Document

CEO COMMENTARY:

“The flexibility of our diversified, national commercial banking strategy, with a broad range of value-added deposit channels and deep commercial customer relationships in a wide variety of sectors and geographies, all contributed to our firm’s resilience in the face of recent turbulence in the banking industry,” said Kenneth A. Vecchione, President and Chief Executive Officer. “We believe our focus on sound financial fundamentals and stable asset quality have helped us navigate through this challenging time. As we move forward with a renewed perspective, we are well-positioned to expand our client relationships and continue to achieve a strong return profile. Balance sheet repositioning, which included surgical sale of assets and loan reclassifications, resulted in after tax net non-operating charges of $109.7 million, but will have an immediate accretive impact to regulatory capital and allow us to prioritize core client relationships with holistic lending, deposit, and treasury management needs. The Company earned through these charges and achieved net income of $142.2 million and earnings per share of $1.28 for the quarter, increasing tangible book value per share1 3.3% to $41.56 from year-end with a CET1 ratio of 9.4%. While we experienced elevated net deposit outflows immediately following the closure of other banks, deposit balances quickly stabilized with end of quarter deposits of $47.6 billion. Since March 31, deposits have increased an additional $2.0 billion through April 14, with total insured deposits representing 73% of total deposits, which is well above industry norms compared to the 50 largest U.S. banks. Immediately available liquidity exceeds uninsured deposits, with a coverage ratio of 158% as of April 14. As we travel through the year and into 2024, capital expectations are targeted against a higher CET1 ratio at or above 11% with greater liquidity to be evidenced by a loan-to-deposit ratio in the mid-80% range. Balance sheet and earnings trajectory will be informed by these guideposts.”

▪Net income of $142.2 million and earnings per share of $1.28, compared to $293.0 million and $2.67, respectively

▪Adjusted earnings per share1 of $2.30 decreased from $2.74

▪Net revenue of $551.9 million, a decrease of 21.3%, or $149.3 million, compared to an increase in non-interest expenses of 4.3%, or $14.5 million

▪Adjusted net revenue1 of $712.2 million, an increase of $1.9 million

▪Pre-provision net revenue1 of $351.6 million, down $25.3 million from $376.9 million

▪Effective tax rate of 23.0%, compared to 19.7%

▪Net income of $142.2 million and earnings per share of $1.28, down 40.8% and 42.3%, from $240.1 million and $2.22, respectively

▪Adjusted earnings per share1 of $2.30 increased from $2.22

▪Net revenue of $551.9 million, a decrease of 0.7%, or $3.9 million, compared to an increase in non-interest expenses of 39.9%, or $99.3 million

▪Adjusted net revenue1 of $712.2 million, an increase of $156.7 million

▪Pre-provision net revenue1 of $351.6 million, up $44.7 million from $306.9 million

▪Effective tax rate of 23.0%, compared to 19.5%

▪Net interest margin of 3.79% decreased from 3.98%

▪Return on average assets and on tangible common equity1 of 0.81% and 12.2%, compared to 1.67% and 27.0%, respectively

▪Adjusted return on average assets1 and adjusted tangible common equity1 of 1.43% and 21.9% compared to 1.71% and 27.7%, respectively

▪Tangible common equity ratio1 of 6.5%, compared to 6.5%

▪CET 1 ratio of 9.4% increased from 9.3%

▪Tangible book value per share1, net of tax, of $41.56, an increase of 3.3% from $40.25

▪Efficiency ratio1 of 43.2%, compared to 39.4%

▪Net interest margin of 3.79% increased from 3.32%

▪Return on average assets and on tangible common equity1 of 0.81% and 12.2%, compared to 1.64% and 23.9%, respectively

▪Adjusted return on average assets1 and adjusted tangible common equity1 of 1.43% and 21.9% compared to 1.64% and 23.9%, respectively

▪Tangible common equity ratio1 of 6.5% decreased from 6.7%

▪CET 1 ratio of 9.4% increased from 9.0%

▪Tangible book value per share1, net of tax, of $41.56, an increase of 11.9% from $37.13

▪Efficiency ratio1 of 43.2%, compared to 43.2%

Net interest income was $609.9 million in the first quarter 2023, a decrease of $29.8 million from $639.7 million in the fourth quarter 2022, and an increase of $160.4 million, or 35.7%, compared to the first quarter 2022. The decrease in net interest income from the fourth quarter 2022 is due to an increase in average balances of short-term borrowings and interest bearing deposits, combined with higher average interest rates. These were partially offset by higher yields on HFI loans and an increase in the average cash balance. The net interest income increase from the first quarter 2022 was driven by HFI loan growth and higher yields on HFI loans, partially offset by an increase in other borrowings and higher interest rates on liabilities.

The Company recorded a provision for credit losses of $19.4 million in the first quarter 2023, an increase of $16.3 million from $3.1 million in the fourth quarter 2022, and an increase of $10.4 million from $9.0 million in the first quarter 2022. The provision for credit losses during the first quarter 2023 is primarily due to a charge-off of a corporate debt security from a financial institution issuer and heightened economic uncertainty, offset by a decrease in HFI loans as the Company transferred $6.0 billion of held for investment loans to held for sale as part of its balance sheet repositioning plan to strengthen regulatory capital.

The Company’s net interest margin in the first quarter 2023 was 3.79%, a decrease from 3.98% in the fourth quarter 2022, and an increase from 3.32% in the first quarter 2022. Higher balances and rates on borrowings and interest bearing deposits drove a decrease in net interest margin, with higher yields on HFI loans partially offsetting the decrease. The increase in net interest margin from the first quarter 2022 was driven by HFI loan growth plus an increase in rates, partially offset by higher deposits and borrowings balances and rates.

Non-interest income was $(58.0) million, or $102.3 million after adjusting for losses on security sales and fair value adjustments, for the first quarter 2023, compared to $61.5 million for the fourth quarter 2022, and $106.3 million for the first quarter 2022. Fair value loss adjustments of $147.8 million are primarily related to the transfer of $6.0 billion of held for investment loans to held for sale. This decrease in non-interest income for the quarter was partially offset by a $20.5 million increase in net loan servicing revenue due to an increase in fees and the value of MSRs as well as a $6.0 million increase in net gain on loan origination and sale activities from an increase in spreads and gains from trading activity. The $164.3 million decrease from the first quarter 2022 was driven by fair value loss adjustments from HFI loans transferred to HFS and losses from sales of investment securities.

Non-interest expense was $347.9 million, or $360.6 million after adjusting for gain on extinguishment of debt from payoff of credit linked notes, for the first quarter 2023, compared to $333.4 million for the fourth quarter 2022, and $248.6 million for the first quarter 2022. The Company’s adjusted efficiency ratio1 was 43.2% for the first quarter 2023, compared to 39.4% in the fourth quarter 2022, and 43.2% for the first quarter 2022. The increase in non-interest expense from the fourth quarter 2022 is due primarily to higher salaries and benefits costs. The increase in non-interest expense from the first quarter 2022 is attributable to increased deposit costs.

Net income was $142.2 million for the first quarter 2023, a decrease of $150.8 million from $293.0 million for the fourth quarter 2022, and a decrease of $97.9 million from $240.1 million for the first quarter 2022. Earnings per share totaled $1.28 for the first quarter 2023, compared to $2.67 for the fourth quarter 2022, and $2.22 for the first quarter 2022. Earnings per share1 adjusted for losses on security sales, fair value loss adjustments and gain on extinguishment of debt was $2.30 for the first quarter 2023, compared to $2.74 and $2.22 for the fourth quarter 2022 and first quarter 2022, respectively.

HFI loans, net of deferred fees totaled $46.4 billion at March 31, 2023, compared to $51.9 billion at December 31, 2022, and $41.1 billion at March 31, 2022. The decrease in HFI loans of $5.4 billion from the prior quarter was driven by a decrease of $5.2 billion in commercial and industrial loans as $5.4 billion of commercial and industrial loans were transferred to HFS as of quarter-end. In addition, residential real estate loans decreased $904 million ($490 million transferred to HFS), partially offset by increases of $394 million in construction and land development and $298 million in CRE non-owner occupied loans ($110 million transferred to HFS). From March 31, 2022, HFI loan growth of $5.3 billion, was primarily driven by residential real estate, CRE non-owner occupied, and construction and land development loans which increased $3.8 billion, $2.8 billion, and $1.1 billion, respectively, offset by commercial and industrial loans which decreased $2.4 billion.

The Company's allowance for credit losses on HFI loans consists of an allowance for funded HFI loans and an allowance for unfunded loan commitments. At March 31, 2023, the allowance for loan losses to funded HFI loans ratio was 0.66%, compared to 0.60% at December 31, 2022, and 0.63% at March 31, 2022. The allowance for credit losses, which includes the allowance for unfunded loan commitments, to funded HFI loans ratio was 0.75% at March 31, 2023, compared to 0.69% at December 31, 2022, and 0.73% at March 31, 2022. The Company is a party to credit linked note transactions, which effectively transfer a portion of the risk of losses on reference pools of loans to the purchasers of the notes. As of March 31, 2023, December 31, 2022, and March 31, 2022, the Company is protected from first credit losses on reference pools of loans totaling $11.0 billion, $12.0 billion, and $5.4 billion, respectively, under these transactions. However, as these note transactions are considered to be free standing credit enhancements, the allowance for credit losses cannot be reduced by the expected credit losses that may be mitigated by these notes. Accordingly, the allowance for loan and credit losses ratios include an allowance of $20.8 million as of March 31, 2023, $21.9 million as of December 31, 2022, and $9.5 million as of March 31, 2022, related to these pools of loans. The allowance for credit losses to funded HFI loans ratio, adjusted to reduce the HFI loan balance by the amount of loans in covered reference pools, was 0.95% at March 31, 2023, 0.89% at December 31, 2022, and 0.84% at March 31, 2022.

Deposits totaled $47.6 billion at March 31, 2023, a decrease of $6.1 billion from $53.6 billion at December 31, 2022, and a decrease of $4.6 billion from $52.2 billion at March 31, 2022. By deposit type, the decrease from the prior quarter is attributable to a decrease of $5.6 billion from savings and money market accounts and $3.2 billion from non-interest bearing demand deposits, partially offset by increases of $1.5 billion from certificates of deposits and $1.2 billion from interest bearing demand deposits. From March 31, 2022, non-interest bearing demand deposits and savings and money market accounts decreased $7.1 billion and $4.7 billion, respectively. These decreases were partially offset by increases in certificates of deposit and interest-bearing demand deposits of $4.7 billion and $2.5 billion, respectively. Non-interest bearing deposits were $16.5 billion at March 31, 2023, compared to $19.7 billion at December 31, 2022, and $23.5 billion at March 31, 2022.

Borrowings were $15.9 billion at March 31, 2023, $6.3 billion at December 31, 2022, and $833 million at March 31, 2022. Borrowings increased from December 31, 2022 due primarily to an increase in short-term borrowings of $9.8 billion offset by payoffs of credit linked notes of $265 million. The increase in borrowings from March 31, 2022 is due to an increase in short-term borrowings of $14.7 billion and issuance of $579 million of credit linked notes, net of issuance costs, during 2022, less payoffs of credit linked notes in the first quarter of 2023.

Stockholders’ equity was $5.5 billion at March 31, 2023, compared to $5.4 billion at December 31, 2022 and $5.0 billion at March 31, 2022. The increase in stockholders’ equity quarter over quarter was due to net income and unrealized fair value gains of approximately $71 million on the Company's available for sale securities, which are recorded in other comprehensive (loss) income, net of tax, partially offset by dividends to shareholders. A cash dividend of $0.36 per share was paid to common shareholders on March 3, 2023, totaling $39.4 million, and a cash dividend of $0.27 per depository share was paid to preferred shareholders on March 30, 2023, totaling $3.2 million. The increase in stockholders' equity from March 31, 2022 is primarily a function of net income and sales of common stock under the Company's ATM program, partially offset by dividends to shareholders and unrealized fair value losses on available for sale securities.

Nonaccrual loans increased $22 million to $107 million during the quarter and increased $16 million from March 31, 2022. Loans past due 90 days and still accruing interest were $1 million (excluding government guaranteed loans of $494 million) at March 31, 2023, compared to zero at December 31, 2022 and March 31, 2022 (excluding government guaranteed loans of $582 million and zero at December 31, 2022 and March 31, 2022, respectively). Loans past due 30-89 days and still accruing interest totaled $58 million (excluding government guaranteed loans of $281 million) at March 31, 2023, a decrease from $70 million at December 31, 2022, and flat from $58 million at March 31, 2022 (excluding government guaranteed loans of $334 million and zero at December 31, 2022 and March 31, 2022, respectively).

The Consumer Related segment reported an HFI loan balance of $19.2 billion at March 31, 2023, a decrease of $1.3 billion during the quarter, and an increase of $3.8 billion during the last twelve months. The Consumer Related segment also has loans held for sale of $2.3 billion at March 31, 2023, an increase of $1.1 billion during the quarter, and a decrease of $2.5 billion during the last twelve months. Deposits for the Consumer Related segment totaled $20.0 billion, an increase of $1.5 billion during the quarter and during the last twelve months.

Western Alliance Bancorporation will host a conference call and live webcast to discuss its first quarter 2023 financial results at 12:00 p.m. ET on Wednesday, April 19, 2023. Participants may access the call by dialing 1-833-470-1428 and using access code 192362 or via live audio webcast using the website link https://events.q4inc.com/attendee/218206682. The webcast is also available via the Company’s website at www.westernalliancebancorporation.com. Participants should log in at least 15 minutes early to receive instructions. The call will be recorded and made available for replay after 3:00 p.m. ET April 19th through 11:00 p.m. ET May 19th by dialing 1-866-813-9403, using access code 279348.

This press release contains both financial measures based on GAAP and non-GAAP based financial measures, which are used where management believes them to be helpful in understanding the Company’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

This release contains forward-looking statements that relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Examples of forward-looking statements include, among others, statements we make regarding our expectations with regard to our business, financial and operating results, future economic performance and dividends. The forward-looking statements contained herein reflect our current views about future events and financial performance and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from historical results and those expressed in any forward-looking statement. Some factors that could cause actual results to differ materially from historical or expected results include, among others: the risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and the Company's subsequent Quarterly Reports on Form 10-Q, each as filed with the Securities and Exchange Commission; adverse developments in the financial services industry generally such as the recent bank failures and any related impact on depositor behavior; risks related to the sufficiency of liquidity; the potential adverse effects of unusual and infrequently occurring events such as the COVID-19 pandemic and any governmental or societal responses thereto; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; the impact on financial markets from geopolitical conflicts such as the war between Russia and Ukraine; inflation, interest rate, market and monetary fluctuations; increases in competitive pressures among financial institutions and businesses offering similar products and services; higher defaults on our loan portfolio than we expect; changes in management’s estimate of the adequacy of the allowance for credit losses; legislative or regulatory changes or changes in accounting principles, policies or guidelines; supervisory actions by regulatory agencies which may limit our ability to pursue certain growth opportunities, including expansion through acquisitions; additional regulatory requirements resulting from our continued growth; management’s estimates and projections of interest rates and interest rate policy; the execution of our business plan; and other factors affecting the financial services industry generally or the banking industry in particular.

With more than $65 billion in assets, Western Alliance Bancorporation (NYSE:WAL) is one of the country’s top-performing banking companies. Through its primary subsidiary, Western Alliance Bank, Member FDIC, business clients benefit from a full spectrum of tailored banking solutions and outstanding service delivered by industry experts who put customers first. Major accolades include #2 best-performing of the 50 largest public U.S. banks in the S&P Global Market Intelligence listing for 2021, and #1 Best Emerging Regional Bank for 2022 by Bank Director. Serving clients across the country wherever business happens, Western Alliance Bank operates individual, full-service banking and financial brands with offices in key markets nationwide. For more information, visit westernalliancebank.com.


Western Alliance Bancorporation and Subsidiaries
Summary Consolidated Financial Data
Unaudited


Selected Balance Sheet Data:
				As of March 31,
				2023		2022		Change %
				(in millions)
Total assets				$	71,047	$	60,576	17.3%
Loans held for sale				7,022		4,762		47.5
HFI loans, net of deferred fees				46,435		41,119		12.9
Investment securities	9,493	8,277	14.7
Total deposits				47,587		52,160		(8.8)
Borrowings				15,853		833		NM
Qualifying debt				895		893		0.2
Stockholders' equity				5,521		5,012		10.2
Tangible common equity, net of tax (1)				4,551		4,021		13.2
Common equity Tier 1 capital				5,159		4,292		20.2

Selected Income Statement Data:
		For the Three Ended March 31,
				2023		2022		Change %
			(in millions, except per share data)
Interest income				$	968.9	$	484.5	100.0	%
Interest expense				359.0		35.0		NM
Net interest income				609.9		449.5		35.7
Provision for credit losses				19.4		9.0		NM
Net interest income after provision for credit losses				590.5		440.5		34.1
Non-interest income				(58.0)		106.3		NM
Non-interest expense				347.9		248.6		39.9
Income before income taxes				184.6		298.2		(38.1)
Income tax expense				42.4		58.1		(27.0)
Net income				142.2		240.1		(40.8)
Dividends on preferred stock				3.2		3.2		—
Net income available to common stockholders				$	139.0	$	236.9	(41.3)
Diluted earnings per common share				$	1.28	$	2.22	(42.3)


Selected Performance Ratios:
Return on average assets (2)	0.81	%	1.64	%	(50.6)	%
Return on average tangible common equity (1, 2)	12.2		23.9		(49.0)
Return on average tangible common equity, excluding AOCI (1, 2)	10.8		23.6		(54.2)
Net interest margin (2)	3.79		3.32		14.2
Efficiency ratio - tax equivalent basis (1)	43.2		43.2		—
HFI loan to deposit ratio	97.6		78.8		23.9

Asset Quality Ratios:
Net charge-offs (recoveries) to average loans outstanding (2)	0.05	%	0.00	%	NM
Nonaccrual loans to funded HFI loans	0.23		0.22		4.5
Nonaccrual loans and repossessed assets to total assets	0.17		0.17		0.0

Allowance for loan losses to funded HFI loans	0.66		0.63		4.8
Allowance for loan losses to nonaccrual HFI loans	286		283		1.0


Western Alliance Bancorporation and Subsidiaries
Condensed Consolidated Income Statements
Unaudited
	Three Months Ended March 31,
	2023		2022
	(dollars in millions, except per share data)
Interest income:
Loans	$	832.7	$	434.7
Investment securities	96.1		48.0
Other	40.1		1.8
Total interest income	968.9		484.5
Interest expense:
Deposits	231.6		14.1
Qualifying debt	9.3		8.4
Borrowings	118.1		12.5
Total interest expense	359.0		35.0
Net interest income	609.9		449.5
Provision for credit losses	19.4		9.0
Net interest income after provision for credit losses	590.5		440.5
Non-interest income:
Net loan servicing revenue	41.9		41.1
Net gain on loan origination and sale activities	31.4		36.9
Service charges and fees	9.5		7.0
Commercial banking related income	6.2		5.1
Gain on recovery from credit guarantees	3.3		2.3
Income from equity investments	1.4		4.1
(Loss) gain on sales of investment securities	(12.5)		6.9
Fair value loss adjustments, net	(147.8)		(6.6)
Other	8.6		9.5
Total non-interest income	(58.0)		106.3
Non-interest expenses:
Salaries and employee benefits	148.9		138.3
Deposit costs	86.9		9.3
Data processing	26.4		17.6
Legal, professional, and directors' fees	23.1		24.0
Occupancy	16.5		12.8
Insurance	15.7		7.2
Loan servicing expenses	13.8		10.8
Business development and marketing	5.2		4.4
Loan acquisition and origination expenses	4.4		6.5
Gain on extinguishment of debt	(12.7)		—
Net loss on sales and valuations of repossessed and other assets	—		0.1

Other	19.7		17.6
Total non-interest expense	347.9		248.6
Income before income taxes	184.6		298.2
Income tax expense	42.4		58.1
Net income	142.2		240.1
Dividends on preferred stock	3.2		3.2
Net income available to common stockholders	$	139.0	$	236.9

Earnings per common share:
Diluted shares	108.3		106.6
Diluted earnings per share	$	1.28	$	2.22


Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Income Statements
Unaudited
	Three Months Ended
	Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022
	(in millions, except per share data)
Interest income:
Loans	$	832.7	$	785.1	$	657.0	$	516.6	$	434.7
Investment securities	96.1		89.4		75.9		59.3		48.0
Other	40.1		13.8		6.5		3.7		1.8
Total interest income	968.9		888.3		739.4		579.6		484.5
Interest expense:
Deposits	231.6		157.6		77.6		27.1		14.1
Qualifying debt	9.3		9.1		8.9		8.6		8.4
Borrowings	118.1		81.9		50.8		18.9		12.5
Total interest expense	359.0		248.6		137.3		54.6		35.0
Net interest income	609.9		639.7		602.1		525.0		449.5
Provision for credit losses	19.4		3.1		28.5		27.5		9.0
Net interest income after provision for credit losses	590.5		636.6		573.6		497.5		440.5
Non-interest income:
Net loan servicing revenue	41.9		21.4		23.0		45.4		41.1
Net gain on loan origination and sale activities	31.4		25.4		14.5		27.2		36.9
Service charges and fees	9.5		5.9		6.5		7.6		7.0
Commercial banking related income	6.2		5.5		5.1		5.8		5.1
Gain on recovery from credit guarantees	3.3		3.0		0.4		9.0		2.3
Income from equity investments	1.4		4.2		4.3		5.2		4.1
(Loss) gain on sales of investment securities	(12.5)		0.1		—		(0.2)		6.9
Fair value loss adjustments, net	(147.8)		(9.2)		(2.8)		(10.0)		(6.6)
Other	8.6		5.2		10.8		5.0		9.5
Total non-interest income	(58.0)		61.5		61.8		95.0		106.3
Non-interest expenses:
Salaries and employee benefits	148.9		125.7		136.5		139.0		138.3
Deposit costs	86.9		82.2		56.2		18.1		9.3
Data processing	26.4		23.9		21.8		19.7		17.6
Legal, professional, and directors' fees	23.1		26.0		24.8		25.1		24.0
Occupancy	16.5		15.8		13.9		13.0		12.8
Insurance	15.7		8.9		8.1		6.9		7.2
Loan servicing expenses	13.8		14.8		15.2		14.7		10.8
Business development and marketing	5.2		7.3		5.0		5.4		4.4
Loan acquisition and origination expenses	4.4		4.4		5.8		6.4		6.5
Net (gain) loss on sales and valuations of repossessed and other assets	—		(0.3)		(0.2)		(0.3)		0.1
Gain on extinguishment of debt	(12.7)		—		—		—		—

Other	19.7		24.7		18.7		20.9		17.6
Total non-interest expense	347.9		333.4		305.8		268.9		248.6
Income before income taxes	184.6		364.7		329.6		323.6		298.2
Income tax expense	42.4		71.7		65.6		63.4		58.1
Net income	142.2		293.0		264.0		260.2		240.1
Dividends on preferred stock	3.2		3.2		3.2		3.2		3.2
Net income available to common stockholders	$	139.0	$	289.8	$	260.8	$	257.0	$	236.9

Earnings per common share:
Diluted shares	108.3		108.4		107.9		107.7		106.6
Diluted earnings per share	$	1.28	$	2.67	$	2.42	$	2.39	$	2.22


Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Balance Sheets
Unaudited
	Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022
	(in millions)
Assets:
Cash and due from banks	$	3,639	$	1,043	$	1,610	$	1,886	$	2,602
Investment securities	9,493		8,760		8,603		8,802		8,277
Loans held for sale	7,022		1,184		2,204		2,803		4,762
Loans held for investment:
Commercial and industrial	15,503		20,710		22,318		20,754		17,862
Commercial real estate - non-owner occupied	9,617		9,319		8,668		7,775		6,849
Commercial real estate - owner occupied	1,809		1,818		1,848		1,848		1,805
Construction and land development	4,407		4,013		3,621		3,231		3,278
Residential real estate	15,024		15,928		15,674		14,908		11,270
Consumer	75		74		72		56		55
Loans HFI, net of deferred fees	46,435		51,862		52,201		48,572		41,119
Allowance for loan losses	(305)		(310)		(304)		(273)		(258)
Loans HFI, net of deferred fees and allowance	46,130		51,552		51,897		48,299		40,861
Mortgage servicing rights	910		1,148		1,044		826		950
Premises and equipment, net	293		276		237		210		196
Operating lease right-of-use asset	156		163		131		136		142
Other assets acquired through foreclosure, net	11		11		11		12		12
Bank owned life insurance	183		182		181		180		179
Goodwill and other intangibles, net	677		680		682		695		698
Other assets	2,533		2,735		2,565		2,206		1,897
Total assets	$	71,047	$	67,734	$	69,165	$	66,055	$	60,576
Liabilities and Stockholders' Equity:
Liabilities:
Deposits
Non-interest bearing demand deposits	$	16,465	$	19,691	$	24,926	$	23,721	$	23,520
Interest bearing:
Demand	10,719		9,507		8,350		8,387		8,268
Savings and money market	13,845		19,397		19,202		19,026		18,553
Certificates of deposit	6,558		5,049		3,111		2,578		1,818
Total deposits	47,587		53,644		55,589		53,712		52,159



Borrowings	15,853		6,299		6,319		5,210		833
Qualifying debt	895		893		889		891		893
Operating lease liability	184		185		149		151		155
Accrued interest payable and other liabilities	1,007		1,357		1,198		1,132		1,524
Total liabilities	65,526		62,378		64,144		61,096		55,564
Stockholders' Equity:
Preferred stock	295		295		295		295		295
Common stock and additional paid-in capital	2,054		2,058		2,049		1,990		1,979
Retained earnings	3,764		3,664		3,413		3,192		2,973
Accumulated other comprehensive (loss) income	(592)		(661)		(736)		(518)		(235)
Total stockholders' equity	5,521		5,356		5,021		4,959		5,012
Total liabilities and stockholders' equity	$	71,047	$	67,734	$	69,165	$	66,055	$	60,576


Western Alliance Bancorporation and Subsidiaries
Changes in the Allowance For Credit Losses on Loans
Unaudited
	Three Months Ended
	Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Jun 30, 2022			Mar 31, 2022
	(in millions)
Allowance for loan losses
Balance, beginning of period	$	309.7		$	304.1		$	273.2		$	257.6		$	252.5
Provision for credit losses (1)	1.0			7.4			29.0			17.0			5.3
Recoveries of loans previously charged-off:
Commercial and industrial	3.2			0.3			3.8			0.8			2.4
Commercial real estate - non-owner occupied	—			—			0.1			—			—
Commercial real estate - owner occupied	—			0.1			—			0.1			—
Construction and land development	—			—			0.1			—			—
Residential real estate	—			—			—			0.1			—
Consumer	—			—			—			—			—
Total recoveries	3.2			0.4			4.0			1.0			2.4
Loans charged-off:
Commercial and industrial	9.1			1.1			2.1			2.4			2.6
Commercial real estate - non-owner occupied	—			—			—			—			—
Commercial real estate - owner occupied	—			0.5			—			—			—
Construction and land development	—			0.6			—			—			—
Residential real estate	—			—			—			—			—
Consumer	0.1			—			—			—			—
Total loans charged-off	9.2			2.2			2.1			2.4			2.6
Net loan charge-offs (recoveries)	6.0			1.8			(1.9)			1.4			0.2
Balance, end of period	$	304.7		$	309.7		$	304.1		$	273.2		$	257.6

Allowance for unfunded loan commitments
Balance, beginning of period	$	47.0		$	52.1		$	53.8		$	43.3		$	37.6
(Recovery of) provision for credit losses (1)	(2.2)			(5.1)			(1.7)			10.5			5.7
Balance, end of period (2)	$	44.8		$	47.0		$	52.1		$	53.8		$	43.3

Components of the allowance for credit losses on loans
Allowance for loan losses	$	304.7		$	309.7		$	304.1		$	273.2		$	257.6
Allowance for unfunded loan commitments	44.8			47.0			52.1			53.8			43.3
Total allowance for credit losses on loans	$	349.5		$	356.7		$	356.2		$	327.0		$	300.9

Net charge-offs (recoveries) to average loans - annualized	0.05		%	0.01		%	(0.02)		%	0.01		%	0.00		%

Allowance ratios
Allowance for loan losses to funded HFI loans (3)	0.66		%	0.60		%	0.58		%	0.56		%	0.63		%

Allowance for credit losses to funded HFI loans (3)	0.75			0.69			0.68			0.67			0.73

Allowance for loan losses to nonaccrual HFI loans	286			364			338			321			283
Allowance for credit losses to nonaccrual HFI loans	327			420			396			385			331


Western Alliance Bancorporation and Subsidiaries
Asset Quality Metrics
Unaudited
	Three Months Ended
	Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Jun 30, 2022			Mar 31, 2022
	(in millions)



































Nonaccrual loans and repossessed assets
Nonaccrual loans	$	107		$	85		$	90		$	85		$	91
Nonaccrual loans to funded HFI loans	0.23		%	0.16		%	0.17		%	0.17		%	0.22		%
Repossessed assets	$	11		$	11		$	11		$	12		$	12
Nonaccrual loans and repossessed assets to total assets	0.17		%	0.14		%	0.15		%	0.15		%	0.17		%

Loans Past Due



Loans past due 90 days, still accruing (1)	$	1		$	—		$	—		$	—		$	—
Loans past due 90 days, still accruing to funded HFI loans	—		%	—		%	—		%	—		%	—		%




Loans past due 30 to 89 days, still accruing (2)	$	58		$	70		$	56		$	117		$	58
Loans past due 30 to 89 days, still accruing to funded HFI loans	0.13		%	0.13		%	0.11		%	0.24		%	0.14		%

Other credit quality metrics
Special mention loans	$	320		$	351		$	312		$	317		$	350
Special mention loans to funded HFI loans	0.69		%	0.68		%	0.60		%	0.65		%	0.85		%

Classified loans on accrual	$	325		$	280		$	268		$	232		$	253
Classified loans on accrual to funded HFI loans	0.70		%	0.54		%	0.51		%	0.48		%	0.61		%
Classified assets	$	459		$	393		$	385		$	346		$	365
Classified assets to total assets	0.65		%	0.58		%	0.56		%	0.52		%	0.60		%


Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields and Rates
Unaudited
	Three Months Ended
	March 31, 2023						December 31, 2022
	Average Balance		Interest		Average Yield / Cost		Average Balance		Interest		Average Yield / Cost
	($ in millions)						($ in millions)
Interest earning assets
Loans held for sale	$	2,153	$	31.3	5.90	%	$	2,659	$	37.8	5.63	%
Loans held for investment:
Commercial and industrial	20,481		368.2		7.35		21,654		349.3		6.45
CRE - non-owner occupied	9,520		169.4		7.22		9,077		148.8		6.51
CRE - owner occupied	1,809		24.6		5.62		1,830		24.4		5.39
Construction and land development	4,230		93.3		8.94		3,798		80.2		8.38
Residential real estate	15,839		144.7		3.71		15,803		143.5		3.60
Consumer	73		1.2		6.82		71		1.1		6.26
Total HFI loans (1), (2), (3)	51,952		801.4		6.28		52,233		747.3		5.70
Securities:
Securities - taxable	6,658		75.2		4.58		6,397		68.4		4.25
Securities - tax-exempt	2,117		20.9		5.00		2,068		21.0		5.07
Total securities (1)	8,775		96.1		4.68		8,465		89.4		4.45
Cash and other	3,331		40.1		4.88		1,361		13.8		4.02
Total interest earning assets	66,211		968.9		5.99		64,718		888.3		5.50
Non-interest earning assets
Cash and due from banks	265						289
Allowance for credit losses	(315)						(308)
Bank owned life insurance	182						181
Other assets	4,931						4,613
Total assets	$	71,274					$	69,493
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts	$	10,534	$	68.2	2.63	%	$	8,754	$	43.6	1.98	%
Savings and money market	18,066		115.5		2.59		18,651		88.0		1.87
Certificates of deposit	5,520		47.9		3.52		4,260		26.0		2.42
Total interest-bearing deposits	34,120		231.6		2.75		31,665		157.6		1.97
Short-term borrowings	7,288		87.5		4.87		5,440		54.8		3.99
Long-term debt	1,275		30.6		9.73		1,240		27.1		8.68
Qualifying debt	893		9.3		4.24		890		9.1		4.08
Total interest-bearing liabilities	43,576		359.0		3.34		39,235		248.6		2.51
Interest cost of funding earning assets					2.20						1.52
Non-interest-bearing liabilities
Non-interest-bearing demand deposits	20,521						23,729
Other liabilities	1,589						1,296
Stockholders’ equity	5,588						5,233
Total liabilities and stockholders' equity	$	71,274					$	69,493
Net interest income and margin (4)			$	609.9	3.79	%			$	639.7	3.98	%


Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields and Rates
Unaudited
	Three Months Ended
	March 31, 2023						March 31, 2022
	Average Balance		Interest		Average Yield / Cost		Average Balance		Interest		Average Yield / Cost
	($ in millions)						($ in millions)
Interest earning assets
Loans held for sale	$	2,153	$	31.3	5.90	%	$	6,522	$	50.4	3.14	%
Loans held for investment:
Commercial and industrial	20,481		368.2		7.35		17,487		165.9		3.91
CRE - non-owner-occupied	9,520		169.4		7.22		6,690		73.2		4.44
CRE - owner-occupied	1,809		24.6		5.62		1,859		22.8		5.07
Construction and land development	4,230		93.3		8.94		3,090		41.7		5.47
Residential real estate	15,839		144.7		3.71		10,384		80.2		3.13
Consumer	73		1.2		6.82		52		0.5		3.95
Total HFI loans (1), (2), (3)	51,952		801.4		6.28		39,562		384.3		3.98
Securities:
Securities - taxable	6,658		75.2		4.58		5,534		29.9		2.19
Securities - tax-exempt	2,117		20.9		5.00		2,136		18.1		4.29
Total securities (1)	8,775		96.1		4.68		7,670		48.0		2.77
Cash and other	3,331		40.1		4.88		2,057		1.8		0.36
Total interest earning assets (4)	66,211		968.9		5.99		55,811		484.5		3.58
Non-interest earning assets
Cash and due from banks	265						245
Allowance for credit losses	(315)						(262)
Bank owned life insurance	182						181
Other assets	4,931						3,299
Total assets	$	71,274					$	59,274
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts	$	10,534	$	68.2	2.63	%	$	7,743	$	2.7	0.14	%
Savings and money market accounts	18,066		115.5		2.59		18,131		9.6		0.21
Certificates of deposit	5,520		47.9		3.52		1,920		1.8		0.38
Total interest-bearing deposits	34,120		231.6		2.75		27,794		14.1		0.21
Short-term borrowings	7,288		87.5		4.87		1,150		1.7		0.62
Long-term debt	1,275		30.6		9.73		770		10.8		5.67
Qualifying debt	893		9.3		4.24		896		8.4		3.81
Total interest-bearing liabilities	43,576		359.0		3.34		30,610		35.0		0.46
Interest cost of funding earning assets					2.20						0.26
Non-interest-bearing liabilities
Non-interest-bearing demand deposits	20,521						22,580
Other liabilities	1,589						1,095
Stockholders’ equity	5,588						4,989
Total liabilities and stockholders' equity	$	71,274					$	59,274
Net interest income and margin (5)			$	609.9	3.79	%			$	449.5	3.32	%


Western Alliance Bancorporation and Subsidiaries
Operating Segment Results
Unaudited

Balance Sheet:
	Consolidated Company		Commercial		Consumer Related		Corporate & Other
At March 31, 2023:	(dollars in millions)
Assets:
Cash, cash equivalents, and investment securities	$	13,132	$	12	$	—	$	13,120
Loans HFS	7,022		4,732		2,290		—
Loans HFI, net of deferred fees and costs	46,435		27,282		19,153		—
Less: allowance for credit losses	(305)		(255)		(50)		—
Net loans HFI	46,130		27,027		19,103		—
Other assets acquired through foreclosure, net	11		11		—		—
Goodwill and other intangible assets, net	677		293		384		—
Other assets	4,075		550		1,703		1,822
Total assets	$	71,047	$	32,625	$	23,480	$	14,942
Liabilities:
Deposits	$	47,587	$	21,991	$	20,017	$	5,579
Borrowings and qualifying debt	16,748		8		927		15,813
Other liabilities	1,191		97		302		792
Total liabilities	65,526		22,096		21,246		22,184
Allocated equity:	5,521		2,545		1,613		1,363
Total liabilities and stockholders' equity	$	71,047	$	24,641	$	22,859	$	23,547
Excess funds provided (used)	—		(7,984)		(621)		8,605

No. of offices	57		47		8		2
No. of full-time equivalent employees	3,340		678		731		1,931

Income Statement:

Three Months Ended March 31, 2023:	(in millions)
Net interest income	$	609.9	$	389.4	$	199.3	$	21.2
Provision for (recovery of) credit losses	19.4		(2.7)		1.5		20.6
Net interest income (expense) after provision for credit losses	590.5		392.1		197.8		0.6
Non-interest income	(58.0)		(96.7)		51.0		(12.3)
Non-interest expense	347.9		136.0		192.0		19.9
Income (loss) before income taxes	184.6		159.4		56.8		(31.6)
Income tax expense (benefit)	42.4		38.5		12.8		(8.9)
Net income (loss)	$	142.2	$	120.9	$	44.0	$	(22.7)


Western Alliance Bancorporation and Subsidiaries
Operating Segment Results
Unaudited

Balance Sheet:
	Consolidated Company		Commercial		Consumer Related		Corporate & Other
At December 31, 2022:	(dollars in millions)
Assets:
Cash, cash equivalents, and investment securities	$	9,803	$	12	$	—	$	9,791
Loans held for sale	1,184		—		1,184		—
Loans, net of deferred fees and costs	51,862		31,414		20,448		—
Less: allowance for credit losses	(310)		(262)		(48)		—
Total loans	51,552		31,152		20,400		—
Other assets acquired through foreclosure, net	11		11		—		—
Goodwill and other intangible assets, net	680		293		387		—
Other assets	4,504		435		2,180		1,889
Total assets	$	67,734	$	31,903	$	24,151	$	11,680
Liabilities:
Deposits	$	53,644	$	29,494	$	18,492	$	5,658
Borrowings and qualifying debt	7,192		27		340		6,825
Other liabilities	1,542		83		656		803
Total liabilities	62,378		29,604		19,488		13,286
Allocated equity:	5,356		2,684		1,691		981
Total liabilities and stockholders' equity	$	67,734	$	32,288	$	21,179	$	14,267
Excess funds provided (used)	—		385		(2,972)		2,587

No. of offices	56		46		8		2
No. of full-time equivalent employees	3,365		671		785		1,909

Income Statement:

Three Months Ended March 31, 2022:	(in millions)
Net interest income	$	449.5	$	334.9	$	183.2	$	(68.6)
Provision for (recovery of) credit losses	9.0		0.6		10.5		(2.1)
Net interest income (expense) after provision for credit losses	440.5		334.3		172.7		(66.5)
Non-interest income	106.3		16.9		79.2		10.2
Non-interest expense	248.6		114.4		125.0		9.2
Income (loss) before income taxes	298.2		236.8		126.9		(65.5)
Income tax expense (benefit)	58.1		56.2		30.4		(28.5)
Net income (loss)	$	240.1	$	180.6	$	96.5	$	(37.0)


Pre-Provision Net Revenue by Quarter:
	Three Months Ended
	3/31/2023		12/31/2022		9/30/2022		6/30/2022		3/31/2022
	(in millions)
Net interest income	$	609.9	$	639.7	$	602.1	$	525.0	$	449.5
Total non-interest income	(58.0)		61.5		61.8		95.0		106.3
Adjusted for:
Loss (gain) on sales of investment securities	12.5		(0.1)		—		0.2		(6.9)
Fair value loss adjustments, net	147.8		9.2		2.8		10.0		6.6
Total non-interest income, adjusted	$	102.3	$	70.6	$	64.6	$	105.2	$	106.0
Net revenue, adjusted	$	712.2	$	710.3	$	666.7	$	630.2	$	555.5
Total non-interest expense	347.9		333.4		305.8		268.9		248.6
Adjusted for:
Gain on extinguishment of debt	12.7		—		—		—		—
Total non-interest expense, adjusted	$	360.6	$	333.4	$	305.8	$	268.9	$	248.6
Pre-provision net revenue (1)	$	351.6	$	376.9	$	360.9	$	361.3	$	306.9
Less:
Provision for credit losses	19.4		3.1		28.5		27.5		9.0
Income tax expense	42.4		71.7		65.6		63.4		58.1
Loss (gain) on sales of investment securities	12.5		(0.1)		—		0.2		(6.9)
Fair value loss adjustments, net	147.8		9.2		2.8		10.0		6.6
Plus: Gain on extinguishment of debt	12.7		—		—		—		—
Net income	$	142.2	$	293.0	$	264.0	$	260.2	$	240.1


Earnings per Share, Adjusted:



Net income available to common stockholders	$	139.0	$	289.8	$	260.8	$	257.0	$	236.9
Adjusted for:
Loss (gain) on sales of investment securities	12.5		(0.1)		—		0.2		(6.9)
Fair value loss adjustments, net	147.8		9.2		2.8		10.0		6.6
Gain on extinguishment of debt	(12.7)		—		—		—		—
Tax effect of adjustments	(37.9)		(1.8)		(0.6)		(2.0)		0.1
Net income available to common stockholders, adjusted	$	248.7	$	297.1	$	263.0	$	265.2	$	236.7
Diluted shares	108.3		108.4		107.9		107.7		106.6
Diluted earnings per share, adjusted (1)	$	2.30	$	2.74	$	2.44	$	2.46	$	2.22


Tangible Common Equity:
	3/31/2023			12/31/2022			9/30/2022			6/30/2022			3/31/2022
	(dollars and shares in millions)
Total stockholders' equity	$	5,521		$	5,356		$	5,021		$	4,959		$	5,012
Less:
Goodwill and intangible assets	677			680			682			695			698
Preferred stock	295			295			295			295			295
Total tangible common equity	4,549			4,381			4,044			3,969			4,019
Plus: deferred tax - attributed to intangible assets	2			2			3			2			2
Total tangible common equity, net of tax	$	4,551		$	4,383		$	4,047		$	3,971		$	4,021
Total assets	$	71,047		$	67,734		$	69,165		$	66,055		$	60,576
Less: goodwill and intangible assets, net	677			680			682			695			698
Tangible assets	70,370			67,054			68,483			65,360			59,878
Plus: deferred tax - attributed to intangible assets	2			2			3			2			2
Total tangible assets, net of tax	$	70,372		$	67,056		$	68,486		$	65,362		$	59,880
Tangible common equity ratio (3)	6.5		%	6.5		%	5.9		%	6.1		%	6.7		%
Common shares outstanding	109.5			108.9			108.9			108.3			108.3
Tangible book value per share, net of tax (3)	$	41.56		$	40.25		$	37.16		$	36.67		$	37.13


Return on Average Tangible Common Equity, Adjusted:
	Three Months Ended
	3/31/2023			12/31/2022			9/30/2022			6/30/2022			3/31/2022
Net income available to common shareholders	$	139.0		$	289.8		$	260.8		$	257.0		$	236.9
Adjusted for:
Loss (gain) on sales of investment securities	12.5			(0.1)			—			0.2			(6.9)
Fair value loss adjustments, net	147.8			9.2			2.8			10.0			6.6
Gain on extinguishment of debt	(12.7)			—			—			—			—
Tax effect of adjustments	(37.9)			(1.8)			(0.6)			(2.0)			0.1
Adjusted net income available to common shareholders	$	248.7		$	297.1		$	263.0		$	265.2		$	236.7
Divided by:
Average stockholders' equity	$	5,587.8		$	5,232.6		$	5,149.6		$	5,021.4		$	4,988.9
Less:
Average goodwill and intangible assets	678.6			681.3			694.1			697.3			679.3
Average preferred stock	294.5			294.5			294.5			294.5			294.5
Average tangible common equity	$	4,614.7		$	4,256.8		$	4,161.1		$	4,029.6		$	4,015.1
Return on average tangible common equity, adjusted (1)	21.9		%	27.7		%	25.1		%	26.4		%	23.9		%


Return on Average Assets, Adjusted:
	Three Months Ended
	3/31/2023			12/31/2022			9/30/2022			6/30/2022			3/31/2022
	(in millions)
Net income	$	142.2		$	293.0		$	264.0		$	260.2		$	240.1
Adjusted for:
Loss (gain) on sales of investment securities	12.5			(0.1)			—			0.2			(6.9)
Fair value loss adjustments, net	147.8			9.2			2.8			10.0			6.6
Gain on extinguishment of debt	(12.7)			—			—			—			—
Tax effect of adjustments	(37.9)			(1.8)			(0.6)			(2.0)			0.1
Net income, adjusted	$	251.9		$	300.3		$	266.2		$	268.4		$	239.9
Divided by:
Average Assets	$	71,274.0		$	69,493.0		$	68,376.0		$	64,271.0		$	59,273.5
Return on average assets, adjusted (1)	1.43		%	1.71		%	1.54		%	1.68		%	1.64		%


Non-GAAP Financial Measures Footnotes

(1)			We believe this non-GAAP measurement is a key indicator of the earnings power of the Company.
(2)			We believe this non-GAAP ratio provides a useful metric to measure the efficiency of the Company.
(3)			We believe this non-GAAP metric provides an important metric with which to analyze and evaluate financial condition and capital strength. In addition, we believe that use of tangible equity and tangible assets improves the comparability to other institutions that have not engaged in acquisitions that resulted in recorded goodwill and other intangibles.


Western Alliance Bancorporation
One East Washington Street
Phoenix, AZ 85004
www.westernalliancebancorporation.com


Capital Ratios:

	Mar 31, 2023		Dec 31, 2022		Mar 31, 2022
Tangible common equity (1)	6.5	%	6.5	%	6.7	%
Common Equity Tier 1 (3)	9.4		9.3		9.0
Tier 1 Leverage ratio (3)	7.8		7.8		8.0
Tier 1 Capital (3)	10.1		10.0		9.8
Total Capital (3)	12.1		12.1		12.0


Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Unaudited





Efficiency Ratio by Quarter:
Total non-interest expense, adjusted	$	360.6		$	333.4		$	305.8		$	268.9		$	248.6
Less:
Deposit costs	86.9			82.2			56.2			18.1			9.3
Divided by:
Total net interest income	609.9			639.7			602.1			525.0			449.5
Plus:
Tax equivalent interest adjustment	8.8			9.0			8.5			8.2			8.0
Total non-interest income, adjusted	102.3			70.6			64.6			105.2			106.0
Less:
Deposit costs	86.9			82.2			56.2			18.1			9.3
	$	634.1		$	637.1		$	619.0		$	620.3		$	554.2
Efficiency ratio - tax equivalent basis (2)	43.2		%	39.4		%	40.3		%	40.4		%	43.2		%


LINKED-QUARTER BASIS			YEAR-OVER-YEAR



FINANCIAL HIGHLIGHTS:


FINANCIAL POSITION RESULTS:


LOANS AND ASSET QUALITY:


KEY PERFORMANCE METRICS: