WESTERN ALLIANCE BANCORPORATION

Previous wording

The forward-looking statements contained in this Form 10-Q reflect the Company's current views about future events and financial performance and involve certain risks, uncertainties, assumptions, and changes in circumstances that may cause the Company's actual results to differ significantly from historical results and those expressed in any forward-looking statement. Risks and uncertainties include those set forth in the Company's filings with the SEC and the following factors that could cause actual results to differ materially from those presented: 1) adverse financial market and economic conditions, including the effects of any recession in the United States, the impact of the bank failures that occurred in 2023 and related adverse developments in the banking industry, the potential impact on borrowers of supply chain disruptions and the economic and market impacts of the military conflicts in Ukraine and the Middle East; 2) changes in interest rates and increased rate competition; 3) exposure of financial instruments to certain market risks that may increase the volatility of earnings and AOCI; 4) the inherent risk associated with accounting estimates, including the impact to the allowance, provision for credit losses, and capital levels; 5) exposure to natural and man-made disasters in markets that we operate and the impact of climate change and ESG practices on us and our customers; 6) the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts, geopolitical conflicts or public health events (such as the COVID-19 pandemic), and of governmental and societal responses thereto; 7) dependency on real estate and events that negatively impact the real estate market; 8) concentrations in certain business lines or product types within our loan portfolio; 9) residual risk retained by us on reference pools covered by credit linked notes; 10) exposure to environmental liabilities related to the properties to which we acquire title; 11) ability to compete in a highly competitive market; 12) expansion strategies through acquisitions or implementation of new lines of business or new products and services that may not be successful; 13) uncertainty associated with digital payment initiatives; 14) ability to recruit and retain qualified employees and implement adequate succession planning to mitigate the loss of key members of our senior management team; 15) ability to meet capital adequacy and liquidity requirements; 16) dependence on low-cost deposits; 17) risks related to representations and warranties made on third-party loan sales; 18) ability to borrow from the FHLB or the FRB; 19) a change in our creditworthiness; 20) information security breaches; 21) reliance on third parties to provide key components of our infrastructure; 22) perpetration of fraud; 23) ability to implement and improve our controls and processes to keep pace with growth; 24) the discontinuation of or substantial c…

Excerpt shortened here; the source contains the full paragraph.

Current wording

The forward-looking statements contained in this Form 10-Q reflect the Company's current views about future events and financial performance and involve certain risks, uncertainties, assumptions, and changes in circumstances that may cause the Company's actual results to differ significantly from historical results and those expressed in any forward-looking statement. Risks and uncertainties include those set forth in the Company's filings with the SEC and the following factors that could cause actual results to differ materially from those presented: 1) adverse financial market and economic conditions, including the effects of any recession in the United States, adverse developments in the financial services industry generally, such as the bank failures in 2023, and any related impact on depositor behavior, the potential impact on borrowers of supply chain disruptions and the economic and market impacts of the military conflicts in Ukraine and the Middle East; 2) changes in interest rates and increased rate competition; 3) exposure of financial instruments to certain market risks that may increase the volatility of earnings and AOCI; 4) the inherent risk associated with accounting estimates, including the impact to the allowance, provision for credit losses, and capital levels; 5) exposure to natural and man-made disasters in markets that we operate and the impact of climate change and ESG practices on us and our customers; 6) the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts, geopolitical conflicts or public health events (such as the COVID-19 pandemic), and of governmental and societal responses thereto; 7) dependency on real estate and events that negatively impact the real estate market; 8) concentrations in certain business lines or product types within our loan portfolio; 9) residual risk retained by us on reference pools covered by credit linked notes; 10) exposure to environmental liabilities related to the properties to which we acquire title; 11) ability to compete in a highly competitive market; 12) expansion strategies through acquisitions or implementation of new lines of business or new products and services that may not be successful and supervisory actions by regulatory agencies which may limit our ability to pursue certain growth opportunities; 13) uncertainty associated with digital payment initiatives; 14) ability to recruit and retain qualified employees and implement adequate succession planning to mitigate the loss of key members of our senior management team; 15) ability to meet capital adequacy and liquidity requirements; 16) dependence on low-cost deposits; 17) risks related to representations and warranties made on third-party loan sales; 18) ability to borrow from the FHLB or the FRB; 19) a change in our creditworthiness; 20) information security breaches; 21) reliance on third parties to provide key components of our infrastructure; 22) perpet…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

For more information regarding risks that may cause the Company's actual results to differ materially from any forward-looking statements, see “Risk Factors” in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2023 and “Risk Factors” in Part II, Item 1A of this Form 10-Q. All forward-looking statements that are made or attributable to us are expressly qualified in their entirety by this cautionary notice. The forward-looking statements included herein are only made as of the date of this Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Current wording

For more information regarding risks that may cause the Company's actual results to differ materially from any forward-looking statements, see “Risk Factors” in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2023 and “Risk Factors” in Part II, Item 1A of this Form 10-Q. All forward-looking statements that are made or attributable to us are expressly qualified in their entirety by this cautionary notice. The forward-looking statements included herein are only made as of the date of this Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Previous 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.

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 September 30, 2024 and December 31, 2023, respectively. Approximately 16% of CRE loans, excluding construction and land loans, were owner occupied at September 30, 2024 and December 31, 2023, and approximately 5% were non-owner occupied office loans at September 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 and nine months ended September 30, 2024, the Company recognized gross charge-offs on CRE non-owner occupied loans totaling $21.7 million and $44.3 million, respectively, which primarily related to office properties. 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 further deterioration of asset quality in this portfolio.

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 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.

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 $2.2 million during the three months ended September 30, 2024 and a net charge of $9.4 million during the nine months ended September 30, 2024 due to adjustments to the loss estimate.

Previous wording

Financial Results Highlights for the Second Quarter of 2024

Current wording

Financial Results Highlights for the Third Quarter of 2024

Previous wording

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

Current wording

•Net income available to common stockholders of $196.6 million, compared to $213.4 million for the third quarter 2023

Previous wording

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

Current wording

•Diluted earnings per share of $1.80, compared to $1.97 per share for the third quarter 2023

Previous 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

Current wording

•Net revenue of $823.1 million, compared to $716.2 million for the third quarter 2023, with non-interest expense of $537.4 million, compared to $426.2 million for the third quarter 2023

Previous wording

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

Current wording

•Stockholders' equity of $6.7 billion, an increase of $599 million from December 31, 2023

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

Current wording

•Nonaccrual loans and repossessed assets increased to 0.45%of total assets compared to 0.40% at December 31, 2023

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

Current wording

•Annualized net loan charge-offs to average loans outstanding of 0.20%, compared to 0.07% for the third quarter 2023

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

Current wording

•Tangible common equity ratio of 7.2%, a decrease compared to 7.3% at December 31, 20231

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

Current wording

•Book value per common share of $57.97, an increase of 9.8% from $52.81 at December 31, 2023

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•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

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•Tangible book value per share, net of tax, of $51.98, an increase of$5.26, or 11.3%, from $46.72 at December 31, 20231

Previous wording

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

Current wording

•Efficiency ratio of 64.5% in the third quarter 2024, compared to 58.8% in the third 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 and six months ended June 30, 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 nine months ended September 30, 2024.

Previous 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.

Current wording

Total assets increased to $80.1 billion at September 30, 2024 from $70.9 billion at December 31, 2023. The increase in total assets of $9.2 billion, or 13.0%, was primarily driven by an increase in deposits, which contributed to increases in investment securities and cash of $3.7 billion and $1.0 billion, respectively, and funded HFI loan growth of $3.0 billion. Loans HFI increased by $3.0 billion, or 6.1%, to $53.3 billion as of September 30, 2024, compared to $50.3 billion as of December 31, 2023. Commercial and industrial loans primarily drove the increase in loans HFI, increasing $3.4 billion from December 31, 2023, which was partially offset by decreases in residential real estate and construction and land development loans of $383 million and $162 million, respectively. In addition, loans HFS increased $925 million from $1.4 billion as of December 31, 2023 primarily due to an increase in agency-conforming and non-EBO loans.

Previous 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.

Current wording

Total deposits increased$12.7 billion, or 23.0%, to $68.0 billion as of September 30, 2024 from $55.3 billion as of December 31, 2023. By type, the increase in deposits from December 31, 2023 was driven by increases of $10.4 billion and $4.8 billion in non-interest bearing deposits and savings and money market accounts, respectively, partially offset by decreases of $2.1 billion and $452 million in interest bearing demand deposits and certificates of deposit, respectively.

Previous 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:

Current wording

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

Previous 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.

Current wording

(1)Yields on loans and securities have been adjusted to a TEB. The taxable-equivalent adjustment was $10.0 million and $8.9 million for the three months ended September 30, 2024 and 2023, respectively.

Previous 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.

Current wording

(2)Included in the yield computation are net loan fees of $21.7 million and $28.0 million for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

(1)Yields on loans and securities have been adjusted to a TEB. The taxable-equivalent adjustment was $19.5 million and $17.5 million for the six months ended June 30, 2024 and 2023, respectively.

Current wording

(1)Yields on loans and securities have been adjusted to a TEB. The taxable-equivalent adjustment was $29.5 million and $26.4 million for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

(2)Included in the yield computation are net loan fees of $65.2 million and $72.4 million for the six months ended June 30, 2024 and 2023, respectively.

Current wording

(2)Included in the yield computation are net loan fees of $86.9 million and $100.4 million for the nine months ended September 30, 2024 and 2023, respectively.

Previous 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.

Current wording

The Company's primary source of revenue is interest income. For the three months ended September 30, 2024, interest income was $1.2 billion, an increase of $173.4 million, or 16.9%, compared to $1.0 billion for the three months ended September 30, 2023. This increase was primarily the result of a $74.3 million increase in interest income from investment securities resulting from an increase in the average investment balance of $6.2 billion and a $64.9 million increase in interest income from loans HFI that was driven by higher average HFI loan balances of $4.6 billion. Higher average balances for loans HFS and cash and other also contributed $19.6 million and $14.6 million, respectively, to the increase in interest income.

Previous wording

For the six months ended June 30, 2024, interest income was $2.2 billion, an increase of $232.8 million, or 11.8%, compared to $2.0 billion for the six months ended June 30, 2023. This increase was primarily the result of a $133.1 million increase in interest income from loans HFI driven by higher rates coupled with a $900 million increase in the average HFI loan balance and a $126.0 million increase in investment income from investment securities due primarily to an increase in the average investment balance of $5.2 billion. These increases were offset in part by a decrease in interest income from loans HFS of $54.4 million driven by a lower average HFS loan balance of $1.6 billion.

Current wording

For the nine months ended September 30, 2024, interest income was $3.4 billion, an increase of $406.2 million, or 13.6%, compared to $3.0 billion for the nine months ended September 30, 2023. This increase was primarily the result of a $200.3 million increase in investment income from investment securities due primarily to an increase in the average investment balance of $5.5 billion and a $197.9 million increase in interest income from loans HFI driven by a $2.2 billion increase in the average HFI loan balance coupled with higher yields. These increases were offset in part by a decrease in interest income from loans HFS of $34.7 million driven by a lower average HFS loan balance of $665.5 million.

Previous 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.

Current wording

For the three months ended September 30, 2024, interest expense was $503.1 million, an increase of $63.5 million, or 14.4%, compared to $439.6 million for the three months ended September 30, 2023. The increase in interest expense was due to an increase in interest expense on deposits of $105.9 million driven by an $8.8 billion increase in the average interest bearing deposit balance and increased interest rates, partially offset by a $42.4 million decrease in interest expense on total borrowings resulting from a decrease in average borrowing balances of $2.2 billion.

Previous wording

For the six months ended June 30, 2024, interest expense was $947.0 million, an increase of $137.5 million, or 17.0%, compared to $809.5 million for the six months ended June 30, 2023. Interest expense on deposits increased $308.2 million for the same period driven by a $9.6 billion increase in average interest-bearing deposits and increased interest rates, partially offset by a $171.0 million decrease in interest expense on total borrowings resulting from a decrease in average borrowing balances of $6.4 billion.

Current wording

For the nine months ended September 30, 2024, interest expense was $1.5 billion, an increase of $201.0 million, or 16.1%, compared to $1.2 billion for the nine months ended September 30, 2023. Interest expense on deposits increased $414.1 million for the same period driven by a $9.3 billion increase in average interest bearing deposits and increased interest rates, partially offset by a $213.4 million decrease in interest expense on total borrowings resulting from a decrease in average borrowing balances of $5.0 billion.

Previous 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.

Current wording

For the three months ended September 30, 2024, net interest income totaled $696.9 million, an increase of $109.9 million, or 18.7%, compared to $587.0 million for the three months ended September 30, 2023. The increase in net interest income was driven by a $13.3 billion increase in average interest-earning assets, partially offset by an increase in funding costs driven by the higher rate environment. The decrease in net interest margin of 6 basis points to 3.61% is largely the result of an increase in both the average balances and rates of deposits, partially offset by an increase in average loans HFI and investment securities balances and yields compared to the same period in 2023.

Previous wording

For the six months ended June 30, 2024, net interest income was $1.3 billion, an increase of $95.3 million, or 8.2%, compared to $1.2 billion for the six months ended June 30, 2023. The increase in net interest income reflects a $5.0 billion increase in average interest-earning assets and yields on interest-earnings assets, partially offset by an increase of $3.2 billion in average interest-bearing liabilities. The increase in net interest margin of 1 basis point to 3.61% is the result of a higher rate environment as explained in the above paragraphs.

Current wording

For the nine months ended September 30, 2024, net interest income was $2.0 billion, an increase of $205.2 million, or 11.7%, compared to $1.7 billion for the nine months ended September 30, 2023. The increase in net interest income reflects a $7.8 billion increase in average interest-earning assets and related yields, partially offset by an increase of $4.3 billion in average interest bearing liabilities. The decrease in net interest margin of 1 basis point to 3.61% is the result of a higher rate environment as explained in the above paragraphs.

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 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.

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 nine months ended September 30, 2024, the Company recorded a provision for credit losses of $33.6 million and $85.9 million, respectively, compared to $12.1 million and $53.3 million for the three and nine months ended September 30, 2023, respectively. The provision for credit losses for the three and nine months ended September 30, 2024 is primarily reflective of net charge-offs of $26.6 million and $59.2 million, respectively, and loan growth.

Previous 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.

Current wording

Total non-interest income for the three months ended September 30, 2024 compared to the same period in 2023 decreased $3.0 million. The decrease in non-interest income from the three months ended September 30, 2023 was primarily driven by decreases in net loan servicing revenue of $14.9 million and fair value gain adjustments, net of $13.7 million, partially offset by an increase in other income of $12.7 million from new bank owned life insurance policies and an increase in gain on sales of investment securities of $8.7 million.

Previous wording

Total non-interest income for the six months ended June 30, 2024 increased $184.1 million compared to the same period in 2023. Non-interest income for the six months ended June 30, 2023 was impacted by the Company's balance sheet repositioning actions, which were largely completed by the end of 2023. These actions resulted in losses of $135.1 million related to fair value adjustments from transferring loans from HFI to HFS and losses on sales of investment securities of $26.1 million during the six months ended June 30, 2023, which did not reoccur in the current period.

Current wording

Total non-interest income for the nine months ended September 30, 2024 increased $181.1 million compared to the same period in 2023. Non-interest income for the nine months ended September 30, 2023 was impacted by the Company's balance sheet repositioning actions, which were largely completed by the end of 2023. These actions resulted in losses of $117.3 million related to fair value adjustments from transferring loans from HFI to HFS and losses on sales of investment securities of $26.0 million during the nine months ended September 30, 2023, which did not reoccur in the current period.

Previous wording

Total non-interest expense for the three months ended June 30, 2024 increased $99.4 million compared to the same period in 2023. The increase in non-interest expense was primarily driven by an increase in deposit costs related to higher ECR balances, which increased from $14.9 billion as of June 30, 2023 to $25.0 billion as of June 30, 2024, and higher ECR rates.

Current wording

Total non-interest expense for the three months ended September 30, 2024 increased $111.2 million compared to the same period in 2023. The increase in non-interest expense was primarily driven by an increase in deposit costs related to higher ECR balances and rates. ECR balances increased $9.0 billion to $26.1 billion as of September 30, 2024 from $17.1 billion as of September 30, 2023.

Previous 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.

Current wording

Total non-interest expense for the nine months ended September 30, 2024 increased$344.5 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 FDIC special assessment charge of $9.4 million recognized during the nine months ended September 30, 2024.

Previous 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.

Current wording

The Company's effective tax rate was 20.7% and 22.1% for the three months ended September 30, 2024 and 2023, respectively, and 22.0% and 20.5% for the nine months ended September 30, 2024 and 2023, respectively. The decrease in the effective tax rate for the three months ended September 30, 2024 compared to the same period in 2023 was primarily due to a decrease in pre-tax book income. The increase in the effective tax rate for the nine months ended September 30, 2024 compared to the same period in 2023 was primarilydue to a decrease in expected investment tax credit benefits, an increase in nondeductible insurance premiums, and shortfalls from stock compensation expense during 2024.

Previous 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.

Current wording

Total assets increased $9.2 billion to $80.1 billion at September 30, 2024, compared to $70.9 billion at December 31, 2023. The increase in total assets was primarily driven by an increase in deposits, which contributed to increases in investment securities and cash of $3.7 billion and $1.0 billion, respectively, and funded HFI loan growth of $3.0 billion. Loans HFI increased $3.0 billion, or 6.1%, to $53.3 billion as of September 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 $3.4 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 $383 million and $162 million, respectively. Loans HFS increased $925 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 $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.

Current wording

Total liabilities increased $8.6 billion to $73.4 billion at September 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 $12.7 billion, or 23.0%, to $68.0 billion. By type, the increase in deposits from December 31, 2023 was driven by increases of $10.4 billion in non-interest bearing deposits and $4.8 billion in savings and money market accounts, partially offset by decreases in interest bearing demand deposits and certificates of deposit of $2.1 billion and $452 million, respectively. Other borrowings decreased $4.2 billion from December 31, 2023 primarily due to a decrease in short-term borrowings, partially offset by a $1.0 billion increase in long-term borrowings from FHLB advances.

Previous 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.

Current wording

Total stockholders’ equity of $6.7 billion at September 30, 2024 increased by $599 million, or 9.9%, from December 31, 2023. The increase in stockholders' equity is primarily a function of net income and unrealized fair value gains on AFS securities, recorded net of tax in other comprehensive income, offset by quarterly dividends to common and preferred stockholders.

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 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.

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 September 30, 2024, loans HFS totaled $2.3 billion, compared to $1.4 billion at December 31, 2023, an increase of $925 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 $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.

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 $107 million and $108 million reduced the carrying value of loans as of September 30, 2024 and December 31, 2023, respectively. Net unamortized purchase premiums on acquired and purchased loans of $173 million and $177 million increased the carrying value of loans as of September 30, 2024 and December 31, 2023, respectively.