation of Non-GAAP Financial Measures. Asset Quality Provision for credit losses totaled $3.1 million for the fourth quarter 2022, compared to $28.5 million for the third quarter 2022, and $13.2 million for the fourth quarter 2021. Net loan charge-offs (recoveries) in the fourth quarter 2022 were $1.8 million, or 0.01% of average loans (annualized), compared to $(1.9) million, or (0.02)%, in the third quarter 2022, and $1.4 million, or 0.02%, in the fourth quarter 2021. Nonaccrual loans decreased $5 million to $85 million during the quarter and increased $12 million from December 31, 2021. Loans past due 90 days and still accruing interest were zero (excluding government guaranteed loans of $582 million) at December 31, 2022, compared to zero at September 30, 2022 and December 31, 2021 (excluding government guaranteed loans of $644 million and zero at September 30, 2022 and December 31, 2021, respectively). Loans past due 30-89 days and still accruing interest totaled $70 million (excluding government guaranteed loans of $334 million) at December 31, 2022, an increase from $56 million at September 30, 2022, and an increase from $53 million at December 31, 2021 (excluding government guaranteed loans of $245 million and zero at September 30, 2022 and December 31, 2021, respectively). Repossessed assets totaled $11 million at December 31, 2022, flat from September 30, 2022, and a $1 million decrease from $12 million at December 31, 2021. Classified assets totaled $393 million at December 31, 2022, an increase of $8 million from $385 million at September 30, 2022, and an increase of $92 million from $301 million at December 31, 2021. The ratio of classified assets to Tier 1 capital plus the allowance for credit losses, a common regulatory measure of asset quality, was 6.8% at December 31, 2022, compared to 7.0% at September 30, 2022, and 6.4% at December 31, 2021. 1 See reconciliation of Non-GAAP Financial Measures. Segment Highlights The Company's reportable segments are aggregated with a focus on products and services offered and consist of three reportable segments: Commercial segment: provides commercial banking and treasury management products and services to small and middle-market businesses, specialized banking services to sophisticated commercial institutions and investors within niche industries, as well as financial services to the real estate industry. Consumer Related segment: offers both commercial banking services to enterprises in consumer-related sectors and consumer banking services, such as residential mortgage banking and beginning on January 25, 2022 includes the financial results of Digital Disbursements. Corporate & Other segment: consists of the Company's investment portfolio, Corporate borrowings and other related items, income and expense items not allocated to our other reportable segments, and inter-segment eliminations. Key management metrics for evaluating the performance of the Company's Commercial and Consumer Related segments include loan and deposit growth, asset quality, and pre-tax income. The Commercial segment reported an HFI loan balance of $31.4 billion at December 31, 2022, a decrease of $646 million during the quarter, and an increase of $6.3 billion during the year. Deposits for the Commercial segment totaled $29.5 billion at December 31, 2022, a decrease of $512 million during the quarter, and a decrease of $973 million during the year. Pre-tax income for the Commercial segment was $320.5 million for the three months ended December 31, 2022, an increase of $22.3 million from the three months ended September 30, 2022, and an increase of $82.2 million from the three months ended December 31, 2021. For the year ended December 31, 2022, the Commercial segment reported total pre-tax income of $1.1 billion, an increase of $233.8 million compared to the year ended December 31, 2021. The Consumer Related segment reported an HFI loan balance of $20.4 billion at December 31, 2022, an increase of $307 million during the quarter, and an increase of $6.5 billion during the year. The Consumer Related segment also has loans held for sale of $1.2 billion at December 31, 2022, a decrease of $1.0 billion during the quarter, and a decrease of $4.5 billion during the year. Deposits for the Consumer Related segment totaled $18.5 billion, a decrease of $2.5 billion during the quarter, and an increase of $3.1 billion during the year. Pre-tax income for the Consumer Related segment was $69.8 million for the three months ended December 31, 2022, a decrease of $23.4 million from the three months ended September 30, 2022, and a decrease of $65.2 million from the three months ended December 31, 2021. Pre-tax income for the Consumer Related segment for the year ended December 31, 2022 totaled $450.1 million, a decrease of $46.0 million compared to the year ended December 31, 2021. Conference Call and Webcast Western Alliance Bancorporation will host a conference call and live webcast to discuss its fourth quarter 2022 financial results at 12:00 p.m. ET on Wednesday, January 25, 2023. Participants may access the call by dialing 1-844-200-6205 and using access code 669213 or via live audio webcast using the website link https://events.q4inc.com/attendee/484930167. The webcast is also available via the Company’s website at www.westernalliancebancorporation.com. Participants should log in at least 15 minutes early to receive instructions. The call will be recorded and made available for replay after 3:00 p.m. ET January 25th through 11:00 p.m. ET February 25th by dialing 1-866-813-9403, using access code 597938. Reclassifications Certain amounts in the Consolidated Income Statements for the prior periods have been reclassified to conform to the current presentation. The reclassifications have no effect on net income or stockholders’ equity as previously reported. Use of Non-GAAP Financial Information This press release contains both financial measures based on GAAP and non-GAAP based financial measures, which are used where management believes them to be helpful in understanding the Company’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Cautionary Note Regarding Forward-Looking Statements This release contains forward-looking statements that relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Examples of forward-looking statements include, among others, statements we make regarding our expectations with regard to our business, financial and operating results, future economic performance and dividends. The forward-looking statements contained herein reflect our current views about future events and financial performance and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from historical results and those expressed in any forward-looking statement. Some factors that could cause actual results to differ materially from historical or expected results include, among others: the risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and the Company's subsequent Quarterly Reports on Form 10-Q, each as filed with the Securities and Exchange Commission; the potential adverse effects of unusual and infrequently occurring events such as the COVID-19 pandemic and any governmental or societal responses thereto; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; the impact on financial markets from geopolitical conflicts such as the war between Russia and Ukraine; inflation, interest rate, market and monetary fluctuations; increases in competitive pressures among financial institutions and businesses offering similar products and services; higher defaults on our loan portfolio than we expect; changes in management’s estimate of the adequacy of the allowance for credit losses; legislative or regulatory changes or changes in accounting principles, policies or guidelines; supervisory actions by regulatory agencies which may limit our ability to pursue certain growth opportunities, including expansion through acquisitions; additional regulatory requirements resulting from our continued growth; management’s estimates and projections of interest rates and interest rate policy; the execution of our business plan; and other factors affecting the financial services industry generally or the banking industry in particular. Any forward-looking statement made by us in this release is based only on information currently available to us and speaks only as of the date on which it is made. We do not intend and disclaim any duty or obligation to update or revise any industry information or forward-looking statements, whether written or oral, that may be made from time to time, set forth in this press release to reflect new information, future events or otherwise. About Western Alliance Bancorporation With more than $65 billion in assets, Western Alliance Bancorporation (NYSE:WAL) is one of the country’s top-performing banking companies. Through its primary subsidiary, Western Alliance Bank, Member FDIC, business clients benefit from a full spectrum of tailored banking solutions and outstanding service delivered by industry experts who put customers first. Major accolades include #2 best-performing of the 50 largest public U.S. banks in the S&P Global Market Intelligence listing for 2021, and #1 Best Emerging Regional Bank for 2022 by Bank Director. Serving clients across the country wherever business happens, Western Alliance Bank operates individual, full-service banking and financial brands with offices in key markets nationwide. For more information, visit westernalliancebank.com. Western Alliance Bancorporation and Subsidiaries Summary Consolidated Financial Data Unaudited Selected Balance Sheet Data: As of December 31, 2022 2021 Change % (in millions) Total assets $ 67,734 $ 55,983 21.0 % Loans held for sale 1,184 5,635 (79.0 ) HFI loans, net of deferred fees 51,862 39,075 32.7 Investment securities 8,760 7,541 16.2 Total deposits 53,644 47,612 12.7 Borrowings 6,299 1,502 NM Qualifying debt 893 896 (0.3 ) Stockholders' equity 5,356 4,963 7.9 Tangible common equity, net of tax (1) 4,383 4,035 8.6 Common equity Tier 1 capital 5,073 4,068 24.7 Selected Income Statement Data: For the Three Months Ended December 31, For the Year Ended December 31, 2022 2021 Change % 2022 2021 Change % (in millions, except per share data) (in millions, except per share data) Interest income $ 888.3 $ 483.3 83.8 % $ 2,691.8 $ 1,658.7 62.3 % Interest expense 248.6 32.7 NM 475.5 109.9 NM Net interest income 639.7 450.6 42.0 2,216.3 1,548.8 43.1 Provision for (recovery of) credit losses 3.1 13.2 (76.5 ) 68.1 (21.4 ) NM Net interest income after provision for credit losses 636.6 437.4 45.5 2,148.2 1,570.2 36.8 Non-interest income 61.5 110.4 (44.3 ) 324.6 404.2 (19.7 ) Non-interest expense 333.4 237.8 40.2 1,156.7 851.4 35.9 Income before income taxes 364.7 310.0 17.6 1,316.1 1,123.0 17.2 Income tax expense 71.7 64.0 12.0 258.8 223.8 15.6 Net income 293.0 246.0 19.1 1,057.3 899.2 17.6 Dividends on preferred stock 3.2 3.5 (8.6 ) 12.8 3.5 NM Net income available to common stockholders $ 289.8 $ 242.5 19.5 $ 1,044.5 $ 895.7 16.6 Diluted earnings per common share $ 2.67 $ 2.32 15.1 $ 9.70 $ 8.67 11.9 (1) See Reconciliation of Non-GAAP Financial Measures. NM Changes +/- 100% are not meaningful. Western Alliance Bancorporation and Subsidiaries Summary Consolidated Financial Data Unaudited Common Share Data: At or For the Three Months Ended December 31, For the Year Ended December 31, 2022 2021 Change % 2022 2021 Change % Diluted earnings per common share $ 2.67 $ 2.32 15.1 % $ 9.70 $ 8.67 11.9 % Book value per common share 46.47 43.78 6.1 Tangible book value per common share, net of tax (1) 40.25 37.84 6.4 Average common shares outstanding (in millions): Basic 108.0 103.9 4.0 107.2 102.7 4.4 Diluted 108.4 104.5 3.7 107.6 103.3 4.2 Common shares outstanding 108.9 106.6 2.1 Selected Performance Ratios: Return on average assets (2) 1.67 % 1.69 % (1.2 ) % 1.62 % 1.83 % (11.5 ) % Return on average tangible common equity (1, 2) 27.0 25.8 4.7 25.4 26.2 (3.1 ) Return on average tangible common equity, excluding AOCI (1, 2) 23.1 26.0 (11.2 ) 23.1 26.6 (13.2 ) Net interest margin (2) 3.98 3.33 19.5 3.67 3.41 7.6 Efficiency ratio - tax equivalent basis (1) 46.9 41.8 12.2 44.9 42.9 4.7 Loan to deposit ratio 96.7 82.1 17.8 Asset Quality Ratios: Net charge-offs (recoveries) to average loans outstanding (2) 0.01 % 0.02 % (50.0 ) % 0.00 % 0.02 % NM Nonaccrual loans to funded HFI loans 0.16 0.19 (15.8 ) Nonaccrual loans and repossessed assets to total assets 0.14 0.15 (6.7 ) Allowance for loan losses to funded HFI loans 0.60 0.65 (7.7 ) Allowance for loan losses to nonaccrual HFI loans 364 348 4.6 Capital Ratios: Dec 31, 2022 Sep 30, 2022 Dec 31, 2021 Tangible common equity (1) 6.5 % 5.9 % 7.3 % Common Equity Tier 1 (3) 9.3 8.7 9.1 Tier 1 Leverage ratio (3) 7.8 7.5 7.8 Tier 1 Capital (3) 10.0 9.3 9.9 Total Capital (3) 12.1 11.4 12.3 (1) See Reconciliation of Non-GAAP Financial Measures. (2) Annualized on an actual/actual basis for periods less than 12 months. (3) Capital ratios for December 31, 2022 are preliminary. NM Changes +/- 100% are not meaningful. Western Alliance Bancorporation and Subsidiaries Condensed Consolidated Income Statements Unaudited Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 (dollars in millions, except per share data) Interest income: Loans $ 785.1 $ 438.6 $ 2,393.4 $ 1,488.8 Investment securities 89.4 43.7 272.6 164.7 Other 13.8 1.0 25.8 5.2 Total interest income 888.3 483.3 2,691.8 1,658.7 Interest expense: Deposits 157.6 12.8 276.4 47.5 Qualifying debt 9.1 9.2 35.0 33.1 Borrowings 81.9 10.7 164.1 29.3 Total interest expense 248.6 32.7 475.5 109.9 Net interest income 639.7 450.6 2,216.3 1,548.8 Provision for (recovery of) credit losses 3.1 13.2 68.1 (21.4 ) Net interest income after provision for credit losses 636.6 437.4 2,148.2 1,570.2 Non-interest income: Net gain on loan origination and sale activities 25.4 73.2 104.0 326.2 Net loan servicing revenue (expense) 21.4 2.3 130.9 (16.3 ) Service charges and fees 5.9 7.1 27.0 28.3 Commercial banking related income 5.5 4.9 21.5 17.4 Income from equity investments 4.2 5.2 17.8 22.1 Gain on recovery from credit guarantees 3.0 7.2 14.7 7.2 Gain on sales of investment securities 0.1 8.3 6.8 8.3 Fair value loss adjustments on assets measured at fair value, net (9.2 ) (0.8 ) (28.6 ) (1.3 ) Other 5.2 3.0 30.5 12.3 Total non-interest income 61.5 110.4 324.6 404.2 Non-interest expenses: Salaries and employee benefits 125.7 120.6 539.5 466.7 Deposit costs 82.2 9.1 165.8 29.8 Legal, professional, and directors' fees 26.0 20.8 99.9 58.6 Data processing 23.9 17.9 83.0 58.2 Occupancy 15.8 12.4 55.5 43.8 Loan servicing expenses 14.8 15.6 55.5 53.5 Insurance 8.9 7.1 31.1 23.0 Business development and marketing 7.3 6.1 22.1 13.5 Loan acquisition and origination expenses 4.4 8.6 23.1 28.8 Loss on extinguishment of debt — 5.9 — 5.9 Net gain on sales and valuations of repossessed and other assets (0.3 ) (0.4 ) (0.7 ) (3.5 ) Acquisition and restructure expenses (recoveries) — (3.2 ) 0.4 15.3 Other 24.7 17.3 81.5 57.8 Total non-interest expense 333.4 237.8 1,156.7 851.4 Income before income taxes 364.7 310.0 1,316.1 1,123.0 Income tax expense 71.7 64.0 258.8 223.8 Net income 293.0 246.0 1,057.3 899.2 Dividends on preferred stock 3.2 3.5 12.8 3.5 Net income available to common stockholders $ 289.8 $ 242.5 $ 1,044.5 $ 895.7 Earnings per common share: Diluted shares 108.4 104.5 107.6 103.3 Diluted earnings per share $ 2.67 $ 2.32 $ 9.70 $ 8.67 Western Alliance Bancorporation and Subsidiaries Five Quarter Condensed Consolidated Income Statements Unaudited Three Months Ended Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 (in millions, except per share data) Interest income: Loans $ 785.1 $ 657.0 $ 516.6 $ 434.7 $ 438.6 Investment securities 89.4 75.9 59.3 48.0 43.7 Other 13.8 6.5 3.7 1.8 1.0 Total interest income 888.3 739.4 579.6 484.5 483.3 Interest expense: Deposits 157.6 77.6 27.1 14.1 12.8 Qualifying debt 9.1 8.9 8.6 8.4 9.2 Borrowings 81.9 50.8 18.9 12.5 10.7 Total interest expense 248.6 137.3 54.6 35.0 32.7 Net interest income 639.7 602.1 525.0 449.5 450.6 Provision for credit losses 3.1 28.5 27.5 9.0 13.2 Net interest income after provision for credit losses 636.6 573.6 497.5 440.5 437.4 Non-interest income: Net gain on loan origination and sale activities 25.4 14.5 27.2 36.9 73.2 Net loan servicing revenue 21.4 23.0 45.4 41.1 2.3 Service charges and fees 5.9 6.5 7.6 7.0 7.1 Commercial banking related income 5.5 5.1 5.8 5.1 4.9 Income from equity investments 4.2 4.3 5.2 4.1 5.2 Gain on recovery from credit guarantees 3.0 0.4 9.0 2.3 7.2 Gain (loss) on sales of investment securities 0.1 — (0.2 ) 6.9 8.3 Fair value loss adjustments on assets measured at fair value, net (9.2 ) (2.8 ) (10.0 ) (6.6 ) (0.8 ) Other 5.2 10.8 5.0 9.5 3.0 Total non-interest income 61.5 61.8 95.0 106.3 110.4 Non-interest expenses: Salaries and employee benefits 125.7 136.5 139.0 138.3 120.6 Deposit costs 82.2 56.2 18.1 9.3 9.1 Legal, professional, and directors' fees 26.0 24.8 25.1 24.0 20.8 Data processing 23.9 21.8 19.7 17.6 17.9 Occupancy 15.8 13.9 13.0 12.8 12.4 Loan servicing expenses 14.8 15.2 14.7 10.8 15.6 Insurance 8.9 8.1 6.9 7.2 7.1 Business development and marketing 7.3 5.0 5.4 4.4 6.1 Loan acquisition and origination expenses 4.4 5.8 6.4 6.5 8.6 Net (gain) loss on sales and valuations of repossessed and other assets (0.3 ) (0.2 ) (0.3 ) 0.1 (0.4 ) Loss on extinguishment of debt — — — — 5.9 Acquisition and restructure expenses (recoveries) — — — 0.4 (3.2 ) Other 24.7 18.7 20.9 17.2 17.3 Total non-interest expense 333.4 305.8 268.9 248.6 237.8 Income before income taxes 364.7 329.6 323.6 298.2 310.0 Income tax expense 71.7 65.6 63.4 58.1 64.0 Net income 293.0 264.0 260.2 240.1 246.0 Dividends on preferred stock 3.2 3.2 3.2 3.2 3.5 Net income available to common stockholders $ 289.8 $ 260.8 $ 257.0 $ 236.9 $ 242.5 Earnings per common share: Diluted shares 108.4 107.9 107.7 106.6 104.5 Diluted earnings per share $ 2.67 $ 2.42 $ 2.39 $ 2.22 $ 2.32 Western Alliance Bancorporation and Subsidiaries Five Quarter Condensed Consolidated Balance Sheets Unaudited Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 (in millions) Assets: Cash and due from banks $ 1,043 $ 1,610 $ 1,886 $ 2,602 $ 516 Investment securities 8,760 8,603 8,802 8,277 7,541 Loans held for sale 1,184 2,204 2,803 4,762 5,635 Loans held for investment: Commercial and industrial 20,710 22,318 20,754 17,862 18,297 Commercial real estate - non-owner occupied 9,319 8,668 7,775 6,849 6,526 Commercial real estate - owner occupied 1,818 1,848 1,848 1,805 1,898 Construction and land development 4,013 3,621 3,231 3,278 3,023 Residential real estate 15,928 15,674 14,908 11,270 9,282 Consumer 74 72 56 55 49 Loans HFI, net of deferred fees 51,862 52,201 48,572 41,119 39,075 Allowance for loan losses (310 ) (304 ) (273 ) (258 ) (252 ) Loans HFI, net of deferred fees and allowance 51,552 51,897 48,299 40,861 38,823 Mortgage servicing rights 1,148 1,044 826 950 698 Premises and equipment, net 276 237 210 196 182 Operating lease right-of-use asset 163 131 136 142 133 Other assets acquired through foreclosure, net 11 11 12 12 12 Bank owned life insurance 182 181 180 179 180 Goodwill and other intangibles, net 680 682 695 698 635 Other assets 2,735 2,565 2,206 1,897 1,628 Total assets $ 67,734 $ 69,165 $ 66,055 $ 60,576 $ 55,983 Liabilities and Stockholders' Equity: Liabilities: Deposits Non-interest bearing demand deposits $ 19,691 $ 24,926 $ 23,721 $ 23,520 $ 21,353 Interest bearing: Demand 9,507 8,350 8,387 8,268 6,924 Savings and money market 19,397 19,202 19,026 18,553 17,279 Certificates of deposit 5,049 3,111 2,578 1,818 2,056 Total deposits 53,644 55,589 53,712 52,159 47,612 Borrowings 6,299 6,319 5,210 833 1,502 Qualifying debt 893 889 891 893 896 Operating lease liability 185 149 151 155 143 Accrued interest payable and other liabilities 1,357 1,198 1,132 1,524 867 Total liabilities 62,378 64,144 61,096 55,564 51,020 Stockholders' Equity: Preferred stock 295 295 295 295 295 Common stock and additional paid-in capital 2,058 2,049 1,990 1,979 1,879 Retained earnings 3,664 3,413 3,192 2,973 2,773 Accumulated other comprehensive (loss) income (661 ) (736 ) (518 ) (235 ) 16 Total stockholders' equity 5,356 5,021 4,959 5,012 4,963 Total liabilities and stockholders' equity $ 67,734 $ 69,165 $ 66,055 $ 60,576 $ 55,983 Western Alliance Bancorporation and Subsidiaries Changes in the Allowance For Credit Losses on Loans Unaudited Three Months Ended Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 (in millions) Allowance for loan losses Balance, beginning of period $ 304.1 $ 273.2 $ 257.6 $ 252.5 $ 246.9 Provision for credit losses (1) 7.4 29.0 17.0 5.3 7.0 Recoveries of loans previously charged-off: Commercial and industrial 0.3 3.8 0.8 2.4 1.8 Commercial real estate - non-owner occupied — 0.1 — — 0.3 Commercial real estate - owner occupied 0.1 — 0.1 — — Construction and land development — 0.1 — — — Residential real estate — — 0.1 — 0.4 Consumer — — — — — Total recoveries 0.4 4.0 1.0 2.4 2.5 Loans charged-off: Commercial and industrial 1.1 2.1 2.4 2.6 3.8 Commercial real estate - non-owner occupied — — — — — Commercial real estate - owner occupied 0.5 — — — — Construction and land development 0.6 — — — — Residential real estate — — — — 0.1 Consumer — — — — — Total loans charged-off 2.2 2.1 2.4 2.6 3.9 Net loan charge-offs (recoveries) 1.8 (1.9 ) 1.4 0.2 1.4 Balance, end of period $ 309.7 $ 304.1 $ 273.2 $ 257.6 $ 252.5 Allowance for unfunded loan commitments Balance, beginning of period $ 52.1 $ 53.8 $ 43.3 $ 37.6 $ 32.1 (Recovery of) provision for credit losses (1) (5.1 ) (1.7 ) 10.5 5.7 5.5 Balance, end of period (2) $ 47.0 $ 52.1 $ 53.8 $ 43.3 $ 37.6 Components of the allowance for credit losses on loans Allowance for loan losses $ 309.7 $ 304.1 $ 273.2 $ 257.6 $ 252.5 Allowance for unfunded loan commitments 47.0 52.1 53.8 43.3 37.6 Total allowance for credit losses on loans $ 356.7 $ 356.2 $ 327.0 $ 300.9 $ 290.1 Net charge-offs (recoveries) to average loans - annualized 0.01 % (0.02 ) % 0.01 % 0.00 % 0.02 % Allowance ratios Allowance for loan losses to funded HFI loans (3) 0.60 % 0.58 % 0.56 % 0.63 % 0.65 % Allowance for credit losses to funded HFI loans (3) 0.69 0.68 0.67 0.73 0.74 Allowance for loan losses to nonaccrual HFI loans 364 338 321 283 346 Allowance for credit losses to nonaccrual HFI loans 420 396 385 331 397 (1) The above tables reflect the provision for credit losses on funded and unfunded loans. There was a $0.8 million provision for credit losses on investment securities for the three months ended December 31, 2022. The allowance for credit losses on investment securities totaled $5.2 million as of December 31, 2022. (2) The allowance for unfunded loan commitments is included as part of accrued interest payable and other liabilities on the balance sheet. (3) Ratio includes an allowance for credit losses of $21.9 million as of December 31, 2022 related to a $12.0 billion pool of loans covered under five separate credit linked note transactions. Western Alliance Bancorporation and Subsidiaries Asset Quality Metrics Unaudited Three Months Ended Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 (in millions) Nonaccrual loans and repossessed assets Nonaccrual loans $ 85 $ 90 $ 85 $ 91 $ 73 Nonaccrual loans to funded HFI loans 0.16 % 0.17 % 0.17 % 0.22 % 0.19 % Repossessed assets $ 11 $ 11 $ 12 $ 12 $ 12 Nonaccrual loans and repossessed assets to total assets 0.14 % 0.15 % 0.15 % 0.17 % 0.15 % Loans Past Due Loans past due 90 days, still accruing (1) $ — $ — $ — $ — $ — Loans past due 90 days, still accruing to funded HFI loans — % — % — % — % — % Loans past due 30 to 89 days, still accruing (2) $ 70 $ 56 $ 117 $ 58 $ 53 Loans past due 30 to 89 days, still accruing to funded HFI loans 0.13 % 0.11 % 0.24 % 0.14 % 0.13 % Other credit quality metrics Special mention loans $ 351 $ 312 $ 317 $ 350 $ 331 Special mention loans to funded HFI loans 0.68 % 0.60 % 0.65 % 0.85 % 0.85 % Classified loans on accrual $ 280 $ 268 $ 232 $ 253 $ 216 Classified loans on accrual to funded HFI loans 0.54 % 0.51 % 0.48 % 0.61 % 0.55 % Classified assets $ 393 $ 385 $ 346 $ 365 $ 301 Classified assets to total assets 0.58 % 0.56 % 0.52 % 0.60 % 0.54 % (1) Excludes government guaranteed residential mortgage loans of $582 million, $644 million, and $827 million as of December 31, 2022, September 30, 2022, and June 30, 2022, respectively. (2) Excludes government guaranteed residential mortgage loans of $334 million, $245 million, and $202 million as of December 31, 2022, September 30, 2022, and June 30, 2022, respectively. Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited Three Months Ended December 31, 2022 September 30, 2022 Average Balance Interest Average Yield / Cost Average Balance Interest Average Yield / Cost ($ in millions) ($ in millions) Interest earning assets Loans held for sale $ 2,659 $ 37.8 5.63 % $ 3,993 $ 49.0 4.87 % Loans held for investment: Commercial and industrial 21,654 349.3 6.45 21,551 282.1 5.25 CRE - non-owner occupied 9,077 148.8 6.51 8,128 111.4 5.44 CRE - owner occupied 1,830 24.4 5.39 1,839 23.3 5.12 Construction and land development 3,798 80.2 8.38 3,471 59.5 6.80 Residential real estate 15,803 143.5 3.60 15,125 130.9 3.43 Consumer 71 1.1 6.26 63 0.8 5.32 Total HFI loans (1), (2), (3) 52,233 747.3 5.70 50,177 608.0 4.84 Securities: Securities - taxable 6,397 68.4 4.25 6,680 56.4 3.35 Securities - tax-exempt 2,068 21.0 5.07 2,047 19.5 4.73 Total securities (1) 8,465 89.4 4.45 8,727 75.9 3.66 Cash and other 1,361 13.8 4.02 1,239 6.5 2.07 Total interest earning assets 64,718 888.3 5.50 64,136 739.4 4.62 Non-interest earning assets Cash and due from banks 289 242 Allowance for credit losses (308 ) (282 ) Bank owned life insurance 181 180 Other assets 4,613 4,100 Total assets $ 69,493 $ 68,376 Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 8,754 $ 43.6 1.98 % $ 8,466 $ 24.5 1.15 % Savings and money market 18,651 88.0 1.87 18,515 44.5 0.95 Certificates of deposit 4,260 26.0 2.42 2,843 8.6 1.19 Total interest-bearing deposits 31,665 157.6 1.97 29,824 77.6 1.03 Short-term borrowings 5,440 54.8 3.99 4,136 27.0 2.59 Long-term debt 1,240 27.1 8.68 1,228 23.8 7.69 Qualifying debt 890 9.1 4.08 891 8.9 3.94 Total interest-bearing liabilities 39,235 248.6 2.51 36,079 137.3 1.51 Interest cost of funding earning assets 1.52 0.84 Non-interest-bearing liabilities Non-interest-bearing demand deposits 23,729 25,865 Other liabilities 1,296 1,282 Stockholders’ equity 5,233 5,150 Total liabilities and stockholders' equity $ 69,493 $ 68,376 Net interest income and margin (4) $ 639.7 3.98 % $ 602.1 3.78 % (1) Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $9.0 million and $8.5 million for the three months ended December 31, 2022 and September 30, 2022, respectively. (2) Included in the yield computation are net loan fees of $34.8 million and $31.9 million for the three months ended December 31, 2022 and September 30, 2022, respectively. (3) Includes non-accrual loans. (4) Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis. Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited Three Months Ended December 31, 2022 December 31, 2021 Average Balance Interest Average Yield / Cost Average Balance Interest Average Yield / Cost ($ in millions) ($ in millions) Interest earning assets Loans held for sale $ 2,659 $ 37.8 5.63 % $ 9,159 $ 70.3 3.04 % Loans held for investment: Commercial and industrial 21,654 349.3 6.45 17,087 169.5 4.01 CRE - non-owner-occupied 9,077 148.8 6.51 6,209 70.0 4.48 CRE - owner-occupied 1,830 24.4 5.39 1,971 24.2 4.96 Construction and land development 3,798 80.2 8.38 3,016 43.9 5.78 Residential real estate 15,803 143.5 3.60 8,282 60.3 2.89 Consumer 71 1.1 6.26 44 0.4 3.85 Total HFI loans (1), (2), (3) 52,233 747.3 5.70 36,609 368.3 4.03 Securities: Securities - taxable 6,397 68.4 4.25 5,443 25.6 1.86 Securities - tax-exempt 2,068 21.0 5.07 2,175 18.1 4.12 Total securities (1) 8,465 89.4 4.45 7,618 43.7 2.51 Other 1,361 13.8 4.02 1,274 1.0 0.31 Total interest earning assets 64,718 888.3 5.50 54,660 483.3 3.57 Non-interest earning assets Cash and due from banks 289 253 Allowance for credit losses (308 ) (256 ) Bank owned life insurance 181 179 Other assets 4,613 2,767 Total assets $ 69,493 $ 57,603 Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 8,754 $ 43.6 1.98 % $ 5,918 $ 1.7 0.11 % Savings and money market accounts 18,651 88.0 1.87 17,215 9.1 0.21 Certificates of deposit 4,260 26.0 2.42 2,074 2.0 0.38 Total interest-bearing deposits 31,665 157.6 1.97 25,207 12.8 0.20 Short-term borrowings 5,440 54.8 3.99 2,815 2.4 0.35 Long-term debt 1,240 27.1 8.68 565 8.3 5.81 Qualifying debt 890 9.1 4.08 978 9.2 3.72 Total interest-bearing liabilities 39,235 248.6 2.51 29,565 32.7 0.44 Interest cost of funding earning assets 1.52 0.24 Non-interest-bearing liabilities Non-interest-bearing demand deposits 23,729 22,487 Other liabilities 1,296 913 Stockholders’ equity 5,233 4,638 Total liabilities and stockholders' equity $ 69,493 $ 57,603 Net interest income and margin (4) $ 639.7 3.98 % $ 450.6 3.33 % (1) Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $9.0 million and $8.4 million for the three months ended December 31, 2022 and 2021, respectively. (2) Included in the yield computation are net loan fees of $34.8 million and $35.8 million for the three months ended December 31, 2022 and 2021, respectively. (3) Includes non-accrual loans. (4) Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis. Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited Year Ended December 31, 2022 December 31, 2021 Average Balance Interest Average Yield / Cost Average Balance Interest Average Yield / Cost ($ in millions) ($ in millions) Interest earning assets Loans held for sale $ 4,364 $ 180.3 4.13 % $ 5,476 $ 174.4 3.18 % Loans held for investment: Commercial and industrial 20,082 1,002.8 5.05 14,979 624.8 4.26 CRE - non-owner occupied 7,769 416.4 5.37 5,829 271.3 4.67 CRE - owner occupied 1,841 93.2 5.16 2,030 97.7 4.92 Construction and land development 3,426 229.1 6.69 2,790 160.0 5.74 Residential real estate 13,771 468.5 3.40 5,129 158.9 3.10 Consumer 61 3.1 5.07 39 1.7 4.43 Total HFI loans (1), (2), (3) 46,951 2,213.1 4.74 30,796 1,314.4 4.32 Securities: Securities - taxable 6,324 195.3 3.09 5,284 95.8 1.81 Securities - tax-exempt 2,067 77.3 4.68 2,137 68.9 4.05 Total securities (1) 8,391 272.6 3.48 7,421 164.7 2.46 Other 1,574 25.8 1.64 2,718 5.2 0.19 Total interest earning assets 61,281 2,691.8 4.45 46,411 1,658.7 3.65 Non-interest earning assets Cash and due from banks 260 293 Allowance for credit losses (280 ) (261 ) Bank owned life insurance 180 178 Other assets 3,948 2,487 Total assets $ 65,389 $ 49,108 Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 8,331 $ 78.8 0.95 % $ 4,751 $ 5.9 0.13 % Savings and money market accounts 18,518 158.6 0.86 15,814 33.1 0.21 Certificates of deposit 2,772 39.0 1.40 1,850 8.5 0.46 Total interest-bearing deposits 29,621 276.4 0.93 22,415 47.5 0.21 Short-term borrowings 3,424 92.1 2.69 1,206 8.2 0.68 Long-term debt 1,008 72.0 7.14 373 21.1 5.65 Qualifying debt 893 35.0 3.92 827 33.1 4.00 Total interest-bearing liabilities 34,946 475.5 1.36 24,821 109.9 0.44 Interest cost of funding earning assets 0.78 0.24 Non-interest-bearing liabilities Non-interest-bearing demand deposits 24,133 19,416 Other liabilities 1,211 837 Stockholders’ equity 5,099 4,034 Total liabilities and stockholders' equity $ 65,389 $ 49,108 Net interest income and margin (4) $ 2,216.3 3.67 % $ 1,548.8 3.41 % (1) Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $33.7 million and $33.3 million for the year ended December 31, 2022 and 2021, respectively. (2) Included in the yield computation are net loan fees of $132.2 million and $131.7 million for the year ended December 31, 2022 and 2021, respectively. (3) Includes non-accrual loans. (4) Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis. Western Alliance Bancorporation and Subsidiaries Operating Segment Results Unaudited Balance Sheet: Consolidated Company Commercial Consumer Related Corporate & Other At December 31, 2022: (dollars in millions) Assets: Cash, cash equivalents, and investment securities $ 9,803 $ 12 $ — $ 9,791 Loans held for sale 1,184 — 1,184 — Loans, net of deferred fees and costs 51,862 31,414 20,448 — Less: allowance for credit losses (310 ) (262 ) (48 ) — Total loans 51,552 31,152 20,400 — Other assets acquired through foreclosure, net 11 11 — — Goodwill and other intangible assets, net 680 293 387 — Other assets 4,504 435 2,180 1,889 Total assets $ 67,734 $ 31,903 $ 24,151 $ 11,680 Liabilities: Deposits $ 53,644 $ 29,494 $ 18,492 $ 5,658 Borrowings and qualifying debt 7,192 27 340 6,825 Other liabilities 1,542 83 656 803 Total liabilities 62,378 29,604 19,488 13,286 Allocated equity: 5,356 2,684 1,691 981 Total liabilities and stockholders' equity $ 67,734 $ 32,288 $ 21,179 $ 14,267 Excess funds provided (used) — 385 (2,972 ) 2,587 No. of offices 56 46 8 2 No. of full-time equivalent employees 3,365 671 785 1,909 Income Statement: Three Months Ended December 31, 2022: (in millions) Net interest income $ 639.7 $ 428.0 $ 216.4 $ (4.7 ) Provision for (recovery of) credit losses 3.1 (5.9 ) 8.2 0.8 Net interest income (expense) after provision for credit losses 636.6 433.9 208.2 (5.5 ) Non-interest income 61.5 8.7 49.2 3.6 Non-interest expense 333.4 122.1 187.6 23.7 Income (loss) before income taxes 364.7 320.5 69.8 (25.6 ) Income tax expense (benefit) 71.7 76.1 16.3 (20.7 ) Net income (loss) $ 293.0 $ 244.4 $ 53.5 $ (4.9 ) Year Ended December 31, 2022: (in millions) Net interest income $ 2,216.3 $ 1,546.3 $ 854.1 $ (184.1 ) Provision for (recovery of) credit losses 68.1 47.2 21.1 (0.2 ) Net interest income (expense) after provision for credit losses 2,148.2 1,499.1 833.0 (183.9 ) Non-interest income 324.6 59.7 247.2 17.7 Non-interest expense 1,156.7 463.5 630.1 63.1 Income (loss) before income taxes 1,316.1 1,095.3 450.1 (229.3 ) Income tax expense (benefit) 258.8 260.5 107.1 (108.8 ) Net income (loss) $ 1,057.3 $ 834.8 $ 343.0 $ (120.5 ) Western Alliance Bancorporation and Subsidiaries Operating Segment Results Unaudited Balance Sheet: Consolidated Company Commercial Consumer Related Corporate At December 31, 2021: (dollars in millions) Assets: Cash, cash equivalents, and investment securities $ 8,057 $ 13 $ 82 $ 7,962 Loans held for sale 5,635 — 5,635 — Loans, net of deferred fees and costs 39,075 25,092 13,983 — Less: allowance for credit losses (252 ) (226 ) (26 ) — Total loans 38,823 24,866 13,957 — Other assets acquired through foreclosure, net 12 12 — — Goodwill and other intangible assets, net 635 295 340 — Other assets 2,821 254 1,278 1,289 Total assets $ 55,983 $ 25,440 $ 21,292 $ 9,251 Liabilities: Deposits $ 47,612 $ 30,467 $ 15,363 $ 1,782 Borrowings and qualifying debt 2,398 — 353 2,045 Other liabilities 1,010 233 138 639 Total liabilities 51,020 30,700 15,854 4,466 Allocated equity: 4,963 2,588 1,596 779 Total liabilities and stockholders' equity $ 55,983 $ 33,288 $ 17,450 $ 5,245 Excess funds provided (used) — 7,848 (3,842 ) (4,006 ) No. of offices 58 50 7 1 No. of full-time equivalent employees 3,139 628 1,173 1,338 Income Statement: Three Months Ended December 31, 2021: (in millions) Net interest income $ 450.6 $ 332.8 $ 185.6 $ (67.8 ) Provision for (recovery of) credit losses 13.2 4.9 7.6 0.7 Net interest income (expense) after provision for credit losses 437.4 327.9 178.0 (68.5 ) Non-interest income 110.4 16.9 76.5 17.0 Non-interest expense 237.8 106.5 119.5 11.8 Income (loss) before income taxes 310.0 238.3 135.0 (63.3 ) Income tax expense (benefit) 64.0 56.9 32.6 (25.5 ) Net income (loss) $ 246.0 $ 181.4 $ 102.4 $ (37.8 ) Year Ended December 31, 2021: (in millions) Net interest income $ 1,548.8 $ 1,181.7 $ 603.4 $ (236.3 ) (Recovery of) provision for credit losses (21.4 ) (30.6 ) 11.0 (1.8 ) Net interest income (expense) after provision for credit losses 1,570.2 1,212.3 592.4 (234.5 ) Non-interest income 404.2 65.1 317.6 21.5 Non-interest expense 851.4 415.9 413.9 21.6 Income (loss) before income taxes 1,123.0 861.5 496.1 (234.6 ) Income tax expense (benefit) 223.8 206.6 120.1 (102.9 ) Net income (loss) $ 899.2 $ 654.9 $ 376.0 $ (131.7 ) Western Alliance Bancorporation and Subsidiaries Reconciliation of Non-GAAP Financial Measures Unaudited Pre-Provision Net Revenue by Quarter: Three Months Ended 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 (in millions) Net interest income $ 639.7 $ 602.1 $ 525.0 $ 449.5 $ 450.6 Total non-interest income 61.5 61.8 95.0 106.3 110.4 Net revenue $ 701.2 $ 663.9 $ 620.0 $ 555.8 $ 561.0 Total non-interest expense 333.4 305.8 268.9 248.6 237.8 Pre-provision net revenue (1) $ 367.8 $ 358.1 $ 351.1 $ 307.2 $ 323.2 Less: Provision for credit losses 3.1 28.5 27.5 9.0 13.2 Income tax expense 71.7 65.6 63.4 58.1 64.0 Net income $ 293.0 $ 264.0 $ 260.2 $ 240.1 $ 246.0 Efficiency Ratio by Quarter: Total non-interest expense $ 333.4 $ 305.8 $ 268.9 $ 248.6 $ 237.8 Divided by: Total net interest income 639.7 602.1 525.0 449.5 450.6 Plus: Tax equivalent interest adjustment 9.0 8.5 8.2 8.0 8.4 Total non-interest income 61.5 61.8 95.0 106.3 110.4 $ 710.2 $ 672.4 $ 628.2 $ 563.8 $ 569.4 Efficiency ratio - tax equivalent basis (2) 46.9 % 45.5 % 42.8 % 44.1 % 41.8 % Tangible Common Equity: 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 (dollars and shares in millions) Total stockholders' equity $ 5,356 $ 5,021 $ 4,959 $ 5,012 $ 4,963 Less: Goodwill and intangible assets 680 682 695 698 635 Preferred stock 295 295 295 295 295 Total tangible common equity 4,381 4,044 3,969 4,019 4,033 Plus: deferred tax - attributed to intangible assets 2 3 2 2 2 Total tangible common equity, net of tax $ 4,383 $ 4,047 $ 3,971 $ 4,021 $ 4,035 Total assets $ 67,734 $ 69,165 $ 66,055 $ 60,576 $ 55,983 Less: goodwill and intangible assets, net 680 682 695 698 635 Tangible assets 67,054 68,483 65,360 59,878 55,348 Plus: deferred tax - attributed to intangible assets 2 3 2 2 2 Total tangible assets, net of tax $ 67,056 $ 68,486 $ 65,362 $ 59,880 $ 55,350 Tangible common equity ratio (3) 6.5 % 5.9 % 6.1 % 6.7 % 7.3 % Common shares outstanding 108.9 108.9 108.3 108.3 106.6 Tangible book value per share, net of tax (3) $ 40.25 $ 37.16 $ 36.67 $ 37.13 $ 37.84 Western Alliance Bancorporation and Subsidiaries Reconciliation of Non-GAAP Financial Measures Unaudited Return on Average Tangible Common Equity: Three Months Ended 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 (in millions) Net income available to common shareholders $ 289.8 $ 260.8 $ 257.0 $ 236.9 $ 242.5 Divided by: Average stockholders' equity 5,232.6 5,149.6 5,021.4 4,988.9 4,637.6 Less: Average goodwill and intangible assets (681.3 ) (694.1 ) (697.3 ) (679.3 ) (610.4 ) Average preferred stock (294.5 ) (294.5 ) (294.5 ) (294.5 ) (294.5 ) Average tangible common equity $ 4,256.8 $ 4,161.1 $ 4,029.6 $ 4,015.1 $ 3,732.7 Average accumulated other comprehensive loss (income) ("AOCI") 725.7 483.5 355.7 56.7 (34.4 ) Average tangible common equity, excluding AOCI $ 4,982.5 $ 4,644.6 $ 4,385.4 $ 4,071.8 $ 3,698.3 Return on average tangible common equity (1) 27.0 % 24.9 % 25.6 % 23.9 % 25.8 % Return on average tangible common equity, excluding AOCI (1) 23.1 % 22.3 % 23.5 % 23.6 % 26.0 % Year Ended December 31, 2022 2021 (in millions) Net income available to common shareholders $ 1,044.5 $ 895.7 Divided by: Average stockholders' equity 5,099.0 4,033.8 Less: Average goodwill and intangible assets (688.0 ) (528.6 ) Average preferred stock (294.5 ) (81.5 ) Average tangible common equity $ 4,116.4 $ 3,423.7 Average accumulated other comprehensive loss (income) ("AOCI") 407.5 (56.9 ) Average tangible common equity, excluding AOCI $ 4,523.9 $ 3,366.7 Return on average tangible common equity (1) 25.4 % 26.2 % Return on average tangible common equity, excluding AOCI (1) 23.1 % 26.6 % Non-GAAP Financial Measures Footnotes (1) We believe this non-GAAP measurement is a key indicator of the earnings power of the Company. (2) We believe this non-GAAP ratio provides a useful metric to measure the efficiency of the Company. (3) We believe this non-GAAP metric provides an important metric with which to analyze and evaluate financial condition and capital strength. In addition, we believe that use of tangible equity and tangible assets improves the comparability to other institutions that have not engaged in acquisitions that resulted in recorded goodwill and other intangibles. View source version on businesswire.com: https://www.businesswire.com/news/home/20230123005838/en/