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 2023 Financial Results By: Western Alliance Bancorporation via Business Wire January 25, 2024 at 16:12 PM EST Western Alliance Bancorporation (NYSE:WAL): FOURTH QUARTER AND FULL YEAR 2023 FINANCIAL RESULTS Quarter Highlights: Net income Earnings per share PPNR1 Net interest margin Adjusted efficiency ratio1 Book value per common share $147.9 million $1.33 $220.3 million 3.65% 59.1% $52.81 $1.911, excluding notable items $46.721, excluding goodwill and intangibles CEO COMMENTARY: “Western Alliance’s diversified, national commercial business strategy continued to drive strong momentum in the fourth quarter as we generated earnings per share of $1.911, excluding $0.58 of notable items. We view this quarter’s solid loan and deposit momentum, continued net interest income growth, and sustained stable asset quality as positioning us to deliver leading profitability in 2024, supported by sturdy capital and liquidity levels,” said Kenneth A. Vecchione, President and Chief Executive Officer. “CET1 capital reached 10.8% at year-end, and tangible book value per share rose 16% year-over-year to $46.721. Additionally, our strong deposit growth allowed us to repay $1.5 billion of debt and borrowings, including our entire loan from the Bank Term Funding Program. As we turn the page on 2023, we are encouraged by how our employees responded to the year’s challenges as well as the ongoing trust placed in us by our customers and shareholders.” LINKED-QUARTER BASIS FULL YEAR FINANCIAL HIGHLIGHTS: Net income of $147.9 million and earnings per share of $1.33, compared to $216.6 million and $1.97, respectively Net revenue of $682.2 million, a decrease of 4.7%, or $34.0 million, compared to an increase in non-interest expenses of 8.4%, or $35.7 million Pre-provision net revenue1 of $220.3 million, down $69.7 million from $290.0 million Effective tax rate of 29.9%, compared to 22.1% Net income of $722.4 million and earnings per share of $6.54, down 31.7% and 32.6%, from $1.1 billion and $9.70, respectively Net revenue of $2.6 billion, an increase of 3.1%, or $78.7 million, compared to an increase in non-interest expenses of 40.3%, or $466.7 million Pre-provision net revenue1 of $996.2 million, down $388.0 million from $1.4 billion Effective tax rate of 22.6%, compared to 19.7% FINANCIAL POSITION RESULTS: HFI loans of $50.3 billion, up $850 million, or 1.7%. Total deposits of $55.3 billion, up $1.0 billion, or 1.9% Stockholders' equity of $6.1 billion, up $332 million Decrease in HFI loans of $1.6 billion, or 3.0% Increase in total deposits of $1.7 billion, or 3.1% Increase in stockholders' equity of $722 million LOANS AND ASSET QUALITY: Nonperforming assets (nonaccrual loans and repossessed assets) to total assets of 0.40%, compared to 0.35% Annualized net loan charge-offs to average loans outstanding of 0.07%, flat from the prior quarter Nonperforming assets to total assets of 0.40%, compared to 0.14% Net loan charge-offs to average loans outstanding of 0.06%, compared to approximately 0.00% KEY PERFORMANCE METRICS: Net interest margin of 3.65% decreased from 3.67% Return on average assets and on tangible common equity1 of 0.84% and 11.9%, compared to 1.24% and 17.3%, respectively Tangible common equity ratio1 of 7.3%, compared to 6.8% CET 1 ratio of 10.8% increased from 10.6% Tangible book value per share1, net of tax, of $46.72, an increase of 7.0% from $43.66 Adjusted efficiency ratio1 of 59.1%, compared to 50.0% Net interest margin of 3.63% decreased from 3.67% Return on average assets and on tangible common equity1 of 1.03% and 14.9%, compared to 1.62% and 25.4%, respectively Tangible common equity ratio1 of 7.3% increased from 6.5% CET 1 ratio of 10.8% increased from 9.3% Tangible book value per share1, net of tax, of $46.72, an increase of 16.1% from $40.25 Adjusted efficiency ratio1 of 53.5%, compared to 41.1% 1 See reconciliation of Non-GAAP Financial Measures. Income Statement Net interest income totaled $591.7 million in the fourth quarter 2023, an increase of $4.7 million, or 0.8%, from $587.0 million in the third quarter 2023, and a decrease of $48.0 million, or 7.5%, compared to the fourth quarter 2022. The increase in net interest income from the third quarter 2023 is due to an increase in average HFI loan and securities balances combined with a decrease in average short-term borrowings, and was partially offset by an increase in deposit balances and rates. The decrease in net interest income from the fourth quarter 2022 was driven by an increase in both the balances and rates of deposits and short-term borrowings, partially offset by higher yields on HFI loans. The Company recorded a provision for credit losses of $9.3 million in the fourth quarter 2023, a decrease of $2.8 million from $12.1 million in the third quarter 2023, and an increase of $6.2 million from $3.1 million in the fourth quarter 2022. The decrease in provision for credit losses during the fourth quarter 2023 is primarily due to improvement in the macroeconomic outlook and stable asset quality. The Company’s net interest margin in the fourth quarter 2023 was 3.65%, a decrease from 3.67% in the third quarter 2023, and a decrease from 3.98% in the fourth quarter 2022. An increase in deposit balances and rates drove a decrease in net interest margin from the third quarter 2023, with higher average HFI loan and securities balances partially offsetting this decrease. The decrease in net interest margin from the fourth quarter 2022 was driven by higher average balances and rates on deposits and short-term borrowings. Non-interest income was $90.5 million for the fourth quarter 2023, compared to $129.2 million for the third quarter 2023, and $61.5 million for the fourth quarter 2022. The $38.7 million decrease in non-interest income for the third quarter 2023 was due to a decrease in fair value gain adjustments of $16.5 million and a $14.8 million loss on sale of securities in the fourth quarter compared to a gain of $0.1 million in the third quarter, combined with an $18.1 million decrease in net loan servicing revenue due to losses on MSR sales and fair value changes, partially offset by higher servicing income, and a $4.2 million decrease in net gain on loan origination and sale activities from lower spreads. These decreases were offset by a $12.6 million increase in income from equity investments. The $29.0 million increase in non-interest income from the fourth quarter 2022 was driven by a higher net gain on loan origination and sale activities, service charges and fees, and fair value gain adjustments. Net revenue totaled $682.2 million for the fourth quarter 2023, a decrease of $34.0 million or 4.7%, compared to $716.2 million for the third quarter 2023, and a decrease of $19.0 million or 2.7%, compared to $701.2 million for the fourth quarter 2022. Non-interest expense was $461.9 million for the fourth quarter 2023, compared to $426.2 million for the third quarter 2023, and $333.4 million for the fourth quarter 2022. The Company’s adjusted efficiency ratio1 was 59.1% for the fourth quarter 2023, compared to 50.0% in the third quarter 2023, and 40.0% for the fourth quarter 2022. The increase in non-interest expense from the third quarter 2023 is due primarily to increased insurance costs largely related to the FDIC special assessment, partially offset by a gain on debt extinguishment related to the early payoff of the AmeriHome senior notes. The increase in non-interest expense from the fourth quarter 2022 is primarily attributable to an increase in insurance and deposit costs. Income tax expense was $63.1 million for the fourth quarter 2023, compared to $61.3 million for the third quarter 2023, and $71.7 million for the fourth quarter 2022. The increase in income tax expense from the third quarter 2023 is primarily related to a higher effective tax rate resulting from lower utilization of tax credits due to timing of projects being placed in service, the AOCI impact of AFS securities gains during the quarter, and discrete nondeductible items. Net income was $147.9 million for the fourth quarter 2023, a decrease of $68.7 million from $216.6 million for the third quarter 2023, and a decrease of $145.1 million from $293.0 million for the fourth quarter 2022. Earnings per share totaled $1.33 for the fourth quarter 2023, compared to $1.97 for the third quarter 2023, and $2.67 for the fourth quarter 2022. Earnings per share, excluding notable items1, totaled $1.91 for the fourth quarter 2023. The Company views its earnings per share, excluding notable items1 as a key metric for assessing the Company’s earnings power. 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 2023, the Company’s PPNR1 was $220.3 million, down $69.7 million from $290.0 million in the third quarter 2023, and down $147.5 million from $367.8 million in the fourth quarter 2022. The Company had 3,260 full-time equivalent employees and 57 offices at December 31, 2023, compared to 3,272 employees and 56 offices at September 30, 2023, and 3,365 employees and 56 offices at December 31, 2022. 1 See reconciliation of Non-GAAP Financial Measures. Balance Sheet HFI loans, net of deferred fees totaled $50.3 billion at December 31, 2023, compared to $49.4 billion at September 30, 2023, and $51.9 billion at December 31, 2022. The increase in HFI loans of $850 million from the prior quarter was driven by an increase of $759 million in commercial and industrial loans and $220 million in construction and land development loans. This increase was partially offset by a decrease in CRE non-owner occupied loans of $160 million. The decrease in HFI loans of $1.6 billion from December 31, 2022 was driven by a $1.6 billion decrease in commercial and industrial loans and a $1.2 billion decrease in residential real estate loans, resulting from loan dispositions undertaken as part of the Company's balance sheet repositioning strategy. This decrease was partially offset by increases in construction and land development loans and CRE non-owner occupied of $876 million and $331 million, respectively. HFS loans totaled $1.4 billion at December 31, 2023, compared to $1.8 billion at September 30, 2023, and $1.2 billion at December 31, 2022. The balance of HFS loans at December 31, 2023 primarily consisted of AmeriHome HFS loans, consistent with the balance at December 31, 2022 and prior periods. The decrease of $364 million in HFS loans from the prior quarter is primarily related to loan sales. The increase of $218 million in HFS loans from December 31, 2022 primarily related to an increase in agency conforming loans. 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, 2023, the allowance for loan losses to funded HFI loans ratio was 0.67%, compared to 0.66% at September 30, 2023, and 0.60% at December 31, 2022. The allowance for credit losses, which includes the allowance for unfunded loan commitments, to funded HFI loans ratio was 0.73% at December 31, 2023, compared to 0.74% at September 30, 2023, and 0.69% at December 31, 2022. 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. The Company is protected from first credit losses on reference pools of loans totaling $9.1 billion, $9.3 billion, and $12.0 billion as of December 31, 2023, September 30, 2023, and December 31, 2022, 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 $14.7 million as of December 31, 2023, $17.4 million as of September 30, 2023, and $18.5 million as of December 31, 2022, 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, 2023, 0.91% at September 30, 2023, and 0.89% at December 31, 2022. Deposits totaled $55.3 billion at December 31, 2023, an increase of $1.0 billion from $54.3 billion at September 30, 2023, and an increase of $1.7 billion from $53.6 billion at December 31, 2022. By deposit type, the increase from the prior quarter is attributable to increases of $3.1 billion from interest-bearing demand deposits and $1.3 billion from certificates of deposits, offset by a decrease of $3.5 billion from non-interest bearing demand deposits. From December 31, 2022, interest-bearing demand deposits and certificates of deposit increased $6.4 billion and $5.1 billion, respectively. These increases were partially offset by decreases in non-interest bearing demand deposits and savings and money market accounts of $5.2 billion and $4.6 billion, respectively. Non-interest bearing deposits were $14.5 billion at December 31, 2023, compared to $18.0 billion at September 30, 2023, and $19.7 billion at December 31, 2022. The table below shows the Company's deposit types as a percentage of total deposits: Dec 31, 2023 Sep 30, 2023 Dec 31, 2022 Non-interest bearing 26.2 % 33.1 % 36.7 % Savings and money market 26.7 27.0 36.2 Interest-bearing demand 28.8 23.7 17.7 Certificates of deposit 18.3 16.2 9.4 The Company’s ratio of HFI loans to deposits was 90.9% at December 31, 2023, compared to 91.1% at September 30, 2023, and 96.7% at December 31, 2022. Borrowings were $7.2 billion at December 31, 2023, $8.7 billion at September 30, 2023, and $6.3 billion at December 31, 2022. Borrowings decreased $1.5 billion from September 30, 2023 due to payoff of the Bank Term Funding Program advances and the AmeriHome senior notes. The increase in borrowings from December 31, 2022 is due primarily to an increase in short-term borrowings of $1.8 billion, partially offset by payoffs of credit linked notes and the AmeriHome senior notes. Qualifying debt totaled $895 million at December 31, 2023, compared to $890 million at September 30, 2023, and $893 million at December 31, 2022. Stockholders’ equity was $6.1 billion at December 31, 2023, compared to $5.7 billion at September 30, 2023 and $5.4 billion at December 31, 2022. The increase in stockholders’ equity from the prior quarter was due to net income and unrealized fair value gains of $222 million on the Company's available-for-sale securities, which are recorded in other comprehensive loss, net of tax. These increases were partially offset by dividends to shareholders. Cash dividends of $40.5 million ($0.37 per common share) and $3.2 million ($0.27 per depository share) were paid to shareholders during the fourth quarter 2023. The increase in stockholders' equity from December 31, 2022 is primarily a function of net income, partially offset by dividends to shareholders. At December 31, 2023, tangible common equity, net of tax1, was 7.3% of tangible assets1 and total capital was 13.7% of risk-weighted assets. The Company’s tangible book value per share1 was $46.72 at December 31, 2023, an increase of 7.0% from $43.66 at September 30, 2023, and up 16.1% from $40.25 at December 31, 2022. The increase in tangible book value per share from September 30, 2023 is attributable to net income. Total assets remained flat from September 30, 2023 to December 31, 2023 at $70.9 billion, and increased 4.6% from $67.7 billion at December 31, 2022. The slight decrease in total assets from September 30, 2023 was driven by a decrease in cash and HFS loans, offset by an increase in investment securities. The increase in total assets from December 31, 2022 was driven by an increase in investments, cash, and HFS loans, partially offset by a decrease in HFI loans. 1 See reconciliation of Non-GAAP Financial Measures. Asset Quality Provision for credit losses totaled $9.3 million for the fourth quarter 2023, compared to $12.1 million for the third quarter 2023, and $3.1 million for the fourth quarter 2022. Net loan charge-offs in the fourth quarter 2023 were $8.5 million, or 0.07% of average loans (annualized), compared to $8.0 million, or 0.07%, in the third quarter 2023, and $1.8 million, or 0.01%, in the fourth quarter 2022. Nonaccrual loans increased $36 million to $273 million during the quarter and increased $188 million from December 31, 2022. Loans past due 90 days and still accruing interest totaled $42 million at December 31, 2023 and zero at September 30, 2023 and December 31, 2022 (excluding government guaranteed loans of $399 million, $439 million, and $582 million, respectively). Loans past due 30-89 days and still accruing interest totaled $164 million at December 31, 2023, a decrease from $189 million at September 30, 2023, and an increase from $70 million at December 31, 2022 (excluding government guaranteed loans of $279 million, $261 million, and $334 million, respectively). Repossessed assets totaled $8 million at December 31, 2023, flat from September 30, 2023, and a decrease of $3 million from December 31, 2022. Classified assets totaled $673 million at December 31, 2023, an increase of $34 million from $639 million at September 30, 2023, and an increase of $280 million from $393 million at December 31, 2022. The ratio of classified assets to Tier 1 capital plus the allowance for credit losses, a common regulatory measure of asset quality, was 10.5% at December 31, 2023, compared to 10.2% at September 30, 2023, and 6.8% at December 31, 2022. 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. – 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 $29.1 billion at December 31, 2023, an increase of $416 million during the quarter, and a decrease of $2.3 billion during the year. Deposits for the Commercial segment totaled $23.9 billion at December 31, 2023, an increase of $1.3 billion during the quarter, and a decrease of $5.6 billion during the year. Pre-tax income for the Commercial segment was $168.4 million for the three months ended December 31, 2023, a decrease of $27.7 million from the three months ended September 30, 2023, and a decrease of $152.1 million from the three months ended December 31, 2022. For the year ended December 31, 2023, the Commercial segment reported total pre-tax income of $745.2 million, a decrease of $350.1 million compared to the year ended December 31, 2022. The Consumer Related segment reported an HFI loan balance of $21.2 billion at December 31, 2023, an increase of $434 million during the quarter, and an increase of $713 million during the year. The Consumer Related segment also has loans held for sale of $1.4 billion at December 31, 2023, a decrease of $364 million during the quarter, and an increase of $218 million during the year. Deposits for the Consumer Related segment totaled $24.9 billion, a decrease of $169 million during the quarter, and an increase of $6.4 billion during the year. Pre-tax income for the Consumer Related segment was $75.6 million for the three months ended December 31, 2023, an increase of $6.7 million from the three months ended September 30, 2023, and an increase of $5.8 million from the three months ended December 31, 2022. Pre-tax income for the Consumer Related segment for the year ended December 31, 2023 totaled $258.0 million, a decrease of $192.1 million compared to the year ended December 31, 2022. Conference Call and Webcast Western Alliance Bancorporation will host a conference call and live webcast to discuss its fourth quarter and full year 2023 financial results at 12:00 p.m. ET on Friday, January 26, 2024. Participants may access the call by dialing 1-833-470-1428 and using access code 941447 or via live audio webcast using the website link https://events.q4inc.com/attendee/536267609. 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 26th through 11:00 p.m. ET February 26th by dialing 1-866-813-9403, using access code 690232. 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, 2022 and the Company's subsequent Quarterly Reports on Form 10-Q, each as filed with the Securities and Exchange Commission; adverse developments in the financial services industry generally such as the bank failures in 2023 and any related impact on depositor behavior; risks related to the sufficiency of liquidity; 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 wars in Ukraine and the Middle East; 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 $70 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, clients benefit from a full spectrum of tailored commercial banking solutions and consumer products, all delivered with outstanding service by industry experts who put customers first. Major accolades include being ranked as a top U.S. bank in 2023 by American Banker and 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, 2023 2022 Change % (in millions) Total assets $ 70,862 $ 67,734 4.6 % Loans held for sale 1,402 1,184 18.4 HFI loans, net of deferred fees 50,297 51,862 (3.0 ) Investment securities 12,993 8,760 48.3 Total deposits 55,333 53,644 3.1 Borrowings 7,230 6,299 14.8 Qualifying debt 895 893 0.2 Stockholders' equity 6,078 5,356 13.5 Tangible common equity, net of tax (1) 5,116 4,383 16.7 Common equity Tier 1 capital 5,659 5,073 11.6 Selected Income Statement Data: For the Three Months Ended December 31, For the Year Ended December 31, 2023 2022 Change % 2023 2022 Change % (in millions, except per share data) (in millions, except per share data) Interest income $ 1,039.0 $ 888.3 17.0 % $ 4,035.3 $ 2,691.8 49.9 % Interest expense 447.3 248.6 79.9 1,696.4 475.5 NM Net interest income 591.7 639.7 (7.5 ) 2,338.9 2,216.3 5.5 Provision for credit losses 9.3 3.1 NM 62.6 68.1 (8.1 ) Net interest income after provision for credit losses 582.4 636.6 (8.5 ) 2,276.3 2,148.2 6.0 Non-interest income 90.5 61.5 47.2 280.7 324.6 (13.5 ) Non-interest expense 461.9 333.4 38.5 1,623.4 1,156.7 40.3 Income before income taxes 211.0 364.7 (42.1 ) 933.6 1,316.1 (29.1 ) Income tax expense 63.1 71.7 (12.0 ) 211.2 258.8 (18.4 ) Net income 147.9 293.0 (49.5 ) 722.4 1,057.3 (31.7 ) Dividends on preferred stock 3.2 3.2 — 12.8 12.8 — Net income available to common stockholders $ 144.7 $ 289.8 (50.1 ) $ 709.6 $ 1,044.5 (32.1 ) Diluted earnings per common share $ 1.33 $ 2.67 (50.2 ) $ 6.54 $ 9.70 (32.6 ) (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, 2023 2022 Change % 2023 2022 Change % Diluted earnings per common share $ 1.33 $ 2.67 (50.2 )% $ 6.54 $ 9.70 (32.6 )% Book value per common share 52.81 46.47 13.6 Tangible book value per common share, net of tax (1) 46.72 40.25 16.1 Average common shares outstanding (in millions): Basic 108.4 108.0 0.3 108.3 107.2 1.0 Diluted 108.7 108.4 0.3 108.5 107.6 0.8 Common shares outstanding 109.5 108.9 0.5 Selected Performance Ratios: Return on average assets (2) 0.84 % 1.67 % (49.7 )% 1.03 % 1.62 % (36.4 )% Return on average tangible common equity (1, 2) 11.9 27.0 (55.9 ) 14.9 25.4 (41.3 ) Net interest margin (2) 3.65 3.98 (8.3 ) 3.63 3.67 (1.1 ) Efficiency ratio, adjusted for deposit costs (1) 59.1 40.0 47.8 53.5 41.1 30.2 HFI loan to deposit ratio 90.9 96.7 (6.0 ) Asset Quality Ratios: Net charge-offs to average loans outstanding (2) 0.07 % 0.01 % NM 0.06 % 0.00 % NM Nonaccrual loans to funded HFI loans 0.54 0.16 NM Nonaccrual loans and repossessed assets to total assets 0.40 0.14 NM Allowance for loan losses to funded HFI loans 0.67 0.60 11.7 Allowance for loan losses to nonaccrual HFI loans 123 364 (66.2 ) Capital Ratios: Dec 31, 2023 Sep 30, 2023 Dec 31, 2022 Tangible common equity (1) 7.3 % 6.8 % 6.5 % Common Equity Tier 1 (3) 10.8 10.6 9.3 Tier 1 Leverage ratio (3) 8.6 8.5 7.8 Tier 1 Capital (3) 11.5 11.3 10.0 Total Capital (3) 13.7 13.5 12.1 (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, 2023 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, 2023 2022 2023 2022 (dollars in millions, except per share data) Interest income: Loans $ 859.0 $ 785.1 $ 3,409.7 $ 2,393.4 Investment securities 136.2 89.4 467.5 272.6 Other 43.8 13.8 158.1 25.8 Total interest income 1,039.0 888.3 4,035.3 2,691.8 Interest expense: Deposits 343.7 157.6 1,142.6 276.4 Qualifying debt 9.6 9.1 37.9 35.0 Borrowings 94.0 81.9 515.9 164.1 Total interest expense 447.3 248.6 1,696.4 475.5 Net interest income 591.7 639.7 2,338.9 2,216.3 Provision for credit losses 9.3 3.1 62.6 68.1 Net interest income after provision for credit losses 582.4 636.6 2,276.3 2,148.2 Non-interest income: Net gain on loan origination and sale activities 47.8 25.4 193.5 104.0 Service charges and fees 22.7 5.9 76.3 27.0 Income from equity investments 13.1 4.2 15.7 17.8 Net loan servicing revenue 9.1 21.4 102.3 130.9 Commercial banking related income 5.9 5.5 23.7 21.5 (Loss) gain on recovery from credit guarantees (2.7 ) 3.0 (2.2 ) 14.7 (Loss) gain on sales of investment securities (14.8 ) 0.1 (40.8 ) 6.8 Fair value gain (loss) adjustments, net 1.3 (9.2 ) (116.0 ) (28.6 ) Other 8.1 5.2 28.2 30.5 Total non-interest income 90.5 61.5 280.7 324.6 Non-interest expenses: Salaries and employee benefits 134.6 125.7 566.3 539.5 Deposit costs 131.0 82.2 436.7 165.8 Insurance 108.6 8.9 190.4 31.1 Data processing 33.1 23.9 122.0 83.0 Legal, professional, and directors' fees 29.4 26.0 107.2 99.9 Occupancy 16.9 15.8 65.6 55.5 Loan servicing expenses 14.7 14.8 58.8 55.5 Business development and marketing 6.7 7.3 21.8 22.1 Loan acquisition and origination expenses 4.8 4.4 20.4 23.1 Net loss (gain) on sales and valuations of repossessed and other assets 0.3 (0.3 ) 3.0 (0.7 ) Gain on extinguishment of debt (39.3 ) — (52.7 ) — Other 21.1 24.7 83.9 81.9 Total non-interest expense 461.9 333.4 1,623.4 1,156.7 Income before income taxes 211.0 364.7 933.6 1,316.1 Income tax expense 63.1 71.7 211.2 258.8 Net income 147.9 293.0 722.4 1,057.3 Dividends on preferred stock 3.2 3.2 12.8 12.8 Net income available to common stockholders $ 144.7 $ 289.8 $ 709.6 $ 1,044.5 Earnings per common share: Diluted shares 108.7 108.4 108.5 107.6 Diluted earnings per share $ 1.33 $ 2.67 $ 6.54 $ 9.70 Western Alliance Bancorporation and Subsidiaries Five Quarter Condensed Consolidated Income Statements Unaudited Three Months Ended Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 (in millions, except per share data) Interest income: Loans $ 859.0 $ 860.8 $ 857.2 $ 832.7 $ 785.1 Investment securities 136.2 122.8 112.4 96.1 89.4 Other 43.8 43.0 31.2 40.1 13.8 Total interest income 1,039.0 1,026.6 1,000.8 968.9 888.3 Interest expense: Deposits 343.7 316.2 251.1 231.6 157.6 Qualifying debt 9.6 9.5 9.5 9.3 9.1 Borrowings 94.0 113.9 189.9 118.1 81.9 Total interest expense 447.3 439.6 450.5 359.0 248.6 Net interest income 591.7 587.0 550.3 609.9 639.7 Provision for credit losses 9.3 12.1 21.8 19.4 3.1 Net interest income after provision for credit losses 582.4 574.9 528.5 590.5 636.6 Non-interest income: Net gain on loan origination and sale activities 47.8 52.0 62.3 31.4 25.4 Service charges and fees 22.7 23.3 20.8 9.5 5.9 Income from equity investments 13.1 0.5 0.7 1.4 4.2 Net loan servicing revenue 9.1 27.2 24.1 41.9 21.4 Commercial banking related income 5.9 5.6 6.0 6.2 5.5 (Loss) gain on recovery from credit guarantees (2.7 ) (4.0 ) 1.2 3.3 3.0 (Loss) gain on sales of investment securities (14.8 ) 0.1 (13.6 ) (12.5 ) 0.1 Fair value gain (loss) adjustments, net 1.3 17.8 12.7 (147.8 ) (9.2 ) Other 8.1 6.7 4.8 8.6 5.2 Total non-interest income 90.5 129.2 119.0 (58.0 ) 61.5 Non-interest expenses: Salaries and employee benefits 134.6 137.2 145.6 148.9 125.7 Deposit costs 131.0 127.8 91.0 86.9 82.2 Insurance 108.6 33.1 33.0 15.7 8.9 Data processing 33.1 33.9 28.6 26.4 23.9 Legal, professional, and directors' fees 29.4 28.3 26.4 23.1 26.0 Occupancy 16.9 16.8 15.4 16.5 15.8 Loan servicing expenses 14.7 11.9 18.4 13.8 14.8 Business development and marketing 6.7 4.9 5.0 5.2 7.3 Loan acquisition and origination expenses 4.8 5.6 5.6 4.4 4.4 Net loss (gain) on sales and valuations of repossessed and other assets 0.3 2.2 0.5 0.0 (0.3 ) Gain on extinguishment of debt (39.3 ) — (0.7 ) (12.7 ) — Other 21.1 24.5 18.6 19.7 24.7 Total non-interest expense 461.9 426.2 387.4 347.9 333.4 Income before income taxes 211.0 277.9 260.1 184.6 364.7 Income tax expense 63.1 61.3 44.4 42.4 71.7 Net income 147.9 216.6 215.7 142.2 293.0 Dividends on preferred stock 3.2 3.2 3.2 3.2 3.2 Net income available to common stockholders $ 144.7 $ 213.4 $ 212.5 $ 139.0 $ 289.8 Earnings per common share: Diluted shares 108.7 108.5 108.3 108.3 108.4 Diluted earnings per share $ 1.33 $ 1.97 $ 1.96 $ 1.28 $ 2.67 Western Alliance Bancorporation and Subsidiaries Five Quarter Condensed Consolidated Balance Sheets Unaudited Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 (in millions) Assets: Cash and due from banks $ 1,576 $ 3,497 $ 2,153 $ 3,639 $ 1,043 Investment securities 12,993 11,423 10,374 9,493 8,760 Loans held for sale 1,402 1,766 3,156 7,022 1,184 Loans held for investment: Commercial and industrial 19,103 18,344 16,657 15,503 20,710 Commercial real estate - non-owner occupied 9,650 9,810 9,913 9,617 9,319 Commercial real estate - owner occupied 1,810 1,771 1,805 1,809 1,818 Construction and land development 4,889 4,669 4,428 4,407 4,013 Residential real estate 14,778 14,779 15,000 15,024 15,928 Consumer 67 74 72 75 74 Loans HFI, net of deferred fees 50,297 49,447 47,875 46,435 51,862 Allowance for loan losses (337 ) (327 ) (321 ) (305 ) (310 ) Loans HFI, net of deferred fees and allowance 49,960 49,120 47,554 46,130 51,552 Mortgage servicing rights 1,124 1,233 1,007 910 1,148 Premises and equipment, net 339 327 315 293 276 Operating lease right-of-use asset 145 150 151 156 163 Other assets acquired through foreclosure, net 8 8 11 11 11 Bank owned life insurance 186 184 184 183 182 Goodwill and other intangibles, net 669 672 674 677 680 Other assets 2,460 2,511 2,581 2,533 2,735 Total assets $ 70,862 $ 70,891 $ 68,160 $ 71,047 $ 67,734 Liabilities and Stockholders' Equity: Liabilities: Deposits Non-interest bearing demand deposits $ 14,520 $ 17,991 $ 16,733 $ 16,465 $ 19,691 Interest bearing: Demand 15,916 12,843 12,646 10,719 9,507 Savings and money market 14,791 14,672 13,085 13,845 19,397 Certificates of deposit 10,106 8,781 8,577 6,558 5,049 Total deposits 55,333 54,287 51,041 47,587 53,644 Borrowings 7,230 8,745 9,567 15,853 6,299 Qualifying debt 895 890 888 895 893 Operating lease liability 179 180 179 184 185 Accrued interest payable and other liabilities 1,147 1,043 800 1,007 1,357 Total liabilities 64,784 65,145 62,475 65,526 62,378 Stockholders' Equity: Preferred stock 295 295 295 295 295 Common stock and additional paid-in capital 2,081 2,073 2,064 2,054 2,058 Retained earnings 4,215 4,111 3,937 3,764 3,664 Accumulated other comprehensive loss (513 ) (733 ) (611 ) (592 ) (661 ) Total stockholders' equity 6,078 5,746 5,685 5,521 5,356 Total liabilities and stockholders' equity $ 70,862 $ 70,891 $ 68,160 $ 71,047 $ 67,734 Western Alliance Bancorporation and Subsidiaries Changes in the Allowance For Credit Losses on Loans Unaudited Three Months Ended Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 (in millions) Allowance for loan losses Balance, beginning of period $ 327.4 $ 321.1 $ 304.7 $ 309.7 $ 304.1 Provision for credit losses (1) 17.8 14.3 23.8 1.0 7.4 Recoveries of loans previously charged-off: Commercial and industrial 0.7 0.4 0.7 3.2 0.3 Commercial real estate - non-owner occupied — — — — — Commercial real estate - owner occupied 0.1 — — — 0.1 Construction and land development — — — — — Residential real estate — 0.1 — — — Consumer — — 0.1 — — Total recoveries 0.8 0.5 0.8 3.2 0.4 Loans charged-off: Commercial and industrial 9.3 5.5 6.0 9.1 1.1 Commercial real estate - non-owner occupied — 3.0 2.2 — — Commercial real estate - owner occupied — — — — 0.5 Construction and land development — — — — 0.6 Residential real estate — — — — — Consumer — — — 0.1 — Total loans charged-off 9.3 8.5 8.2 9.2 2.2 Net loan charge-offs 8.5 8.0 7.4 6.0 1.8 Balance, end of period $ 336.7 $ 327.4 $ 321.1 $ 304.7 $ 309.7 Allowance for unfunded loan commitments Balance, beginning of period $ 37.9 $ 41.1 $ 44.8 $ 47.0 $ 52.1 Recovery of credit losses (1) (6.3 ) (3.2 ) (3.7 ) (2.2 ) (5.1 ) Balance, end of period (2) $ 31.6 $ 37.9 $ 41.1 $ 44.8 $ 47.0 Components of the allowance for credit losses on loans Allowance for loan losses $ 336.7 $ 327.4 $ 321.1 $ 304.7 $ 309.7 Allowance for unfunded loan commitments 31.6 37.9 41.1 44.8 47.0 Total allowance for credit losses on loans $ 368.3 $ 365.3 $ 362.2 $ 349.5 $ 356.7 Net charge-offs to average loans - annualized 0.07 % 0.07 % 0.06 % 0.05 % 0.01 % Allowance ratios Allowance for loan losses to funded HFI loans (3) 0.67 % 0.66 % 0.67 % 0.66 % 0.60 % Allowance for credit losses to funded HFI loans (3) 0.73 0.74 0.76 0.75 0.69 Allowance for loan losses to nonaccrual HFI loans 123 138 125 285 364 Allowance for credit losses to nonaccrual HFI loans 135 154 141 327 420 (1) The above tables reflect the provision for credit losses on funded and unfunded loans. There was a $3.3 million provision release on AFS investment securities and a $1.1 million provision for credit losses on HTM investment securities for the three months ended December 31, 2023. The allowance for credit losses on AFS and HTM investment securities totaled $1.4 million and $7.8 million, respectively, as of December 31, 2023. (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 $14.7 million as of December 31, 2023 related to a pool of loans covered under three separate credit linked note transactions. Western Alliance Bancorporation and Subsidiaries Asset Quality Metrics Unaudited Three Months Ended Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 (in millions) Nonaccrual loans and repossessed assets Nonaccrual loans $ 273 $ 237 $ 256 $ 107 $ 85 Nonaccrual loans to funded HFI loans 0.54 % 0.48 % 0.53 % 0.23 % 0.16 % Repossessed assets $ 8 $ 8 $ 11 $ 11 $ 11 Nonaccrual loans and repossessed assets to total assets 0.40 % 0.35 % 0.39 % 0.17 % 0.14 % Loans Past Due Loans past due 90 days, still accruing (1) $ 42 $ — $ — $ 1 $ — Loans past due 90 days, still accruing to funded HFI loans 0.08 % — % — % 0.00 % — % Loans past due 30 to 89 days, still accruing (2) $ 164 $ 189 $ 121 $ 58 $ 70 Loans past due 30 to 89 days, still accruing to funded HFI loans 0.33 % 0.38 % 0.25 % 0.13 % 0.13 % Other credit quality metrics Special mention loans $ 641 $ 668 $ 694 $ 320 $ 351 Special mention loans to funded HFI loans 1.27 % 1.35 % 1.45 % 0.69 % 0.68 % Classified loans on accrual $ 379 $ 381 $ 324 $ 325 $ 280 Classified loans on accrual to funded HFI loans 0.75 % 0.77 % 0.68 % 0.70 % 0.54 % Classified assets $ 673 $ 639 $ 604 $ 459 $ 393 Classified assets to total assets 0.95 % 0.90 % 0.89 % 0.65 % 0.58 % (1) Excludes government guaranteed residential mortgage loans of $399 million, $439 million, $481 million, $494 million, and $582 million as of each respective date in the table above. (2) Excludes government guaranteed residential mortgage loans of $279 million, $261 million, $289 million, $281 million, and $334 million as of each respective date in the table above. Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited Three Months Ended December 31, 2023 September 30, 2023 Average Balance Interest Average Yield / Cost Average Balance Interest Average Yield / Cost ($ in millions) Interest earning assets Loans held for sale $ 1,830 $ 29.6 6.42 % $ 3,069 $ 47.3 6.11 % Loans held for investment: Commercial and industrial 18,530 343.2 7.40 16,855 324.3 7.70 CRE - non-owner occupied 9,715 188.7 7.71 9,950 196.1 7.83 CRE - owner occupied 1,786 26.0 5.88 1,790 26.4 5.97 Construction and land development 4,789 112.6 9.33 4,545 110.3 9.63 Residential real estate 14,758 157.6 4.24 14,914 155.0 4.12 Consumer 71 1.3 7.52 73 1.4 7.43 Total HFI loans (1), (2), (3) 49,649 829.4 6.65 48,127 813.5 6.73 Securities: Securities - taxable 9,168 113.5 4.91 8,272 101.1 4.85 Securities - tax-exempt 2,106 22.7 5.35 2,103 21.7 5.12 Total securities (1) 11,274 136.2 4.99 10,375 122.8 4.91 Cash and other 2,572 43.8 6.75 2,911 43.0 5.87 Total interest earning assets 65,325 1,039.0 6.37 64,482 1,026.6 6.37 Non-interest earning assets Cash and due from banks 287 279 Allowance for credit losses (340 ) (334 ) Bank owned life insurance 185 184 Other assets 4,525 4,513 Total assets $ 69,982 $ 69,124 Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 14,268 $ 104.6 2.91 % $ 12,947 $ 98.9 3.03 % Savings and money market 14,595 119.1 3.24 13,832 106.3 3.05 Certificates of deposit 9,453 120.0 5.03 9,125 111.0 4.83 Total interest-bearing deposits 38,316 343.7 3.56 35,904 316.2 3.49 Short-term borrowings 5,492 79.4 5.74 6,260 97.2 6.16 Long-term debt 594 14.6 9.73 764 16.7 8.68 Qualifying debt 891 9.6 4.26 888 9.5 4.26 Total interest-bearing liabilities 45,293 447.3 3.92 43,816 439.6 3.98 Interest cost of funding earning assets 2.72 2.70 Non-interest-bearing liabilities Non-interest-bearing demand deposits 17,579 18,402 Other liabilities 1,330 1,052 Stockholders’ equity 5,780 5,854 Total liabilities and stockholders' equity $ 69,982 $ 69,124 Net interest income and margin (4) $ 591.7 3.65 % $ 587.0 3.67 % (1) Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $9.1 million and $8.9 million for the three months ended December 31, 2023 and September 30, 2023, respectively. (2) Included in the yield computation are net loan fees of $30.8 million and $28.0 million for the three months ended December 31, 2023 and September 30, 2023, respectively. (3) Includes non-accrual loans. (4) Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis. Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited Three Months Ended December 31, 2023 December 31, 2022 Average Balance Interest Average Yield / Cost Average Balance Interest Average Yield / Cost ($ in millions) Interest earning assets Loans held for sale $ 1,830 $ 29.6 6.42 % $ 2,659 $ 37.8 5.63 % Loans held for investment: Commercial and industrial 18,530 343.2 7.40 21,654 349.3 6.45 CRE - non-owner-occupied 9,715 188.7 7.71 9,077 148.8 6.51 CRE - owner-occupied 1,786 26.0 5.88 1,830 24.4 5.39 Construction and land development 4,789 112.6 9.33 3,798 80.2 8.38 Residential real estate 14,758 157.6 4.24 15,803 143.5 3.60 Consumer 71 1.3 7.52 71 1.1 6.26 Total loans HFI (1), (2), (3) 49,649 829.4 6.65 52,233 747.3 5.70 Securities: Securities - taxable 9,168 113.5 4.91 6,397 68.4 4.25 Securities - tax-exempt 2,106 22.7 5.35 2,068 21.0 5.07 Total securities (1) 11,274 136.2 4.99 8,465 89.4 4.45 Cash and other 2,572 43.8 6.75 1,361 13.8 4.02 Total interest earning assets 65,325 1,039.0 6.37 64,718 888.3 5.50 Non-interest earning assets Cash and due from banks 287 289 Allowance for credit losses (340 ) (308 ) Bank owned life insurance 185 181 Other assets 4,525 4,613 Total assets $ 69,982 $ 69,493 Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 14,268 $ 104.6 2.91 % $ 8,754 $ 43.6 1.98 % Savings and money market accounts 14,595 119.1 3.24 18,651 88.0 1.87 Certificates of deposit 9,453 120.0 5.03 4,260 26.0 2.42 Total interest-bearing deposits 38,316 343.7 3.56 31,665 157.6 1.97 Short-term borrowings 5,492 79.4 5.74 5,440 54.8 3.99 Long-term debt 594 14.6 9.73 1,240 27.1 8.68 Qualifying debt 891 9.6 4.26 890 9.1 4.08 Total interest-bearing liabilities 45,293 447.3 3.92 39,235 248.6 2.51 Interest cost of funding earning assets 2.72 1.52 Non-interest-bearing liabilities Non-interest-bearing demand deposits 17,579 23,729 Other liabilities 1,330 1,296 Stockholders’ equity 5,780 5,233 Total liabilities and stockholders' equity $ 69,982 $ 69,493 Net interest income and margin (4) $ 591.7 3.65 % $ 639.7 3.98 % (1) Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $9.1 million and $9.0 million for the three months ended December 31, 2023 and 2022, respectively. (2) Included in the yield computation are net loan fees of $30.8 million and $34.8 million for the three months ended December 31, 2023 and 2022, respectively. (3) Includes non-accrual loans. (4) Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis. Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited Year Ended December 31, 2023 December 31, 2022 Average Balance Interest Average Yield / Cost Average Balance Interest Average Yield / Cost ($ in millions) Interest earning assets Loans HFS $ 3,347 $ 213.4 6.38 % $ 4,364 $ 180.3 4.13 % Loans HFI: Commercial and industrial 17,886 1,337.9 7.54 20,083 1,002.8 5.05 CRE - non-owner occupied 9,736 734.8 7.56 7,769 416.4 5.37 CRE - owner occupied 1,800 102.3 5.79 1,841 93.2 5.16 Construction and land development 4,498 419.7 9.33 3,426 229.1 6.69 Residential real estate 15,126 596.4 3.94 13,771 468.5 3.40 Consumer 72 5.2 7.23 61 3.1 5.07 Total loans HFI (1), (2), (3) 49,118 3,196.3 6.53 46,951 2,213.1 4.74 Securities: Securities - taxable 8,002 381.3 4.76 6,325 195.3 3.09 Securities - tax-exempt 2,097 86.2 5.15 2,067 77.3 4.68 Total securities (1) 10,099 467.5 4.84 8,392 272.6 3.48 Other 2,848 158.1 5.55 1,574 25.8 1.64 Total interest earning assets (4) 65,412 4,035.3 6.22 61,281 2,691.8 4.45 Non-interest earning assets Cash and due from banks 273 260 Allowance for credit losses (326 ) (280 ) Bank owned life insurance 183 180 Other assets 4,581 3,948 Total assets $ 70,123 $ 65,389 Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 12,422 $ 352.0 2.83 % $ 8,331 $ 78.8 0.95 % Savings and money market accounts 14,903 428.1 2.87 18,518 158.6 0.86 Certificates of deposit 7,945 362.5 4.56 2,772 39.0 1.40 Total interest-bearing deposits 35,270 1,142.6 3.24 29,621 276.4 0.93 Short-term borrowings 7,800 434.6 5.57 3,424 92.1 2.69 Long-term debt 862 81.3 9.43 1,008 72.0 7.14 Qualifying debt 892 37.9 4.25 893 35.0 3.92 Total interest-bearing liabilities 44,824 1,696.4 3.78 34,946 475.5 1.36 Interest cost of funding earning assets 2.59 0.78 Non-interest-bearing liabilities Non-interest-bearing demand deposits 18,293 24,133 Other liabilities 1,287 1,211 Stockholders’ equity 5,719 5,099 Total liabilities and stockholders' equity $ 70,123 $ 65,389 Net interest income and margin (5) $ 2,338.9 3.63 % $ 2,216.3 3.67 % (1) Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $35.5 million and $33.7 million for the year ended December 31, 2023 and 2022, respectively. (2) Included in the yield computation are net loan fees of $131.2 million and $132.2 million for the year ended December 31, 2023 and 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 Operating Segment Results Unaudited Balance Sheet: Consolidated Company Commercial Consumer Related Corporate & Other At December 31, 2023: (dollars in millions) Assets: Cash, cash equivalents, and investment securities $ 14,569 $ 13 $ 125 $ 14,431 Loans HFS 1,402 — 1,402 — Loans HFI, net of deferred fees and costs 50,297 29,136 21,161 — Less: allowance for credit losses (337 ) (284 ) (53 ) — Net loans HFI 49,960 28,852 21,108 — Other assets acquired through foreclosure, net 8 8 — — Goodwill and other intangible assets, net 669 292 377 — Other assets 4,254 390 1,826 2,038 Total assets $ 70,862 $ 29,555 $ 24,838 $ 16,469 Liabilities: Deposits $ 55,333 $ 23,897 $ 24,925 $ 6,511 Borrowings and qualifying debt 8,125 7 402 7,716 Other liabilities 1,326 109 338 879 Total liabilities 64,784 24,013 25,665 15,106 Allocated equity: 6,078 2,555 1,300 2,223 Total liabilities and stockholders' equity $ 70,862 $ 26,568 $ 26,965 $ 17,329 Excess funds provided (used) — (2,987 ) 2,127 860 No. of offices 57 46 8 3 No. of full-time equivalent employees 3,260 584 711 1,965 Income Statement: Three Months Ended December 31, 2023: (in millions) Net interest income $ 591.7 $ 309.9 $ 251.1 $ 30.7 Provision for (recovery of) credit losses 9.3 8.6 2.9 (2.2 ) Net interest income after provision for credit losses 582.4 301.3 248.2 32.9 Non-interest income 90.5 16.8 60.3 13.4 Non-interest expense 461.9 149.7 232.9 79.3 Income (loss) before income taxes 211.0 168.4 75.6 (33.0 ) Income tax expense (benefit) 63.1 49.7 19.8 (6.4 ) Net income (loss) $ 147.9 $ 118.7 $ 55.8 $ (26.6 ) Year Ended December 31, 2023: (in millions) Net interest income $ 2,338.9 $ 1,387.4 $ 898.9 $ 52.6 Provision for credit losses 62.6 38.3 3.3 21.0 Net interest income after provision for credit losses 2,276.3 1,349.1 895.6 31.6 Non-interest income 280.7 (23.3 ) 286.9 17.1 Non-interest expense 1,623.4 580.6 924.5 118.3 Income (loss) before provision for income taxes 933.6 745.2 258.0 (69.6 ) Income tax expense (benefit) 211.2 174.8 59.2 (22.8 ) Net income (loss) $ 722.4 $ 570.4 $ 198.8 $ (46.8 ) 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 Reconciliation of Non-GAAP Financial Measures Unaudited Pre-Provision Net Revenue by Quarter: Three Months Ended 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 (in millions) Net interest income $ 591.7 $ 587.0 $ 550.3 $ 609.9 $ 639.7 Total non-interest income 90.5 129.2 119.0 (58.0 ) 61.5 Net revenue $ 682.2 $ 716.2 $ 669.3 $ 551.9 $ 701.2 Total non-interest expense 461.9 426.2 387.4 347.9 333.4 Pre-provision net revenue (1) $ 220.3 $ 290.0 $ 281.9 $ 204.0 $ 367.8 Less: Provision for credit losses 9.3 12.1 21.8 19.4 3.1 Income tax expense 63.1 61.3 44.4 42.4 71.7 Net income $ 147.9 $ 216.6 $ 215.7 $ 142.2 $ 293.0 Pre-Provision Net Revenue, Excluding Notable Items Three Months Ended 12/31/2023: (in millions) Pre-provision net revenue (1) $ 220.3 Excluding notable items: Non-interest income MSR fair value adjustments and sales, net of hedging 25.3 Loss on sales of HFI loans 3.7 Outsized solar investment gains (8.0 ) Loss on sales of investment securities 14.8 Non-interest expense FDIC special assessment 66.3 Gain on extinguishment of debt (39.3 ) Total notable items 62.8 Pre-provision net revenue, excluding notable items (1) $ 283.1 Less: Provision for credit losses 9.3 Income tax expense 63.1 Total notable items 62.8 Net income $ 147.9 Three Months Ended 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 Efficiency Ratio (Tax Equivalent Basis) by Quarter: (dollars in millions) Total non-interest expense $ 461.9 $ 426.2 $ 387.4 $ 347.9 $ 333.4 Less: Deposit costs 131.0 127.8 91.0 86.9 82.2 Total non-interest expense, excluding deposit costs 330.9 298.4 296.4 261.0 251.2 Divided by: Total net interest income 591.7 587.0 550.3 609.9 639.7 Plus: Tax equivalent interest adjustment 9.1 8.9 8.7 8.8 9.0 Total non-interest income 90.5 129.2 119.0 (58.0 ) 61.5 Less: Deposit costs 131.0 127.8 91.0 86.9 82.2 $ 560.3 $ 597.3 $ 587.0 $ 473.8 $ 628.0 Efficiency ratio (2) 66.8 % 58.8 % 57.1 % 62.0 % 46.9 % Efficiency ratio, adjusted for deposit costs (2) 59.1 % 50.0 % 50.5 % 55.1 % 40.0 % Western Alliance Bancorporation and Subsidiaries Reconciliation of Non-GAAP Financial Measures Unaudited Earnings per Share, Excluding Notable Items: Three Months Ended 12/31/2023: (in millions) Net income available to common stockholders $ 144.7 Excluding: Total notable items (4) 62.8 Income tax Tax effect of notable items (14.4 ) Elevated effective tax rate 14.6 Net income available to common stockholders, excluding notable items $ 207.7 Diluted shares 108.7 Diluted earnings per share, excluding notable items (1) $ 1.91 Tangible Common Equity: 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 (dollars and shares in millions) Total stockholders' equity $ 6,078 $ 5,746 $ 5,685 $ 5,521 $ 5,356 Less: Goodwill and intangible assets 669 672 674 677 680 Preferred stock 295 295 295 295 295 Total tangible common equity 5,114 4,779 4,716 4,549 4,381 Plus: deferred tax - attributed to intangible assets 2 2 2 2 2 Total tangible common equity, net of tax $ 5,116 $ 4,781 $ 4,718 $ 4,551 $ 4,383 Total assets $ 70,862 $ 70,891 $ 68,160 $ 71,047 $ 67,734 Less: goodwill and intangible assets, net 669 672 674 677 680 Tangible assets 70,193 70,219 67,486 70,370 67,054 Plus: deferred tax - attributed to intangible assets 2 2 2 2 2 Total tangible assets, net of tax $ 70,195 $ 70,221 $ 67,488 $ 70,372 $ 67,056 Tangible common equity ratio (3) 7.3 % 6.8 % 7.0 % 6.5 % 6.5 % Common shares outstanding 109.5 109.5 109.5 109.5 108.9 Tangible book value per share, net of tax (3) $ 46.72 $ 43.66 $ 43.09 $ 41.56 $ 40.25 Return on Average Tangible Common Equity, Excluding Notable Items: Three Months Ended 12/31/2023: (in millions) Net income available to common shareholders, excluding notable items $ 207.7 Divided by: Average stockholders' equity $ 5,780 Less: Average goodwill and intangible assets 670 Average preferred stock 295 Average tangible common equity $ 4,816 Return on average tangible common equity, excluding notable items (1) 17.1 % Return on Average Assets, Excluding Notable Items: Three Months Ended 12/31/2023: (in millions) Net income $ 147.9 Excluding: Total notable items (4) 62.8 Income tax Tax effect of notable items (14.4 ) Elevated effective tax rate 14.6 Net income, excluding notable items $ 210.9 Divided by: Average assets $ 69,982 Return on average assets, excluding notable items (1) 1.20 % 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 the financial condition and capital strength of the Company. (4) See reconciliation of PPNR, excluding notable items, for additional detail regarding the components of notable items. View source version on businesswire.com: https://www.businesswire.com/news/home/20240124805047/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 2023 Financial Results By: Western Alliance Bancorporation via Business Wire January 25, 2024 at 16:12 PM EST Western Alliance Bancorporation (NYSE:WAL): FOURTH QUARTER AND FULL YEAR 2023 FINANCIAL RESULTS Quarter Highlights: Net income Earnings per share PPNR1 Net interest margin Adjusted efficiency ratio1 Book value per common share $147.9 million $1.33 $220.3 million 3.65% 59.1% $52.81 $1.911, excluding notable items $46.721, excluding goodwill and intangibles CEO COMMENTARY: “Western Alliance’s diversified, national commercial business strategy continued to drive strong momentum in the fourth quarter as we generated earnings per share of $1.911, excluding $0.58 of notable items. We view this quarter’s solid loan and deposit momentum, continued net interest income growth, and sustained stable asset quality as positioning us to deliver leading profitability in 2024, supported by sturdy capital and liquidity levels,” said Kenneth A. Vecchione, President and Chief Executive Officer. “CET1 capital reached 10.8% at year-end, and tangible book value per share rose 16% year-over-year to $46.721. Additionally, our strong deposit growth allowed us to repay $1.5 billion of debt and borrowings, including our entire loan from the Bank Term Funding Program. As we turn the page on 2023, we are encouraged by how our employees responded to the year’s challenges as well as the ongoing trust placed in us by our customers and shareholders.” LINKED-QUARTER BASIS FULL YEAR FINANCIAL HIGHLIGHTS: Net income of $147.9 million and earnings per share of $1.33, compared to $216.6 million and $1.97, respectively Net revenue of $682.2 million, a decrease of 4.7%, or $34.0 million, compared to an increase in non-interest expenses of 8.4%, or $35.7 million Pre-provision net revenue1 of $220.3 million, down $69.7 million from $290.0 million Effective tax rate of 29.9%, compared to 22.1% Net income of $722.4 million and earnings per share of $6.54, down 31.7% and 32.6%, from $1.1 billion and $9.70, respectively Net revenue of $2.6 billion, an increase of 3.1%, or $78.7 million, compared to an increase in non-interest expenses of 40.3%, or $466.7 million Pre-provision net revenue1 of $996.2 million, down $388.0 million from $1.4 billion Effective tax rate of 22.6%, compared to 19.7% FINANCIAL POSITION RESULTS: HFI loans of $50.3 billion, up $850 million, or 1.7%. Total deposits of $55.3 billion, up $1.0 billion, or 1.9% Stockholders' equity of $6.1 billion, up $332 million Decrease in HFI loans of $1.6 billion, or 3.0% Increase in total deposits of $1.7 billion, or 3.1% Increase in stockholders' equity of $722 million LOANS AND ASSET QUALITY: Nonperforming assets (nonaccrual loans and repossessed assets) to total assets of 0.40%, compared to 0.35% Annualized net loan charge-offs to average loans outstanding of 0.07%, flat from the prior quarter Nonperforming assets to total assets of 0.40%, compared to 0.14% Net loan charge-offs to average loans outstanding of 0.06%, compared to approximately 0.00% KEY PERFORMANCE METRICS: Net interest margin of 3.65% decreased from 3.67% Return on average assets and on tangible common equity1 of 0.84% and 11.9%, compared to 1.24% and 17.3%, respectively Tangible common equity ratio1 of 7.3%, compared to 6.8% CET 1 ratio of 10.8% increased from 10.6% Tangible book value per share1, net of tax, of $46.72, an increase of 7.0% from $43.66 Adjusted efficiency ratio1 of 59.1%, compared to 50.0% Net interest margin of 3.63% decreased from 3.67% Return on average assets and on tangible common equity1 of 1.03% and 14.9%, compared to 1.62% and 25.4%, respectively Tangible common equity ratio1 of 7.3% increased from 6.5% CET 1 ratio of 10.8% increased from 9.3% Tangible book value per share1, net of tax, of $46.72, an increase of 16.1% from $40.25 Adjusted efficiency ratio1 of 53.5%, compared to 41.1% 1 See reconciliation of Non-GAAP Financial Measures. Income Statement Net interest income totaled $591.7 million in the fourth quarter 2023, an increase of $4.7 million, or 0.8%, from $587.0 million in the third quarter 2023, and a decrease of $48.0 million, or 7.5%, compared to the fourth quarter 2022. The increase in net interest income from the third quarter 2023 is due to an increase in average HFI loan and securities balances combined with a decrease in average short-term borrowings, and was partially offset by an increase in deposit balances and rates. The decrease in net interest income from the fourth quarter 2022 was driven by an increase in both the balances and rates of deposits and short-term borrowings, partially offset by higher yields on HFI loans. The Company recorded a provision for credit losses of $9.3 million in the fourth quarter 2023, a decrease of $2.8 million from $12.1 million in the third quarter 2023, and an increase of $6.2 million from $3.1 million in the fourth quarter 2022. The decrease in provision for credit losses during the fourth quarter 2023 is primarily due to improvement in the macroeconomic outlook and stable asset quality. The Company’s net interest margin in the fourth quarter 2023 was 3.65%, a decrease from 3.67% in the third quarter 2023, and a decrease from 3.98% in the fourth quarter 2022. An increase in deposit balances and rates drove a decrease in net interest margin from the third quarter 2023, with higher average HFI loan and securities balances partially offsetting this decrease. The decrease in net interest margin from the fourth quarter 2022 was driven by higher average balances and rates on deposits and short-term borrowings. Non-interest income was $90.5 million for the fourth quarter 2023, compared to $129.2 million for the third quarter 2023, and $61.5 million for the fourth quarter 2022. The $38.7 million decrease in non-interest income for the third quarter 2023 was due to a decrease in fair value gain adjustments of $16.5 million and a $14.8 million loss on sale of securities in the fourth quarter compared to a gain of $0.1 million in the third quarter, combined with an $18.1 million decrease in net loan servicing revenue due to losses on MSR sales and fair value changes, partially offset by higher servicing income, and a $4.2 million decrease in net gain on loan origination and sale activities from lower spreads. These decreases were offset by a $12.6 million increase in income from equity investments. The $29.0 million increase in non-interest income from the fourth quarter 2022 was driven by a higher net gain on loan origination and sale activities, service charges and fees, and fair value gain adjustments. Net revenue totaled $682.2 million for the fourth quarter 2023, a decrease of $34.0 million or 4.7%, compared to $716.2 million for the third quarter 2023, and a decrease of $19.0 million or 2.7%, compared to $701.2 million for the fourth quarter 2022. Non-interest expense was $461.9 million for the fourth quarter 2023, compared to $426.2 million for the third quarter 2023, and $333.4 million for the fourth quarter 2022. The Company’s adjusted efficiency ratio1 was 59.1% for the fourth quarter 2023, compared to 50.0% in the third quarter 2023, and 40.0% for the fourth quarter 2022. The increase in non-interest expense from the third quarter 2023 is due primarily to increased insurance costs largely related to the FDIC special assessment, partially offset by a gain on debt extinguishment related to the early payoff of the AmeriHome senior notes. The increase in non-interest expense from the fourth quarter 2022 is primarily attributable to an increase in insurance and deposit costs. Income tax expense was $63.1 million for the fourth quarter 2023, compared to $61.3 million for the third quarter 2023, and $71.7 million for the fourth quarter 2022. The increase in income tax expense from the third quarter 2023 is primarily related to a higher effective tax rate resulting from lower utilization of tax credits due to timing of projects being placed in service, the AOCI impact of AFS securities gains during the quarter, and discrete nondeductible items. Net income was $147.9 million for the fourth quarter 2023, a decrease of $68.7 million from $216.6 million for the third quarter 2023, and a decrease of $145.1 million from $293.0 million for the fourth quarter 2022. Earnings per share totaled $1.33 for the fourth quarter 2023, compared to $1.97 for the third quarter 2023, and $2.67 for the fourth quarter 2022. Earnings per share, excluding notable items1, totaled $1.91 for the fourth quarter 2023. The Company views its earnings per share, excluding notable items1 as a key metric for assessing the Company’s earnings power. 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 2023, the Company’s PPNR1 was $220.3 million, down $69.7 million from $290.0 million in the third quarter 2023, and down $147.5 million from $367.8 million in the fourth quarter 2022. The Company had 3,260 full-time equivalent employees and 57 offices at December 31, 2023, compared to 3,272 employees and 56 offices at September 30, 2023, and 3,365 employees and 56 offices at December 31, 2022. 1 See reconciliation of Non-GAAP Financial Measures. Balance Sheet HFI loans, net of deferred fees totaled $50.3 billion at December 31, 2023, compared to $49.4 billion at September 30, 2023, and $51.9 billion at December 31, 2022. The increase in HFI loans of $850 million from the prior quarter was driven by an increase of $759 million in commercial and industrial loans and $220 million in construction and land development loans. This increase was partially offset by a decrease in CRE non-owner occupied loans of $160 million. The decrease in HFI loans of $1.6 billion from December 31, 2022 was driven by a $1.6 billion decrease in commercial and industrial loans and a $1.2 billion decrease in residential real estate loans, resulting from loan dispositions undertaken as part of the Company's balance sheet repositioning strategy. This decrease was partially offset by increases in construction and land development loans and CRE non-owner occupied of $876 million and $331 million, respectively. HFS loans totaled $1.4 billion at December 31, 2023, compared to $1.8 billion at September 30, 2023, and $1.2 billion at December 31, 2022. The balance of HFS loans at December 31, 2023 primarily consisted of AmeriHome HFS loans, consistent with the balance at December 31, 2022 and prior periods. The decrease of $364 million in HFS loans from the prior quarter is primarily related to loan sales. The increase of $218 million in HFS loans from December 31, 2022 primarily related to an increase in agency conforming loans. 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, 2023, the allowance for loan losses to funded HFI loans ratio was 0.67%, compared to 0.66% at September 30, 2023, and 0.60% at December 31, 2022. The allowance for credit losses, which includes the allowance for unfunded loan commitments, to funded HFI loans ratio was 0.73% at December 31, 2023, compared to 0.74% at September 30, 2023, and 0.69% at December 31, 2022. 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. The Company is protected from first credit losses on reference pools of loans totaling $9.1 billion, $9.3 billion, and $12.0 billion as of December 31, 2023, September 30, 2023, and December 31, 2022, 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 $14.7 million as of December 31, 2023, $17.4 million as of September 30, 2023, and $18.5 million as of December 31, 2022, 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, 2023, 0.91% at September 30, 2023, and 0.89% at December 31, 2022. Deposits totaled $55.3 billion at December 31, 2023, an increase of $1.0 billion from $54.3 billion at September 30, 2023, and an increase of $1.7 billion from $53.6 billion at December 31, 2022. By deposit type, the increase from the prior quarter is attributable to increases of $3.1 billion from interest-bearing demand deposits and $1.3 billion from certificates of deposits, offset by a decrease of $3.5 billion from non-interest bearing demand deposits. From December 31, 2022, interest-bearing demand deposits and certificates of deposit increased $6.4 billion and $5.1 billion, respectively. These increases were partially offset by decreases in non-interest bearing demand deposits and savings and money market accounts of $5.2 billion and $4.6 billion, respectively. Non-interest bearing deposits were $14.5 billion at December 31, 2023, compared to $18.0 billion at September 30, 2023, and $19.7 billion at December 31, 2022. The table below shows the Company's deposit types as a percentage of total deposits: Dec 31, 2023 Sep 30, 2023 Dec 31, 2022 Non-interest bearing 26.2 % 33.1 % 36.7 % Savings and money market 26.7 27.0 36.2 Interest-bearing demand 28.8 23.7 17.7 Certificates of deposit 18.3 16.2 9.4 The Company’s ratio of HFI loans to deposits was 90.9% at December 31, 2023, compared to 91.1% at September 30, 2023, and 96.7% at December 31, 2022. Borrowings were $7.2 billion at December 31, 2023, $8.7 billion at September 30, 2023, and $6.3 billion at December 31, 2022. Borrowings decreased $1.5 billion from September 30, 2023 due to payoff of the Bank Term Funding Program advances and the AmeriHome senior notes. The increase in borrowings from December 31, 2022 is due primarily to an increase in short-term borrowings of $1.8 billion, partially offset by payoffs of credit linked notes and the AmeriHome senior notes. Qualifying debt totaled $895 million at December 31, 2023, compared to $890 million at September 30, 2023, and $893 million at December 31, 2022. Stockholders’ equity was $6.1 billion at December 31, 2023, compared to $5.7 billion at September 30, 2023 and $5.4 billion at December 31, 2022. The increase in stockholders’ equity from the prior quarter was due to net income and unrealized fair value gains of $222 million on the Company's available-for-sale securities, which are recorded in other comprehensive loss, net of tax. These increases were partially offset by dividends to shareholders. Cash dividends of $40.5 million ($0.37 per common share) and $3.2 million ($0.27 per depository share) were paid to shareholders during the fourth quarter 2023. The increase in stockholders' equity from December 31, 2022 is primarily a function of net income, partially offset by dividends to shareholders. At December 31, 2023, tangible common equity, net of tax1, was 7.3% of tangible assets1 and total capital was 13.7% of risk-weighted assets. The Company’s tangible book value per share1 was $46.72 at December 31, 2023, an increase of 7.0% from $43.66 at September 30, 2023, and up 16.1% from $40.25 at December 31, 2022. The increase in tangible book value per share from September 30, 2023 is attributable to net income. Total assets remained flat from September 30, 2023 to December 31, 2023 at $70.9 billion, and increased 4.6% from $67.7 billion at December 31, 2022. The slight decrease in total assets from September 30, 2023 was driven by a decrease in cash and HFS loans, offset by an increase in investment securities. The increase in total assets from December 31, 2022 was driven by an increase in investments, cash, and HFS loans, partially offset by a decrease in HFI loans. 1 See reconciliation of Non-GAAP Financial Measures. Asset Quality Provision for credit losses totaled $9.3 million for the fourth quarter 2023, compared to $12.1 million for the third quarter 2023, and $3.1 million for the fourth quarter 2022. Net loan charge-offs in the fourth quarter 2023 were $8.5 million, or 0.07% of average loans (annualized), compared to $8.0 million, or 0.07%, in the third quarter 2023, and $1.8 million, or 0.01%, in the fourth quarter 2022. Nonaccrual loans increased $36 million to $273 million during the quarter and increased $188 million from December 31, 2022. Loans past due 90 days and still accruing interest totaled $42 million at December 31, 2023 and zero at September 30, 2023 and December 31, 2022 (excluding government guaranteed loans of $399 million, $439 million, and $582 million, respectively). Loans past due 30-89 days and still accruing interest totaled $164 million at December 31, 2023, a decrease from $189 million at September 30, 2023, and an increase from $70 million at December 31, 2022 (excluding government guaranteed loans of $279 million, $261 million, and $334 million, respectively). Repossessed assets totaled $8 million at December 31, 2023, flat from September 30, 2023, and a decrease of $3 million from December 31, 2022. Classified assets totaled $673 million at December 31, 2023, an increase of $34 million from $639 million at September 30, 2023, and an increase of $280 million from $393 million at December 31, 2022. The ratio of classified assets to Tier 1 capital plus the allowance for credit losses, a common regulatory measure of asset quality, was 10.5% at December 31, 2023, compared to 10.2% at September 30, 2023, and 6.8% at December 31, 2022. 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. – 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 $29.1 billion at December 31, 2023, an increase of $416 million during the quarter, and a decrease of $2.3 billion during the year. Deposits for the Commercial segment totaled $23.9 billion at December 31, 2023, an increase of $1.3 billion during the quarter, and a decrease of $5.6 billion during the year. Pre-tax income for the Commercial segment was $168.4 million for the three months ended December 31, 2023, a decrease of $27.7 million from the three months ended September 30, 2023, and a decrease of $152.1 million from the three months ended December 31, 2022. For the year ended December 31, 2023, the Commercial segment reported total pre-tax income of $745.2 million, a decrease of $350.1 million compared to the year ended December 31, 2022. The Consumer Related segment reported an HFI loan balance of $21.2 billion at December 31, 2023, an increase of $434 million during the quarter, and an increase of $713 million during the year. The Consumer Related segment also has loans held for sale of $1.4 billion at December 31, 2023, a decrease of $364 million during the quarter, and an increase of $218 million during the year. Deposits for the Consumer Related segment totaled $24.9 billion, a decrease of $169 million during the quarter, and an increase of $6.4 billion during the year. Pre-tax income for the Consumer Related segment was $75.6 million for the three months ended December 31, 2023, an increase of $6.7 million from the three months ended September 30, 2023, and an increase of $5.8 million from the three months ended December 31, 2022. Pre-tax income for the Consumer Related segment for the year ended December 31, 2023 totaled $258.0 million, a decrease of $192.1 million compared to the year ended December 31, 2022. Conference Call and Webcast Western Alliance Bancorporation will host a conference call and live webcast to discuss its fourth quarter and full year 2023 financial results at 12:00 p.m. ET on Friday, January 26, 2024. Participants may access the call by dialing 1-833-470-1428 and using access code 941447 or via live audio webcast using the website link https://events.q4inc.com/attendee/536267609. 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 26th through 11:00 p.m. ET February 26th by dialing 1-866-813-9403, using access code 690232. 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, 2022 and the Company's subsequent Quarterly Reports on Form 10-Q, each as filed with the Securities and Exchange Commission; adverse developments in the financial services industry generally such as the bank failures in 2023 and any related impact on depositor behavior; risks related to the sufficiency of liquidity; 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 wars in Ukraine and the Middle East; 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 $70 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, clients benefit from a full spectrum of tailored commercial banking solutions and consumer products, all delivered with outstanding service by industry experts who put customers first. Major accolades include being ranked as a top U.S. bank in 2023 by American Banker and 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, 2023 2022 Change % (in millions) Total assets $ 70,862 $ 67,734 4.6 % Loans held for sale 1,402 1,184 18.4 HFI loans, net of deferred fees 50,297 51,862 (3.0 ) Investment securities 12,993 8,760 48.3 Total deposits 55,333 53,644 3.1 Borrowings 7,230 6,299 14.8 Qualifying debt 895 893 0.2 Stockholders' equity 6,078 5,356 13.5 Tangible common equity, net of tax (1) 5,116 4,383 16.7 Common equity Tier 1 capital 5,659 5,073 11.6 Selected Income Statement Data: For the Three Months Ended December 31, For the Year Ended December 31, 2023 2022 Change % 2023 2022 Change % (in millions, except per share data) (in millions, except per share data) Interest income $ 1,039.0 $ 888.3 17.0 % $ 4,035.3 $ 2,691.8 49.9 % Interest expense 447.3 248.6 79.9 1,696.4 475.5 NM Net interest income 591.7 639.7 (7.5 ) 2,338.9 2,216.3 5.5 Provision for credit losses 9.3 3.1 NM 62.6 68.1 (8.1 ) Net interest income after provision for credit losses 582.4 636.6 (8.5 ) 2,276.3 2,148.2 6.0 Non-interest income 90.5 61.5 47.2 280.7 324.6 (13.5 ) Non-interest expense 461.9 333.4 38.5 1,623.4 1,156.7 40.3 Income before income taxes 211.0 364.7 (42.1 ) 933.6 1,316.1 (29.1 ) Income tax expense 63.1 71.7 (12.0 ) 211.2 258.8 (18.4 ) Net income 147.9 293.0 (49.5 ) 722.4 1,057.3 (31.7 ) Dividends on preferred stock 3.2 3.2 — 12.8 12.8 — Net income available to common stockholders $ 144.7 $ 289.8 (50.1 ) $ 709.6 $ 1,044.5 (32.1 ) Diluted earnings per common share $ 1.33 $ 2.67 (50.2 ) $ 6.54 $ 9.70 (32.6 ) (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, 2023 2022 Change % 2023 2022 Change % Diluted earnings per common share $ 1.33 $ 2.67 (50.2 )% $ 6.54 $ 9.70 (32.6 )% Book value per common share 52.81 46.47 13.6 Tangible book value per common share, net of tax (1) 46.72 40.25 16.1 Average common shares outstanding (in millions): Basic 108.4 108.0 0.3 108.3 107.2 1.0 Diluted 108.7 108.4 0.3 108.5 107.6 0.8 Common shares outstanding 109.5 108.9 0.5 Selected Performance Ratios: Return on average assets (2) 0.84 % 1.67 % (49.7 )% 1.03 % 1.62 % (36.4 )% Return on average tangible common equity (1, 2) 11.9 27.0 (55.9 ) 14.9 25.4 (41.3 ) Net interest margin (2) 3.65 3.98 (8.3 ) 3.63 3.67 (1.1 ) Efficiency ratio, adjusted for deposit costs (1) 59.1 40.0 47.8 53.5 41.1 30.2 HFI loan to deposit ratio 90.9 96.7 (6.0 ) Asset Quality Ratios: Net charge-offs to average loans outstanding (2) 0.07 % 0.01 % NM 0.06 % 0.00 % NM Nonaccrual loans to funded HFI loans 0.54 0.16 NM Nonaccrual loans and repossessed assets to total assets 0.40 0.14 NM Allowance for loan losses to funded HFI loans 0.67 0.60 11.7 Allowance for loan losses to nonaccrual HFI loans 123 364 (66.2 ) Capital Ratios: Dec 31, 2023 Sep 30, 2023 Dec 31, 2022 Tangible common equity (1) 7.3 % 6.8 % 6.5 % Common Equity Tier 1 (3) 10.8 10.6 9.3 Tier 1 Leverage ratio (3) 8.6 8.5 7.8 Tier 1 Capital (3) 11.5 11.3 10.0 Total Capital (3) 13.7 13.5 12.1 (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, 2023 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, 2023 2022 2023 2022 (dollars in millions, except per share data) Interest income: Loans $ 859.0 $ 785.1 $ 3,409.7 $ 2,393.4 Investment securities 136.2 89.4 467.5 272.6 Other 43.8 13.8 158.1 25.8 Total interest income 1,039.0 888.3 4,035.3 2,691.8 Interest expense: Deposits 343.7 157.6 1,142.6 276.4 Qualifying debt 9.6 9.1 37.9 35.0 Borrowings 94.0 81.9 515.9 164.1 Total interest expense 447.3 248.6 1,696.4 475.5 Net interest income 591.7 639.7 2,338.9 2,216.3 Provision for credit losses 9.3 3.1 62.6 68.1 Net interest income after provision for credit losses 582.4 636.6 2,276.3 2,148.2 Non-interest income: Net gain on loan origination and sale activities 47.8 25.4 193.5 104.0 Service charges and fees 22.7 5.9 76.3 27.0 Income from equity investments 13.1 4.2 15.7 17.8 Net loan servicing revenue 9.1 21.4 102.3 130.9 Commercial banking related income 5.9 5.5 23.7 21.5 (Loss) gain on recovery from credit guarantees (2.7 ) 3.0 (2.2 ) 14.7 (Loss) gain on sales of investment securities (14.8 ) 0.1 (40.8 ) 6.8 Fair value gain (loss) adjustments, net 1.3 (9.2 ) (116.0 ) (28.6 ) Other 8.1 5.2 28.2 30.5 Total non-interest income 90.5 61.5 280.7 324.6 Non-interest expenses: Salaries and employee benefits 134.6 125.7 566.3 539.5 Deposit costs 131.0 82.2 436.7 165.8 Insurance 108.6 8.9 190.4 31.1 Data processing 33.1 23.9 122.0 83.0 Legal, professional, and directors' fees 29.4 26.0 107.2 99.9 Occupancy 16.9 15.8 65.6 55.5 Loan servicing expenses 14.7 14.8 58.8 55.5 Business development and marketing 6.7 7.3 21.8 22.1 Loan acquisition and origination expenses 4.8 4.4 20.4 23.1 Net loss (gain) on sales and valuations of repossessed and other assets 0.3 (0.3 ) 3.0 (0.7 ) Gain on extinguishment of debt (39.3 ) — (52.7 ) — Other 21.1 24.7 83.9 81.9 Total non-interest expense 461.9 333.4 1,623.4 1,156.7 Income before income taxes 211.0 364.7 933.6 1,316.1 Income tax expense 63.1 71.7 211.2 258.8 Net income 147.9 293.0 722.4 1,057.3 Dividends on preferred stock 3.2 3.2 12.8 12.8 Net income available to common stockholders $ 144.7 $ 289.8 $ 709.6 $ 1,044.5 Earnings per common share: Diluted shares 108.7 108.4 108.5 107.6 Diluted earnings per share $ 1.33 $ 2.67 $ 6.54 $ 9.70 Western Alliance Bancorporation and Subsidiaries Five Quarter Condensed Consolidated Income Statements Unaudited Three Months Ended Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 (in millions, except per share data) Interest income: Loans $ 859.0 $ 860.8 $ 857.2 $ 832.7 $ 785.1 Investment securities 136.2 122.8 112.4 96.1 89.4 Other 43.8 43.0 31.2 40.1 13.8 Total interest income 1,039.0 1,026.6 1,000.8 968.9 888.3 Interest expense: Deposits 343.7 316.2 251.1 231.6 157.6 Qualifying debt 9.6 9.5 9.5 9.3 9.1 Borrowings 94.0 113.9 189.9 118.1 81.9 Total interest expense 447.3 439.6 450.5 359.0 248.6 Net interest income 591.7 587.0 550.3 609.9 639.7 Provision for credit losses 9.3 12.1 21.8 19.4 3.1 Net interest income after provision for credit losses 582.4 574.9 528.5 590.5 636.6 Non-interest income: Net gain on loan origination and sale activities 47.8 52.0 62.3 31.4 25.4 Service charges and fees 22.7 23.3 20.8 9.5 5.9 Income from equity investments 13.1 0.5 0.7 1.4 4.2 Net loan servicing revenue 9.1 27.2 24.1 41.9 21.4 Commercial banking related income 5.9 5.6 6.0 6.2 5.5 (Loss) gain on recovery from credit guarantees (2.7 ) (4.0 ) 1.2 3.3 3.0 (Loss) gain on sales of investment securities (14.8 ) 0.1 (13.6 ) (12.5 ) 0.1 Fair value gain (loss) adjustments, net 1.3 17.8 12.7 (147.8 ) (9.2 ) Other 8.1 6.7 4.8 8.6 5.2 Total non-interest income 90.5 129.2 119.0 (58.0 ) 61.5 Non-interest expenses: Salaries and employee benefits 134.6 137.2 145.6 148.9 125.7 Deposit costs 131.0 127.8 91.0 86.9 82.2 Insurance 108.6 33.1 33.0 15.7 8.9 Data processing 33.1 33.9 28.6 26.4 23.9 Legal, professional, and directors' fees 29.4 28.3 26.4 23.1 26.0 Occupancy 16.9 16.8 15.4 16.5 15.8 Loan servicing expenses 14.7 11.9 18.4 13.8 14.8 Business development and marketing 6.7 4.9 5.0 5.2 7.3 Loan acquisition and origination expenses 4.8 5.6 5.6 4.4 4.4 Net loss (gain) on sales and valuations of repossessed and other assets 0.3 2.2 0.5 0.0 (0.3 ) Gain on extinguishment of debt (39.3 ) — (0.7 ) (12.7 ) — Other 21.1 24.5 18.6 19.7 24.7 Total non-interest expense 461.9 426.2 387.4 347.9 333.4 Income before income taxes 211.0 277.9 260.1 184.6 364.7 Income tax expense 63.1 61.3 44.4 42.4 71.7 Net income 147.9 216.6 215.7 142.2 293.0 Dividends on preferred stock 3.2 3.2 3.2 3.2 3.2 Net income available to common stockholders $ 144.7 $ 213.4 $ 212.5 $ 139.0 $ 289.8 Earnings per common share: Diluted shares 108.7 108.5 108.3 108.3 108.4 Diluted earnings per share $ 1.33 $ 1.97 $ 1.96 $ 1.28 $ 2.67 Western Alliance Bancorporation and Subsidiaries Five Quarter Condensed Consolidated Balance Sheets Unaudited Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 (in millions) Assets: Cash and due from banks $ 1,576 $ 3,497 $ 2,153 $ 3,639 $ 1,043 Investment securities 12,993 11,423 10,374 9,493 8,760 Loans held for sale 1,402 1,766 3,156 7,022 1,184 Loans held for investment: Commercial and industrial 19,103 18,344 16,657 15,503 20,710 Commercial real estate - non-owner occupied 9,650 9,810 9,913 9,617 9,319 Commercial real estate - owner occupied 1,810 1,771 1,805 1,809 1,818 Construction and land development 4,889 4,669 4,428 4,407 4,013 Residential real estate 14,778 14,779 15,000 15,024 15,928 Consumer 67 74 72 75 74 Loans HFI, net of deferred fees 50,297 49,447 47,875 46,435 51,862 Allowance for loan losses (337 ) (327 ) (321 ) (305 ) (310 ) Loans HFI, net of deferred fees and allowance 49,960 49,120 47,554 46,130 51,552 Mortgage servicing rights 1,124 1,233 1,007 910 1,148 Premises and equipment, net 339 327 315 293 276 Operating lease right-of-use asset 145 150 151 156 163 Other assets acquired through foreclosure, net 8 8 11 11 11 Bank owned life insurance 186 184 184 183 182 Goodwill and other intangibles, net 669 672 674 677 680 Other assets 2,460 2,511 2,581 2,533 2,735 Total assets $ 70,862 $ 70,891 $ 68,160 $ 71,047 $ 67,734 Liabilities and Stockholders' Equity: Liabilities: Deposits Non-interest bearing demand deposits $ 14,520 $ 17,991 $ 16,733 $ 16,465 $ 19,691 Interest bearing: Demand 15,916 12,843 12,646 10,719 9,507 Savings and money market 14,791 14,672 13,085 13,845 19,397 Certificates of deposit 10,106 8,781 8,577 6,558 5,049 Total deposits 55,333 54,287 51,041 47,587 53,644 Borrowings 7,230 8,745 9,567 15,853 6,299 Qualifying debt 895 890 888 895 893 Operating lease liability 179 180 179 184 185 Accrued interest payable and other liabilities 1,147 1,043 800 1,007 1,357 Total liabilities 64,784 65,145 62,475 65,526 62,378 Stockholders' Equity: Preferred stock 295 295 295 295 295 Common stock and additional paid-in capital 2,081 2,073 2,064 2,054 2,058 Retained earnings 4,215 4,111 3,937 3,764 3,664 Accumulated other comprehensive loss (513 ) (733 ) (611 ) (592 ) (661 ) Total stockholders' equity 6,078 5,746 5,685 5,521 5,356 Total liabilities and stockholders' equity $ 70,862 $ 70,891 $ 68,160 $ 71,047 $ 67,734 Western Alliance Bancorporation and Subsidiaries Changes in the Allowance For Credit Losses on Loans Unaudited Three Months Ended Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 (in millions) Allowance for loan losses Balance, beginning of period $ 327.4 $ 321.1 $ 304.7 $ 309.7 $ 304.1 Provision for credit losses (1) 17.8 14.3 23.8 1.0 7.4 Recoveries of loans previously charged-off: Commercial and industrial 0.7 0.4 0.7 3.2 0.3 Commercial real estate - non-owner occupied — — — — — Commercial real estate - owner occupied 0.1 — — — 0.1 Construction and land development — — — — — Residential real estate — 0.1 — — — Consumer — — 0.1 — — Total recoveries 0.8 0.5 0.8 3.2 0.4 Loans charged-off: Commercial and industrial 9.3 5.5 6.0 9.1 1.1 Commercial real estate - non-owner occupied — 3.0 2.2 — — Commercial real estate - owner occupied — — — — 0.5 Construction and land development — — — — 0.6 Residential real estate — — — — — Consumer — — — 0.1 — Total loans charged-off 9.3 8.5 8.2 9.2 2.2 Net loan charge-offs 8.5 8.0 7.4 6.0 1.8 Balance, end of period $ 336.7 $ 327.4 $ 321.1 $ 304.7 $ 309.7 Allowance for unfunded loan commitments Balance, beginning of period $ 37.9 $ 41.1 $ 44.8 $ 47.0 $ 52.1 Recovery of credit losses (1) (6.3 ) (3.2 ) (3.7 ) (2.2 ) (5.1 ) Balance, end of period (2) $ 31.6 $ 37.9 $ 41.1 $ 44.8 $ 47.0 Components of the allowance for credit losses on loans Allowance for loan losses $ 336.7 $ 327.4 $ 321.1 $ 304.7 $ 309.7 Allowance for unfunded loan commitments 31.6 37.9 41.1 44.8 47.0 Total allowance for credit losses on loans $ 368.3 $ 365.3 $ 362.2 $ 349.5 $ 356.7 Net charge-offs to average loans - annualized 0.07 % 0.07 % 0.06 % 0.05 % 0.01 % Allowance ratios Allowance for loan losses to funded HFI loans (3) 0.67 % 0.66 % 0.67 % 0.66 % 0.60 % Allowance for credit losses to funded HFI loans (3) 0.73 0.74 0.76 0.75 0.69 Allowance for loan losses to nonaccrual HFI loans 123 138 125 285 364 Allowance for credit losses to nonaccrual HFI loans 135 154 141 327 420 (1) The above tables reflect the provision for credit losses on funded and unfunded loans. There was a $3.3 million provision release on AFS investment securities and a $1.1 million provision for credit losses on HTM investment securities for the three months ended December 31, 2023. The allowance for credit losses on AFS and HTM investment securities totaled $1.4 million and $7.8 million, respectively, as of December 31, 2023. (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 $14.7 million as of December 31, 2023 related to a pool of loans covered under three separate credit linked note transactions. Western Alliance Bancorporation and Subsidiaries Asset Quality Metrics Unaudited Three Months Ended Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 (in millions) Nonaccrual loans and repossessed assets Nonaccrual loans $ 273 $ 237 $ 256 $ 107 $ 85 Nonaccrual loans to funded HFI loans 0.54 % 0.48 % 0.53 % 0.23 % 0.16 % Repossessed assets $ 8 $ 8 $ 11 $ 11 $ 11 Nonaccrual loans and repossessed assets to total assets 0.40 % 0.35 % 0.39 % 0.17 % 0.14 % Loans Past Due Loans past due 90 days, still accruing (1) $ 42 $ — $ — $ 1 $ — Loans past due 90 days, still accruing to funded HFI loans 0.08 % — % — % 0.00 % — % Loans past due 30 to 89 days, still accruing (2) $ 164 $ 189 $ 121 $ 58 $ 70 Loans past due 30 to 89 days, still accruing to funded HFI loans 0.33 % 0.38 % 0.25 % 0.13 % 0.13 % Other credit quality metrics Special mention loans $ 641 $ 668 $ 694 $ 320 $ 351 Special mention loans to funded HFI loans 1.27 % 1.35 % 1.45 % 0.69 % 0.68 % Classified loans on accrual $ 379 $ 381 $ 324 $ 325 $ 280 Classified loans on accrual to funded HFI loans 0.75 % 0.77 % 0.68 % 0.70 % 0.54 % Classified assets $ 673 $ 639 $ 604 $ 459 $ 393 Classified assets to total assets 0.95 % 0.90 % 0.89 % 0.65 % 0.58 % (1) Excludes government guaranteed residential mortgage loans of $399 million, $439 million, $481 million, $494 million, and $582 million as of each respective date in the table above. (2) Excludes government guaranteed residential mortgage loans of $279 million, $261 million, $289 million, $281 million, and $334 million as of each respective date in the table above. Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited Three Months Ended December 31, 2023 September 30, 2023 Average Balance Interest Average Yield / Cost Average Balance Interest Average Yield / Cost ($ in millions) Interest earning assets Loans held for sale $ 1,830 $ 29.6 6.42 % $ 3,069 $ 47.3 6.11 % Loans held for investment: Commercial and industrial 18,530 343.2 7.40 16,855 324.3 7.70 CRE - non-owner occupied 9,715 188.7 7.71 9,950 196.1 7.83 CRE - owner occupied 1,786 26.0 5.88 1,790 26.4 5.97 Construction and land development 4,789 112.6 9.33 4,545 110.3 9.63 Residential real estate 14,758 157.6 4.24 14,914 155.0 4.12 Consumer 71 1.3 7.52 73 1.4 7.43 Total HFI loans (1), (2), (3) 49,649 829.4 6.65 48,127 813.5 6.73 Securities: Securities - taxable 9,168 113.5 4.91 8,272 101.1 4.85 Securities - tax-exempt 2,106 22.7 5.35 2,103 21.7 5.12 Total securities (1) 11,274 136.2 4.99 10,375 122.8 4.91 Cash and other 2,572 43.8 6.75 2,911 43.0 5.87 Total interest earning assets 65,325 1,039.0 6.37 64,482 1,026.6 6.37 Non-interest earning assets Cash and due from banks 287 279 Allowance for credit losses (340 ) (334 ) Bank owned life insurance 185 184 Other assets 4,525 4,513 Total assets $ 69,982 $ 69,124 Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 14,268 $ 104.6 2.91 % $ 12,947 $ 98.9 3.03 % Savings and money market 14,595 119.1 3.24 13,832 106.3 3.05 Certificates of deposit 9,453 120.0 5.03 9,125 111.0 4.83 Total interest-bearing deposits 38,316 343.7 3.56 35,904 316.2 3.49 Short-term borrowings 5,492 79.4 5.74 6,260 97.2 6.16 Long-term debt 594 14.6 9.73 764 16.7 8.68 Qualifying debt 891 9.6 4.26 888 9.5 4.26 Total interest-bearing liabilities 45,293 447.3 3.92 43,816 439.6 3.98 Interest cost of funding earning assets 2.72 2.70 Non-interest-bearing liabilities Non-interest-bearing demand deposits 17,579 18,402 Other liabilities 1,330 1,052 Stockholders’ equity 5,780 5,854 Total liabilities and stockholders' equity $ 69,982 $ 69,124 Net interest income and margin (4) $ 591.7 3.65 % $ 587.0 3.67 % (1) Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $9.1 million and $8.9 million for the three months ended December 31, 2023 and September 30, 2023, respectively. (2) Included in the yield computation are net loan fees of $30.8 million and $28.0 million for the three months ended December 31, 2023 and September 30, 2023, respectively. (3) Includes non-accrual loans. (4) Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis. Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited Three Months Ended December 31, 2023 December 31, 2022 Average Balance Interest Average Yield / Cost Average Balance Interest Average Yield / Cost ($ in millions) Interest earning assets Loans held for sale $ 1,830 $ 29.6 6.42 % $ 2,659 $ 37.8 5.63 % Loans held for investment: Commercial and industrial 18,530 343.2 7.40 21,654 349.3 6.45 CRE - non-owner-occupied 9,715 188.7 7.71 9,077 148.8 6.51 CRE - owner-occupied 1,786 26.0 5.88 1,830 24.4 5.39 Construction and land development 4,789 112.6 9.33 3,798 80.2 8.38 Residential real estate 14,758 157.6 4.24 15,803 143.5 3.60 Consumer 71 1.3 7.52 71 1.1 6.26 Total loans HFI (1), (2), (3) 49,649 829.4 6.65 52,233 747.3 5.70 Securities: Securities - taxable 9,168 113.5 4.91 6,397 68.4 4.25 Securities - tax-exempt 2,106 22.7 5.35 2,068 21.0 5.07 Total securities (1) 11,274 136.2 4.99 8,465 89.4 4.45 Cash and other 2,572 43.8 6.75 1,361 13.8 4.02 Total interest earning assets 65,325 1,039.0 6.37 64,718 888.3 5.50 Non-interest earning assets Cash and due from banks 287 289 Allowance for credit losses (340 ) (308 ) Bank owned life insurance 185 181 Other assets 4,525 4,613 Total assets $ 69,982 $ 69,493 Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 14,268 $ 104.6 2.91 % $ 8,754 $ 43.6 1.98 % Savings and money market accounts 14,595 119.1 3.24 18,651 88.0 1.87 Certificates of deposit 9,453 120.0 5.03 4,260 26.0 2.42 Total interest-bearing deposits 38,316 343.7 3.56 31,665 157.6 1.97 Short-term borrowings 5,492 79.4 5.74 5,440 54.8 3.99 Long-term debt 594 14.6 9.73 1,240 27.1 8.68 Qualifying debt 891 9.6 4.26 890 9.1 4.08 Total interest-bearing liabilities 45,293 447.3 3.92 39,235 248.6 2.51 Interest cost of funding earning assets 2.72 1.52 Non-interest-bearing liabilities Non-interest-bearing demand deposits 17,579 23,729 Other liabilities 1,330 1,296 Stockholders’ equity 5,780 5,233 Total liabilities and stockholders' equity $ 69,982 $ 69,493 Net interest income and margin (4) $ 591.7 3.65 % $ 639.7 3.98 % (1) Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $9.1 million and $9.0 million for the three months ended December 31, 2023 and 2022, respectively. (2) Included in the yield computation are net loan fees of $30.8 million and $34.8 million for the three months ended December 31, 2023 and 2022, respectively. (3) Includes non-accrual loans. (4) Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis. Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited Year Ended December 31, 2023 December 31, 2022 Average Balance Interest Average Yield / Cost Average Balance Interest Average Yield / Cost ($ in millions) Interest earning assets Loans HFS $ 3,347 $ 213.4 6.38 % $ 4,364 $ 180.3 4.13 % Loans HFI: Commercial and industrial 17,886 1,337.9 7.54 20,083 1,002.8 5.05 CRE - non-owner occupied 9,736 734.8 7.56 7,769 416.4 5.37 CRE - owner occupied 1,800 102.3 5.79 1,841 93.2 5.16 Construction and land development 4,498 419.7 9.33 3,426 229.1 6.69 Residential real estate 15,126 596.4 3.94 13,771 468.5 3.40 Consumer 72 5.2 7.23 61 3.1 5.07 Total loans HFI (1), (2), (3) 49,118 3,196.3 6.53 46,951 2,213.1 4.74 Securities: Securities - taxable 8,002 381.3 4.76 6,325 195.3 3.09 Securities - tax-exempt 2,097 86.2 5.15 2,067 77.3 4.68 Total securities (1) 10,099 467.5 4.84 8,392 272.6 3.48 Other 2,848 158.1 5.55 1,574 25.8 1.64 Total interest earning assets (4) 65,412 4,035.3 6.22 61,281 2,691.8 4.45 Non-interest earning assets Cash and due from banks 273 260 Allowance for credit losses (326 ) (280 ) Bank owned life insurance 183 180 Other assets 4,581 3,948 Total assets $ 70,123 $ 65,389 Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 12,422 $ 352.0 2.83 % $ 8,331 $ 78.8 0.95 % Savings and money market accounts 14,903 428.1 2.87 18,518 158.6 0.86 Certificates of deposit 7,945 362.5 4.56 2,772 39.0 1.40 Total interest-bearing deposits 35,270 1,142.6 3.24 29,621 276.4 0.93 Short-term borrowings 7,800 434.6 5.57 3,424 92.1 2.69 Long-term debt 862 81.3 9.43 1,008 72.0 7.14 Qualifying debt 892 37.9 4.25 893 35.0 3.92 Total interest-bearing liabilities 44,824 1,696.4 3.78 34,946 475.5 1.36 Interest cost of funding earning assets 2.59 0.78 Non-interest-bearing liabilities Non-interest-bearing demand deposits 18,293 24,133 Other liabilities 1,287 1,211 Stockholders’ equity 5,719 5,099 Total liabilities and stockholders' equity $ 70,123 $ 65,389 Net interest income and margin (5) $ 2,338.9 3.63 % $ 2,216.3 3.67 % (1) Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $35.5 million and $33.7 million for the year ended December 31, 2023 and 2022, respectively. (2) Included in the yield computation are net loan fees of $131.2 million and $132.2 million for the year ended December 31, 2023 and 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 Operating Segment Results Unaudited Balance Sheet: Consolidated Company Commercial Consumer Related Corporate & Other At December 31, 2023: (dollars in millions) Assets: Cash, cash equivalents, and investment securities $ 14,569 $ 13 $ 125 $ 14,431 Loans HFS 1,402 — 1,402 — Loans HFI, net of deferred fees and costs 50,297 29,136 21,161 — Less: allowance for credit losses (337 ) (284 ) (53 ) — Net loans HFI 49,960 28,852 21,108 — Other assets acquired through foreclosure, net 8 8 — — Goodwill and other intangible assets, net 669 292 377 — Other assets 4,254 390 1,826 2,038 Total assets $ 70,862 $ 29,555 $ 24,838 $ 16,469 Liabilities: Deposits $ 55,333 $ 23,897 $ 24,925 $ 6,511 Borrowings and qualifying debt 8,125 7 402 7,716 Other liabilities 1,326 109 338 879 Total liabilities 64,784 24,013 25,665 15,106 Allocated equity: 6,078 2,555 1,300 2,223 Total liabilities and stockholders' equity $ 70,862 $ 26,568 $ 26,965 $ 17,329 Excess funds provided (used) — (2,987 ) 2,127 860 No. of offices 57 46 8 3 No. of full-time equivalent employees 3,260 584 711 1,965 Income Statement: Three Months Ended December 31, 2023: (in millions) Net interest income $ 591.7 $ 309.9 $ 251.1 $ 30.7 Provision for (recovery of) credit losses 9.3 8.6 2.9 (2.2 ) Net interest income after provision for credit losses 582.4 301.3 248.2 32.9 Non-interest income 90.5 16.8 60.3 13.4 Non-interest expense 461.9 149.7 232.9 79.3 Income (loss) before income taxes 211.0 168.4 75.6 (33.0 ) Income tax expense (benefit) 63.1 49.7 19.8 (6.4 ) Net income (loss) $ 147.9 $ 118.7 $ 55.8 $ (26.6 ) Year Ended December 31, 2023: (in millions) Net interest income $ 2,338.9 $ 1,387.4 $ 898.9 $ 52.6 Provision for credit losses 62.6 38.3 3.3 21.0 Net interest income after provision for credit losses 2,276.3 1,349.1 895.6 31.6 Non-interest income 280.7 (23.3 ) 286.9 17.1 Non-interest expense 1,623.4 580.6 924.5 118.3 Income (loss) before provision for income taxes 933.6 745.2 258.0 (69.6 ) Income tax expense (benefit) 211.2 174.8 59.2 (22.8 ) Net income (loss) $ 722.4 $ 570.4 $ 198.8 $ (46.8 ) 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 Reconciliation of Non-GAAP Financial Measures Unaudited Pre-Provision Net Revenue by Quarter: Three Months Ended 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 (in millions) Net interest income $ 591.7 $ 587.0 $ 550.3 $ 609.9 $ 639.7 Total non-interest income 90.5 129.2 119.0 (58.0 ) 61.5 Net revenue $ 682.2 $ 716.2 $ 669.3 $ 551.9 $ 701.2 Total non-interest expense 461.9 426.2 387.4 347.9 333.4 Pre-provision net revenue (1) $ 220.3 $ 290.0 $ 281.9 $ 204.0 $ 367.8 Less: Provision for credit losses 9.3 12.1 21.8 19.4 3.1 Income tax expense 63.1 61.3 44.4 42.4 71.7 Net income $ 147.9 $ 216.6 $ 215.7 $ 142.2 $ 293.0 Pre-Provision Net Revenue, Excluding Notable Items Three Months Ended 12/31/2023: (in millions) Pre-provision net revenue (1) $ 220.3 Excluding notable items: Non-interest income MSR fair value adjustments and sales, net of hedging 25.3 Loss on sales of HFI loans 3.7 Outsized solar investment gains (8.0 ) Loss on sales of investment securities 14.8 Non-interest expense FDIC special assessment 66.3 Gain on extinguishment of debt (39.3 ) Total notable items 62.8 Pre-provision net revenue, excluding notable items (1) $ 283.1 Less: Provision for credit losses 9.3 Income tax expense 63.1 Total notable items 62.8 Net income $ 147.9 Three Months Ended 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 Efficiency Ratio (Tax Equivalent Basis) by Quarter: (dollars in millions) Total non-interest expense $ 461.9 $ 426.2 $ 387.4 $ 347.9 $ 333.4 Less: Deposit costs 131.0 127.8 91.0 86.9 82.2 Total non-interest expense, excluding deposit costs 330.9 298.4 296.4 261.0 251.2 Divided by: Total net interest income 591.7 587.0 550.3 609.9 639.7 Plus: Tax equivalent interest adjustment 9.1 8.9 8.7 8.8 9.0 Total non-interest income 90.5 129.2 119.0 (58.0 ) 61.5 Less: Deposit costs 131.0 127.8 91.0 86.9 82.2 $ 560.3 $ 597.3 $ 587.0 $ 473.8 $ 628.0 Efficiency ratio (2) 66.8 % 58.8 % 57.1 % 62.0 % 46.9 % Efficiency ratio, adjusted for deposit costs (2) 59.1 % 50.0 % 50.5 % 55.1 % 40.0 % Western Alliance Bancorporation and Subsidiaries Reconciliation of Non-GAAP Financial Measures Unaudited Earnings per Share, Excluding Notable Items: Three Months Ended 12/31/2023: (in millions) Net income available to common stockholders $ 144.7 Excluding: Total notable items (4) 62.8 Income tax Tax effect of notable items (14.4 ) Elevated effective tax rate 14.6 Net income available to common stockholders, excluding notable items $ 207.7 Diluted shares 108.7 Diluted earnings per share, excluding notable items (1) $ 1.91 Tangible Common Equity: 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 (dollars and shares in millions) Total stockholders' equity $ 6,078 $ 5,746 $ 5,685 $ 5,521 $ 5,356 Less: Goodwill and intangible assets 669 672 674 677 680 Preferred stock 295 295 295 295 295 Total tangible common equity 5,114 4,779 4,716 4,549 4,381 Plus: deferred tax - attributed to intangible assets 2 2 2 2 2 Total tangible common equity, net of tax $ 5,116 $ 4,781 $ 4,718 $ 4,551 $ 4,383 Total assets $ 70,862 $ 70,891 $ 68,160 $ 71,047 $ 67,734 Less: goodwill and intangible assets, net 669 672 674 677 680 Tangible assets 70,193 70,219 67,486 70,370 67,054 Plus: deferred tax - attributed to intangible assets 2 2 2 2 2 Total tangible assets, net of tax $ 70,195 $ 70,221 $ 67,488 $ 70,372 $ 67,056 Tangible common equity ratio (3) 7.3 % 6.8 % 7.0 % 6.5 % 6.5 % Common shares outstanding 109.5 109.5 109.5 109.5 108.9 Tangible book value per share, net of tax (3) $ 46.72 $ 43.66 $ 43.09 $ 41.56 $ 40.25 Return on Average Tangible Common Equity, Excluding Notable Items: Three Months Ended 12/31/2023: (in millions) Net income available to common shareholders, excluding notable items $ 207.7 Divided by: Average stockholders' equity $ 5,780 Less: Average goodwill and intangible assets 670 Average preferred stock 295 Average tangible common equity $ 4,816 Return on average tangible common equity, excluding notable items (1) 17.1 % Return on Average Assets, Excluding Notable Items: Three Months Ended 12/31/2023: (in millions) Net income $ 147.9 Excluding: Total notable items (4) 62.8 Income tax Tax effect of notable items (14.4 ) Elevated effective tax rate 14.6 Net income, excluding notable items $ 210.9 Divided by: Average assets $ 69,982 Return on average assets, excluding notable items (1) 1.20 % 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 the financial condition and capital strength of the Company. (4) See reconciliation of PPNR, excluding notable items, for additional detail regarding the components of notable items. View source version on businesswire.com: https://www.businesswire.com/news/home/20240124805047/en/Contacts Western Alliance Bancorporation Dale Gibbons, 602-952-5476
Western Alliance Bancorporation (NYSE:WAL): FOURTH QUARTER AND FULL YEAR 2023 FINANCIAL RESULTS Quarter Highlights: Net income Earnings per share PPNR1 Net interest margin Adjusted efficiency ratio1 Book value per common share $147.9 million $1.33 $220.3 million 3.65% 59.1% $52.81 $1.911, excluding notable items $46.721, excluding goodwill and intangibles CEO COMMENTARY: “Western Alliance’s diversified, national commercial business strategy continued to drive strong momentum in the fourth quarter as we generated earnings per share of $1.911, excluding $0.58 of notable items. We view this quarter’s solid loan and deposit momentum, continued net interest income growth, and sustained stable asset quality as positioning us to deliver leading profitability in 2024, supported by sturdy capital and liquidity levels,” said Kenneth A. Vecchione, President and Chief Executive Officer. “CET1 capital reached 10.8% at year-end, and tangible book value per share rose 16% year-over-year to $46.721. Additionally, our strong deposit growth allowed us to repay $1.5 billion of debt and borrowings, including our entire loan from the Bank Term Funding Program. As we turn the page on 2023, we are encouraged by how our employees responded to the year’s challenges as well as the ongoing trust placed in us by our customers and shareholders.” LINKED-QUARTER BASIS FULL YEAR FINANCIAL HIGHLIGHTS: Net income of $147.9 million and earnings per share of $1.33, compared to $216.6 million and $1.97, respectively Net revenue of $682.2 million, a decrease of 4.7%, or $34.0 million, compared to an increase in non-interest expenses of 8.4%, or $35.7 million Pre-provision net revenue1 of $220.3 million, down $69.7 million from $290.0 million Effective tax rate of 29.9%, compared to 22.1% Net income of $722.4 million and earnings per share of $6.54, down 31.7% and 32.6%, from $1.1 billion and $9.70, respectively Net revenue of $2.6 billion, an increase of 3.1%, or $78.7 million, compared to an increase in non-interest expenses of 40.3%, or $466.7 million Pre-provision net revenue1 of $996.2 million, down $388.0 million from $1.4 billion Effective tax rate of 22.6%, compared to 19.7% FINANCIAL POSITION RESULTS: HFI loans of $50.3 billion, up $850 million, or 1.7%. Total deposits of $55.3 billion, up $1.0 billion, or 1.9% Stockholders' equity of $6.1 billion, up $332 million Decrease in HFI loans of $1.6 billion, or 3.0% Increase in total deposits of $1.7 billion, or 3.1% Increase in stockholders' equity of $722 million LOANS AND ASSET QUALITY: Nonperforming assets (nonaccrual loans and repossessed assets) to total assets of 0.40%, compared to 0.35% Annualized net loan charge-offs to average loans outstanding of 0.07%, flat from the prior quarter Nonperforming assets to total assets of 0.40%, compared to 0.14% Net loan charge-offs to average loans outstanding of 0.06%, compared to approximately 0.00% KEY PERFORMANCE METRICS: Net interest margin of 3.65% decreased from 3.67% Return on average assets and on tangible common equity1 of 0.84% and 11.9%, compared to 1.24% and 17.3%, respectively Tangible common equity ratio1 of 7.3%, compared to 6.8% CET 1 ratio of 10.8% increased from 10.6% Tangible book value per share1, net of tax, of $46.72, an increase of 7.0% from $43.66 Adjusted efficiency ratio1 of 59.1%, compared to 50.0% Net interest margin of 3.63% decreased from 3.67% Return on average assets and on tangible common equity1 of 1.03% and 14.9%, compared to 1.62% and 25.4%, respectively Tangible common equity ratio1 of 7.3% increased from 6.5% CET 1 ratio of 10.8% increased from 9.3% Tangible book value per share1, net of tax, of $46.72, an increase of 16.1% from $40.25 Adjusted efficiency ratio1 of 53.5%, compared to 41.1% 1 See reconciliation of Non-GAAP Financial Measures. Income Statement Net interest income totaled $591.7 million in the fourth quarter 2023, an increase of $4.7 million, or 0.8%, from $587.0 million in the third quarter 2023, and a decrease of $48.0 million, or 7.5%, compared to the fourth quarter 2022. The increase in net interest income from the third quarter 2023 is due to an increase in average HFI loan and securities balances combined with a decrease in average short-term borrowings, and was partially offset by an increase in deposit balances and rates. The decrease in net interest income from the fourth quarter 2022 was driven by an increase in both the balances and rates of deposits and short-term borrowings, partially offset by higher yields on HFI loans. The Company recorded a provision for credit losses of $9.3 million in the fourth quarter 2023, a decrease of $2.8 million from $12.1 million in the third quarter 2023, and an increase of $6.2 million from $3.1 million in the fourth quarter 2022. The decrease in provision for credit losses during the fourth quarter 2023 is primarily due to improvement in the macroeconomic outlook and stable asset quality. The Company’s net interest margin in the fourth quarter 2023 was 3.65%, a decrease from 3.67% in the third quarter 2023, and a decrease from 3.98% in the fourth quarter 2022. An increase in deposit balances and rates drove a decrease in net interest margin from the third quarter 2023, with higher average HFI loan and securities balances partially offsetting this decrease. The decrease in net interest margin from the fourth quarter 2022 was driven by higher average balances and rates on deposits and short-term borrowings. Non-interest income was $90.5 million for the fourth quarter 2023, compared to $129.2 million for the third quarter 2023, and $61.5 million for the fourth quarter 2022. The $38.7 million decrease in non-interest income for the third quarter 2023 was due to a decrease in fair value gain adjustments of $16.5 million and a $14.8 million loss on sale of securities in the fourth quarter compared to a gain of $0.1 million in the third quarter, combined with an $18.1 million decrease in net loan servicing revenue due to losses on MSR sales and fair value changes, partially offset by higher servicing income, and a $4.2 million decrease in net gain on loan origination and sale activities from lower spreads. These decreases were offset by a $12.6 million increase in income from equity investments. The $29.0 million increase in non-interest income from the fourth quarter 2022 was driven by a higher net gain on loan origination and sale activities, service charges and fees, and fair value gain adjustments. Net revenue totaled $682.2 million for the fourth quarter 2023, a decrease of $34.0 million or 4.7%, compared to $716.2 million for the third quarter 2023, and a decrease of $19.0 million or 2.7%, compared to $701.2 million for the fourth quarter 2022. Non-interest expense was $461.9 million for the fourth quarter 2023, compared to $426.2 million for the third quarter 2023, and $333.4 million for the fourth quarter 2022. The Company’s adjusted efficiency ratio1 was 59.1% for the fourth quarter 2023, compared to 50.0% in the third quarter 2023, and 40.0% for the fourth quarter 2022. The increase in non-interest expense from the third quarter 2023 is due primarily to increased insurance costs largely related to the FDIC special assessment, partially offset by a gain on debt extinguishment related to the early payoff of the AmeriHome senior notes. The increase in non-interest expense from the fourth quarter 2022 is primarily attributable to an increase in insurance and deposit costs. Income tax expense was $63.1 million for the fourth quarter 2023, compared to $61.3 million for the third quarter 2023, and $71.7 million for the fourth quarter 2022. The increase in income tax expense from the third quarter 2023 is primarily related to a higher effective tax rate resulting from lower utilization of tax credits due to timing of projects being placed in service, the AOCI impact of AFS securities gains during the quarter, and discrete nondeductible items. Net income was $147.9 million for the fourth quarter 2023, a decrease of $68.7 million from $216.6 million for the third quarter 2023, and a decrease of $145.1 million from $293.0 million for the fourth quarter 2022. Earnings per share totaled $1.33 for the fourth quarter 2023, compared to $1.97 for the third quarter 2023, and $2.67 for the fourth quarter 2022. Earnings per share, excluding notable items1, totaled $1.91 for the fourth quarter 2023. The Company views its earnings per share, excluding notable items1 as a key metric for assessing the Company’s earnings power. 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 2023, the Company’s PPNR1 was $220.3 million, down $69.7 million from $290.0 million in the third quarter 2023, and down $147.5 million from $367.8 million in the fourth quarter 2022. The Company had 3,260 full-time equivalent employees and 57 offices at December 31, 2023, compared to 3,272 employees and 56 offices at September 30, 2023, and 3,365 employees and 56 offices at December 31, 2022. 1 See reconciliation of Non-GAAP Financial Measures. Balance Sheet HFI loans, net of deferred fees totaled $50.3 billion at December 31, 2023, compared to $49.4 billion at September 30, 2023, and $51.9 billion at December 31, 2022. The increase in HFI loans of $850 million from the prior quarter was driven by an increase of $759 million in commercial and industrial loans and $220 million in construction and land development loans. This increase was partially offset by a decrease in CRE non-owner occupied loans of $160 million. The decrease in HFI loans of $1.6 billion from December 31, 2022 was driven by a $1.6 billion decrease in commercial and industrial loans and a $1.2 billion decrease in residential real estate loans, resulting from loan dispositions undertaken as part of the Company's balance sheet repositioning strategy. This decrease was partially offset by increases in construction and land development loans and CRE non-owner occupied of $876 million and $331 million, respectively. HFS loans totaled $1.4 billion at December 31, 2023, compared to $1.8 billion at September 30, 2023, and $1.2 billion at December 31, 2022. The balance of HFS loans at December 31, 2023 primarily consisted of AmeriHome HFS loans, consistent with the balance at December 31, 2022 and prior periods. The decrease of $364 million in HFS loans from the prior quarter is primarily related to loan sales. The increase of $218 million in HFS loans from December 31, 2022 primarily related to an increase in agency conforming loans. 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, 2023, the allowance for loan losses to funded HFI loans ratio was 0.67%, compared to 0.66% at September 30, 2023, and 0.60% at December 31, 2022. The allowance for credit losses, which includes the allowance for unfunded loan commitments, to funded HFI loans ratio was 0.73% at December 31, 2023, compared to 0.74% at September 30, 2023, and 0.69% at December 31, 2022. 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. The Company is protected from first credit losses on reference pools of loans totaling $9.1 billion, $9.3 billion, and $12.0 billion as of December 31, 2023, September 30, 2023, and December 31, 2022, 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 $14.7 million as of December 31, 2023, $17.4 million as of September 30, 2023, and $18.5 million as of December 31, 2022, 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, 2023, 0.91% at September 30, 2023, and 0.89% at December 31, 2022. Deposits totaled $55.3 billion at December 31, 2023, an increase of $1.0 billion from $54.3 billion at September 30, 2023, and an increase of $1.7 billion from $53.6 billion at December 31, 2022. By deposit type, the increase from the prior quarter is attributable to increases of $3.1 billion from interest-bearing demand deposits and $1.3 billion from certificates of deposits, offset by a decrease of $3.5 billion from non-interest bearing demand deposits. From December 31, 2022, interest-bearing demand deposits and certificates of deposit increased $6.4 billion and $5.1 billion, respectively. These increases were partially offset by decreases in non-interest bearing demand deposits and savings and money market accounts of $5.2 billion and $4.6 billion, respectively. Non-interest bearing deposits were $14.5 billion at December 31, 2023, compared to $18.0 billion at September 30, 2023, and $19.7 billion at December 31, 2022. The table below shows the Company's deposit types as a percentage of total deposits: Dec 31, 2023 Sep 30, 2023 Dec 31, 2022 Non-interest bearing 26.2 % 33.1 % 36.7 % Savings and money market 26.7 27.0 36.2 Interest-bearing demand 28.8 23.7 17.7 Certificates of deposit 18.3 16.2 9.4 The Company’s ratio of HFI loans to deposits was 90.9% at December 31, 2023, compared to 91.1% at September 30, 2023, and 96.7% at December 31, 2022. Borrowings were $7.2 billion at December 31, 2023, $8.7 billion at September 30, 2023, and $6.3 billion at December 31, 2022. Borrowings decreased $1.5 billion from September 30, 2023 due to payoff of the Bank Term Funding Program advances and the AmeriHome senior notes. The increase in borrowings from December 31, 2022 is due primarily to an increase in short-term borrowings of $1.8 billion, partially offset by payoffs of credit linked notes and the AmeriHome senior notes. Qualifying debt totaled $895 million at December 31, 2023, compared to $890 million at September 30, 2023, and $893 million at December 31, 2022. Stockholders’ equity was $6.1 billion at December 31, 2023, compared to $5.7 billion at September 30, 2023 and $5.4 billion at December 31, 2022. The increase in stockholders’ equity from the prior quarter was due to net income and unrealized fair value gains of $222 million on the Company's available-for-sale securities, which are recorded in other comprehensive loss, net of tax. These increases were partially offset by dividends to shareholders. Cash dividends of $40.5 million ($0.37 per common share) and $3.2 million ($0.27 per depository share) were paid to shareholders during the fourth quarter 2023. The increase in stockholders' equity from December 31, 2022 is primarily a function of net income, partially offset by dividends to shareholders. At December 31, 2023, tangible common equity, net of tax1, was 7.3% of tangible assets1 and total capital was 13.7% of risk-weighted assets. The Company’s tangible book value per share1 was $46.72 at December 31, 2023, an increase of 7.0% from $43.66 at September 30, 2023, and up 16.1% from $40.25 at December 31, 2022. The increase in tangible book value per share from September 30, 2023 is attributable to net income. Total assets remained flat from September 30, 2023 to December 31, 2023 at $70.9 billion, and increased 4.6% from $67.7 billion at December 31, 2022. The slight decrease in total assets from September 30, 2023 was driven by a decrease in cash and HFS loans, offset by an increase in investment securities. The increase in total assets from December 31, 2022 was driven by an increase in investments, cash, and HFS loans, partially offset by a decrease in HFI loans. 1 See reconciliation of Non-GAAP Financial Measures. Asset Quality Provision for credit losses totaled $9.3 million for the fourth quarter 2023, compared to $12.1 million for the third quarter 2023, and $3.1 million for the fourth quarter 2022. Net loan charge-offs in the fourth quarter 2023 were $8.5 million, or 0.07% of average loans (annualized), compared to $8.0 million, or 0.07%, in the third quarter 2023, and $1.8 million, or 0.01%, in the fourth quarter 2022. Nonaccrual loans increased $36 million to $273 million during the quarter and increased $188 million from December 31, 2022. Loans past due 90 days and still accruing interest totaled $42 million at December 31, 2023 and zero at September 30, 2023 and December 31, 2022 (excluding government guaranteed loans of $399 million, $439 million, and $582 million, respectively). Loans past due 30-89 days and still accruing interest totaled $164 million at December 31, 2023, a decrease from $189 million at September 30, 2023, and an increase from $70 million at December 31, 2022 (excluding government guaranteed loans of $279 million, $261 million, and $334 million, respectively). Repossessed assets totaled $8 million at December 31, 2023, flat from September 30, 2023, and a decrease of $3 million from December 31, 2022. Classified assets totaled $673 million at December 31, 2023, an increase of $34 million from $639 million at September 30, 2023, and an increase of $280 million from $393 million at December 31, 2022. The ratio of classified assets to Tier 1 capital plus the allowance for credit losses, a common regulatory measure of asset quality, was 10.5% at December 31, 2023, compared to 10.2% at September 30, 2023, and 6.8% at December 31, 2022. 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. – 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 $29.1 billion at December 31, 2023, an increase of $416 million during the quarter, and a decrease of $2.3 billion during the year. Deposits for the Commercial segment totaled $23.9 billion at December 31, 2023, an increase of $1.3 billion during the quarter, and a decrease of $5.6 billion during the year. Pre-tax income for the Commercial segment was $168.4 million for the three months ended December 31, 2023, a decrease of $27.7 million from the three months ended September 30, 2023, and a decrease of $152.1 million from the three months ended December 31, 2022. For the year ended December 31, 2023, the Commercial segment reported total pre-tax income of $745.2 million, a decrease of $350.1 million compared to the year ended December 31, 2022. The Consumer Related segment reported an HFI loan balance of $21.2 billion at December 31, 2023, an increase of $434 million during the quarter, and an increase of $713 million during the year. The Consumer Related segment also has loans held for sale of $1.4 billion at December 31, 2023, a decrease of $364 million during the quarter, and an increase of $218 million during the year. Deposits for the Consumer Related segment totaled $24.9 billion, a decrease of $169 million during the quarter, and an increase of $6.4 billion during the year. Pre-tax income for the Consumer Related segment was $75.6 million for the three months ended December 31, 2023, an increase of $6.7 million from the three months ended September 30, 2023, and an increase of $5.8 million from the three months ended December 31, 2022. Pre-tax income for the Consumer Related segment for the year ended December 31, 2023 totaled $258.0 million, a decrease of $192.1 million compared to the year ended December 31, 2022. Conference Call and Webcast Western Alliance Bancorporation will host a conference call and live webcast to discuss its fourth quarter and full year 2023 financial results at 12:00 p.m. ET on Friday, January 26, 2024. Participants may access the call by dialing 1-833-470-1428 and using access code 941447 or via live audio webcast using the website link https://events.q4inc.com/attendee/536267609. 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 26th through 11:00 p.m. ET February 26th by dialing 1-866-813-9403, using access code 690232. 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, 2022 and the Company's subsequent Quarterly Reports on Form 10-Q, each as filed with the Securities and Exchange Commission; adverse developments in the financial services industry generally such as the bank failures in 2023 and any related impact on depositor behavior; risks related to the sufficiency of liquidity; 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 wars in Ukraine and the Middle East; 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 $70 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, clients benefit from a full spectrum of tailored commercial banking solutions and consumer products, all delivered with outstanding service by industry experts who put customers first. Major accolades include being ranked as a top U.S. bank in 2023 by American Banker and 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, 2023 2022 Change % (in millions) Total assets $ 70,862 $ 67,734 4.6 % Loans held for sale 1,402 1,184 18.4 HFI loans, net of deferred fees 50,297 51,862 (3.0 ) Investment securities 12,993 8,760 48.3 Total deposits 55,333 53,644 3.1 Borrowings 7,230 6,299 14.8 Qualifying debt 895 893 0.2 Stockholders' equity 6,078 5,356 13.5 Tangible common equity, net of tax (1) 5,116 4,383 16.7 Common equity Tier 1 capital 5,659 5,073 11.6 Selected Income Statement Data: For the Three Months Ended December 31, For the Year Ended December 31, 2023 2022 Change % 2023 2022 Change % (in millions, except per share data) (in millions, except per share data) Interest income $ 1,039.0 $ 888.3 17.0 % $ 4,035.3 $ 2,691.8 49.9 % Interest expense 447.3 248.6 79.9 1,696.4 475.5 NM Net interest income 591.7 639.7 (7.5 ) 2,338.9 2,216.3 5.5 Provision for credit losses 9.3 3.1 NM 62.6 68.1 (8.1 ) Net interest income after provision for credit losses 582.4 636.6 (8.5 ) 2,276.3 2,148.2 6.0 Non-interest income 90.5 61.5 47.2 280.7 324.6 (13.5 ) Non-interest expense 461.9 333.4 38.5 1,623.4 1,156.7 40.3 Income before income taxes 211.0 364.7 (42.1 ) 933.6 1,316.1 (29.1 ) Income tax expense 63.1 71.7 (12.0 ) 211.2 258.8 (18.4 ) Net income 147.9 293.0 (49.5 ) 722.4 1,057.3 (31.7 ) Dividends on preferred stock 3.2 3.2 — 12.8 12.8 — Net income available to common stockholders $ 144.7 $ 289.8 (50.1 ) $ 709.6 $ 1,044.5 (32.1 ) Diluted earnings per common share $ 1.33 $ 2.67 (50.2 ) $ 6.54 $ 9.70 (32.6 ) (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, 2023 2022 Change % 2023 2022 Change % Diluted earnings per common share $ 1.33 $ 2.67 (50.2 )% $ 6.54 $ 9.70 (32.6 )% Book value per common share 52.81 46.47 13.6 Tangible book value per common share, net of tax (1) 46.72 40.25 16.1 Average common shares outstanding (in millions): Basic 108.4 108.0 0.3 108.3 107.2 1.0 Diluted 108.7 108.4 0.3 108.5 107.6 0.8 Common shares outstanding 109.5 108.9 0.5 Selected Performance Ratios: Return on average assets (2) 0.84 % 1.67 % (49.7 )% 1.03 % 1.62 % (36.4 )% Return on average tangible common equity (1, 2) 11.9 27.0 (55.9 ) 14.9 25.4 (41.3 ) Net interest margin (2) 3.65 3.98 (8.3 ) 3.63 3.67 (1.1 ) Efficiency ratio, adjusted for deposit costs (1) 59.1 40.0 47.8 53.5 41.1 30.2 HFI loan to deposit ratio 90.9 96.7 (6.0 ) Asset Quality Ratios: Net charge-offs to average loans outstanding (2) 0.07 % 0.01 % NM 0.06 % 0.00 % NM Nonaccrual loans to funded HFI loans 0.54 0.16 NM Nonaccrual loans and repossessed assets to total assets 0.40 0.14 NM Allowance for loan losses to funded HFI loans 0.67 0.60 11.7 Allowance for loan losses to nonaccrual HFI loans 123 364 (66.2 ) Capital Ratios: Dec 31, 2023 Sep 30, 2023 Dec 31, 2022 Tangible common equity (1) 7.3 % 6.8 % 6.5 % Common Equity Tier 1 (3) 10.8 10.6 9.3 Tier 1 Leverage ratio (3) 8.6 8.5 7.8 Tier 1 Capital (3) 11.5 11.3 10.0 Total Capital (3) 13.7 13.5 12.1 (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, 2023 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, 2023 2022 2023 2022 (dollars in millions, except per share data) Interest income: Loans $ 859.0 $ 785.1 $ 3,409.7 $ 2,393.4 Investment securities 136.2 89.4 467.5 272.6 Other 43.8 13.8 158.1 25.8 Total interest income 1,039.0 888.3 4,035.3 2,691.8 Interest expense: Deposits 343.7 157.6 1,142.6 276.4 Qualifying debt 9.6 9.1 37.9 35.0 Borrowings 94.0 81.9 515.9 164.1 Total interest expense 447.3 248.6 1,696.4 475.5 Net interest income 591.7 639.7 2,338.9 2,216.3 Provision for credit losses 9.3 3.1 62.6 68.1 Net interest income after provision for credit losses 582.4 636.6 2,276.3 2,148.2 Non-interest income: Net gain on loan origination and sale activities 47.8 25.4 193.5 104.0 Service charges and fees 22.7 5.9 76.3 27.0 Income from equity investments 13.1 4.2 15.7 17.8 Net loan servicing revenue 9.1 21.4 102.3 130.9 Commercial banking related income 5.9 5.5 23.7 21.5 (Loss) gain on recovery from credit guarantees (2.7 ) 3.0 (2.2 ) 14.7 (Loss) gain on sales of investment securities (14.8 ) 0.1 (40.8 ) 6.8 Fair value gain (loss) adjustments, net 1.3 (9.2 ) (116.0 ) (28.6 ) Other 8.1 5.2 28.2 30.5 Total non-interest income 90.5 61.5 280.7 324.6 Non-interest expenses: Salaries and employee benefits 134.6 125.7 566.3 539.5 Deposit costs 131.0 82.2 436.7 165.8 Insurance 108.6 8.9 190.4 31.1 Data processing 33.1 23.9 122.0 83.0 Legal, professional, and directors' fees 29.4 26.0 107.2 99.9 Occupancy 16.9 15.8 65.6 55.5 Loan servicing expenses 14.7 14.8 58.8 55.5 Business development and marketing 6.7 7.3 21.8 22.1 Loan acquisition and origination expenses 4.8 4.4 20.4 23.1 Net loss (gain) on sales and valuations of repossessed and other assets 0.3 (0.3 ) 3.0 (0.7 ) Gain on extinguishment of debt (39.3 ) — (52.7 ) — Other 21.1 24.7 83.9 81.9 Total non-interest expense 461.9 333.4 1,623.4 1,156.7 Income before income taxes 211.0 364.7 933.6 1,316.1 Income tax expense 63.1 71.7 211.2 258.8 Net income 147.9 293.0 722.4 1,057.3 Dividends on preferred stock 3.2 3.2 12.8 12.8 Net income available to common stockholders $ 144.7 $ 289.8 $ 709.6 $ 1,044.5 Earnings per common share: Diluted shares 108.7 108.4 108.5 107.6 Diluted earnings per share $ 1.33 $ 2.67 $ 6.54 $ 9.70 Western Alliance Bancorporation and Subsidiaries Five Quarter Condensed Consolidated Income Statements Unaudited Three Months Ended Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 (in millions, except per share data) Interest income: Loans $ 859.0 $ 860.8 $ 857.2 $ 832.7 $ 785.1 Investment securities 136.2 122.8 112.4 96.1 89.4 Other 43.8 43.0 31.2 40.1 13.8 Total interest income 1,039.0 1,026.6 1,000.8 968.9 888.3 Interest expense: Deposits 343.7 316.2 251.1 231.6 157.6 Qualifying debt 9.6 9.5 9.5 9.3 9.1 Borrowings 94.0 113.9 189.9 118.1 81.9 Total interest expense 447.3 439.6 450.5 359.0 248.6 Net interest income 591.7 587.0 550.3 609.9 639.7 Provision for credit losses 9.3 12.1 21.8 19.4 3.1 Net interest income after provision for credit losses 582.4 574.9 528.5 590.5 636.6 Non-interest income: Net gain on loan origination and sale activities 47.8 52.0 62.3 31.4 25.4 Service charges and fees 22.7 23.3 20.8 9.5 5.9 Income from equity investments 13.1 0.5 0.7 1.4 4.2 Net loan servicing revenue 9.1 27.2 24.1 41.9 21.4 Commercial banking related income 5.9 5.6 6.0 6.2 5.5 (Loss) gain on recovery from credit guarantees (2.7 ) (4.0 ) 1.2 3.3 3.0 (Loss) gain on sales of investment securities (14.8 ) 0.1 (13.6 ) (12.5 ) 0.1 Fair value gain (loss) adjustments, net 1.3 17.8 12.7 (147.8 ) (9.2 ) Other 8.1 6.7 4.8 8.6 5.2 Total non-interest income 90.5 129.2 119.0 (58.0 ) 61.5 Non-interest expenses: Salaries and employee benefits 134.6 137.2 145.6 148.9 125.7 Deposit costs 131.0 127.8 91.0 86.9 82.2 Insurance 108.6 33.1 33.0 15.7 8.9 Data processing 33.1 33.9 28.6 26.4 23.9 Legal, professional, and directors' fees 29.4 28.3 26.4 23.1 26.0 Occupancy 16.9 16.8 15.4 16.5 15.8 Loan servicing expenses 14.7 11.9 18.4 13.8 14.8 Business development and marketing 6.7 4.9 5.0 5.2 7.3 Loan acquisition and origination expenses 4.8 5.6 5.6 4.4 4.4 Net loss (gain) on sales and valuations of repossessed and other assets 0.3 2.2 0.5 0.0 (0.3 ) Gain on extinguishment of debt (39.3 ) — (0.7 ) (12.7 ) — Other 21.1 24.5 18.6 19.7 24.7 Total non-interest expense 461.9 426.2 387.4 347.9 333.4 Income before income taxes 211.0 277.9 260.1 184.6 364.7 Income tax expense 63.1 61.3 44.4 42.4 71.7 Net income 147.9 216.6 215.7 142.2 293.0 Dividends on preferred stock 3.2 3.2 3.2 3.2 3.2 Net income available to common stockholders $ 144.7 $ 213.4 $ 212.5 $ 139.0 $ 289.8 Earnings per common share: Diluted shares 108.7 108.5 108.3 108.3 108.4 Diluted earnings per share $ 1.33 $ 1.97 $ 1.96 $ 1.28 $ 2.67 Western Alliance Bancorporation and Subsidiaries Five Quarter Condensed Consolidated Balance Sheets Unaudited Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 (in millions) Assets: Cash and due from banks $ 1,576 $ 3,497 $ 2,153 $ 3,639 $ 1,043 Investment securities 12,993 11,423 10,374 9,493 8,760 Loans held for sale 1,402 1,766 3,156 7,022 1,184 Loans held for investment: Commercial and industrial 19,103 18,344 16,657 15,503 20,710 Commercial real estate - non-owner occupied 9,650 9,810 9,913 9,617 9,319 Commercial real estate - owner occupied 1,810 1,771 1,805 1,809 1,818 Construction and land development 4,889 4,669 4,428 4,407 4,013 Residential real estate 14,778 14,779 15,000 15,024 15,928 Consumer 67 74 72 75 74 Loans HFI, net of deferred fees 50,297 49,447 47,875 46,435 51,862 Allowance for loan losses (337 ) (327 ) (321 ) (305 ) (310 ) Loans HFI, net of deferred fees and allowance 49,960 49,120 47,554 46,130 51,552 Mortgage servicing rights 1,124 1,233 1,007 910 1,148 Premises and equipment, net 339 327 315 293 276 Operating lease right-of-use asset 145 150 151 156 163 Other assets acquired through foreclosure, net 8 8 11 11 11 Bank owned life insurance 186 184 184 183 182 Goodwill and other intangibles, net 669 672 674 677 680 Other assets 2,460 2,511 2,581 2,533 2,735 Total assets $ 70,862 $ 70,891 $ 68,160 $ 71,047 $ 67,734 Liabilities and Stockholders' Equity: Liabilities: Deposits Non-interest bearing demand deposits $ 14,520 $ 17,991 $ 16,733 $ 16,465 $ 19,691 Interest bearing: Demand 15,916 12,843 12,646 10,719 9,507 Savings and money market 14,791 14,672 13,085 13,845 19,397 Certificates of deposit 10,106 8,781 8,577 6,558 5,049 Total deposits 55,333 54,287 51,041 47,587 53,644 Borrowings 7,230 8,745 9,567 15,853 6,299 Qualifying debt 895 890 888 895 893 Operating lease liability 179 180 179 184 185 Accrued interest payable and other liabilities 1,147 1,043 800 1,007 1,357 Total liabilities 64,784 65,145 62,475 65,526 62,378 Stockholders' Equity: Preferred stock 295 295 295 295 295 Common stock and additional paid-in capital 2,081 2,073 2,064 2,054 2,058 Retained earnings 4,215 4,111 3,937 3,764 3,664 Accumulated other comprehensive loss (513 ) (733 ) (611 ) (592 ) (661 ) Total stockholders' equity 6,078 5,746 5,685 5,521 5,356 Total liabilities and stockholders' equity $ 70,862 $ 70,891 $ 68,160 $ 71,047 $ 67,734 Western Alliance Bancorporation and Subsidiaries Changes in the Allowance For Credit Losses on Loans Unaudited Three Months Ended Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 (in millions) Allowance for loan losses Balance, beginning of period $ 327.4 $ 321.1 $ 304.7 $ 309.7 $ 304.1 Provision for credit losses (1) 17.8 14.3 23.8 1.0 7.4 Recoveries of loans previously charged-off: Commercial and industrial 0.7 0.4 0.7 3.2 0.3 Commercial real estate - non-owner occupied — — — — — Commercial real estate - owner occupied 0.1 — — — 0.1 Construction and land development — — — — — Residential real estate — 0.1 — — — Consumer — — 0.1 — — Total recoveries 0.8 0.5 0.8 3.2 0.4 Loans charged-off: Commercial and industrial 9.3 5.5 6.0 9.1 1.1 Commercial real estate - non-owner occupied — 3.0 2.2 — — Commercial real estate - owner occupied — — — — 0.5 Construction and land development — — — — 0.6 Residential real estate — — — — — Consumer — — — 0.1 — Total loans charged-off 9.3 8.5 8.2 9.2 2.2 Net loan charge-offs 8.5 8.0 7.4 6.0 1.8 Balance, end of period $ 336.7 $ 327.4 $ 321.1 $ 304.7 $ 309.7 Allowance for unfunded loan commitments Balance, beginning of period $ 37.9 $ 41.1 $ 44.8 $ 47.0 $ 52.1 Recovery of credit losses (1) (6.3 ) (3.2 ) (3.7 ) (2.2 ) (5.1 ) Balance, end of period (2) $ 31.6 $ 37.9 $ 41.1 $ 44.8 $ 47.0 Components of the allowance for credit losses on loans Allowance for loan losses $ 336.7 $ 327.4 $ 321.1 $ 304.7 $ 309.7 Allowance for unfunded loan commitments 31.6 37.9 41.1 44.8 47.0 Total allowance for credit losses on loans $ 368.3 $ 365.3 $ 362.2 $ 349.5 $ 356.7 Net charge-offs to average loans - annualized 0.07 % 0.07 % 0.06 % 0.05 % 0.01 % Allowance ratios Allowance for loan losses to funded HFI loans (3) 0.67 % 0.66 % 0.67 % 0.66 % 0.60 % Allowance for credit losses to funded HFI loans (3) 0.73 0.74 0.76 0.75 0.69 Allowance for loan losses to nonaccrual HFI loans 123 138 125 285 364 Allowance for credit losses to nonaccrual HFI loans 135 154 141 327 420 (1) The above tables reflect the provision for credit losses on funded and unfunded loans. There was a $3.3 million provision release on AFS investment securities and a $1.1 million provision for credit losses on HTM investment securities for the three months ended December 31, 2023. The allowance for credit losses on AFS and HTM investment securities totaled $1.4 million and $7.8 million, respectively, as of December 31, 2023. (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 $14.7 million as of December 31, 2023 related to a pool of loans covered under three separate credit linked note transactions. Western Alliance Bancorporation and Subsidiaries Asset Quality Metrics Unaudited Three Months Ended Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 (in millions) Nonaccrual loans and repossessed assets Nonaccrual loans $ 273 $ 237 $ 256 $ 107 $ 85 Nonaccrual loans to funded HFI loans 0.54 % 0.48 % 0.53 % 0.23 % 0.16 % Repossessed assets $ 8 $ 8 $ 11 $ 11 $ 11 Nonaccrual loans and repossessed assets to total assets 0.40 % 0.35 % 0.39 % 0.17 % 0.14 % Loans Past Due Loans past due 90 days, still accruing (1) $ 42 $ — $ — $ 1 $ — Loans past due 90 days, still accruing to funded HFI loans 0.08 % — % — % 0.00 % — % Loans past due 30 to 89 days, still accruing (2) $ 164 $ 189 $ 121 $ 58 $ 70 Loans past due 30 to 89 days, still accruing to funded HFI loans 0.33 % 0.38 % 0.25 % 0.13 % 0.13 % Other credit quality metrics Special mention loans $ 641 $ 668 $ 694 $ 320 $ 351 Special mention loans to funded HFI loans 1.27 % 1.35 % 1.45 % 0.69 % 0.68 % Classified loans on accrual $ 379 $ 381 $ 324 $ 325 $ 280 Classified loans on accrual to funded HFI loans 0.75 % 0.77 % 0.68 % 0.70 % 0.54 % Classified assets $ 673 $ 639 $ 604 $ 459 $ 393 Classified assets to total assets 0.95 % 0.90 % 0.89 % 0.65 % 0.58 % (1) Excludes government guaranteed residential mortgage loans of $399 million, $439 million, $481 million, $494 million, and $582 million as of each respective date in the table above. (2) Excludes government guaranteed residential mortgage loans of $279 million, $261 million, $289 million, $281 million, and $334 million as of each respective date in the table above. Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited Three Months Ended December 31, 2023 September 30, 2023 Average Balance Interest Average Yield / Cost Average Balance Interest Average Yield / Cost ($ in millions) Interest earning assets Loans held for sale $ 1,830 $ 29.6 6.42 % $ 3,069 $ 47.3 6.11 % Loans held for investment: Commercial and industrial 18,530 343.2 7.40 16,855 324.3 7.70 CRE - non-owner occupied 9,715 188.7 7.71 9,950 196.1 7.83 CRE - owner occupied 1,786 26.0 5.88 1,790 26.4 5.97 Construction and land development 4,789 112.6 9.33 4,545 110.3 9.63 Residential real estate 14,758 157.6 4.24 14,914 155.0 4.12 Consumer 71 1.3 7.52 73 1.4 7.43 Total HFI loans (1), (2), (3) 49,649 829.4 6.65 48,127 813.5 6.73 Securities: Securities - taxable 9,168 113.5 4.91 8,272 101.1 4.85 Securities - tax-exempt 2,106 22.7 5.35 2,103 21.7 5.12 Total securities (1) 11,274 136.2 4.99 10,375 122.8 4.91 Cash and other 2,572 43.8 6.75 2,911 43.0 5.87 Total interest earning assets 65,325 1,039.0 6.37 64,482 1,026.6 6.37 Non-interest earning assets Cash and due from banks 287 279 Allowance for credit losses (340 ) (334 ) Bank owned life insurance 185 184 Other assets 4,525 4,513 Total assets $ 69,982 $ 69,124 Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 14,268 $ 104.6 2.91 % $ 12,947 $ 98.9 3.03 % Savings and money market 14,595 119.1 3.24 13,832 106.3 3.05 Certificates of deposit 9,453 120.0 5.03 9,125 111.0 4.83 Total interest-bearing deposits 38,316 343.7 3.56 35,904 316.2 3.49 Short-term borrowings 5,492 79.4 5.74 6,260 97.2 6.16 Long-term debt 594 14.6 9.73 764 16.7 8.68 Qualifying debt 891 9.6 4.26 888 9.5 4.26 Total interest-bearing liabilities 45,293 447.3 3.92 43,816 439.6 3.98 Interest cost of funding earning assets 2.72 2.70 Non-interest-bearing liabilities Non-interest-bearing demand deposits 17,579 18,402 Other liabilities 1,330 1,052 Stockholders’ equity 5,780 5,854 Total liabilities and stockholders' equity $ 69,982 $ 69,124 Net interest income and margin (4) $ 591.7 3.65 % $ 587.0 3.67 % (1) Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $9.1 million and $8.9 million for the three months ended December 31, 2023 and September 30, 2023, respectively. (2) Included in the yield computation are net loan fees of $30.8 million and $28.0 million for the three months ended December 31, 2023 and September 30, 2023, respectively. (3) Includes non-accrual loans. (4) Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis. Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited Three Months Ended December 31, 2023 December 31, 2022 Average Balance Interest Average Yield / Cost Average Balance Interest Average Yield / Cost ($ in millions) Interest earning assets Loans held for sale $ 1,830 $ 29.6 6.42 % $ 2,659 $ 37.8 5.63 % Loans held for investment: Commercial and industrial 18,530 343.2 7.40 21,654 349.3 6.45 CRE - non-owner-occupied 9,715 188.7 7.71 9,077 148.8 6.51 CRE - owner-occupied 1,786 26.0 5.88 1,830 24.4 5.39 Construction and land development 4,789 112.6 9.33 3,798 80.2 8.38 Residential real estate 14,758 157.6 4.24 15,803 143.5 3.60 Consumer 71 1.3 7.52 71 1.1 6.26 Total loans HFI (1), (2), (3) 49,649 829.4 6.65 52,233 747.3 5.70 Securities: Securities - taxable 9,168 113.5 4.91 6,397 68.4 4.25 Securities - tax-exempt 2,106 22.7 5.35 2,068 21.0 5.07 Total securities (1) 11,274 136.2 4.99 8,465 89.4 4.45 Cash and other 2,572 43.8 6.75 1,361 13.8 4.02 Total interest earning assets 65,325 1,039.0 6.37 64,718 888.3 5.50 Non-interest earning assets Cash and due from banks 287 289 Allowance for credit losses (340 ) (308 ) Bank owned life insurance 185 181 Other assets 4,525 4,613 Total assets $ 69,982 $ 69,493 Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 14,268 $ 104.6 2.91 % $ 8,754 $ 43.6 1.98 % Savings and money market accounts 14,595 119.1 3.24 18,651 88.0 1.87 Certificates of deposit 9,453 120.0 5.03 4,260 26.0 2.42 Total interest-bearing deposits 38,316 343.7 3.56 31,665 157.6 1.97 Short-term borrowings 5,492 79.4 5.74 5,440 54.8 3.99 Long-term debt 594 14.6 9.73 1,240 27.1 8.68 Qualifying debt 891 9.6 4.26 890 9.1 4.08 Total interest-bearing liabilities 45,293 447.3 3.92 39,235 248.6 2.51 Interest cost of funding earning assets 2.72 1.52 Non-interest-bearing liabilities Non-interest-bearing demand deposits 17,579 23,729 Other liabilities 1,330 1,296 Stockholders’ equity 5,780 5,233 Total liabilities and stockholders' equity $ 69,982 $ 69,493 Net interest income and margin (4) $ 591.7 3.65 % $ 639.7 3.98 % (1) Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $9.1 million and $9.0 million for the three months ended December 31, 2023 and 2022, respectively. (2) Included in the yield computation are net loan fees of $30.8 million and $34.8 million for the three months ended December 31, 2023 and 2022, respectively. (3) Includes non-accrual loans. (4) Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis. Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited Year Ended December 31, 2023 December 31, 2022 Average Balance Interest Average Yield / Cost Average Balance Interest Average Yield / Cost ($ in millions) Interest earning assets Loans HFS $ 3,347 $ 213.4 6.38 % $ 4,364 $ 180.3 4.13 % Loans HFI: Commercial and industrial 17,886 1,337.9 7.54 20,083 1,002.8 5.05 CRE - non-owner occupied 9,736 734.8 7.56 7,769 416.4 5.37 CRE - owner occupied 1,800 102.3 5.79 1,841 93.2 5.16 Construction and land development 4,498 419.7 9.33 3,426 229.1 6.69 Residential real estate 15,126 596.4 3.94 13,771 468.5 3.40 Consumer 72 5.2 7.23 61 3.1 5.07 Total loans HFI (1), (2), (3) 49,118 3,196.3 6.53 46,951 2,213.1 4.74 Securities: Securities - taxable 8,002 381.3 4.76 6,325 195.3 3.09 Securities - tax-exempt 2,097 86.2 5.15 2,067 77.3 4.68 Total securities (1) 10,099 467.5 4.84 8,392 272.6 3.48 Other 2,848 158.1 5.55 1,574 25.8 1.64 Total interest earning assets (4) 65,412 4,035.3 6.22 61,281 2,691.8 4.45 Non-interest earning assets Cash and due from banks 273 260 Allowance for credit losses (326 ) (280 ) Bank owned life insurance 183 180 Other assets 4,581 3,948 Total assets $ 70,123 $ 65,389 Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 12,422 $ 352.0 2.83 % $ 8,331 $ 78.8 0.95 % Savings and money market accounts 14,903 428.1 2.87 18,518 158.6 0.86 Certificates of deposit 7,945 362.5 4.56 2,772 39.0 1.40 Total interest-bearing deposits 35,270 1,142.6 3.24 29,621 276.4 0.93 Short-term borrowings 7,800 434.6 5.57 3,424 92.1 2.69 Long-term debt 862 81.3 9.43 1,008 72.0 7.14 Qualifying debt 892 37.9 4.25 893 35.0 3.92 Total interest-bearing liabilities 44,824 1,696.4 3.78 34,946 475.5 1.36 Interest cost of funding earning assets 2.59 0.78 Non-interest-bearing liabilities Non-interest-bearing demand deposits 18,293 24,133 Other liabilities 1,287 1,211 Stockholders’ equity 5,719 5,099 Total liabilities and stockholders' equity $ 70,123 $ 65,389 Net interest income and margin (5) $ 2,338.9 3.63 % $ 2,216.3 3.67 % (1) Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $35.5 million and $33.7 million for the year ended December 31, 2023 and 2022, respectively. (2) Included in the yield computation are net loan fees of $131.2 million and $132.2 million for the year ended December 31, 2023 and 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 Operating Segment Results Unaudited Balance Sheet: Consolidated Company Commercial Consumer Related Corporate & Other At December 31, 2023: (dollars in millions) Assets: Cash, cash equivalents, and investment securities $ 14,569 $ 13 $ 125 $ 14,431 Loans HFS 1,402 — 1,402 — Loans HFI, net of deferred fees and costs 50,297 29,136 21,161 — Less: allowance for credit losses (337 ) (284 ) (53 ) — Net loans HFI 49,960 28,852 21,108 — Other assets acquired through foreclosure, net 8 8 — — Goodwill and other intangible assets, net 669 292 377 — Other assets 4,254 390 1,826 2,038 Total assets $ 70,862 $ 29,555 $ 24,838 $ 16,469 Liabilities: Deposits $ 55,333 $ 23,897 $ 24,925 $ 6,511 Borrowings and qualifying debt 8,125 7 402 7,716 Other liabilities 1,326 109 338 879 Total liabilities 64,784 24,013 25,665 15,106 Allocated equity: 6,078 2,555 1,300 2,223 Total liabilities and stockholders' equity $ 70,862 $ 26,568 $ 26,965 $ 17,329 Excess funds provided (used) — (2,987 ) 2,127 860 No. of offices 57 46 8 3 No. of full-time equivalent employees 3,260 584 711 1,965 Income Statement: Three Months Ended December 31, 2023: (in millions) Net interest income $ 591.7 $ 309.9 $ 251.1 $ 30.7 Provision for (recovery of) credit losses 9.3 8.6 2.9 (2.2 ) Net interest income after provision for credit losses 582.4 301.3 248.2 32.9 Non-interest income 90.5 16.8 60.3 13.4 Non-interest expense 461.9 149.7 232.9 79.3 Income (loss) before income taxes 211.0 168.4 75.6 (33.0 ) Income tax expense (benefit) 63.1 49.7 19.8 (6.4 ) Net income (loss) $ 147.9 $ 118.7 $ 55.8 $ (26.6 ) Year Ended December 31, 2023: (in millions) Net interest income $ 2,338.9 $ 1,387.4 $ 898.9 $ 52.6 Provision for credit losses 62.6 38.3 3.3 21.0 Net interest income after provision for credit losses 2,276.3 1,349.1 895.6 31.6 Non-interest income 280.7 (23.3 ) 286.9 17.1 Non-interest expense 1,623.4 580.6 924.5 118.3 Income (loss) before provision for income taxes 933.6 745.2 258.0 (69.6 ) Income tax expense (benefit) 211.2 174.8 59.2 (22.8 ) Net income (loss) $ 722.4 $ 570.4 $ 198.8 $ (46.8 ) 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 Reconciliation of Non-GAAP Financial Measures Unaudited Pre-Provision Net Revenue by Quarter: Three Months Ended 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 (in millions) Net interest income $ 591.7 $ 587.0 $ 550.3 $ 609.9 $ 639.7 Total non-interest income 90.5 129.2 119.0 (58.0 ) 61.5 Net revenue $ 682.2 $ 716.2 $ 669.3 $ 551.9 $ 701.2 Total non-interest expense 461.9 426.2 387.4 347.9 333.4 Pre-provision net revenue (1) $ 220.3 $ 290.0 $ 281.9 $ 204.0 $ 367.8 Less: Provision for credit losses 9.3 12.1 21.8 19.4 3.1 Income tax expense 63.1 61.3 44.4 42.4 71.7 Net income $ 147.9 $ 216.6 $ 215.7 $ 142.2 $ 293.0 Pre-Provision Net Revenue, Excluding Notable Items Three Months Ended 12/31/2023: (in millions) Pre-provision net revenue (1) $ 220.3 Excluding notable items: Non-interest income MSR fair value adjustments and sales, net of hedging 25.3 Loss on sales of HFI loans 3.7 Outsized solar investment gains (8.0 ) Loss on sales of investment securities 14.8 Non-interest expense FDIC special assessment 66.3 Gain on extinguishment of debt (39.3 ) Total notable items 62.8 Pre-provision net revenue, excluding notable items (1) $ 283.1 Less: Provision for credit losses 9.3 Income tax expense 63.1 Total notable items 62.8 Net income $ 147.9 Three Months Ended 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 Efficiency Ratio (Tax Equivalent Basis) by Quarter: (dollars in millions) Total non-interest expense $ 461.9 $ 426.2 $ 387.4 $ 347.9 $ 333.4 Less: Deposit costs 131.0 127.8 91.0 86.9 82.2 Total non-interest expense, excluding deposit costs 330.9 298.4 296.4 261.0 251.2 Divided by: Total net interest income 591.7 587.0 550.3 609.9 639.7 Plus: Tax equivalent interest adjustment 9.1 8.9 8.7 8.8 9.0 Total non-interest income 90.5 129.2 119.0 (58.0 ) 61.5 Less: Deposit costs 131.0 127.8 91.0 86.9 82.2 $ 560.3 $ 597.3 $ 587.0 $ 473.8 $ 628.0 Efficiency ratio (2) 66.8 % 58.8 % 57.1 % 62.0 % 46.9 % Efficiency ratio, adjusted for deposit costs (2) 59.1 % 50.0 % 50.5 % 55.1 % 40.0 % Western Alliance Bancorporation and Subsidiaries Reconciliation of Non-GAAP Financial Measures Unaudited Earnings per Share, Excluding Notable Items: Three Months Ended 12/31/2023: (in millions) Net income available to common stockholders $ 144.7 Excluding: Total notable items (4) 62.8 Income tax Tax effect of notable items (14.4 ) Elevated effective tax rate 14.6 Net income available to common stockholders, excluding notable items $ 207.7 Diluted shares 108.7 Diluted earnings per share, excluding notable items (1) $ 1.91 Tangible Common Equity: 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 (dollars and shares in millions) Total stockholders' equity $ 6,078 $ 5,746 $ 5,685 $ 5,521 $ 5,356 Less: Goodwill and intangible assets 669 672 674 677 680 Preferred stock 295 295 295 295 295 Total tangible common equity 5,114 4,779 4,716 4,549 4,381 Plus: deferred tax - attributed to intangible assets 2 2 2 2 2 Total tangible common equity, net of tax $ 5,116 $ 4,781 $ 4,718 $ 4,551 $ 4,383 Total assets $ 70,862 $ 70,891 $ 68,160 $ 71,047 $ 67,734 Less: goodwill and intangible assets, net 669 672 674 677 680 Tangible assets 70,193 70,219 67,486 70,370 67,054 Plus: deferred tax - attributed to intangible assets 2 2 2 2 2 Total tangible assets, net of tax $ 70,195 $ 70,221 $ 67,488 $ 70,372 $ 67,056 Tangible common equity ratio (3) 7.3 % 6.8 % 7.0 % 6.5 % 6.5 % Common shares outstanding 109.5 109.5 109.5 109.5 108.9 Tangible book value per share, net of tax (3) $ 46.72 $ 43.66 $ 43.09 $ 41.56 $ 40.25 Return on Average Tangible Common Equity, Excluding Notable Items: Three Months Ended 12/31/2023: (in millions) Net income available to common shareholders, excluding notable items $ 207.7 Divided by: Average stockholders' equity $ 5,780 Less: Average goodwill and intangible assets 670 Average preferred stock 295 Average tangible common equity $ 4,816 Return on average tangible common equity, excluding notable items (1) 17.1 % Return on Average Assets, Excluding Notable Items: Three Months Ended 12/31/2023: (in millions) Net income $ 147.9 Excluding: Total notable items (4) 62.8 Income tax Tax effect of notable items (14.4 ) Elevated effective tax rate 14.6 Net income, excluding notable items $ 210.9 Divided by: Average assets $ 69,982 Return on average assets, excluding notable items (1) 1.20 % 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 the financial condition and capital strength of the Company. (4) See reconciliation of PPNR, excluding notable items, for additional detail regarding the components of notable items. View source version on businesswire.com: https://www.businesswire.com/news/home/20240124805047/en/