WESTERN ALLIANCE BANCORPORATION
For the period ended Mar 31, 2025. Filed May 1, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 1, 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-Q
Period ended 2024-09-30; filed 2024-10-31.
0001212545-24-000293
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-01.
0001212545-25-000141
Item 2. 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 179 previous paragraphs and 174 current paragraphs.
88 unchanged; 66 reworded; 20 added; 21 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 39 previous and 34 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 (20)
Current report
CRE Exposure
Current report
•PPNR of $277.6 million, up 12.4% from $247.0 million in the first quarter 20241
Current report
•Total loans HFI of $54.8 billion, up $1.1 billion, or 2.0%, from December 31, 2024
Current report
•Total equity of $7.2 billion, an increase of $508 million from December 31, 2024
Current report
•Net interest margin of 3.47%, decreased from 3.60% in the first quarter 2024
Current report
Asset Quality
Current report
Total assets increased to $83.0 billion at March 31, 2025 from $80.9 billion at December 31, 2024. The increase in total assets of $2.1 billion, or 2.6%, was primarily driven by an increase in deposits, which contributed to an increase in funded HFI and HFS loan growth of $1.1 billion and $952 million, respectively, and investment securities of $773 million, which was partially offset by a decrease in cash of $817 million.
Current report
Loans HFI increased $1.1 billion, or 2.0%, to $54.8 billion as of March 31, 2025, compared to $53.7 billion as of December 31, 2024. By loan type, commercial and industrial and commercial real estate loans increased $989 million and $134 million, respectively, from December 31, 2024. In addition, loans HFS increased $952 million from $2.3 billion as of December 31, 2024 primarily due to an increase in agency-conforming and non-EBO loans.
Current report
For the three months ended March 31, 2025, interest expense totaled $445.0 million, a decrease of $11.1 million, or 2.4%, compared to $456.1 million for the three months ended March 31, 2024. The decrease in interest expense related to decreases in interest expense on other borrowings and deposits of $8.6 million and $2.3 million, respectively, due to lower rates, which were offset in part by an increase in average interest bearing deposits of $5.4 billion.
Current report
Total non-interest income for the three months ended March 31, 2025 compared to the same period in 2024 decreased $2.5 million. The decrease in non-interest income from the three months ended March 31, 2024 was primarily driven by a decrease in net loan servicing revenue and a loss from equity investments. The decrease in net loan servicing revenue of $24.6 million resulted from fair value losses on MSRs and lower servicing income. The decrease in income from equity investments of $21.9 million was primarily due to the timing of income recognition on an equity investment that is expected to be recovered over time. These decreases were partially offset by increases in service charges and loan fees and income from bank owned life insurance. Service charges and loan fees increased $20.8 million primarily from service charges related to insured deposit products. Income from bank owned life insurance increased $10.4 million due to a new policy that was entered into in the second quarter of 2024.
Current report
Total non-interest expense for the three months ended March 31, 2025 increased $18.6 million compared to the same period in 2024. The increase in non-interest expense was primarily driven by increases in salaries and employee benefits and data processing expenses, partially offset by a decrease in insurance costs. Salaries and employee benefits increased $27.5 million due to increases in average salary and headcount. Data processing expenses increased $9.2 million due to higher software fees and an increase in software depreciation for additional capitalized software placed in service. These increases were partially offset by a decrease in insurance costs of $21.0 million as the prior year period included a $17.6 million charge related to the FDIC special assessment.
Current report
The fluctuations in Residential MBS issued by GSEs and GNMA, CLO, and U.S. Treasury securities balances from December 31, 2024 were primarily related to the Company's efforts to capitalize on changes in the yield curve and increase investment yields by shifting the investment portfolio mix from shorter term securities without changing the portfolio's overall liquidity.
Current report
The following tables present the amortized cost basis of loans HFI that were modified during the period by loan portfolio segment:
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 March 31, 2025 and December 31, 2024, totaled $51 million and $52 million, respectively, net of a valuation allowance of $5 million, as of each date.
Current report
The majority of the repossessed asset balance at March 31, 2025 and December 31, 2024 related to a single office property. The Company held five properties at March 31, 2025 and December 31, 2024.
Current report
The Company had no deferred tax valuation allowance as of March 31, 2025 and December 31, 2024.
Current report
Bank Owned Life Insurance
Current report
The carrying value of BOLI totaled $1.0 billion as of March 31, 2025, an increase of $11 million, from December 31, 2024. BOLI is used as a tax efficient method to help offset employee benefit costs.
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 March 31, 2025:
Removed paragraphs (21)
Previous report
Market Developments
Previous report
Banking Industry
Previous report
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 report
•PPNR of $285.7 million, down 1.5% from $290.0 million in the third quarter 20231
Previous report
•Total deposits of $68.0 billion, up $12.7 billion, or 23.0%, from December 31, 2023
Previous report
•Stockholders' equity of $6.7 billion, an increase of $599 million from December 31, 2023
Previous report
•Net interest margin of 3.61%, decreased from 3.67% in the third quarter 2023
Previous report
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 report
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 report
(3)Includes non-accrual loans.
Previous report
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 report
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 report
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 report
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 report
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 report
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 report
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 report
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 report
The increases in Residential MBS issued by GSEs and U.S. Treasury securities from December 31, 2023 are primarily due the Company's efforts to shift its investment portfolio mix toward high quality liquid assets, which also included the sale of CLOs.
Previous report
The following tables present loan modifications during the period to borrowers experiencing financial difficulty:
Previous report
The following table presents the available and outstanding balances on the Company's lines of credit:
Reworded paragraphs (66)
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, 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.
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 inflation and any recession in the United States, adverse developments in the financial services industry generally, U.S. and global trade policies and tensions, including changes in, or the imposition of, tariffs and/or trade barriers, 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) the discontinuation of or substantial changes to interest rate benchmarks utilized in our lending, borrowing and hedging activities; 4) exposure of financial instruments to certain market risks that may increase the volatility of earnings and AOCI; 5) the inherent risk associated with accounting estimates, including the impact to the allowance, provision for credit losses, and capital levels; 6) exposure to natural and man-made disasters in markets that we operate and the impact of climate change and sustainability practices on us and our customers; 7) the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts, geopolitical conflicts or public health events, and of governmental and societal responses thereto; 8) higher defaults on our loan portfolio than we expect; 9) increased foreclosures and ownership of real property; 10) changes in management's estimate of the adequacy of the allowance for credit losses; 11) dependency on real estate and events that negatively impact the real estate market; 12) concentrations in certain business lines or product types within our loan portfolio; 13) residual risk retained by us on reference pools covered by credit linked notes; 14) exposures related to the properties to which we acquire title; 15) ability to compete in a highly competitive market; 16) 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; 17) uncertainty associated with digital payment initiatives; 18) ability to recruit and retain qualified employees and implement adequate succession planning to mitigate the loss of key members of our senior management team; 19)…
Excerpt shortened here; the source contains the full paragraph.
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 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.
Current wording
The Company's loan portfolio includes significant credit exposure to the CRE market, with CRE related loans comprising approximately 30% of total loans at March 31, 2025 and December 31, 2024. Approximately 15% and 16% of CRE loans, excluding construction and land loans, were owner occupied at March 31, 2025 and December 31, 2024, respectively, and less than 5% were non-owner occupied office loans at March 31, 2025 and December 31, 2024. 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, 2024. During the three months ended March 31, 2025, the Company recognized gross charge-offs on CRE non-owner occupied loans totaling $14.5 million, 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
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 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
Financial Results Highlights for the Third Quarter of 2024
Current wording
Financial Results Highlights for the First Quarter of 2025
Previous wording
•Net income available to common stockholders of $196.6 million, compared to $213.4 million for the third quarter 2023
Current wording
•Net income available to common stockholders of $195.9 million, compared to $174.2 million for the first quarter 2024
Previous wording
•Diluted earnings per share of $1.80, compared to $1.97 per share for the third quarter 2023
Current wording
•Diluted earnings per share of $1.79, compared to $1.60 per share for the first quarter 2024
Previous 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
Current wording
•Net revenue of $778.0 million, compared to $728.8 million for the first quarter 2024, with non-interest expense of $500.4 million, compared to $481.8 million for the first quarter 2024
Previous wording
•Total loans HFI of $53.3 billion, up $3.0 billion, or 6.1%, from December 31, 2023
Current wording
•Total deposits of $69.3 billion, up $3.0 billion, or 4.5%, from December 31, 2024
Previous wording
•Nonaccrual loans and repossessed assets increased to 0.45%of total assets compared to 0.40% at December 31, 2023
Current wording
•Nonperforming assets (nonaccrual loans and repossessed assets) decreased to 0.60%of total assets, compared to 0.65% at December 31, 2024
Previous wording
•Annualized net loan charge-offs to average loans outstanding of 0.20%, compared to 0.07% for the third quarter 2023
Current wording
•Annualized net loan charge-offs to average loans outstanding of 0.20%, compared to 0.08% for the first quarter 2024
Previous wording
•Tangible common equity ratio of 7.2%, a decrease compared to 7.3% at December 31, 20231
Current wording
•Tangible common equity ratio of 7.2%, consistent with December 31, 20241
Previous wording
•Book value per common share of $57.97, an increase of 9.8% from $52.81 at December 31, 2023
Current wording
•Book value per common share of $60.03, an increase of 3.1% from $58.24 at December 31, 2024
Previous wording
•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
Current wording
•Tangible book value per share, net of tax, of $54.10, an increase of$1.83, or 3.5%, from $52.27 at December 31, 20241
Previous wording
•Efficiency ratio of 64.5% in the third quarter 2024, compared to 58.8% in the third quarter 20231
Current wording
•Efficiency ratio of 63.5% in the first quarter 2025, compared to 65.2% in the first quarter 20241
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 nine months ended September 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 months ended March 31, 2025.
Previous 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.
Current wording
Total deposits increased $3.0 billion, or 4.5%, to $69.3 billion as of March 31, 2025 from $66.3 billion as of December 31, 2024. By type, the increase in deposits from December 31, 2024 was driven by increases of $3.2 billion and $520 million in non-interest bearing deposits and savings and money market accounts, respectively, partially offset by decreases of $371 million and $331 million in interest bearing demand deposits and certificates of deposit, respectively.
Previous wording
Banking regulations define PPNR as the sum of net interest income and non-interest income less expenses before adjusting for loss provisions. Management believes that this is an important metric as it illustrates the underlying performance of the Company, it enables investors and others to assess the Company's ability to generate capital to cover credit losses through the credit cycle, and provides consistent reporting with a key metric used by bank regulatory agencies.
Current wording
Banking regulations define PPNR as the sum of net interest income and non-interest income less expenses before adjusting for loss provisions. Management believes this is an important metric as it illustrates the underlying performance of the Company, it enables investors and others to assess the Company's ability to generate capital to cover credit losses through the credit cycle, and provides consistent reporting with a key metric used by bank regulatory agencies.
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
The following tables present financial measures related to tangible common equity. Tangible common equity represents total stockholders' equity reduced by goodwill and intangible assets and preferred stock. Management believes that tangible common equity financial measures are useful in evaluating the Company's capital strength, financial condition, and ability to manage potential losses.
Current wording
The following tables present financial measures related to tangible common equity. Tangible common equity represents total stockholders' equity reduced by goodwill and intangible assets and preferred stock. Management believes tangible common equity financial measures are useful in evaluating the Company's capital strength, financial condition, and ability to manage potential losses.
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 in 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.
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 that ended December 31, 2024. Accordingly, capital ratios and amounts for 2024 included a 25% capital benefit that resulted from the increased ACL related to the adoption of ASC 326. This capital benefit was fully phased out beginning in 2025.
Previous 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.
Current wording
(1)Yields on loans and securities have been adjusted to a TEB. The taxable-equivalent adjustment was $10.2 million and $9.6 million for the three months ended March 31, 2025 and 2024, respectively.
Previous 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.
Current wording
(2)Included in the yield computation are net loan fees of $23.8 million and $33.1 million for the three months ended March 31, 2025 and 2024, respectively.
Previous 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.
Current wording
The Company's primary source of revenue is interest income. For the three months ended March 31, 2025, interest income totaled $1.1 billion, an increase of $40.6 million, or 3.8%, compared to $1.1 billion for the three months ended March 31, 2024. This increase was primarily the result of increases in interest income from loans HFS and investment securities of $27.5 million and $24.0 million, respectively, resulting from increases in the average balances of these assets of $1.9 billion and $2.4 billion, respectively. These increases were offset in part by a decrease in interest income from loans HFI of $18.4 million as lower loan yields outweighed the increase in the average balance of $3.8 billion.
Previous 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.
Current wording
For the three months ended March 31, 2025, net interest income totaled $650.6 million, an increase of $51.7 million, or 8.6%, compared to $598.9 million for the three months ended March 31, 2024. The increase in net interest income was driven by an increase in average interest earning assets of $9.2 billion and lower rates on deposits, partially offset by lower yields on interest earning assets. The decrease in net interest margin of 13 basis points to 3.47% is largely the result of a decrease in rates that reduced yields on interest earning assets, partially offset by an increase in average interest earning assets compared to the same period in 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 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.
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 months ended March 31, 2025, the Company recorded a provision for credit losses of $31.2 million, compared to $15.2 million for the three months ended March 31, 2024. The provision for credit losses for the three months ended March 31, 2025 is primarily reflective of net loan charge-offs of $25.8 million, HFI loan growth, and an incremental ACL build for CRE and construction loans resulting from current market conditions.
Previous 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.
Current wording
The Company's effective tax rate was 19.2% and 23.5% for the three months ended March 31, 2025 and 2024, respectively. The decrease in the effective tax rate for the three months ended March 31, 2025 compared to the same period in 2024 was primarily due to a decrease in nondeductible insurance premiums and an increase in investment tax credit benefits.
Previous 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.
Current wording
Total assets increased $2.1 billion to $83.0 billion at March 31, 2025, compared to $80.9 billion at December 31, 2024. The increase in total assets was primarily driven by an increase in deposits, which drove HFI and HFS loan growth and contributed to an increase in investment securities of $773 million as the Company has focused on increasing its holdings of high quality liquid assets. Loans HFI increased $1.1 billion, or 2.0%, to $54.8 billion as of March 31, 2025, compared to $53.7 billion as of December 31, 2024. The increase in loans HFI from December 31, 2024 was driven by increases in commercial and industrial loans and commercial real estate loans of $989 million and $134 million, respectively. Loans HFS increased $952 million from $2.3 billion as of December 31, 2024 due to an increase in agency-conforming and non-EBO loans.
Previous 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.
Current wording
Total liabilities increased $1.6 billion to $75.8 billion at March 31, 2025, compared to $74.2 billion at December 31, 2024 due primarily to an increase in total deposits of $3.0 billion, or 4.5%, to $69.3 billion. By type, the increase in deposits from December 31, 2024 was driven by increases of $3.2 billion in non-interest bearing deposits and $520 million in savings and money market accounts, partially offset by decreases in interest bearing demand deposits and certificates of deposit of $371 million and $331 million, respectively. Other borrowings decreased $1.4 billion from December 31, 2024 primarily due to a decrease in FHLB advances.
Previous 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.
Current wording
Total equity of $7.2 billion at March 31, 2025 increased $508 million, or 7.6%, from December 31, 2024. The increase in equity is primarily due to the issuance of preferred stock from the Company's REIT subsidiary, net income of $199.1 million, and unrealized fair value gains on AFS securities, recorded net of tax in OCI. Proceeds from the REIT preferred stock issuance totaled $293 million, net of issuance costs, and was recognized as a noncontrolling interest in subsidiary. These increases were offset in part by quarterly 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 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.
Current wording
The Company purchases and originates residential mortgage loans that are held for sale or securitization through its AmeriHome mortgage banking business channel. As of March 31, 2025, loans HFS totaled $3.2 billion, compared to $2.3 billion at December 31, 2024, an increase of $952 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 $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.
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 $108 million and $106 million reduced the carrying value of loans as of March 31, 2025 and December 31, 2024, respectively. Net unamortized purchase premiums on acquired and purchased loans of $175 million increased the carrying value of loans as of March 31, 2025 and December 31, 2024.
Previous wording
Commercial and industrial loans made up 42% and 38% of total loans HFI as of September 30, 2024 and December 31, 2023, respectively.
Current wording
Commercial and industrial loans made up 44% and 43% of total loans HFI as of March 31, 2025 and December 31, 2024, respectively.
Previous wording
In addition, the Company's loan portfolio includes significant credit exposure to the CRE market as CRE related loans accounted for approximately 31% and 33% of total loans at September 30, 2024 and December 31, 2023 respectively. Non-owner occupied CRE loans are CRE loans for which the primary source of repayment is rental income generated from the collateral property. Owner occupied CRE loans are loans secured by owner occupied non-farm nonresidential properties for which the primary source of repayment (more than 50%) is the cash flow from the ongoing operations and activities conducted by the borrower who owns the property. These CRE loans are secured by multi-family residential properties, professional offices, industrial facilities, retail centers, hotels, and other commercial properties.
Current wording
In addition, the Company's loan portfolio includes significant credit exposure to the CRE market as CRE related loans accounted for approximately 30% of total loans at March 31, 2025 and December 31, 2024. Non-owner occupied CRE loans are loans for which the primary source of repayment is rental income generated from the collateral property. Owner occupied CRE loans are loans secured by owner occupied non-farm nonresidential properties for which the primary source of repayment (more than 50%) is the cash flow from the ongoing operations and activities conducted by the borrower who owns the property. These CRE loans are secured by multi-family residential properties, professional offices, industrial facilities, retail centers, hotels, and other commercial properties.
Previous wording
Approximately $2.4 billion, or 4.5%, of total loans HFI consisted of CRE non-owner occupied office loans as of September 30, 2024, compared to $2.4 billion, or 4.7%, as of December 31, 2023. Of the non-owner occupied office loan balance as of September 30, 2024, $166 million is scheduled to mature in the remainder of 2024. These office loans primarily consist of shorter-term bridge loans that enable borrowers to reposition or redevelop projects with more modern standards attractive to in-office employers in today’s environment, including enhanced on-site amenities. The vast majority of these projects are located in suburban locations in the Company's core footprint states (Arizona, California, and Nevada), with central business district and midtown exposure totaling approximately 2% and 10% of office loans as of September 30, 2024, respectively.
Current wording
Approximately $2.4 billion, or 4.3%, of total loans HFI consisted of CRE non-owner occupied office loans as of March 31, 2025, compared to $2.3 billion, or 4.4%, as of December 31, 2024. Of the non-owner occupied office loan balance as of March 31, 2025, $1.0 billion is scheduled to mature in the remainder of 2025. These office loans primarily consist of shorter-term bridge loans that enable borrowers to reposition or redevelop projects with more modern standards attractive to in-office employers in today’s environment, including enhanced on-site amenities. The vast majority of these projects are located in suburban locations in the Company's core footprint states (Arizona, California, and Nevada), with central business district and midtown exposure totaling less than 1% and 10% of office loans as of March 31, 2025, respectively.
Previous wording
As of September 30, 2024 and December 31, 2023, 16% of the Company's CRE loans, excluding construction and land loans, were owner occupied, with substantially all of these loans secured by first liens and had an initial loan-to-value ratio of generally not more than 75%.
Current wording
As of March 31, 2025 and December 31, 2024, 15% and 16% of the Company's CRE loans, excluding construction and land loans, were owner occupied, respectively, with substantially all of these loans secured by first liens and had an initial loan-to-value ratio of generally not more than 75%.
Previous wording
Total non-performing loans increased $79 million to $489 million at September 30, 2024, from $410 million at December 31, 2023.
Current wording
Total non-performing loans increased $26 million to $630 million at March 31, 2025, from $604 million at December 31, 2024.
Previous wording
(1)Includes loan modifications to borrowers experiencing financial difficulty of $136 million and $129 million at September 30, 2024 and December 31, 2023, respectively.
Current wording
(1)Includes loan modifications to borrowers experiencing financial difficulty of $164 million and $169 million at March 31, 2025 and December 31, 2024, respectively.
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Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Pre-Provision Net Revenue, Excluding FDIC Special Assessment
Previous report — wording carried elsewhere
(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 report — wording carried elsewhere
(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 report — wording carried elsewhere
(4)Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis.