WESTERN ALLIANCE BANCORPORATION

Previous wording

In November 2023, the FDIC approved a final rule implementing a special assessment to recover losses to the Deposit Insurance Fund associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank. The assessment base is equal to an institution’s estimated uninsured deposits as of December 31, 2022, adjusted to exclude the first $5 billion of estimated uninsured deposits. The special assessment will be collected over an eight-quarter collection period, at a quarterly rate of 3.36 basis points, with the first quarterly assessment period beginning on January 1, 2024. The amount of the total special assessment is subject to adjustment and will not be finalized by the FDIC until after termination of the receiverships. The Company recognized a charge of $17.6 million during the three months ended March 31, 2024 due to an adjustment of the loss estimate.

Current wording

In November 2023, the FDIC approved a final rule implementing a special assessment to recover losses to the Deposit Insurance Fund associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank. The assessment base is equal to an institution’s estimated uninsured deposits as of December 31, 2022, adjusted to exclude the first $5 billion of estimated uninsured deposits. The special assessment will be collected over an eight-quarter collection period, at a quarterly rate of 3.36 basis points, with the first quarterly assessment period beginning on January 1, 2024. The amount of the total special assessment is subject to adjustment and will not be finalized by the FDIC until after termination of the receiverships. The Company recognized a reduction to expense of $6.0 million during the three months ended June 30, 2024 and a net charge of $11.6 million during the six months ended June 30, 2024 due to adjustments to the loss estimate.

Previous wording

The Company's loan portfolio includes significant credit exposure to the CRE market, with CRE related loans comprising approximately 32% and 33% of total loans at March 31, 2024 and December 31, 2023, respectively. Approximately 16% of CRE loans, excluding construction and land loans, were owner occupied at March 31, 2024 and December 31, 2023 and approximately 5% were non-owner occupied office loans at March 31, 2024 and December 31, 2023. As elevated focus on the evolving industry dynamics facing the CRE market have emerged over the past year, the Company has been proactive in establishing enhanced monitoring policies and procedures as it relates to its CRE loans and has undertaken actions to limit growth of its CRE portfolio, as further discussed in “Item 1. Business, Lending Activities – Asset Quality” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. While the Company has not incurred significant charge-offs on its CRE portfolio to date, CRE market conditions may worsen, which could result in deterioration of asset quality in this portfolio.

Current wording

The Company's loan portfolio includes significant credit exposure to the CRE market, with CRE related loans comprising approximately 31% and 33% of total loans at June 30, 2024 and December 31, 2023, respectively. Approximately 16% of CRE loans, excluding construction and land loans, were owner occupied at June 30, 2024 and December 31, 2023, and approximately 5% were non-owner occupied office loans at June 30, 2024 and December 31, 2023. As elevated focus on the evolving industry dynamics facing the CRE market have emerged over the past year, the Company has been proactive in establishing enhanced monitoring policies and procedures as it relates to its CRE loans and has undertaken actions to limit growth of its CRE portfolio, as further discussed in “Item 1. Business, Lending Activities – Asset Quality” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. During the three months ended June 30, 2024, the Company recognized gross charge-offs on CRE non-owner occupied loans totaling $17.6 million, which related to one office property. While the Company believes that its increased monitoring efforts to provide earlier identification of potential stressed loans and proactive engagement with borrowers has helped the Company assess its credit related exposure to this portfolio segment and establish adequate reserve levels, CRE market conditions may worsen, which could result in deterioration of asset quality in this portfolio.

Previous wording

WAL is a bank holding company headquartered in Phoenix, Arizona, incorporated under the laws of the state of Delaware. WAL provides a full spectrum of customized loan, deposit and treasury management capabilities, including 24/7 funds transfer and other digital payment offerings through its wholly-owned banking subsidiary, WAB.

Current wording

WAL is a bank holding company headquartered in Phoenix, Arizona, incorporated under the laws of the state of Delaware. WAL provides a full spectrum of customized loan, deposit and treasury management capabilities, including funds transfer and other digital payment offerings through its wholly-owned banking subsidiary, WAB.

Previous wording

Financial Results Highlights for the First Quarter of 2024

Current wording

Financial Results Highlights for the Second Quarter of 2024

Previous wording

•Net income available to common stockholders of $174.2 million, compared to $139.0 million for the first quarter 2023

Current wording

•Net income available to common stockholders of $190.4 million, compared to $212.5 million for the second quarter 2023

Previous wording

•Diluted earnings per share of $1.60, compared to $1.28 per share for the first quarter 2023

Current wording

•Diluted earnings per share of $1.75, compared to $1.96 per share for the second quarter 2023

Previous wording

•Net revenue of $728.8 million, compared to $551.9 million for the first quarter 2023, with non-interest expense of $481.8 million, compared to $347.9 million for the first quarter 2023

Current wording

•Net revenue of $771.8 million, compared to $669.3 million for the second quarter 2023, with non-interest expense of $486.8 million, compared to $387.4 million for the second quarter 2023

Previous wording

•Stockholders' equity of $6.2 billion, an increase of $94 million from December 31, 2023

Current wording

•Stockholders' equity of $6.3 billion, an increase of $256 million from December 31, 2023

Previous wording

•Nonperforming assets (nonaccrual loans and repossessed assets) increased to 0.53%of total assets compared to 0.17% at March 31, 2023

Current wording

•Nonperforming assets (nonaccrual loans and repossessed assets) increased to 0.51%of total assets compared to 0.40% at December 31, 2023

Previous wording

•Annualized net loan charge-offs to average loans outstanding of 0.08%, compared to 0.05% for the first quarter 2023

Current wording

•Annualized net loan charge-offs to average loans outstanding of 0.18%, compared to 0.06% for the second quarter 2023

Previous wording

•Tangible common equity ratio of 6.8%, an increase compared to 6.5% at March 31, 20231

Current wording

•Tangible common equity ratio of 6.7%, a decrease compared to 7.3% at December 31, 20231

Previous wording

•Book value per common share of $53.33, an increase of 11.8% from $47.72 at March 31, 2023

Current wording

•Book value per common share of $54.80, an increase of 3.8% from $52.81 at December 31, 2023

Previous wording

•Tangible book value per share, net of tax, of $47.30, an increase of $5.74, or 13.8%, from $41.56 at March 31, 20231

Current wording

•Tangible book value per share, net of tax, of $48.79, an increase of$2.07, or 4.4%, from $46.72 at December 31, 20231

Previous wording

•Efficiency ratio of 65.2% in the first quarter 2024, compared to 62.0% in the first quarter 20231

Current wording

•Efficiency ratio of 62.3% in the second quarter 2024, compared to 57.1% in the second quarter 20231

Previous wording

The impact to the Company from these items, and others of both a positive and negative nature, are discussed in more detail below as they pertain to the Company’s overall comparative performance for the three months ended March 31, 2024.

Current wording

The impact to the Company from these items, and others of both a positive and negative nature, are discussed in more detail below as they pertain to the Company’s overall comparative performance for the three and six months ended June 30, 2024.

Previous wording

Total assets increased to $77.0 billion at March 31, 2024 from $70.9 billion at December 31, 2023. The increase in total assets of $6.1 billion, or 8.6%, was driven by an increase in deposits, which contributed to an increase in investment securities of $3.4 billion and an increase in cash of $2.0 billion. Loans HFI increased by $403 million, or 0.8%, to $50.7 billion as of March 31, 2024, compared to $50.3 billion as of December 31, 2023. By loan type, commercial and industrial loans increased $646 million from December 31, 2023, partially offset by decreases in residential real estate and construction and land development loans of $154 million and $108 million, respectively. Loans HFS increased $439 million from $1.4 billion as of December 31, 2023 due to an increase in non-EBO and agency conforming loans.

Current wording

Total assets increased to $80.6 billion at June 30, 2024 from $70.9 billion at December 31, 2023. The increase in total assets of $9.7 billion, or 13.7%, was primarily driven by an increase in deposits, which contributed to increases in investment securities and cash of $4.6 billion and $2.5 billion, respectively, and funded HFI loan growth of $2.1 billion. Loans HFI increased by $2.1 billion, or 4.2%, to $52.4 billion as of June 30, 2024, compared to $50.3 billion as of December 31, 2023. Commercial and industrial loans primarily drove the increase in loans HFI, increasing $2.6 billion from December 31, 2023, which was partially offset by decreases in residential real estate and construction and land development loans of $333 million and $177 million, respectively. Loans HFS increased $605 million from $1.4 billion as of December 31, 2023 primairly due to an increase in agency-conforming and non-EBO loans.

Previous wording

Total deposits increased$6.9 billion, or 12.5%, to $62.2 billion as of March 31, 2024 from $55.3 billion as of December 31, 2023. By type, the increase in deposits from December 31, 2023 was driven by an increase of $3.9 billion in non-interest bearing demand deposits, $1.4 billion in savings and money market accounts, $1.0 billion in interest bearing demand deposits, and $564 million in certificates of deposit.

Current wording

Total deposits increased$10.9 billion, or 19.7%, to $66.2 billion as of June 30, 2024 from $55.3 billion as of December 31, 2023. By type, the increase in deposits from December 31, 2023 was driven by an increase of $7.0 billion in non-interest bearing deposits, $2.3 billion in savings and money market accounts, $1.4 billion in interest bearing demand deposits, and $262 million in certificates of deposit.

Previous wording

The following table shows the components used in the calculation of earnings per share for the three months ended March 31, 2024, adjusted to exclude the FDIC special assessment, which management believes is more comparable to historical earnings trends:

Current wording

The following table shows PPNR for the three and six months ended June 30, 2024, adjusted to exclude the FDIC special assessment, which management believes is more comparable to historical earnings trends:

Previous wording

As permitted by the regulatory capital rules, the Company elected the CECL transition option that delayed the estimated impact on regulatory capital resulting from the adoption of CECL over a five-year transition period ending December 31, 2024. Accordingly, beginning in 2024, capital ratios and amounts include a 25% capital benefit that resulted from the increased ACL related to the adoption of ASC 326.

Current wording

As permitted by the regulatory capital rules, the Company elected the CECL transition option that delayed the estimated impact on regulatory capital resulting from the adoption of CECL over a five-year transition period ending December 31, 2024. Accordingly, capital ratios and amounts for 2024 include a 25% capital benefit that resulted from the increased ACL related to the adoption of ASC 326, compared to a 50% capital benefit for 2023.

Previous wording

(1)Yields on loans and securities have been adjusted to a TEB. The taxable-equivalent adjustment was $9.6 million and $8.8 million for the three months ended March 31, 2024 and 2023, respectively.

Current wording

(1)Yields on loans and securities have been adjusted to a TEB. The taxable-equivalent adjustment was $9.9 million and $8.7 million for the three months ended June 30, 2024 and 2023, respectively.

Previous wording

(2)Included in the yield computation are net loan fees of $33.1 million and $35.6 million for the three months ended March 31, 2024 and 2023, respectively.

Current wording

(2)Included in the yield computation are net loan fees of $32.1 million and $36.8 million for the three months ended June 30, 2024 and 2023, respectively.

Previous wording

The Company's primary source of revenue is interest income. For the three months ended March 31, 2024, interest income was $1.1 billion, an increase of $86.1 million, or 8.9%, compared to $968.9 million for the three months ended March 31, 2023. This increase was primarily the result of a $47.9 million increase in interest income from investment securities due to an increase in the average investment balance of $4.1 billion and a $31.4 million increase in interest income from loans HFI that was driven primarily by higher yields and partially offset by lower average HFI loan balances of $2.2 billion.

Current wording

The Company's primary source of revenue is interest income. For the three months ended June 30, 2024, interest income was $1.1 billion, an increase of $146.7 million, or 14.7%, compared to $1.0 billion for the three months ended June 30, 2023. This increase was primarily the result of a $101.7 million increase in interest income from loans HFI that was driven by higher average HFI loan balances of $4.0 billion and higher yields and a $78.1 million increase in interest income from investment securities due primarily to an increase in the average investment balance of $6.3 billion. The increase in interest income was also the result of a $29.1 million increase in interest income from cash and other, largely driven by higher average cash and other balances of $1.4 billion. These increases were partially offset by a $62.2 million decrease in interest income from loans HFS driven by lower average HFS loan balances of $3.5 billion.

Previous wording

For the three months ended March 31, 2024, interest expense was $456.1 million, an increase of $97.1 million, compared to $359.0 million for the three months ended March 31, 2023. The increase in interest expense was due to an increase in interest expense on deposits of $149.0 million driven by a $7.6 billion increase in the average interest-bearing deposit balance and increased interest rates, partially offset by a $52.1 million decrease in interest expense on borrowings resulting from a decrease in average borrowing balances of $4.4 billion.

Current wording

For the three months ended June 30, 2024, interest expense was $490.9 million, an increase of $40.4 million, or 9.0%, compared to $450.5 million for the three months ended June 30, 2023. The increase in interest expense was due to an increase in interest expense on deposits of $159.2 million driven by an $11.6 billion increase in the average interest-bearing deposit balance and increased interest rates, partially offset by a $118.9 million decrease in interest expense on total borrowings resulting from a decrease in average borrowing balances of $8.4 billion.

Previous wording

For the three months ended March 31, 2024, net interest income was $598.9 million, a decrease of $11.0 million, or 1.8%, compared to $609.9 million for the three months ended March 31, 2023. The decrease in net interest income was driven by the higher rate environment and reflects a $3.2 billion increase in average interest-bearing liabilities, partially offset by an increase in yields on interest-earning assets. The decrease in net interest margin of 19 basis points to 3.60% is largely the result of an increase in both the rates and balances of deposits, partially offset by higher yields on HFI loans and a decrease in borrowings compared to the same period in 2023.

Current wording

For the three months ended June 30, 2024, net interest income totaled $656.6 million, an increase of $106.3 million, or 19.3%, compared to $550.3 million for the three months ended June 30, 2023. The increase in net interest income was driven by an $8.2 billion increase in average interest-earning assets and related yields, partially offset by an increase in funding costs driven by the higher rate environment. The increase in net interest margin of 21 basis points to 3.63% is largely the result of an increase in both the average balances and rates of loans HFI, investment securities, and deposits, partially offset by a decrease in the average loans HFS balance compared to the same period in 2023.

Previous wording

The provision for credit losses in each period is reflected as a reduction in earnings for that period and includes amounts related to funded loans, unfunded loan commitments, and investment securities. The provision is equal to the amount required to maintain the ACL at a level that is adequate to absorb estimated lifetime credit losses inherent in the loan and investment securities portfolios based on remaining contractual maturity, adjusted for estimated prepayments as of each period end. The Company's CECL models incorporate historical experience, current conditions, and reasonable and supportable forecasts in measuring expected credit losses. For the three months ended March 31, 2024, the Company recorded a provision for credit losses of $15.2 million, compared to $19.4 million for the three months ended March 31, 2023. The provision for credit losses for the three months ended March 31, 2024 is primarily reflective of loan growth, net charge-offs of $9.8 million, and a stable economic outlook.

Current wording

The provision for credit losses in each period is reflected as a reduction in earnings for that period and includes amounts related to funded loans, unfunded loan commitments, and investment securities. The provision is equal to the amount required to maintain the ACL at a level that is adequate to absorb estimated lifetime credit losses inherent in the loan and investment securities portfolios based on remaining contractual maturity, adjusted for estimated prepayments as of each period end. The Company's CECL models incorporate historical experience, current conditions, and reasonable and supportable forecasts in measuring expected credit losses. For the three and six months ended June 30, 2024, the Company recorded a provision for credit losses of $37.1 million and $52.3 million, respectively, compared to $21.8 million and $41.2 million for the three and six months ended June 30, 2023, respectively. The provision for credit losses for the three and six months ended June 30, 2024 is primarily reflective of net charge-offs of $22.8 million and $32.6 million, respectively, and loan growth.

Previous wording

Total non-interest income for the three months ended March 31, 2024 compared to the same period in 2023 increased $187.9 million. The increase in non-interest income from the three months ended March 31, 2023 was primarily driven by a net fair value loss adjustment of $147.8 million recognized during the three months ended March 31, 2023 due to the Company's balance sheet repositioning in the prior year that did not reoccur. Also contributing to the increase in non-interest income was an increase in income from equity investments of $15.7 million and a net increase in mortgage banking income as net gain on loan origination and sale activities increased $13.9 million from higher production volume and spreads.

Current wording

Total non-interest income for the three months ended June 30, 2024 compared to the same period in 2023 decreased $3.8 million. The decrease in non-interest income from the three months ended June 30, 2023 was primarily driven by a decrease in service charges and fees of $10.0 million and a net decrease in mortgage banking income of $1.5 million as net gain on loan origination and sale activities decreased $15.5 million from lower production volume and spreads, partially offset by an increase in net loan servicing revenue of $14.0 million. The Company's balance sheet repositioning actions in the prior year also partially offset these decreases as sales activity related to loans and investment securities have normalized in the current period.

Previous wording

Total non-interest expense for the three months ended March 31, 2024 increased $133.9 million compared to the same period in 2023. The increase in non-interest expense was primarily driven by an increase in deposit and insurance costs. The increase in deposit costs from the prior year relates primarily to higher average ECR balances and rates, while the increase in insurance costs is due to elevated insured and brokered deposit levels and a $17.6 million charge related to the FDIC special assessment.

Current wording

Total non-interest expense for the six months ended June 30, 2024 increased$233.3 million compared to the same period in 2023. The increase in non-interest expense for this period was primarily driven by an increase in deposit and insurance costs. Higher ECR balances and rates drove the increase in deposit costs. The increase in insurance costs is due to elevated insured and brokered deposit levels and a net charge of$11.6 million related to the FDIC special assessment recognized during the six months ended June 30, 2024.

Previous wording

The Company's effective tax rate was 23.5% and 23.0% for the three months ended March 31, 2024 and 2023, respectively. The increase in the effective tax rate was primarily due to an increase in nondeductible insurance premiums and shortfalls from stock compensation expense in 2024.

Current wording

The Company's effective tax rate was 21.9% and 17.1% for the three months ended June 30, 2024 and 2023, respectively, and 22.7% and 19.5% for the six months ended June 30, 2024 and 2023, respectively. The increase in theeffective tax rates for thethree and six month periods ended June 30, 2024 compared to the same period in 2023 was primarily due to an increase in nondeductible insurance premiums and a decrease in expected investment tax credit benefits during 2024.

Previous wording

•Consumer Related: offers consumer banking services, such as mortgage banking and commercial banking services to enterprises in consumer-related sectors.

Current wording

•Consumer Related: offers both commercial banking services to enterprises in consumer-related sectors and consumer banking services, such as residential mortgage banking.

Previous wording

Total assets increased $6.1 billion to $77.0 billion at March 31, 2024, compared to $70.9 billion at December 31, 2023. The increase in total assets was driven by an increase in investment securities of $3.4 billion as well an increase in cash of $2.0 billion. Loans HFI increased by $403 million, or 0.8%, to $50.7 billion as of March 31, 2024, compared to $50.3 billion as of December 31, 2023. The increase in loans HFI from December 31, 2023 was driven by a $646 million increase in commercial and industrial loans from December 31, 2023, partially offset by decreases in residential real estate and construction and land development loans of $154 million and $108 million, respectively. Loans HFS increased $439 million from $1.4 billion as of December 31, 2023 due to an increase in non-EBO and agency conforming loans.

Current wording

Total assets increased $9.7 billion to $80.6 billion at June 30, 2024, compared to $70.9 billion at December 31, 2023. The increase in total assets was primarily driven by an increase in investment securities and cash of $4.6 billion and $2.5 billion, respectively. Loans HFI also increased $2.1 billion, or 4.2%, to $52.4 billion as of June 30, 2024, compared to $50.3 billion as of December 31, 2023. The increase in loans HFI from December 31, 2023 was driven by a $2.6 billion increase in commercial and industrial loans from December 31, 2023, partially offset by decreases in residential real estate and construction and land development loans of $333 million and $177 million, respectively. Loans HFS increased $605 million from $1.4 billion as of December 31, 2023 due to an increase in agency conforming and non-EBO loans.

Previous wording

Total liabilities increased $6.0 billion to $70.8 billion at March 31, 2024, compared to $64.8 billion at December 31, 2023. The increase in liabilities is due primarily to an increase in total deposits of $6.9 billion, or 12.5%, to $62.2 billion. By type, the increase in deposits from December 31, 2023 was driven by increases of $3.9 billion in non-interest bearing demand deposits, $1.4 billion in savings and money market accounts, $1.0 billion in interest bearing demand deposits, and $564 million in certificates of deposit. Other borrowings decreased $1.0 billion from December 31, 2023 primarily due to a decrease in short-term borrowings.

Current wording

Total liabilities increased $9.4 billion to $74.2 billion at June 30, 2024, compared to $64.8 billion at December 31, 2023. The increase in liabilities is due primarily to an increase in total deposits of $10.9 billion, or 19.7%, to $66.2 billion. By type, the increase in deposits from December 31, 2023 was driven by increases of $7.0 billion in non-interest bearing deposits, $2.3 billion in savings and money market accounts, $1.4 billion in interest bearing demand deposits, and $262 million in certificates of deposit. Other borrowings decreased $1.6 billion from December 31, 2023 primarily due to a decrease in short-term borrowings.

Previous wording

Total stockholders’ equity of $6.2 billion at March 31, 2024 increased by $94 million, or 1.5%, from December 31, 2023. The increase in stockholders' equity is primarily a function of net income, offset by quarterly dividends to common and preferred stockholders, and unrealized fair value losses on AFS securities, recorded net of tax in other comprehensive income.

Current wording

Total stockholders’ equity of $6.3 billion at June 30, 2024 increased by $256 million, or 4.2%, from December 31, 2023. The increase in stockholders' equity is primarily a function of net income, offset by quarterly dividends to common and preferred stockholders, and unrealized fair value losses on AFS securities, recorded net of tax in other comprehensive income.

Previous wording

Debt securities are classified at the time of acquisition as either HTM, AFS, or trading based upon various factors, including asset/liability management strategies, liquidity and profitability objectives, and regulatory requirements. HTM securities are carried at amortized cost, adjusted for amortization of premiums or accretion of discounts. AFS securities are debt securities that may be sold prior to maturity based upon asset/liability management decisions. Investment securities classified as AFS are carried at fair value with unrealized gains or losses on these securities recorded in AOCI in stockholders’ equity, net of tax.

Current wording

Debt securities are classified at the time of acquisition as either HTM, AFS, or trading based upon various factors, including asset/liability management strategies, liquidity and profitability objectives, and regulatory requirements. HTM securities are carried at amortized cost, adjusted for amortization of premiums or accretion of discounts. AFS securities are debt securities that may be sold prior to maturity based upon asset/liability management decisions. Investment securities classified as AFS are carried at fair value with unrealized gains or losses on these securities recorded in AOCI in stockholders’ equity, net of tax. Amortization of premiums or accretion of discounts on MBS is periodically adjusted for estimated prepayments. Trading securities are reported at fair value, with unrealized gains and losses on these securities included in current period earnings.

Previous wording

The Company purchases and originates residential mortgage loans through its AmeriHome mortgage banking business channel that are held for sale or securitization. As of March 31, 2024, loans HFS totaled $1.8 billion, compared to $1.4 billion at December 31, 2023, an increase of $439 million primarily related to an increase in non-EBO and agency-conforming loans.

Current wording

The Company purchases and originates residential mortgage loans through its AmeriHome mortgage banking business channel that are held for sale or securitization. As of June 30, 2024, loans HFS totaled $2.0 billion, compared to $1.4 billion at December 31, 2023, an increase of $605 million primarily related to an increase in agency-conforming and non-EBO loans.

Previous wording

Loans classified as HFI are stated at the amount of unpaid principal, adjusted for net deferred fees and costs, premiums and discounts on acquired and purchased loans, and an ACL. Net deferred loan fees of $102 million and $108 million reduced the carrying value of loans as of March 31, 2024 and December 31, 2023, respectively. Net unamortized purchase premiums on acquired and purchased loans of $175 million and $177 million increased the carrying value of loans as of March 31, 2024 and December 31, 2023, respectively.

Current wording

Loans classified as HFI are stated at the amount of unpaid principal, adjusted for net deferred fees and costs, premiums and discounts on acquired and purchased loans, and an ACL. Net deferred loan fees of $105 million and $108 million reduced the carrying value of loans as of June 30, 2024 and December 31, 2023, respectively. Net unamortized purchase premiums on acquired and purchased loans of $172 million and $177 million increased the carrying value of loans as of June 30, 2024 and December 31, 2023, respectively.

Previous wording

Commercial and industrial loans made up 39% and 38% of total loans HFI as of March 31, 2024 and December 31, 2023, respectively.

Current wording

Commercial and industrial loans made up 41% and 38% of total loans HFI as of June 30, 2024 and December 31, 2023, respectively.

Previous wording

In addition, the Company's loan portfolio includes significant credit exposure to the CRE market as CRE related loans accounted for approximately 32% and 33% of total loans at March 31, 2024 and December 31, 2023 respectively. Non-owner occupied CRE loans are CRE loans for which the primary source of repayment is rental income generated from the collateral property. Owner occupied CRE loans are loans secured by owner occupied non-farm nonresidential properties for which the primary source of repayment (more than 50%) is the cash flow from the ongoing operations and activities conducted by the borrower who owns the property. These CRE loans are secured by multi-family residential properties, professional offices, industrial facilities, retail centers, hotels, and other commercial properties.

Current wording

In addition, the Company's loan portfolio includes significant credit exposure to the CRE market as CRE related loans accounted for approximately 31% and 33% of total loans at June 30, 2024 and December 31, 2023 respectively. Non-owner occupied CRE loans are CRE loans for which the primary source of repayment is rental income generated from the collateral property. Owner occupied CRE loans are loans secured by owner occupied non-farm nonresidential properties for which the primary source of repayment (more than 50%) is the cash flow from the ongoing operations and activities conducted by the borrower who owns the property. These CRE loans are secured by multi-family residential properties, professional offices, industrial facilities, retail centers, hotels, and other commercial properties.

Previous wording

Approximately $2.5 billion, or 4.9%, of total loans HFI consisted of CRE non-owner occupied office loans as of March 31, 2024, compared to $2.4 billion, or 4.7%, as of December 31, 2023. Of the non-owner occupied office loan balance as of March 31, 2024, $266 million is scheduled to mature in the remainder of 2024. These office loans primarily consist of shorter-term bridge loans that enable borrowers to reposition or redevelop projects with more modern standards attractive to in-office employers in today’s environment, including enhanced on-site amenities. The vast majority of these projects are located in suburban locations in the Company's core footprint states (Arizona, California, and Nevada), with central business district and midtown exposure totaling approximately 2% and 10% of office loans as of March 31, 2024, respectively.

Current wording

Approximately $2.5 billion, or 4.7%, of total loans HFI consisted of CRE non-owner occupied office loans as of June 30, 2024, compared to $2.4 billion, or 4.7%, as of December 31, 2023. Of the non-owner occupied office loan balance as of June 30, 2024, $235 million is scheduled to mature in the remainder of 2024. These office loans primarily consist of shorter-term bridge loans that enable borrowers to reposition or redevelop projects with more modern standards attractive to in-office employers in today’s environment, including enhanced on-site amenities. The vast majority of these projects are located in suburban locations in the Company's core footprint states (Arizona, California, and Nevada), with central business district and midtown exposure totaling approximately 2% and 10% of office loans as of June 30, 2024, respectively.

Previous wording

Total non-performing loans increased $124 million to $534 million at March 31, 2024, from $410 million at December 31, 2023.

Current wording

Total non-performing loans increased $76 million to $486 million at June 30, 2024, from $410 million at December 31, 2023.

Previous wording

(1)Includes loan modifications to borrowers experiencing financial difficulty of $129 million and $111 million at March 31, 2024 and December 31, 2023, respectively.

Current wording

(1)Includes loan modifications to borrowers experiencing financial difficulty of $156 million and $111 million at June 30, 2024 and December 31, 2023, respectively.