WESTERN ALLIANCE BANCORPORATION
For the period ended Dec 31, 2024. Filed Feb 25, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 25, 2025
WAL$75.55-0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-28.
0001212545-24-000092
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-25.
0001212545-25-000090
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 321 previous paragraphs and 300 current paragraphs.
179 unchanged; 99 reworded; 21 added; 38 removed; 5 previous and 1 current paragraphs rearranged.
Tables are not compared: 41 previous and 41 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
Recent Market and Banking Industry Developments
Current report
CRE Exposure
Current report
Other Assets Acquired Through Foreclosure
Current report
During the year ended December 31, 2024, the Company foreclosed on a delinquent CRE loan and took possession of an office building in downtown San Diego. The property was recorded as OREO with a carrying value of $44 million, which represents its fair value based on a recent appraisal less estimated selling costs. The Company has assumed the existing tenant leases and will recognize rental income from these leases as well the associated operating expenses for the building.
Current report
Southern California Wildfires
Current report
In January 2025, a series of destructive wildfires erupted across the Los Angeles, California area. While California is one of the Company's core footprint states, the Company has not experienced any impact to its offices and its exposure to borrower collateral damage has been limited. The Company's aggregate exposure totals less than $15 million, with 17 properties experiencing either a significant or total loss. Further, insurance coverage for each of these properties meets or exceeds the outstanding loan balance.
Current report
•PPNR 1 increased $140.9 million to $1.1 billion, compared to $996.2 million in 2023
Current report
Total assets increased to $80.9 billion at December 31, 2024 from $70.9 billion at December 31, 2023. The increase in total assets of $10.1 billion, or 14.2%, was driven primarily by an increase in deposits. This increase in deposits drove loan growth of $3.4 billion and contributed to increases in cash of $2.5 billion, or 159.9%, and investment securities of $2.4 billion, or 18.7%.
Current report
Loans HFI increased by $3.4 billion, or 6.7%, to $53.7 billion as of December 31, 2024, compared to $50.3 billion as of December 31, 2023. By loan type, commercial and industrial loans and CRE, non-owner occupied loans increased $4.0 billion and $218 million, respectively, from December 31, 2023. This increase in loans HFI was partially offset by decreases in residential real estate and construction and land development loans of$452 million and $410 million, respectively.
Current report
Total non-interest income for the year ended December 31, 2024 increased by $262.5 million compared to the same period in 2023. The increase in non-interest income from the year ended December 31, 2023 was driven in large part by execution of the Company's balance sheet repositioning strategy, which included sales of certain loans and investment securities. These actions resulted in recognition of losses in 2023 related to fair value adjustments from transferring loans from HFI to HFS and sales of investment securities totaling $116.0 million and $40.8 million, respectively. In addition, income from bank owned life insurance increased $23.3 million as the Company entered into a new policy during 2024.
Current report
Total non-interest expense for the year ended December 31, 2024 increased $401.6 million compared to the same period in 2023. The increase in non-interest expense from the year ended December 31, 2023 was primarily driven by increased deposit costs and salaries and employee benefits, in addition to a net gain on extinguishment of debt in 2023 that did not reoccur. Higher earnings credit deposit balances and rates drove the increase in deposits costs of $256.5 millionas ECR related deposit balances increased $2.9 billion to $20.7 billion as of December 31, 2024. Salaries and employee benefits increased $64.8 million due to increased average headcount and a higher corporate bonus accrual resulting from improved performance in 2024. The gain on extinguishment of debt totaling $52.7 million recognized during the year ended December 31, 2023 was related to payoffs of the warehouse and equity fund resource loan credit linked notes and Amerihome senior notes.
Current report
The carrying value of debt securities increased $2.4 billion, or 19.1%, from December 31, 2023. The increase in investment securities is largely attributable to purchases of Residential MBS issued by GSEs and GNMA, partially offset by sales of CLOs. These actions were part of the Company's efforts to shift its investment portfolio mix toward high quality liquid assets.
Current report
The average duration, which is a measure of the interest rate sensitivity of the Company's debt securities portfolio, is 3.4 years as of December 31, 2024.
Current report
Other Assets Acquired through Foreclosure
Current report
Other assets acquired through foreclosure consist primarily of properties acquired as a result of, or in-lieu-of, foreclosure and at December 31, 2024 and 2023, totaled $52 million and $8 million, respectively, net of a valuation allowance of $5 million and $4 million, respectively. The increase in other assets acquired through foreclosure compared to 2023 was due to the Company taking possession of an office property.
Current report
The majority of the repossessed asset balance at December 31, 2024 related to a single office property. The Company held five properties at December 31, 2024 and 2023.
Current report
Bank Owned Life Insurance
Current report
The carrying value of BOLI totaled $1.0 billion as of December 31, 2024, an increase of $825 million from $186 million as of December 31, 2023. BOLI is used as a tax efficient method to help offset employee benefit costs. The increase in BOLI from December 31, 2023 is attributable to the purchase of a new BOLI policy during the year. The earnings from the new BOLI policy are linked to the performance of a pool of highly rated (AA or better) CLO securities, secured by a stable value wrap that provides a level of stability to the investment performance of the underlying CLO portfolio.
Current report
The Company's long-term borrowings consist of long-term FHLB borrowings and credit linked notes, inclusive of issuance costs. At December 31, 2024, the carrying value of long-term borrowings totaled $2.4 billion, compared to $446 million at December 31, 2023. The increase in long-term borrowings of $2.0 billion was driven by long-term FHLB advances entered into during 2024.
Current report
In addition to the funding sources above, the Company may utilize securities repurchase agreements and unsecured federal funds lines to meet its liquidity requirements. The following table presents the outstanding balance on the Company's unsecured federal funds lines of credit as of December 31, 2024:
Current report
In July 2023, the FRB and FDIC proposed rules to implement the final components of the Basel III agreement, often known as the “Basel III endgame.” These proposed rules contain provisions that would apply to banks with $100 billion or more in assets. In September 2024, the FRB announced a re-proposal of the Basel III endgame that would cover all major areas of the rule: credit risk, operational risk and market risk. Under the re-proposal, banks with assets between $100 and $250 billion would not be subject to the Basel III endgame changes, other than the requirement to recognize unrealized gains and losses of their securities in regulatory capital. These re-proposed rules do not apply to holding companies or banks with less than $250 billion in assets, such as the Company and the Bank, but the final impacts of these rules cannot yet be predicted, as the agencies have not made final decisions on any aspect of the re-proposals.
Removed paragraphs (38)
Previous report
Recent Banking Industry and Market Developments
Previous report
The bank failures in 2023 caused significant disruption in the United States banking industry, particularly among mid-sized banks, such as the Company. The closures of these banks triggered a surge in deposit outflows and stock price volatility at many mid-sized banks, including the Company.
Previous report
Regulatory actions in response to these bank failures included establishment of the BTFP, which offered loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral valued at par. The Company drew $1.3 billion from the BTFP during the first quarter of 2023, all of which was repaid as of December 31, 2023.
Previous report
The recent volatility in the banking industry and other recent regulatory actions have had and may continue to have a material impact on the Company's operations, as further discussed below.
Previous report
Capital and liquidity
Previous report
While the Company believes it has sufficient capital, funding, and access to contingent sources of liquidity, the Company has taken several actions to ensure the strength of its capital and liquidity position. These actions included disposition of selected assets, including $1.6 billion of AFS securities and $4.3 billion of loans during the year ended December 31, 2023, and increasing its borrowing capacity with the FRB. With these actions, the Company strengthened its capital position, increasing its CET1 ratio 150 basis points to 10.8%, grew high quality liquid assets 1 $5.5 billion to $7.4 billion as of December 31, 2023, and reduced its loan to deposit ratio from 96.7% as of December 31, 2022 to 90.9% as of December 31, 2023.
Previous report
The Company's deposit balances stabilized as of March 20, 2023 and increased $1.7 billion as of December 31, 2023 when compared to December 31, 2022. The Company also strengthened its insured deposit ratio from 45% as of December 31, 2022 to 73% as of December 31, 2023. Insured and collateralized deposits as a percentage of total deposits was 80% at December 31, 2023, compared to 47% at December 31, 2022.
Previous report
Financial position and results of operations
Previous report
The Company's financial position and results of operations as of and for the year ended December 31, 2023 have been impacted by this disruption. These events contributed to the $62.6 million provision for credit losses recognized during the year ended December 31, 2023, of which $17.1 million related to a charge-off of a corporate debt security from a financial institution issuer. The Company's actions to strengthen its capital and liquidity position contributed to a $116.0 million pre-tax fair value loss adjustment primarily related to the transfer of loans to HFS, a net loss of $40.8 million on sales of investment securities, partially offset by a $52.7 million gain on extinguishment of debt. The continued uncertainty regarding the severity and duration of the volatility in the banking industry and related economic effects may continue to affect the Company’s estimate of its allowance for credit losses and resulting provision for credit losses. To the extent the impact of the banking industry volatility is prolonged and economic conditions worsen or persist longer than forecast, such estimates may be insufficient and may change significantly in the future. The Company’s net interest margin also may be negatively impacted in future periods if the Company's borrowings remain elevated. These uncertainties and the economic environment will continue to affect earnings, growth, and may result in deterioration of asset quality in the Company's loan and investment portfolios.
Previous report
Depositors in the technology industry were generally considered to be the most impacted by these adverse events and may have greater sensitivity to the volatility in the banking industry with potentially longer recovery periods than other types of businesses. The Company's deposit exposure to the technology industry totaled $4.4 billion, or 8.0% of total deposits, as of December 31, 2023.
Previous report
1 Includes U.S. Treasury securities, U.S. government agency securities, and MBS issued by GSEs that are liquid and readily marketable.
Previous report
Asset valuation
Previous report
Sustained declines in the Company's stock price and/or other liquidity related impacts, such as increases in deposit outflows, could give rise to triggering events in the future that could result in a non-cash write-down in the value of our goodwill, which could have a material adverse impact on our results of operations.
Previous report
•PPNR 1 decreased $388.0 million to $1.0 billion, compared to $1.4 billion in 2022
Previous report
Total assets increased to $70.9 billion at December 31, 2023 from $67.7 billion at December 31, 2022. The increase in total assets of $3.1 billion, or 4.6%, was driven primarily by an increase in deposits and borrowings, which contributed to an increase in investment securities of $4.2 billion, or 48.9%, and an increase in cash of $533 million. As a result of loan dispositions undertaken as part of the Company's balance sheet repositioning strategy, loans HFI decreased by $1.6 billion, or 3.1%, to $50.0 billion as of December 31, 2023, compared to $51.9 billion as of December 31, 2022. By loan type, commercial and industrial and residential real estate loans decreased $1.6 billion and $1.2 billion, respectively, from December 31, 2022. This decrease in loans HFI was partially offset by increases in construction and land development and CRE, non-owner occupied loans of $876 million and $331 million, respectively.
Previous report
Earnings Per Share, Adjusted
Previous report
The Company's earnings for the year ended December 31, 2023 were impacted broadly by the bank failures in 2023 and resulting actions undertaken by the Company to reposition its balance sheet to ensure the strength of its capital and liquidity position. The following table shows the components used in the calculation of earnings per share for the year ended December 31, 2023, adjusted to exclude certain items, which management believes is more comparable to historical earnings trends:
Previous report
Total non-interest income for the year ended December 31, 2023 compared to the same period in 2022 decreased by $43.9 million. The decrease in non-interest income was primarily driven by an increase in fair value loss adjustments, a net loss on sales of investment securities, and a decrease in loan servicing revenue. Fair value loss adjustments and the net loss on sales of investment securities during the year ended December 31, 2023 were driven by balance sheet repositioning charges incurred primarily during the first quarter following execution of the Company's balance sheet repositioning strategy, which included sales of select loans and investment securities. The decrease in net loan servicing revenue of $28.6 million is primarily related to lower MSR valuations, partially offset by a reduction in MSR hedging losses and an increase in base service fee revenue. These decreases were offset in part by an increase in net gain on loan origination and sale activities of $89.5 million from higher spreads and an increase in service charges and fees of $49.3 million.
Previous report
Total non-interest expense for the year ended December 31, 2023 increased $466.7 million compared to the same period in 2022. The increase in non-interest expense was primarily driven by increased deposit costs, insurance, data processing, and salaries and employee benefits. The increase in deposits costs of $270.9 million primarily relates to higher earnings credit deposit balances and rates, as ECR related deposits increased $5.0 billion to $17.8 billion as of December 31, 2023. Insurance costs increased $159.3 million due to elevated insured and brokered deposit levels and the FDIC special assessment of $66.3 million. The increase in data processing of $39.0 million was driven by an increase in software licensing costs. Salaries and employee benefits increased $26.8 million due to an increase in base salary and a reduction in deferred origination costs from lower loan origination volume during the year, partially offset by a reduction in corporate bonuses.
Previous report
The carrying value of debt securities increased $4.2 billion, or 50.3%, from December 31, 2022. The increase in investment securities is largely attributable to purchases of U.S. Treasury securities, offset by sales of CLOs, MBS, and tax-exempt securities. The Company increased its investment in U.S. Treasury securities during 2023 as part of its balance sheet repositioning efforts and to hold additional high quality liquid assets. The Company's U.S. Treasury security portfolio consists primarily of U.S. Treasury bills maturing in one year or less.
Previous report
The Company adopted the amendments in ASU 2022-02, which eliminated the accounting guidance on TDR loans for creditors and requires enhanced disclosures for loan modifications to borrowers experiencing financial difficulty made on or after January 1, 2023.
Previous report
Troubled Debt Restructured Loans
Previous report
Prior to the adoption of ASU 2022-02, the Company accounted for a modification to the contractual terms of a loan that resulted in granting a concession to a borrower experiencing financial difficulties as a TDR. The loan terms that were modified or restructured due to a borrower’s financial situation included, but were not limited to, a reduction in the stated interest rate, an extension of the maturity or renewal of the loan at an interest rate below current market, a reduction in the face amount of the debt, a reduction in the accrued interest, or deferral of interest payments. The majority of the Company's modifications were extensions in terms or deferral of payments which result in no lost principal or interest. Consistent with regulatory guidance, a TDR loan subsequently modified in another restructuring agreement but had shown sustained performance and classification as a TDR, was removed from TDR status provided that the modified terms were market-based at the time of modification.
Previous report
The following table presents TDR loans:
Previous report
As of December 31, 2022, the ACL on TDR loans totaled $4 million and there were no outstanding commitments on TDR loans.
Previous report
As of December 31, 2023, the net DTA balance totaled $287 million, a decrease of $24 million from $311 million as of December 31, 2022. This decrease in the net deferred tax asset was primarily the result of increases in the fair market value of AFS securities and decreases to credit carryforwards that were not fully offset by the decrease to MSR DTLs.
Previous report
The Company's long-term borrowings consist of credit linked notes, inclusive of issuance costs and fair market value adjustments related to the AmeriHome Senior Notes that were redeemed during the year. At December 31, 2023, the carrying value of long-term borrowings was $446 million, compared to $1.3 billion at December 31, 2022. The decrease in long-term borrowings from December 31, 2022 primarily relates to the payoff of credit linked notes on the Company's mortgage warehouse and equity fund resource loans and the AmeriHome senior notes during the year ended December 31, 2023.
Previous report
Goodwill impairment
Previous report
The Company performs its annual goodwill impairment test as of October 1 each year, or more often if events or circumstances indicate the carrying value may not be recoverable. As described in "Note 1. Summary of Significant Accounting Policies” in Item 8 of this Form 10-K, the Company may first elect to assess, through qualitative factors, whether it is more likely than not goodwill is impaired. This qualitative assessment includes consideration of relevant events and circumstances, such as macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other events specific to the Company, significant events affecting a reporting unit, and a sustained decrease in stock price. If, after assessing all relevant events or circumstances, the qualitative assessment indicates potential impairment, a quantitative impairment test is performed. A quantitative valuation involves determining the fair value of each reporting unit and comparing the fair value to its corresponding carrying amount. If, based on the quantitative test, a reporting unit's carrying amount exceeds its fair value, a goodwill impairment charge for this difference is recorded to current period earnings as non-interest expense.
Previous report
After considering the economic uncertainty and market volatility resulting from the rising rate environment and the industry disruption from the bank failures in 2023 which impacted the Company's stock price and market capitalization, the Company elected to perform a quantitative valuation to assess goodwill impairment for each of its reporting units as of October 1, 2023. The determination of the fair value of a reporting unit is a subjective process that involves the use of estimates and judgments, particularly related to forecasted cash flows, the appropriate discount rates and an applicable control premium. The determination of the fair value of the Company’s reporting units as of October 1, 2023 employed both an income and a market approach. The income approach utilizes the reporting unit’s forecasted cash flows (including a terminal value approach to estimate cash flows beyond the final year of the forecast) and the reporting unit’s estimated cost of equity as the discount rate to estimate value. Significant management judgment is necessary in the preparation of each reporting unit’s forecasted cash flows as it relates to expectations for earnings projections, growth, and credit loss expectations and actual results may differ from forecasted results. The market approach relies upon valuation multiples derived from stock prices and enterprise values of publicly traded companies and also incorporates a control premium to develop an estimate of value. The selection of comparable companies and an appropriate control premium under this approach is subjective. Changes to any of these assumptions or judgments, either individually or collectively, may have a significant effect on the estimated fair value of the Company’s reporting units as calculated under both these approaches. Based on the results of the Company’s annual goodwill impairment test, the fair value of each of the Company’s reporting units with goodwill exceeded its carrying value. The Company monitored events and circumstances during the period from October 1, 2023 through December 31, 2023, including macroeconomic conditions, industry and market events and Company-specific performance indicators, and concluded it was not more likely than not the fair value of each of the Company's reporting units was below its respective carrying value as of December 31, 2023. Therefore, no impairment charges were recorded during the year ended December 31, 2023. The carrying value of goodwill by reporting unit is disclosed in "Note 8. Goodwill and Other Intangible Assets"in Item 8 of this Form 10-K.
Previous report
The following table presents the available and outstanding balances on the Company's lines of credit as of December 31, 2023:
Previous report
The Dodd-Frank Act significantly changed the financial regulatory regime in the United States. Since the enactment of the Dodd-Frank Act, U.S. banks and financial services firms have been subject to enhanced regulation and oversight. Several provisions of the Dodd-Frank Act are subject to further rulemaking, guidance, and interpretation by the federal banking agencies.
Previous report
Enacted in 2018, the EGRRCPA, among other things, amended certain provisions of the Dodd-Frank Act. The EGRRCPA provides limited regulatory relief to certain financial institutions while preserving the existing framework under which U.S. financial institutions are regulated. The EGRRCPA relieves bank holding companies with less than $100 billion in assets from the enhanced prudential standards imposed under Section 165 of the Dodd-Frank Act (including, but not limited to, resolution planning and enhanced liquidity and risk management requirements).
Previous report
Additionally, on June 4, 2021, the Federal Reserve adopted amendments to Regulation D (Reserve Requirements of Depository Institutions, 12 C.F.R. Part 204) to eliminate references to an “interest on required reserves” rate and to an “interest on excess reserves” rate and replace them with a reference to a single “interest on reserve balances” rate. The amendments also simplified the formula used to calculate the amount of interest paid on balances maintained by or on behalf of eligible institutions in master accounts at Federal Reserve Banks, and to made other conforming amendments. The rule became effective on July 29, 2021.
Previous report
Bank Term Funding Program
Previous report
In response to the bank failures that occurred earlier in 2023, the Federal Reserve System has established the BTFP, which is intended to provide additional funding to eligible depository institutions to help ensure banks have the ability to meet the needs of all their depositors. The BTFP functions similarly to the Federal Reserve’s traditional discount window, offering loans of up to one year in length to eligible depository institutions pledging any collateral eligible for purchase by the Federal Reserve Banks in open market operations (for example, U.S. Treasuries, U.S. agency securities, and U.S. agency mortgage-backed securities), which are valued at par. The U.S. Department of the Treasury will provide $25 billion as credit protection to the Federal Reserve Banks in connection with the BTFP. The BTFP's goal is to be an additional source of liquidity against high- quality securities, eliminating an institution’s need to quickly sell those securities in times of stress. The Company borrowed $1.3 billion under the BTFP, all of which was repaid as of December 31, 2023.
Previous report
As of April 1, 2020, final rules became effective simplifying the capital treatment for mortgage servicing assets, certain DTAs, investments in the capital instruments of unconsolidated financial institutions, and minority interest. Management believes the Company is in compliance, and will continue to be in compliance, with the targeted capital ratios.
Previous report
The Dodd-Frank Act also requires publicly traded companies to give stockholders a non-binding vote on executive compensation at least every three years and on so-called “golden parachute” payments in connection with approvals of mergers and acquisitions. WAL gives stockholders a non-binding vote on executive compensation annually.
Reworded paragraphs (99)
Previous wording
The Company's loan portfolio includes significant credit exposure to the CRE market, with CRE related loans comprising approximately 33% of total loans at December 31, 2023, which includes 16% of loans that were owner occupied and 4.7% of non-owner occupied office loans. As elevated focus on the evolving industry dynamics facing the CRE market have emerged during the 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” of this Form 10-K. While the Company has not incurred significant charge-offs on its CRE portfolio during the year ended December, 31, 2023, 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 30% and 33% of total loans at December 31, 2024 and 2023, respectively. Approximately 16% of CRE loans, excluding construction and land loans, were owner occupied and less than 5% were non-owner occupied office loans at December 31, 2024 and 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” of this Form 10-K. During the year ended December 31, 2024, the Company recognized gross charge-offs on CRE non-owner occupied loans totaling $56.8 million, which primarily related to office properties. While the Company believes 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 related 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
Additionally, the Department of the Treasury, FRB, and FDIC issued a joint statement, which stated that losses to support uninsured deposits of those failed banks would be recovered via a special assessment on banks. In November 2023, the FDIC approved an annual special assessment rate of approximately 13.4 basis points. The assessment base for the special assessments 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 assessments will be collected over an eight-quarter collection period, at a quarterly special assessment rate of 3.36 basis points, with the first quarterly assessment period beginning on January 1, 2024. However, 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 $66.3 million during the year ended December 31, 2023 in connection with the special assessment.
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 at a quarterly rate of 3.36 basis points for the initial eight-quarter collection period, with the first quarterly assessment period beginning on January 1, 2024. Given the update to the loss estimates and the increase in the aggregate special assessment base resulting from amendments to the reported amount of estimated uninsured deposits related to the bank failures, as of September 2024, the FDIC is projecting that the special assessment will be collected for an additional two quarters beyond the initial eight-quarter collection period, at a lower rate. For the year ended December 31, 2024, the Company recognized a net charge of $8.3 million related to the special assessment due to adjustments to the loss estimate.
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 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, together with its banking divisions: ABA, BON, FIB, Bridge, and TPB.
Previous wording
WAB operates the following full-service banking divisions: ABA, BON and FIB, Bridge, and TPB. The Company also provides an array of specialized financial services across the country, including mortgage banking services through AmeriHome, treasury management services to the homeowner's association sector, and digital payment services for the class action legal industry.
Current wording
The Company also provides an array of specialized financial services across the country, including mortgage banking services through AmeriHome, treasury management services to the homeowner's association sector, and digital payment services for the class action legal industry.
Previous wording
•Net income available to common stockholders of $709.6 million for 2023, a decrease from $1.0 billion for 2022
Current wording
•Net income available to common stockholders of $774.9 million for 2024, an increase from $709.6 million for 2023
Previous wording
•Diluted earnings per share of $6.54 for 2023, a decrease from $9.70 per share for 2022
Current wording
•Diluted earnings per share of $7.09 for 2024, an increase from $6.54 per share for 2023
Previous wording
•Net revenue of $2.6 billion, constituting year-over-year growth of 3.1%, or $78.7 million, compared to an increase in non-interest expenses of 40.3%, or $466.7 million
Current wording
•Net revenue of $3.2 billion, constituting year-over-year growth of 20.7%, or $542.5 million, compared to an increase in non-interest expenses of 24.7%, or $401.6 million
Previous wording
•Effective tax rate of 22.6% for 2023, compared to 19.7% for 2022
Current wording
•Effective tax rate of 20.5% for 2024, compared to 22.6% for 2023
Previous wording
•Total loans HFI of $50.3 billion, down $1.6 billion from December 31, 2022
Current wording
•Total loans HFI of $53.7 billion, up $3.4 billion from December 31, 2023
Previous wording
•Total deposits of $55.3 billion, up $1.7 billion from December 31, 2022
Current wording
•Total deposits of $66.3 billion, up $11.0 billion from December 31, 2023
Previous wording
•Stockholders' equity of $6.1 billion, an increase of $722 million from December 31, 2022
Current wording
•Stockholders' equity of $6.7 billion, an increase of $629 million from December 31, 2023
Previous wording
•Nonperforming assets (nonaccrual loans and repossessed assets) increased to 0.40% of total assets, from 0.14% at December 31, 2022
Current wording
•Nonperforming assets (nonaccrual loans and repossessed assets) increased to 0.65% of total assets, from 0.40% at December 31, 2023
Previous wording
•Net loan charge-offs to average loans outstanding of approximately 0.06% for 2023, compared to approximately 0.00% for 2022
Current wording
•Net loan charge-offs to average loans outstanding of 0.18% for 2024, compared to 0.06% for 2023
Previous wording
•Net interest margin of 3.63% in 2023, decreased from 3.67% in 2022
Current wording
•Net interest margin of 3.58% in 2024, decreased from 3.63% in 2023
Previous wording
•Return on average assets of 1.03% for 2023, compared to 1.62% for 2022
Current wording
•Return on average assets of 0.99% for 2024, compared to 1.03% for 2023
Previous wording
•Tangible common equity ratio 1 of 7.3%, compared to 6.5% at December 31, 2022
Current wording
•Tangible common equity ratio 1 of 7.2%, compared to 7.3% at December 31, 2023
Previous wording
•Tangible book value per share, net of tax 1, of $46.72, an increase of 16.1% from $40.25 at December 31, 2022
Current wording
•Tangible book value per share, net of tax 1, of $52.27, an increase of 11.9% from $46.72 at December 31, 2023
Previous wording
•Efficiency ratio 1 of 61.1% in 2023, compared to 44.9% in 2022
Current wording
•Efficiency ratio 1 of 63.2% in 2024, compared to 61.1% in 2023
Previous wording
Total deposits increased $1.7 billion, or 3.1%, to $55.3 billion as of December 31, 2023 from $53.6 billion as of December 31, 2022. By type, the increase in deposits from December 31, 2022 was driven by increases of $6.4 billion of interest bearing demand deposits and $5.1 billion in certificates of deposits, partially offset by decreases of $5.2 billion in non-interest bearing demand deposits and $4.6 billion in savings and money market accounts.
Current wording
Total deposits increased $11.0 billion, or 19.9%, to $66.3 billion as of December 31, 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 $6.4 billion in savings and money market accounts and $4.3 billion in non-interest bearing deposits.
Previous wording
The following table shows the components used in the calculation of the efficiency ratio, which management uses as a metric for assessing cost efficiency:
Current wording
The following table shows the components used in the calculation of the efficiency ratio, which measures non-interest expense as a ratio of net revenue on a tax equivalent basis. Management uses this ratio as a metric for assessing cost efficiency:
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, capital ratios and amounts for 2022 include a 25% reduction to the capital benefit that resulted from the increased ACL related to the adoption of ASC 326, which has increased to include a 50% reduction beginning in 2023.
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 $35.5 million and $33.7 million for the year ended December 31, 2023 and 2022, respectively.
Current wording
(1)Yields on loans and securities have been adjusted to a TEB. The taxable-equivalent adjustment was $39.5 million and $35.5 million for the year ended December 31, 2024 and 2023, respectively.
Previous wording
(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.
Current wording
(2)Included in the yield computation are net loan fees of $109.0 million and $131.2 million for the year ended December 31, 2024 and 2023, respectively.
Previous wording
(4)Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis.
Current wording
(4)Net interest margin is computed by dividing net interest income by total average earning assets.
Previous wording
The Company's primary source of revenue is interest income. For the year ended December 31, 2023, interest income was $4.0 billion, an increase of $1.3 billion, or 49.9%, compared to $2.7 billion for the year ended December 31, 2022. This increase was primarily the result of a $983.3 million increase in interest income from loans HFI, driven by higher yields and to a lesser extent an increase in the average HFI loan balance of $2.2 billion for the year ended December 31, 2023. Interest income from investment securities also increased by $194.9 million for the comparable period due to increased investment yields and a $1.7 billion increase in average investment balances. Average yield on interest earning assets increased to 6.22% for the year ended December 31, 2023, compared to 4.45% for 2022, which was primarily the result of a higher rate environment.
Current wording
The Company's primary source of revenue is interest income. For the year ended December 31, 2024, interest income was $4.5 billion, an increase of $505.8 million, or 12.5%, compared to $4.0 billion for the year ended December 31, 2023. This increase was primarily the result of a $243.5 million increase from investment securities due to a $5.3 billion increase in average investment securities balances and a $216.4 million increase from HFI loans due to a $2.6 billion increase in average HFI loan balances. Average yield on interest earning assets decreased to 6.17% for the year ended December 31, 2024, compared to 6.22% for 2023, which was primarily the result of a lower yields on investment securities.
Previous wording
For the year ended December 31, 2023, interest expense was $1.7 billion, compared to $475.5 million for the year ended December 31, 2022. Interest expense on deposits increased $866.2 million for the same period due to increasing deposit rates, coupled with a $5.6 billion increase in average interest-bearing deposits. Interest expense on short-term borrowings increased $342.5 million for the year ended December 31, 2023 compared to the same period in 2022 as a result of an increase of $4.4 billion in the average balance.
Current wording
For the year ended December 31, 2024, interest expense was $1.9 billion, compared to $1.7 billion for the year ended December 31, 2023. Interest expense on deposits increased $457.6 million for the same period due to an $8.4 billion increase in average interest-bearing deposits, coupled with increasing rates. Deposit rates increased year-over-year due to increases in the federal funds target rate throughout 2023 that were not fully offset by reductions concentrated in the latter part of 2024. Interest expense on short-term borrowings decreased $218.3 million for the year ended December 31, 2024 compared to the same period in 2023 as a result of a decrease of $3.9 billion in the average balance.
Previous wording
For the year ended December 31, 2023, net interest income was $2.3 billion, compared to $2.2 billion for the year ended December 31, 2022. The increase in net interest income was driven by a $4.1 billion increase in average interest earning assets, partially offset by an increase of $9.9 billion in average interest-bearing liabilities. The decrease in net interest margin of 4 basis points compared to 2022 is the result of higher funding costs on deposits and borrowings, partially offset by higher loan and investment security yields during 2023.
Current wording
For the year ended December 31, 2024, net interest income was $2.6 billion, compared to $2.3 billion for the year ended December 31, 2023. The increase in net interest income was driven by an $8.9 billion increase in average interest earning assets, partially offset by an increase of $4.5 billion in average interest-bearing liabilities. The decrease in net interest margin of 5 basis points compared to 2023 is the result of higher funding costs on deposits and borrowings, coupled with lower asset yields during 2024.
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 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 year ended December 31, 2023 and 2022, the Company recorded a provision for credit losses of $62.6 million and $68.1 million, respectively. The decrease in the provision for credit losses from the year ended December 31, 2022 is due to a significant decline in loan growth during 2023, offset by heightened economic uncertainty, particularly in the commercial real estate market.
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 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 year ended December 31, 2024 and 2023, the Company recorded a provision for credit losses of $145.9 million and $62.6 million, respectively. The increase in the provision for credit losses from the year ended December 31, 2023 is primarily reflective of net charge-offs of $93.3 million, loan growth, and an incremental ACL build for CRE non-owner occupied loans resulting from current market conditions.
Previous wording
For the years ended December 31, 2023 and 2022, the Company's effective tax rate was 22.6% and 19.7%, respectively. The increase in the effective tax rate from 2022 to 2023 is primarily due to a decrease in pretax book income, decreases in investment tax credits and increases in nondeductible insurance premium expenses during 2023.
Current wording
For the years ended December 31, 2024 and 2023, the Company's effective tax rate was 20.5% and 22.6%, respectively. The decrease in the effective tax rate for the year ended December 31, 2024 compared to the same period in 2023 was primarily due to increases in investment tax credit benefits and tax-exempt income.
Previous wording
Total assets increased to $70.9 billion at December 31, 2023 from $67.7 billion at December 31, 2022. The increase in total assets of $3.1 billion, or 4.6%, was driven by an increase in investment securities of $4.2 billion as the Company has focused on increasing its holdings of high quality liquid assets. As a result of loan dispositions undertaken as part of the Company's balance sheet repositioning strategy, loans HFI decreased by $1.6 billion, or 3.0%, to $50.3 billion as of December 31, 2023, compared to $51.9 billion as of December 31, 2022. By loan type, commercial and industrial and residential real estate loans decreased $1.6 billion and $1.2 billion, respectively, from December 31, 2022, partially offset by increases in construction and land development and CRE, non-owner occupied loans of $876 million and $331 million, respectively during the same period. In addition, loans HFS increased $218 million at December 31, 2023, up from $1.2 billion as of December 31, 2022.
Current wording
Total assets increased to $80.9 billion at December 31, 2024 from $70.9 billion at December 31, 2023. The increase in total assets of $10.1 billion, or 14.2%, was driven primarily by an increase in deposits, which drove loan growth of $3.4 billion and contributed to increases in cash and cash equivalents of $2.5 billion and investment securities of $2.4 billion as the Company has focused on increasing its holdings of high quality liquid assets. Loans HFI increased by $3.4 billion, or 6.7%, to $53.7 billion as of December 31, 2024, compared to $50.3 billion as of December 31, 2023. By loan type, commercial and industrial and CRE, non-owner occupied loans increased $4.0 billion and $218 million, respectively, from December 31, 2023, partially offset by decreases in residential real estate and construction and land development loans of $452 million and $410 million, respectively, during the same period. In addition, loans HFS increased $884 million at December 31, 2024, up from $1.4 billion as of December 31, 2023.
Previous wording
Total liabilities increased $2.4 billion, or 3.9%, to $64.8 billion at December 31, 2023, compared to $62.4 billion at December 31, 2022. The increase in liabilities is due primarily to an increase in total deposits and borrowings. Total deposits increased $1.7 billion, or 3.1%, to $55.3 billion at December 31, 2023. The increase in deposits from December 31, 2022 was driven by increases in interest-bearing demand deposits of $6.4 billion and certificates of deposit of $5.1 billion, partially offset by decreases in non-interest-bearing demand deposits of $5.2 billion and savings and money market accounts of $4.6 billion. Other borrowings also increased $931 million due to an increase in overnight borrowings, partially offset by decreases in long-term borrowings.
Current wording
Total liabilities increased $9.4 billion, or 14.6%, to $74.2 billion at December 31, 2024, compared to $64.8 billion at December 31, 2023. The increase in liabilities is due primarily to an increase in total deposits. Total deposits increased $11.0 billion, or 19.9%, to $66.3 billion at December 31, 2024. The increase in deposits from December 31, 2023 was driven by increases in savings and money market accounts of $6.4 billion and non-interest-bearing demand deposits of $4.3 billion. These increases were offset in part by a decrease in other borrowings of $1.7 billion due to a decrease in short-term FHLB borrowings, partially offset by an increase in long-term FHLB borrowings.
Previous wording
Total stockholders’ equity increased by $722 million, or 13.5%, to $6.1 billion at December 31, 2023, compared to $5.4 billion at December 31, 2022. 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 dividends to common and preferred stockholders.
Current wording
Total stockholders’ equity increased by $629 million, or 10.3%, to $6.7 billion at December 31, 2024, compared to $6.1 billion at December 31, 2023. The increase in stockholders' equity is primarily a function of net income, partially offset by dividends to common and preferred stockholders.
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. 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.
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 carried at fair value with unrealized gains or losses on these securities recorded in AOCI in stockholders’ equity, net of tax. Trading securities are reported at fair value, with unrealized gains and losses on these securities included in current period earnings.
Previous wording
The Company's investment securities portfolio is utilized as collateral for borrowings, required collateral for public deposits and repurchase agreements, and to manage liquidity, capital, and interest rate risk.
Current wording
The Company's investment securities portfolio may be utilized as collateral for borrowings, required collateral for public deposits and repurchase agreements, and to manage liquidity, capital, and interest rate risk.
Previous wording
The Company does not hold any subprime MBS in its investment portfolio. Approximately 65% of its MBS are GSE issued. The MBS that are not GSE issued consist primarily of investment grade securities, including $1.1 billion rated AAA and $26 million rated AA.
Current wording
The Company does not hold any subprime MBS in its investment portfolio. Approximately 83% of its MBS are GSE or GNMA issued. The MBS that are not GSE issued consist primarily of investment grade securities, including $921 million rated AAA and $26 million rated AA.
Previous wording
Gross unrealized losses on the Company's AFS securities at December 31, 2023 relate primarily to changes in interest rates and other market conditions not considered to be credit-related issues. The Company has reviewed its securities on which there is an unrealized loss in accordance with its ACL policy described in "Note 1. Summary of Significant Accounting Policies" in Item 8 of this Form 10-K. Based on the analysis performed, management determined an ACL of $1 million on the Company's AFS securities was required at December 31, 2023.
Current wording
Gross unrealized losses on the Company's AFS securities at December 31, 2024 relate primarily to changes in interest rates and other market conditions not considered to be credit-related issues. The Company has reviewed its securities on which there is an unrealized loss in accordance with its ACL policy described in "Note 1. Summary of Significant Accounting Policies" in Item 8 of this Form 10-K. Based on the analysis performed, management determined an ACL of $0.4 million on the Company's AFS securities was required at December 31, 2024.
Previous wording
The credit loss model applicable to HTM securities, requires recognition of lifetime expected credit losses through an allowance account at the time the security is purchased. For the year ended December 31, 2023, the Company recognized $2.6 million provision for credit losses on HTM securities, compared to no provision of credit losses of for the same period in 2022, resulting in a total allowance of $7.8 million and $5.2 million as of December 31, 2023 and 2022, respectively.
Current wording
The credit loss model applicable to HTM securities requires recognition of lifetime expected credit losses through an allowance account at the time the security is purchased. For the year ended December 31, 2024, the Company recognized a provision for credit losses on HTM securities of $8.6 million, compared to $2.6 million for the same period in 2023, resulting in a total allowance of $16.4 million and $7.8 million as of December 31, 2024 and 2023, respectively.
Previous wording
The Company purchases and originates residential mortgage loans through its AmeriHome mortgage banking business channel that are held for sale or securitization. These loans have historically made up substantially all of the balance of loans HFS. However, as part of the Company's balance sheet repositioning strategy, the Company transferred $6.6 billion of loans, net of a fair value loss adjustment (primarily commercial and industrial loans) to HFS during the year ended December 31, 2023. The Company completed loan dispositions from this transferred loan pool totaling $4.3 billion through September 30, 2023 and transferred all remaining HFS loans back to HFI at the end of the period as a result of a change in management's intentions. At December 31, 2023, the loans HFS balance totaled $1.4 billion, compared to $1.2 billion at December 31, 2022. The increase in loans HFS from December 31, 2022 relates to 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. At December 31, 2024, the loans HFS balance totaled $2.3 billion, compared to $1.4 billion at December 31, 2023. The increase in loans HFS from December 31, 2023 relates primarily to agency conforming 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 $108 million and $141 million reduced the carrying value of loans as of December 31, 2023 and 2022, respectively. Net unamortized purchase premiums on acquired and purchased loans of $177 million and $195 million increased the carrying value of loans as of December 31, 2023 and 2022, 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 $106 million and $108 million reduced the carrying value of loans as of December 31, 2024 and 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 December 31, 2024 and 2023, respectively.
Previous wording
At December 31, 2023, total loans consisted of 58.3% with variable rates and 41.7% with fixed rates, compared to 55.9% with variable rates and 44.1% with fixed rates at December 31, 2022. As of December 31, 2023, approximately $22.3 billion, or 76.2%, of total variable rate loans were subject to rate floors with a weighted average interest rate of 4.6%. At December 31, 2022, approximately $21.6 billion, or 74.5% of total variable rate loans were subject to rate floors with a weighted average interest rate of 4.1%.
Current wording
At December 31, 2024, total loans consisted of 64.4% with variable rates and 35.6% with fixed rates, compared to 58.3% with variable rates and 41.7% with fixed rates at December 31, 2023. As of December 31, 2024, approximately $25.0 billion, or 72.5%, of total variable rate loans were subject to rate floors with a weighted average interest rate of 5.1%. At December 31, 2023, approximately $22.3 billion, or 76.2%, of total variable rate loans were subject to rate floors with a weighted average interest rate of 4.6%.
Showing the first 40 of 99 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
For the Company's annual goodwill impairment test as of October 1, 2024 and 2023, the Company elected to perform a Step 1 goodwill impairment test for all reporting units. Based on the analyses performed, the Company determined the fair value of the Company and its reporting units exceeded their respective carrying values and therefore, no goodwill impairment was recorded during the years ended December 31, 2024 and 2023.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
Approximately $2.4 billion, or 4.7%, of total loans HFI consisted of CRE non-owner occupied office loans as of December 31, 2023, compared to $2.4 billion, or 4.6%, as of December 31, 2022. Of the non-owner occupied office loan balance as of
Previous report — wording carried elsewhere
During the years ended December 31, 2022 and 2021, there were no events or circumstances that indicated an interim impairment test of goodwill or other intangible assets was necessary.
Previous report — wording carried elsewhere
WAB is subject to the supervision of, and to regular examination by, the Arizona Department of Financial Institutions, the FRB as its primary federal regulator, and the FDIC as its deposit insurer.
Previous report — wording carried elsewhere
(as determined by the FRB in consultation with the Secretary of the Treasury) or (ii) complementary to a financial activity, and that does not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally (as solely determined by the FRB). Activities that are financial in nature include securities underwriting and dealing, insurance underwriting, and making merchant banking investments.
Previous report — wording carried elsewhere
USA PATRIOT Act BOD-approved compliance program and engages in relatively few transactions with foreign financial institutions or foreign persons.