WESTERN ALLIANCE BANCORPORATION
10-Qs and 10-Ks
PROXIES
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark One)
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||||||
For the quarterly period ended
March 31, 2025
or
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||||||
For the transition period from__________ to __________
Commission file number:
001-32550
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification No.) |
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| (Address of principal executive offices) | (Zip Code) | |||||||||||||
(
602
)
389-3500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Trading
Symbol(s) |
Name of each exchange
on which registered |
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Depositary Shares, Each Representing a 1/400
th
Interest in a Share of
4.250% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
ý
No
¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
ý
No
¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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☒ | Accelerated filer | ☐ | |||||||||||||||||
| Non accelerated filer | ☐ | Smaller reporting company |
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| Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐
No
☒
As of April 25, 2025, Western Alliance Bancorporation had
110,404,256
shares of common stock outstanding.
INDEX
| Page | ||||||||
| Item 1. | ||||||||
| Item 2. | ||||||||
| Item 3. | ||||||||
| Item 4. | ||||||||
| Item 1. | ||||||||
| Item 1A. | ||||||||
| Item 2. | ||||||||
| Item 5. | ||||||||
| Item 6. | ||||||||
2
GLOSSARY OF ENTITIES AND TERMS
The acronyms and abbreviations identified below are used in various sections of this Form 10-Q, including "Management's Discussion and Analysis of Financial Condition and Results of Operations," in Item 2 and the Consolidated Financial Statements and the Notes to Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q.
| ENTITIES / DIVISIONS: | |||||||||||
| ABA | Alliance Bank of Arizona | FIB | First Independent Bank | ||||||||
| AmeriHome | AmeriHome Mortgage Company, LLC | LVSP | Las Vegas Sunset Properties | ||||||||
| BON | Bank of Nevada | TPB | Torrey Pines Bank | ||||||||
| Bridge | Bridge Bank | WA PWI | Western Alliance Public Welfare Investments, LLC | ||||||||
| BW | BW Real Estate Inc. | WAB or Bank | Western Alliance Bank | ||||||||
| Company | Western Alliance Bancorporation and subsidiaries | WABT | Western Alliance Business Trust | ||||||||
| CSI | CS Insurance Company | WAL or Parent | Western Alliance Bancorporation | ||||||||
| DST | Digital Settlement Technologies LLC | WATC | Western Alliance Trust Company | ||||||||
| TERMS: | |||||||||||
| ACL | Allowance for Credit Losses | FNMA | Federal National Mortgage Association | ||||||||
| AFS | Available-for-Sale | FOMC | Federal Open Market Committee | ||||||||
| ALCO | Asset and Liability Management Committee | FRB | Federal Reserve Bank | ||||||||
| AOCI | Accumulated Other Comprehensive Income | FVO | Fair Value Option | ||||||||
| ASC | Accounting Standards Codification | GAAP | U.S. Generally Accepted Accounting Principles | ||||||||
| ASU | Accounting Standards Update | GNMA | Government National Mortgage Association | ||||||||
| Basel III | Banking Supervision's December 2010 Final Capital Framework | GSE | Government-Sponsored Enterprise | ||||||||
| BOD | Board of Directors | HFI | Held for Investment | ||||||||
| Capital Rules | The FRB, the OCC, and the FDIC 2013 Approved Final Rules | HFS | Held for Sale | ||||||||
| CDARS | Certificate Deposit Account Registry Service | HTM | Held-to-Maturity | ||||||||
| CECL | Current Expected Credit Losses | HUD | U.S. Department of Housing and Urban Development | ||||||||
| CEO | Chief Executive Officer | ICS | Insured Cash Sweep Service | ||||||||
| CET1 | Common Equity Tier 1 | IRLC | Interest Rate Lock Commitment | ||||||||
| CFO | Chief Financial Officer | ISDA | International Swaps and Derivatives Association | ||||||||
| CLO | Collateralized Loan Obligation | LIHTC | Low-Income Housing Tax Credit | ||||||||
| CRA | Community Reinvestment Act | MBS | Mortgage-Backed Securities | ||||||||
| CRE | Commercial Real Estate | MSR | Mortgage Servicing Right | ||||||||
| DTA | Deferred Tax Asset | NPV | Net Present Value | ||||||||
| DTL | Deferred Tax Liability | OCI | Other Comprehensive Income | ||||||||
| EaR | Earnings-at-Risk | PPNR | Pre-Provision Net Revenue | ||||||||
| EBO | Early Buyout | SEC | Securities and Exchange Commission | ||||||||
| ECR | Earnings Credit Rates | SERP | Supplemental Executive Retirement Plan | ||||||||
| EPS | Earnings per Share | SOFR | Secured Overnight Financing Rate | ||||||||
| ESG | Environmental, Social, and Governance | TEB | Tax Equivalent Basis | ||||||||
| EVE | Economic Value of Equity | TSR | Total Shareholder Return | ||||||||
| Exchange Act | Securities Exchange Act of 1934, as Amended | UPB | Unpaid Principal Balance | ||||||||
| FASB | Financial Accounting Standards Board | USDA | United States Department of Agriculture | ||||||||
| FDIC | Federal Deposit Insurance Corporation | VA | Veterans Affairs | ||||||||
| FHA | Federal Housing Administration | VIE | Variable Interest Entity | ||||||||
| FHLB | Federal Home Loan Bank | XBRL | eXtensible Business Reporting Language | ||||||||
| FHLMC | Federal Home Loan Mortgage Corporation | ||||||||||
3
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| (Unaudited) | ||||||||||||||
| March 31, 2025 | December 31, 2024 | |||||||||||||
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(in millions,
except shares and per share amounts) |
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| Assets: | ||||||||||||||
| Cash and due from banks | $ |
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$ |
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| Interest bearing deposits in other financial institutions |
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| Cash and cash equivalents |
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Investment securities - AFS, at fair value; amortized cost of $
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Investment securities - HTM, at amortized cost and net of ACL of $
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| Investment securities - equity |
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| Investments in restricted stock, at cost |
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| Loans HFS |
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| Loans HFI, net of deferred fees and costs |
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| Less: allowance for credit losses |
(
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(
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| Net loans held for investment |
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| Mortgage servicing rights |
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| Premises and equipment, net |
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| Operating lease right of use asset |
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| Bank owned life insurance |
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| Goodwill and intangible assets, net |
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| Deferred tax assets, net |
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| Investments in LIHTC and renewable energy |
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| Other assets |
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| Total assets | $ |
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$ |
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| Liabilities: | ||||||||||||||
| Deposits: | ||||||||||||||
| Non-interest bearing | $ |
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$ |
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| Interest bearing |
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| Total deposits |
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| Other borrowings |
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| Qualifying debt |
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| Operating lease liability |
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| Other liabilities |
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| Total liabilities |
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| Commitments and contingencies (Note 15) |
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| Equity: | ||||||||||||||
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Preferred stock (par value $
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Common stock (par value $
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Treasury stock, at cost (
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(
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(
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| Accumulated other comprehensive loss |
(
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(
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| Retained earnings |
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| Total Western Alliance stockholders’ equity |
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| Noncontrolling interest in subsidiary |
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| Total equity |
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| Total liabilities and equity | $ |
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$ |
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See accompanying Notes to Unaudited Consolidated Financial Statements.
4
WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions, except per share amounts) | ||||||||||||||
| Interest income: | ||||||||||||||
| Loans, including fees | $ |
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$ |
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| Investment securities |
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| Dividends and other |
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| Total interest income |
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| Interest expense: | ||||||||||||||
| Deposits |
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| Qualifying debt |
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| Other borrowings |
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| Total interest expense |
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| Net interest income |
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| Provision for credit losses |
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| Net interest income after provision for credit losses |
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| Non-interest income: | ||||||||||||||
| Service charges and loan fees |
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| Net gain on loan origination and sale activities |
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| Net loan servicing revenue |
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| Income from bank owned life insurance |
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| Gain (loss) on sales of investment securities |
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(
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| Fair value gain adjustments, net |
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| (Loss) income from equity investments |
(
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| Other income |
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| Total non-interest income |
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| Non-interest expense: | ||||||||||||||
| Salaries and employee benefits |
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| Deposit costs |
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| Data processing |
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| Insurance |
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| Legal, professional, and directors' fees |
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| Occupancy |
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| Loan servicing expenses |
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| Business development and marketing |
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| Loan acquisition and origination expenses |
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| Other expense |
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| Total non-interest expense |
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| Income before provision for income taxes |
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| Income tax expense |
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| Net income |
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| Dividends on preferred stock |
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| Net income available to common stockholders | $ |
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$ |
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| Earnings per share: | ||||||||||||||
| Basic | $ |
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$ |
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| Diluted |
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| Weighted average number of common shares outstanding: | ||||||||||||||
| Basic |
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| Diluted |
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| Dividends declared per common share | $ |
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$ |
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See accompanying Notes to Unaudited Consolidated Financial Statements.
5
WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions) | ||||||||||||||
| Net income | $ |
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$ |
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| Other comprehensive income (loss), net: | ||||||||||||||
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Unrealized gain (loss) on AFS securities, net of tax effect of $(
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(
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Unrealized gain (loss) on junior subordinated debt, net of tax effect of $(
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(
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Realized (gain) loss on sale of AFS securities included in income, net of tax effect of $
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(
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| Net other comprehensive income (loss) |
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(
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| Comprehensive income attributable to controlling interest | $ |
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$ |
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See accompanying Notes to Unaudited Consolidated Financial Statements.
6
WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid in Capital | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Noncontrolling Interest in Subsidiary | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 |
|
$ |
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$ | — | $ |
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$ |
(
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$ |
(
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$ |
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$ | — | $ |
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| Net income | — | — | — | — | — | — | — |
|
— |
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| Restricted stock, performance stock units, and other grants, net | — | — |
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— |
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— | — | — | — |
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| Restricted stock surrendered (1) | — | — |
(
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— |
(
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(
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— | — | — |
(
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|||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends paid to preferred stockholders | — | — | — | — | — | — | — |
(
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— |
(
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|||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends paid to common stockholders | — | — | — | — | — | — | — |
(
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— |
(
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| Other comprehensive loss, net | — | — | — | — | — | — |
(
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— | — |
(
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| Balance, March 31, 2024 |
|
$ |
|
|
$ | — | $ |
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$ |
(
|
$ |
(
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$ |
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$ | — | $ |
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|||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 |
|
$ |
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|
$ | — | $ |
|
$ |
(
|
$ |
(
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$ |
|
$ |
|
$ |
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| Net income | — | — | — | — | — | — | — |
|
— |
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|||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock, performance stock units, and other grants, net | — | — |
|
— |
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— | — | — | — |
|
|||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock surrendered (1) | — | — |
(
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— | — |
(
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— | — | — |
(
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| Equity issued by subsidiary | — | — | — | — | — | — | — | — |
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| Dividends paid to preferred stockholders | — | — | — | — | — | — | — |
(
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— |
(
|
|||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends paid to common stockholders | — | — | — | — | — | — | — |
(
|
— |
(
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|||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net | — | — | — | — | — | — |
|
— | — |
|
|||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2025 |
|
$ |
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$ | — | $ |
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$ |
(
|
$ |
(
|
$ |
|
$ |
|
$ |
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(1)
Share amounts represent Treasury Shares.
See accompanying Notes to Unaudited Consolidated Financial Statements.
7
WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions) | ||||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net income | $ |
|
$ |
|
||||||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||||||||
| Provision for credit losses |
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| Depreciation and amortization |
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| Stock-based compensation |
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| Deferred income taxes |
(
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| Amortization of net discounts for investment securities |
(
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(
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| Amortization of tax credit investments |
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| Amortization of operating lease right of use asset |
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| Amortization of net deferred loan fees and net purchase premiums |
(
|
(
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| Purchases and originations of loans HFS |
(
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(
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| Proceeds from sales and payments on loans HFS |
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| Mortgage servicing rights capitalized upon sale of mortgage loans |
(
|
(
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| Net losses (gains) on: | ||||||||||||||
| Change in fair value of loans HFS, mortgage servicing rights, and related derivatives |
|
(
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| Fair value adjustments |
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||||||||||||
| Sale of investment securities |
(
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|
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| Other |
|
(
|
||||||||||||
| Other assets and liabilities, net |
(
|
|
||||||||||||
| Net cash used in operating activities | $ |
(
|
$ |
(
|
||||||||||
| Cash flows from investing activities: | ||||||||||||||
| Investment securities - AFS | ||||||||||||||
| Purchases | $ |
(
|
$ |
(
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||||||||||
| Principal pay downs and maturities |
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||||||||||||
| Proceeds from sales |
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| Investment securities - HTM | ||||||||||||||
| Purchases |
(
|
(
|
||||||||||||
| Principal pay downs and maturities |
|
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||||||||||||
| Equity securities carried at fair value | ||||||||||||||
| Purchases |
(
|
(
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| Redemptions |
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||||||||||||
| Proceeds from sales |
|
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||||||||||||
| Proceeds from sale of mortgage servicing rights and related holdbacks, net |
|
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| Proceeds from sale and purchase of other investments, net |
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| Proceeds from bank owned life insurance, net |
|
|
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| Net increase in loans HFI |
(
|
(
|
||||||||||||
| Purchase of premises, equipment, and other assets, net |
(
|
(
|
||||||||||||
| Net cash used in investing activities | $ |
(
|
$ |
(
|
||||||||||
8
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions) | ||||||||||||||
| Cash flows from financing activities: | ||||||||||||||
| Net increase in deposits | $ |
|
$ |
|
||||||||||
| Net proceeds from issuance of long-term debt |
|
|
||||||||||||
| Payments on long-term debt |
(
|
(
|
||||||||||||
| Net increase (decrease) in short-term borrowings |
|
(
|
||||||||||||
| Net proceeds from issuance of equity by a subsidiary |
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|
||||||||||||
| Cash paid for tax withholding on vested restricted stock and other |
(
|
(
|
||||||||||||
| Cash dividends paid on common and preferred stock |
(
|
(
|
||||||||||||
| Net cash provided by financing activities | $ |
|
$ |
|
||||||||||
| Net (decrease) increase in cash and cash equivalents |
(
|
|
||||||||||||
| Cash, cash equivalents, and restricted cash at beginning of period |
|
|
||||||||||||
| Cash, cash equivalents, and restricted cash at end of period | $ |
|
$ |
|
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| Supplemental disclosure: | ||||||||||||||
| Cash paid during the period for: | ||||||||||||||
| Interest | $ |
|
$ |
|
||||||||||
| Income taxes, net |
|
(
|
||||||||||||
| Non-cash activities: | ||||||||||||||
| Transfers of mortgage-backed securities in settlement of secured borrowings |
|
|
||||||||||||
| Transfers of securitized loans HFS to AFS securities |
|
|
||||||||||||
| Transfers of loans HFI to HFS, net of fair value loss adjustment (1) |
|
|
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(1)
Activity for the three months ended March 31, 2025 and 2024 excludes $
129.9
million and $
89.1
million, respectively, of loans transferred with an original designation of HFS, which sales activity was classified as operating cash flows.
See accompanying Notes to Unaudited Consolidated Financial Statements.
9
WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of operations
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.
The Company also serves business customers through a national platform of specialized financial services, including mortgage banking services through AmeriHome and digital payment services for the class action legal industry. In addition, the Company has the following non-bank subsidiaries: CSI, a captive insurance company formed and licensed under the laws of the state of Arizona and established as part of the Company's overall enterprise risk management strategy, and WATC, which provides corporate trust services and levered loan administration solutions.
Basis of presentation
The accompanying Unaudited Consolidated Financial Statements as of March 31, 2025 and for the three months ended March 31, 2025 and 2024 have been prepared in accordance with GAAP for interim financial information and Article 10 of Regulation S-X and, therefore, do not include all of the information and footnotes required by GAAP for complete financial statements. Accordingly, these statements should be read in conjunction with the Company's audited Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. The accounts of the Company and its consolidated subsidiaries are included in the Consolidated Financial Statements.
Recent accounting pronouncements
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued guidance within ASU 2024-03,
Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Topic 220)
. The amendments in this update require disclosure, in the notes to financial statements, of specified information about certain costs and expenses. Entities will be required to disclose the amounts of employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption. The update also requires entities to include certain amounts that are already required to be disclosed under current GAAP in the same disclosure as the other disaggregation requirements, disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.
The amendments in this update are effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027 and may be applied on a prospective or retrospective basis. The Company is currently evaluating the impact these amendments will have on its Consolidated Financial Statements.
10
Improvements to Income Tax Disclosures
In December 2023, the FASB issued guidance within ASU 2023-09,
Income Taxes (Topic 740)
. The amendments in this update are intended to increase visibility into various income tax components that affect the reconciliation of the effective tax rate to the statutory rate, as well as the qualitative and quantitative aspects of those components. Public business entities will be required to disclose on an annual basis, specific categories in the rate reconciliation and provide additional information for reconciling items that meet or exceed a five percent threshold (computed by multiplying pretax income by the applicable statutory income tax rate) and include disclosure of state and local jurisdictions that make up the majority of the state and local income tax category in the rate reconciliation. Additional disclosure items include disaggregation of income taxes paid to and income tax expense from federal, state, and foreign jurisdictions as well as disaggregation of income taxes paid to individual jurisdictions in which income taxes paid are equal to or greater than five percent of total income taxes paid.
The amendments in this update are effective for fiscal years beginning after December 15, 2024 and interim periods within fiscal years beginning after December 15, 2025 and may be applied on a prospective or retrospective basis. As the amendments in this update relate entirely to enhanced disclosure requirements, adoption of this guidance will not have an impact on the Company's financial position or results of operations. Upon adoption, the Company expects to provide these enhanced income tax disclosures.
Recently adopted accounting guidance
Improvements to Reportable Segment Disclosures
In November 2023, the FASB issued guidance within ASU 2023-07,
Segment Reporting (Topic 280).
The amendments in this update are intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures related to significant segment expenses. The amendments did not change how an entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments, and all existing segment disclosure requirements in ASC 280 and other Codification topics remain unchanged. The amendments in this update are incremental and require public entities that report segment information to disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss as well as other segment items. Annual disclosure of the title and position of the chief operating decision maker and how the reported measures of segment profit or loss are used to assess performance and allocation of resources is also required.
The Company adopted this guidance beginning with the annual period ending December 31, 2024 and applied these updates on a retrospective basis. Upon adoption, the Company provided additional expense detail within its segment disclosures and there was no impact on the Company's financial position or results of operations.
Accounting for and Disclosure of Crypto Assets
In December 2023, the FASB issued guidance within ASU 2023-08,
Intangibles — Goodwill and Other — Crypto Assets (Topic 350)
. The amendments in this update require entities that hold certain crypto assets to measure such assets at fair value and recognize any changes in fair value in net income in each reporting period. Entities will also be required to present crypto assets measured at fair value separately from other intangible assets on the balance sheet and changes from the remeasurement of crypto assets separately from changes in the carrying amounts of other intangible assets in the income statement. Other disclosure items include the name, cost basis, fair value, and number of units for each significant crypto asset holding and the aggregate fair values and cost bases of crypto asset holdings that are not individually significant along with a rollforward of activity in the reporting period and disclosure of the method for determining the cost basis of the crypto assets.
The Company adopted this accounting guidance on January 1, 2025. Although the Company has digital payment offerings, it does not currently hold crypto assets meeting the criteria outlined in the update. Accordingly, the adoption of this guidance did not have an impact on the Company's Consolidated Financial Statements.
11
Use of estimates
Principles of consolidation
As of March 31, 2025, WAL has the following significant wholly-owned subsidiaries: WAB and
eight
unconsolidated subsidiaries used as business trusts in connection with the issuance of trust-preferred securities.
WAB has the following significant subsidiaries: 1) WABT, which holds certain investment securities, municipal and nonprofit loans, and leases; 2) WA PWI, which holds interests in certain limited partnerships invested primarily in low income housing tax credits and small business investment corporations; 3) Helios Prime, which holds interests in certain limited partnerships invested in renewable energy projects; 4) BW, which operates as a real estate investment trust and holds certain of WAB's real estate loans and related securities; and 5) Western Finance Company, which purchases and originates equipment finance leases and provides mortgage banking services through its wholly-owned subsidiary, AmeriHome.
The Company does not have any other significant entities that should be consolidated. All significant intercompany balances and transactions have been eliminated in consolidation.
Reclassifications
12
2. INVESTMENT SECURITIES
The carrying amounts and fair values of investment securities are summarized as follows:
| March 31, 2025 | ||||||||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized (Losses) | Fair Value | |||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Held-to-maturity | ||||||||||||||||||||||||||
| Tax-exempt | $ |
|
$ |
|
$ |
(
|
$ |
|
||||||||||||||||||
| Private label residential MBS |
|
|
(
|
|
||||||||||||||||||||||
| Total HTM securities | $ |
|
$ |
|
$ |
(
|
$ |
|
||||||||||||||||||
| Available-for-sale debt securities | ||||||||||||||||||||||||||
| Residential MBS issued by GSEs and GNMA | $ |
|
$ |
|
$ |
(
|
$ |
|
||||||||||||||||||
| U.S. Treasury securities |
|
|
(
|
|
||||||||||||||||||||||
| Private label residential MBS |
|
|
(
|
|
||||||||||||||||||||||
| CLO |
|
|
(
|
|
||||||||||||||||||||||
| Tax-exempt |
|
|
(
|
|
||||||||||||||||||||||
| Commercial MBS issued by GSEs and GNMA |
|
|
(
|
|
||||||||||||||||||||||
| Corporate debt securities |
|
|
(
|
|
||||||||||||||||||||||
| Other |
|
|
(
|
|
||||||||||||||||||||||
| Total AFS debt securities | $ |
|
$ |
|
$ |
(
|
$ |
|
||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized (Losses) | Fair Value | |||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Held-to-maturity | ||||||||||||||||||||||||||
| Tax-exempt | $ |
|
$ |
|
$ |
(
|
$ |
|
||||||||||||||||||
| Private label residential MBS |
|
|
(
|
|
||||||||||||||||||||||
| Total HTM securities | $ |
|
$ |
|
$ |
(
|
$ |
|
||||||||||||||||||
| Available-for-sale debt securities | ||||||||||||||||||||||||||
| Residential MBS issued by GSEs and GNMA | $ |
|
$ |
|
$ |
(
|
$ |
|
||||||||||||||||||
| U.S. Treasury securities |
|
|
(
|
|
||||||||||||||||||||||
| Private label residential MBS |
|
|
(
|
|
||||||||||||||||||||||
| Tax-exempt |
|
|
(
|
|
||||||||||||||||||||||
| CLO |
|
|
|
|
||||||||||||||||||||||
| Commercial MBS issued by GSEs and GNMA |
|
|
(
|
|
||||||||||||||||||||||
| Corporate debt securities |
|
|
(
|
|
||||||||||||||||||||||
| Other |
|
|
(
|
|
||||||||||||||||||||||
| Total AFS debt securities | $ |
|
$ |
|
$ |
(
|
$ |
|
||||||||||||||||||
In addition, the Company held equity securities, which primarily consisted of preferred stock and CRA investments, with a fair value of $
113
million and $
117
million at March 31, 2025 and December 31, 2024, respectively. Unrealized losses of $
1.3
million and unrealized gains of $
3.9
million on equity securities for the three months ended March 31, 2025 and 2024, respectively, were recognized in earnings as a component of Fair value gain adjustments, net.
Securities with carrying amounts of approximately $
4.7
billion and $
4.0
billion at March 31, 2025 and December 31, 2024, respectively, were pledged for various purposes as required or permitted by law.
13
The following tables summarize the Company's AFS debt securities in an unrealized loss position, aggregated by major security type and length of time in a continuous unrealized loss position:
| March 31, 2025 | |||||||||||||||||||||||||||||||||||
| Less Than Twelve Months | More Than Twelve Months | Total | |||||||||||||||||||||||||||||||||
| Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||
| Available-for-sale debt securities | |||||||||||||||||||||||||||||||||||
| Residential MBS issued by GSEs and GNMA | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
| U.S. Treasury securities |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Private label residential MBS |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Tax-exempt |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| CLO |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Corporate debt securities (1) |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Commercial MBS issued by GSEs and GNMA |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Other |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total AFS securities | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
(1)
Includes securities with an ACL that have a fair value of $
8
million and unrealized losses of $
1
million.
| December 31, 2024 | |||||||||||||||||||||||||||||||||||
| Less Than Twelve Months | More Than Twelve Months | Total | |||||||||||||||||||||||||||||||||
| Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||
| Available-for-sale debt securities | |||||||||||||||||||||||||||||||||||
| Residential MBS issued by GSEs and GNMA | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
| U.S. Treasury securities |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Private label residential MBS |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Tax-exempt |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Corporate debt securities (1) |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Commercial MBS issued by GSEs and GNMA |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Other |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total AFS securities | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
(1)
Includes securities with an ACL that have a fair value of $
8
million and unrealized losses of $
1
million.
The total number of AFS debt securities in an unrealized loss position at March 31, 2025 was
724
, compared to
796
at December 31, 2024.
On a quarterly basis, the Company performs an impairment analysis on its AFS debt securities in an unrealized loss position at the end of the period to determine whether credit losses should be recognized on these securities.
Qualitative considerations made by the Company in its impairment analysis are further discussed below.
Government Issued Securities
U.S. Treasury securities and commercial and residential MBS are issued by either government agencies or GSEs. These securities are either explicitly or implicitly guaranteed by the U.S. government, and are highly rated by major rating agencies. Further, principal and interest payments on these securities continue to be made on a timely basis.
14
Non-Government Issued Securities
Qualitative factors used in the Company's credit loss assessment of its securities that are not issued and guaranteed by the U.S. government include consideration of any adverse conditions related to a specific security, industry, or geographic region of its securities, any credit ratings below investment grade, the payment structure of the security and the likelihood of the issuer to be able to make payments that increase in the future, and failure of the issuer to make any scheduled principal or interest payments.
For the Company's corporate debt and tax-exempt securities, the Company also considers various metrics of the issuer including days of cash on hand, the ratio of long-term debt to total assets, the net change in cash between reporting periods, and consideration of any breach in covenant requirements. The Company's corporate debt securities are primarily investment grade, issuers continue to make timely principal and interest payments, and the unrealized losses on these security portfolios primarily relate to changes in interest rates and other market conditions not considered to be credit-related issues. The Company continues to receive timely principal and interest payments on its tax-exempt securities and the majority of these issuers have revenues pledged for payment of debt service prior to payment of other types of expenses.
For the Company's private label residential MBS, which consist of non-agency collateralized mortgage obligations secured by pools of residential mortgage loans, the Company also considers metrics such as securitization risk weight factor, current credit support, whether there were any mortgage principal losses resulting from defaults in payments on the underlying mortgage collateral, and the credit default rate over the last twelve months. These securities primarily carry investment grade credit ratings, principal and interest payments on these securities continue to be made on a timely basis, and credit support for these securities is considered adequate.
The Company's CLO portfolio consists of highly rated securitization tranches, containing pools of medium- to large-sized corporate, high-yield loans. These are variable rate securities that have an investment grade rating of Single-A or better. Unrealized losses on these securities are primarily a function of the differential from the offer price and the valuation mid-market price as well as changes in interest rates.
Unrealized losses on the Company's other securities portfolio relate to taxable municipal and trust preferred securities. The Company is continuing to receive timely principal and interest payments on its taxable municipal securities, these securities continue to be highly rated and the number of days of cash on hand is strong. The Company's trust preferred securities are investment grade and the issuers continue to make timely principal and interest payments.
The following tables present a rollforward by major security type of the ACL on the Company's AFS debt securities:
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||
|
Balance,
December 31, 2024 |
Recovery of Credit Losses | Charge-offs | Recoveries |
Balance,
March 31, 2025 |
||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||
| Available-for-sale securities | ||||||||||||||||||||||||||||||||
| Corporate debt securities | $ |
|
$ |
(
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||
| Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||||||||
|
Balance,
December 31, 2023 |
Recovery of Credit Losses | Charge-offs | Recoveries |
Balance
March 31, 2024 |
||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||
| Available-for-sale securities | ||||||||||||||||||||||||||||||||
| Corporate debt securities | $ |
|
$ |
(
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||
15
The credit loss model under ASC 326-20, applicable to HTM debt securities, requires recognition of lifetime expected credit losses through an allowance account at the time the security is purchased.
The following table presents a rollforward by major security type of the ACL on the Company's HTM debt securities:
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||
|
Balance,
December 31, 2024 |
Recovery of Credit Losses | Charge-offs | Recoveries |
Balance,
March 31, 2025 |
||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||
| Held-to-maturity debt securities | ||||||||||||||||||||||||||||||||
| Tax-exempt | $ |
|
$ |
(
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||
| Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||||||||
|
Balance,
December 31, 2023 |
Provision for Credit Losses | Charge-offs | Recoveries |
Balance
March 31, 2024 |
||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||
| Held-to-maturity debt securities | ||||||||||||||||||||||||||||||||
| Tax-exempt | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||
No allowance has been recognized on the Company's HTM private label residential MBS as losses are not expected due to the Company holding a senior position in these securities.
Accrued interest receivable on HTM debt securities totaled $
5
million at March 31, 2025 and December 31, 2024 and is excluded from the estimate of expected credit losses.
The following tables summarize the carrying amount of the Company’s investment ratings position, which are updated quarterly and used to monitor the credit quality of the Company's securities:
| March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| AAA | Split-rated AAA/AA+ | AA+ to AA- | A+ to A- | BBB+ to BBB- | BB+ and below | Unrated | Totals | |||||||||||||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Held-to-maturity | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax-exempt | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| Private label residential MBS |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Total HTM securities (1) | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| Available-for-sale debt securities | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Residential MBS issued by GSEs and GNMA | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| U.S. Treasury securities |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Private label residential MBS |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| CLO |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Tax-exempt |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Commercial MBS issued by GSEs and GNMA |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Corporate debt securities |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Other |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Total AFS securities (1) | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| Equity securities | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| CRA investments |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Total equity securities (1) | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
(1)
For rated securities, if ratings differ, the Company uses an average of the available ratings by major credit agencies.
16
| December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| AAA | Split-rated AAA/AA+ | AA+ to AA- | A+ to A- | BBB+ to BBB- | BB+ and below | Unrated | Totals | |||||||||||||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Held-to-maturity | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax-exempt | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| Private label residential MBS |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Total HTM securities (1) | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| Available-for-sale debt securities | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Residential MBS issued by GSEs and GNMA | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| U.S. Treasury securities |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Private label residential MBS |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Tax-exempt |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| CLO |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Commercial MBS issued by GSEs and GNMA |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Corporate debt securities |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Other |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Total AFS securities (1) | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| Equity securities | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| CRA investments |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Total equity securities (1) | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
(1)
For rated securities, if ratings differ, the Company uses an average of the available ratings by major credit agencies.
A security is considered to be past due once it is 30 days contractually past due under the terms of the agreement. As of March 31, 2025, the Company did not have a significant amount of investment securities that were past due or on nonaccrual status.
The amortized cost and fair value of the Company's debt securities as of March 31, 2025, by contractual maturities are shown below. MBS are shown separately as individual MBS are comprised of pools of loans with varying maturities.
| March 31, 2025 | ||||||||||||||
| Amortized Cost | Estimated Fair Value | |||||||||||||
| (in millions) | ||||||||||||||
| Held-to-maturity | ||||||||||||||
| Due in one year or less | $ |
|
$ |
|
||||||||||
| After one year through five years |
|
|
||||||||||||
| After five years through ten years |
|
|
||||||||||||
| After ten years |
|
|
||||||||||||
| Mortgage-backed securities |
|
|
||||||||||||
| Total HTM securities | $ |
|
$ |
|
||||||||||
| Available-for-sale | ||||||||||||||
| Due in one year or less | $ |
|
$ |
|
||||||||||
| After one year through five years |
|
|
||||||||||||
| After five years through ten years |
|
|
||||||||||||
| After ten years |
|
|
||||||||||||
| Mortgage-backed securities |
|
|
||||||||||||
| Total AFS securities | $ |
|
$ |
|
||||||||||
17
The following table presents gross gains and losses on sales of investment securities:
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions) | ||||||||||||||
| Available-for-sale securities | ||||||||||||||
| Gross gains | $ |
|
$ |
|
||||||||||
| Gross losses |
|
(
|
||||||||||||
| Net gain (loss) on AFS securities | $ |
|
$ |
(
|
||||||||||
During the three months ended March 31, 2025, the Company sold AFS securities with a carrying value of $
410
million and recognized a net gain of $
2.1
million as U.S. Treasury securities and MBS were sold to secure gains. During the three months ended March 31, 2024, the Company sold securities with a carrying value of $
1.4
billion and recognized a net loss of $
0.9
million as CLOs were sold as part of the Company's efforts to shift the investment portfolio mix toward high quality liquid assets.
18
3. LOANS HELD FOR SALE
The Company purchases and originates residential mortgage loans that are held for sale or securitization primarily through its AmeriHome mortgage banking business channel.
The following is a summary of loans HFS by type:
| March 31, 2025 | December 31, 2024 | |||||||||||||
| (in millions) | ||||||||||||||
| Government-insured or guaranteed: | ||||||||||||||
| EBO (1) | $ |
|
$ |
|
||||||||||
| Non-EBO |
|
|
||||||||||||
| Total government-insured or guaranteed |
|
|
||||||||||||
| Agency-conforming |
|
|
||||||||||||
| Non-agency |
|
|
||||||||||||
| Total loans HFS | $ |
|
$ |
|
||||||||||
(1) EBO loans are delinquent FHA, VA, or USDA loans purchased from GNMA pools under the terms of the GNMA MBS program that can be repooled when loans are brought current either through the borrower's reperformance or through completion of a loan modification.
The following is a summary of the net gain on loan purchase, origination, and sale activities on residential mortgage loans to be sold or securitized:
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions) | ||||||||||||||
| Mortgage servicing rights capitalized upon sale of loans | $ |
|
$ |
|
||||||||||
| Net proceeds from sale of loans (1) |
(
|
(
|
||||||||||||
| Provision for and change in estimate of liability for losses under representations and warranties, net |
|
|
||||||||||||
| Change in fair value |
|
(
|
||||||||||||
| Change in fair value of derivatives: | ||||||||||||||
| Unrealized (loss) gain on derivatives |
(
|
|
||||||||||||
| Realized gain (loss) on derivatives |
|
(
|
||||||||||||
| Total change in fair value of derivatives |
(
|
|
||||||||||||
| Net gain on residential mortgage loans HFS | $ |
|
$ |
|
||||||||||
| Loan acquisition and origination fees |
|
|
||||||||||||
| Net gain on loan origination and sale activities | $ |
|
$ |
|
||||||||||
19
4. LOANS, LEASES AND ALLOWANCE FOR CREDIT LOSSES
The composition of the Company's HFI loan portfolio is as follows:
| March 31, 2025 | December 31, 2024 | |||||||||||||
| (in millions) | ||||||||||||||
| Warehouse lending | $ |
|
$ |
|
||||||||||
| Municipal & nonprofit |
|
|
||||||||||||
| Tech & innovation |
|
|
||||||||||||
| Equity fund resources |
|
|
||||||||||||
| Other commercial and industrial |
|
|
||||||||||||
| CRE - owner occupied |
|
|
||||||||||||
| Hotel franchise finance |
|
|
||||||||||||
| Other CRE - non-owner occupied |
|
|
||||||||||||
| Residential |
|
|
||||||||||||
| Residential - EBO |
|
|
||||||||||||
| Construction and land development |
|
|
||||||||||||
| Other |
|
|
||||||||||||
| Total loans HFI |
|
|
||||||||||||
| Allowance for credit losses |
(
|
(
|
||||||||||||
| Total loans HFI, net of allowance | $ |
|
$ |
|
||||||||||
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 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.
Nonaccrual and Past Due Loans
Loans are placed on nonaccrual status when management determines that the full repayment of principal and collection of interest according to contractual terms is no longer likely, generally when the loan becomes 90 days or more past due.
The following tables present nonperforming loan balances by loan portfolio segment:
| March 31, 2025 | ||||||||||||||||||||||||||
| Nonaccrual with No Allowance for Credit Loss | Nonaccrual with an Allowance for Credit Loss | Total Nonaccrual | Loans Past Due 90 Days or More and Still Accruing | |||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Municipal & nonprofit | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Tech & innovation |
|
|
|
|
||||||||||||||||||||||
| Equity fund resources |
|
|
|
|
||||||||||||||||||||||
| Other commercial and industrial |
|
|
|
|
||||||||||||||||||||||
| CRE - owner occupied |
|
|
|
|
||||||||||||||||||||||
| Other CRE - non-owner occupied |
|
|
|
|
||||||||||||||||||||||
| Residential |
|
|
|
|
||||||||||||||||||||||
| Residential - EBO |
|
|
|
|
||||||||||||||||||||||
| Construction and land development |
|
|
|
|
||||||||||||||||||||||
| Other |
|
|
|
|
||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
Loans contractually delinquent by 90 days or more and still accruing totaled $
319
million at March 31, 2025 and consisted of government guaranteed EBO and certain other residential loans.
Additionally, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $
98
million and $
99
million at March 31, 2025 and December 31, 2024, respectively.
20
| December 31, 2024 | ||||||||||||||||||||||||||
| Nonaccrual with No Allowance for Credit Loss | Nonaccrual with an Allowance for Credit Loss | Total Nonaccrual | Loans Past Due 90 Days or More and Still Accruing | |||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Municipal & nonprofit | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Tech & innovation |
|
|
|
|
||||||||||||||||||||||
| Equity fund resources |
|
|
|
|
||||||||||||||||||||||
| Other commercial and industrial |
|
|
|
|
||||||||||||||||||||||
| CRE - owner occupied |
|
|
|
|
||||||||||||||||||||||
| Other CRE - non-owner occupied |
|
|
|
|
||||||||||||||||||||||
| Residential |
|
|
|
|
||||||||||||||||||||||
| Residential - EBO |
|
|
|
|
||||||||||||||||||||||
| Construction and land development |
|
|
|
|
||||||||||||||||||||||
| Other |
|
|
|
|
||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
Loans contractually delinquent by 90 days or more and still accruing totaled $
326
million at December 31, 2024 and consisted of government guaranteed EBO residential loans.
The reduction in interest income associated with loans on nonaccrual status was approximately $
8.0
million and $
4.9
million for the three months ended March 31, 2025 and 2024, respectively.
The following table presents an aging analysis of past due loans by loan portfolio segment:
| March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Current |
30-59 Days
Past Due |
60-89 Days
Past Due |
Over 90 days
Past Due |
Total
Past Due |
Total Nonaccrual | Total | ||||||||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||||||||
| Warehouse lending | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||
| Municipal & nonprofit |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Tech & innovation |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Equity fund resources |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Other commercial and industrial |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| CRE - owner occupied |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Hotel franchise finance |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Other CRE - non-owner occupied |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Residential |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Residential - EBO |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Construction and land development |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Other |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Total loans | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||
21
| December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| Current |
30-59 Days
Past Due |
60-89 Days
Past Due |
Over 90 days
Past Due |
Total
Past Due |
Total Nonaccrual | Total | ||||||||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||||||||
| Warehouse lending | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||
| Municipal & nonprofit |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Tech & innovation |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Equity fund resources |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Other commercial and industrial |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| CRE - owner occupied |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Hotel franchise finance |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Other CRE - non-owner occupied |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Residential |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Residential - EBO |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Construction and land development |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Other |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Total loans | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||
22
Credit Quality Indicators
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually to classify the loans as to credit risk. The following tables present risk ratings by loan portfolio segment and origination year. The origination year is the year of origination or renewal.
| Term Loan Amortized Cost Basis by Origination Year | Revolving Loans Amortized Cost Basis | Total | |||||||||||||||||||||||||||||||||||||||||||||
| As of and for the three months ended March 31, 2025 | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||||||||
| Warehouse lending | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Municipal & nonprofit | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Tech & innovation | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||
| Equity fund resources | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Other commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| CRE - owner occupied | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Hotel franchise finance | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
23
| Term Loan Amortized Cost Basis by Origination Year | Revolving Loans Amortized Cost Basis | Total | |||||||||||||||||||||||||||||||||||||||||||||
| As of and for the three months ended March 31, 2025 | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||||||||
| Other CRE - non-owner occupied | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Residential | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Cumulative fair value hedging adjustment | — | — | — | — | — | — | — |
(
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Residential - EBO | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Construction and land development | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Total by Risk Category | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Cumulative fair value hedging adjustment | — | — | — | — | — | — | — |
(
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
24
| Term Loan Amortized Cost Basis by Origination Year | Revolving Loans Amortized Cost Basis | Total | |||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2024 and gross charge-offs for the three months ended March 31, 2024 | 2024 | 2023 | 2022 | 2021 | 2020 | Prior | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||||||||
| Warehouse lending | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Municipal & nonprofit | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Tech & innovation | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Equity fund resources | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Other commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| CRE - owner occupied | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Hotel franchise finance | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Other CRE - non-owner occupied | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
25
| Term Loan Amortized Cost Basis by Origination Year | Revolving Loans Amortized Cost Basis | Total | |||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2024 and gross charge-offs for the three months ended March 31, 2024 | 2024 | 2023 | 2022 | 2021 | 2020 | Prior | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||||||||
| Residential | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Cumulative fair value hedging adjustment | — | — | — | — | — | — | — |
(
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Residential - EBO | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Construction and land development | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Total by Risk Category | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Special mention |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Classified |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Cumulative fair value hedging adjustment | — | — | — | — | — | — | — |
(
|
|||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
26
Restructurings for Borrowers Experiencing Financial Difficulty
The following tables present the amortized cost basis of loans HFI that were modified during the period by loan portfolio segment:
| Amortized Cost Basis at March 31, 2025 | ||||||||||||||||||||||||||||||||
| Term Extension | Interest Rate Reduction | Payment Delay | Total | % of Total Class of Financing Receivable | ||||||||||||||||||||||||||||
| Three Months Ended | (dollars in millions) | |||||||||||||||||||||||||||||||
| Tech & innovation | $ |
|
$ |
|
$ |
|
$ |
|
|
% | ||||||||||||||||||||||
| Other commercial and industrial |
|
|
|
|
|
|||||||||||||||||||||||||||
| Other CRE - non-owner occupied |
|
|
|
|
|
|||||||||||||||||||||||||||
| Construction and land development |
|
|
|
|
|
|||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
|
% | ||||||||||||||||||||||
| Amortized Cost Basis at March 31, 2024 | ||||||||||||||||||||||||||||||||
| Term Extension | Interest Rate Reduction | Payment Delay | Total | % of Total Class of Financing Receivable | ||||||||||||||||||||||||||||
| Three Months Ended | (dollars in millions) | |||||||||||||||||||||||||||||||
| Tech & innovation | $ |
|
$ |
|
$ |
|
$ |
|
|
% | ||||||||||||||||||||||
| Other commercial and industrial |
|
|
|
|
|
|||||||||||||||||||||||||||
| CRE - owner occupied |
|
|
|
|
|
|||||||||||||||||||||||||||
| Construction and land development |
|
|
|
|
|
|||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
|
% | ||||||||||||||||||||||
The performance of these modified loans is monitored for 12 months following the modification. As of March 31, 2025, modified loans of $
135
million were current with contractual payments and $
164
million were on nonaccrual status. As of December 31, 2024, modified loans of $
128
million were current with contractual payments and $
169
million were on nonaccrual status.
In the normal course of business, the Company also modifies EBO loans, which are delinquent FHA, VA, or USDA insured or guaranteed loans repurchased under the terms of the GNMA MBS program and can be repooled or resold when loans are brought current either through the borrower's reperformance or completion of a loan modification. During the three months ended March 31, 2025, and 2024, the Company completed modifications of EBO loans with an amortized cost of $
147
million and $
90
million, respectively. These modifications consisted of term extensions, payment delays, and interest rate reductions. Certain of these loans were repooled or resold after modification and are no longer included in the pool of loan modifications being monitored for future performance. As of March 31, 2025, modified EBO loans consisted of $
37
million in loans that were current to 89 days delinquent and $
12
million in loans 90 days or more delinquent. As of December 31, 2024, modified EBO loans consisted of $
29
million in loans that were current to 89 days delinquent and $
11
million in loans 90 days or more delinquent.
Collateral-Dependent Loans
The following table presents the amortized cost basis of collateral-dependent loans by loan portfolio segment:
| March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||
| Real Estate Collateral | Other Collateral | Total | Real Estate Collateral | Other Collateral | Total | |||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||
| Municipal & nonprofit | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||
| Tech & innovation |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Other commercial and industrial |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| CRE - owner occupied |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Hotel franchise finance |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Other CRE - non-owner occupied |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Construction and land development |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||
27
The Company did not identify any significant changes in the extent to which collateral secures its collateral dependent loans, whether in the form of general deterioration or from other factors during the period ended March 31, 2025.
Allowance for Credit Losses
The ACL consists of the ACL on funded loans HFI and an ACL on unfunded loan commitments. The ACL on HTM securities is estimated separately from loans, see "Note 2. Investment Securities" of these Notes to Unaudited Consolidated Financial Statements for further discussion. Management considers the level of ACL to be a reasonable and supportable estimate of expected credit losses inherent within the Company's HFI loan portfolio as of March 31, 2025.
The below tables reflect the activity in the ACL on loans HFI by loan portfolio segment, which includes an estimate of future recoveries:
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||
|
Balance,
December 31, 2024 |
Provision for (Recovery of) Credit Losses | Charge-offs | Recoveries |
Balance,
March 31, 2025 |
||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||
| Warehouse lending | $ |
|
$ |
(
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||
| Municipal & nonprofit |
|
|
|
|
|
|||||||||||||||||||||||||||
| Tech & innovation |
|
|
|
(
|
|
|||||||||||||||||||||||||||
| Equity fund resources |
|
(
|
|
|
|
|||||||||||||||||||||||||||
| Other commercial and industrial |
|
|
|
(
|
|
|||||||||||||||||||||||||||
| CRE - owner occupied |
|
|
|
(
|
|
|||||||||||||||||||||||||||
| Hotel franchise finance |
|
(
|
|
(
|
|
|||||||||||||||||||||||||||
| Other CRE - non-owner occupied |
|
|
|
|
|
|||||||||||||||||||||||||||
| Residential |
|
|
|
|
|
|||||||||||||||||||||||||||
| Residential - EBO |
|
|
|
|
|
|||||||||||||||||||||||||||
| Construction and land development |
|
|
|
|
|
|||||||||||||||||||||||||||
| Other |
|
(
|
|
|
|
|||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
||||||||||||||||||||||
| Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||||||||
|
Balance,
December 31, 2023 |
Provision for (Recovery of) Credit Losses | Charge-offs | Recoveries |
Balance,
March 31, 2024 |
||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||
| Warehouse lending | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||
| Municipal & nonprofit |
|
(
|
|
|
|
|||||||||||||||||||||||||||
| Tech & innovation |
|
|
|
|
|
|||||||||||||||||||||||||||
| Equity fund resources |
|
(
|
|
|
|
|||||||||||||||||||||||||||
| Other commercial and industrial |
|
(
|
|
(
|
|
|||||||||||||||||||||||||||
| CRE - owner occupied |
|
|
|
|
|
|||||||||||||||||||||||||||
| Hotel franchise finance |
|
|
|
|
|
|||||||||||||||||||||||||||
| Other CRE - non-owner occupied |
|
|
|
|
|
|||||||||||||||||||||||||||
| Residential |
|
(
|
|
|
|
|||||||||||||||||||||||||||
| Residential - EBO |
|
|
|
|
|
|||||||||||||||||||||||||||
| Construction and land development |
|
|
|
|
|
|||||||||||||||||||||||||||
| Other |
|
(
|
|
|
|
|||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
||||||||||||||||||||||
Accrued interest receivable of $
266
million and $
272
million at March 31, 2025 and December 31, 2024, respectively, was excluded from the estimate of credit losses. Whereas, accrued interest receivable related to the Company's Residential-EBO loan portfolio segment was included in the estimate of credit losses and had an allowance of $
1.3
million and $
1.5
million as of March 31, 2025 and December 31, 2024, respectively. Accrued interest receivable, net of any allowance, is included in Other assets on the Consolidated Balance Sheet.
28
In addition to the ACL on funded loans HFI, the Company maintains a separate ACL related to off-balance sheet credit exposures, including unfunded loan commitments. This allowance is included in Other liabilities on the Consolidated Balance Sheet.
The below table reflects the activity in the ACL on unfunded loan commitments:
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions) | ||||||||||||||
| Balance, beginning of period | $ |
|
$ |
|
||||||||||
| (Recovery of) provision for credit losses |
(
|
|
||||||||||||
| Balance, end of period | $ |
|
$ |
|
||||||||||
The following tables disaggregate the Company's ACL on funded loans HFI and loan balances by measurement methodology:
| March 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| Loans | Allowance | |||||||||||||||||||||||||||||||||||||
| Collectively Evaluated for Credit Loss | Individually Evaluated for Credit Loss | Total | Collectively Evaluated for Credit Loss | Individually Evaluated for Credit Loss | Total | |||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||
| Warehouse lending | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||
| Municipal & nonprofit |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Tech & innovation |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Equity fund resources |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Other commercial and industrial |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| CRE - owner occupied |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Hotel franchise finance |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Other CRE - non-owner occupied |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Residential |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Residential EBO |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Construction and land development |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Other |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||||||||
| Loans | Allowance | |||||||||||||||||||||||||||||||||||||
| Collectively Evaluated for Credit Loss | Individually Evaluated for Credit Loss | Total | Collectively Evaluated for Credit Loss | Individually Evaluated for Credit Loss | Total | |||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||
| Warehouse lending | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||
| Municipal & nonprofit |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Tech & innovation |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Equity fund resources |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Other commercial and industrial |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| CRE - owner occupied |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Hotel franchise finance |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Other CRE - non-owner occupied |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Residential |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Residential EBO |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Construction and land development |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Other |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||
29
Loan Purchases and Sales
Loan purchases during the three months ended March 31, 2025 and 2024 totaled $
335
million and $
389
million, respectively, which primarily consisted of residential and commercial and industrial loan purchases. There were no loans purchased with more-than-insignificant deterioration in credit quality during the three months ended March 31, 2025 and 2024.
In the normal course of business, the Company also repurchases guaranteed or insured loans under the terms of the GNMA MBS program which can be repooled when loans are brought current either through the borrower's reperformance or completion of a loan modification and have demonstrated sustained performance for a period of time. The Company repurchased $
127
million and $
83
million of such EBO loans during the three months ended March 31, 2025 and 2024, respectively. Prior to repurchase, these loans are classified as loans eligible for repurchase, which is included as a component of Other assets on the Consolidated Balance Sheet.
During the three months ended March 31, 2025, the Company sold loans with a carrying value of approximately $
218
million and recognized a net loss of $
2.6
million on these loan sales. During the three months ended March 31, 2024, the Company sold loans with a carrying value of approximately $
148
million and recognized charge-offs of $
1.4
million and a net loss of $
4.9
million related to these loan sales.
5. MORTGAGE SERVICING RIGHTS
The following table presents changes in the fair value of the Company's MSR portfolio related to its mortgage banking business and other information related to its servicing portfolio:
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (in millions) | |||||||||||
| Balance, beginning of period | $ |
|
$ |
|
|||||||
| Additions from loans sold with servicing rights retained |
|
|
|||||||||
| Carrying value of MSRs sold |
(
|
(
|
|||||||||
| Change in fair value |
(
|
|
|||||||||
| Realization of cash flows |
(
|
(
|
|||||||||
| Balance, end of period | $ |
|
$ |
|
|||||||
| Unpaid principal balance of mortgage loans serviced for others | $ |
|
$ |
|
|||||||
Changes in the fair value of MSRs are recorded as Net loan servicing revenue in the Consolidated Income Statement. Due to the regulatory capital impact of MSRs on capital ratios, the Company sells certain MSRs and related servicing advances in the normal course of business. The Company may also sell excess servicing spread related to certain mortgage loans serviced by the Company. During the three months ended March 31, 2025, the Company sold MSRs related to a portfolio of loans with a total UPB of $
8.7
billion and recognized a net loss of $
0.3
million on these sales. During the three months ended March 31, 2024, the Company sold MSRs related to a portfolio of loans with a total UPB of $
10.8
billion and recognized a net gain of $
2.7
million on these sales. As of March 31, 2025 and December 31, 2024, the Company had a remaining receivable balance of $
12
million and $
37
million, respectively, related to holdbacks on MSR sales for servicing transfers, which are recorded in Other assets on the Consolidated Balance Sheet.
The Company receives loan servicing fees, net of subservicing costs, based on the UPB of the underlying loans. Loan servicing fees are collected from payments made by borrowers. The Company may receive other remuneration from rights to various borrower contracted fees, such as late charges, collateral reconveyance charges, and non-sufficient funds fees. Contractually specified servicing fees, late fees, and ancillary income associated with the Company's MSR portfolio totaled $
59.0
million for the three months ended March 31, 2025 and $
67.0
million for the three months ended March 31, 2024. Early payoff fee income totaled $
4.4
million and $
4.8
million for the three months ended March 31, 2025 and 2024, respectively. These amounts are recorded as Net loan servicing revenue in the Consolidated Income Statement.
In accordance with its contractual loan servicing obligations, the Company is required to advance funds to or on behalf of investors when borrowers do not make payments. The Company advances property taxes and insurance premiums for borrowers who have insufficient funds in escrow accounts, plus any other costs to preserve real estate properties. The Company may also advance funds to maintain, repair, and market foreclosed real estate properties. The Company is entitled to recover all or a portion of the advances from borrowers of reinstated and performing loans, from the proceeds of liquidated properties or from the government agency or GSE guarantor of charged-off loans. Servicing advances are charged-off when they are deemed to be uncollectible. As of March 31, 2025 and December 31, 2024, net servicing advances totaled $
66
million and $
84
million, respectively, which are recorded as Other assets on the Consolidated Balance Sheet.
30
The following table presents the effect of hypothetical changes in the fair value of MSRs caused by assumed immediate changes in the below inputs that are used to determine fair value:
| March 31, 2025 | ||||||||
| (in millions) | ||||||||
| Fair value of mortgage servicing rights | $ |
|
||||||
| Increase (decrease) in fair value resulting from: | ||||||||
| Interest rate change of 50 basis points | ||||||||
| Adverse change |
(
|
|||||||
| Favorable change |
|
|||||||
| Option adjusted spread change of 50 basis points | ||||||||
| Increase |
(
|
|||||||
| Decrease |
|
|||||||
| Conditional prepayment rate change of 1% | ||||||||
| Increase |
(
|
|||||||
| Decrease |
|
|||||||
| Cost to service change of 10% | ||||||||
| Increase |
(
|
|||||||
| Decrease |
|
|||||||
6. OTHER ASSETS ACQUIRED THROUGH FORECLOSURE
Other assets acquired through foreclosure consist primarily of properties acquired as a result of, or in-lieu-of, foreclosure. At March 31, 2025 and December 31, 2024, the Company had a repossessed asset balance of $
51
million and $
52
million, respectively, net of a valuation allowance of $
5
million, as of each date.
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.
31
7. DEPOSITS
The table below summarizes deposits by type:
| March 31, 2025 | December 31, 2024 | |||||||||||||
| (in millions) | ||||||||||||||
| Non-interest bearing deposits | $ |
|
$ |
|
||||||||||
| Interest bearing: | ||||||||||||||
| Demand accounts |
|
|
||||||||||||
| Savings and money market accounts |
|
|
||||||||||||
| Time certificates of deposit ($250,000 or more) |
|
|
||||||||||||
| Other time deposits (1) |
|
|
||||||||||||
| Total deposits | $ |
|
$ |
|
||||||||||
(1) Retail brokered time deposits over $250,000 of $
5.3
billion and $
5.6
billion as of March 31, 2025 and December 31, 2024, respectively, are included within Other time deposits as these deposits are generally participated out by brokers in shares below the FDIC insurance limit.
A summary of the contractual maturities for all time deposits as of March 31, 2025 is as follows:
| (in millions) | ||||||||
| 2025 | $ |
|
||||||
| 2026 |
|
|||||||
| 2027 |
|
|||||||
| 2028 |
|
|||||||
| 2029 |
|
|||||||
| Thereafter |
|
|||||||
| Total | $ |
|
||||||
Brokered deposits provide an additional source of deposits and are placed with the Bank through third-party brokers. At March 31, 2025 and December 31, 2024, the Company held wholesale brokered deposits of $
6.2
billion and $
6.9
billion, respectively, excluding reciprocal deposits. In addition, WAB is a participant in the IntraFi Network, a network that offers deposit placement services such as CDARS and ICS, and other reciprocal deposit networks, which offer products that qualify large deposits for FDIC insurance. At March 31, 2025, the Company had $
13.3
billion of reciprocal deposits, compared to $
14.0
billion at December 31, 2024.
In addition, deposits for which the Company provides account holders with earnings credits or referral fees totaled $
24.1
billion and $
20.7
billion at March 31, 2025 and December 31, 2024, respectively. Costs related to these deposits are primarily reported as Deposit costs in non-interest expense. Deposit costs included $
129.9
million and $
131.2
million in deposit related costs on these deposits for the three months ended March 31, 2025 and 2024, respectively.
32
8. OTHER BORROWINGS
The following table summarizes the Company’s other borrowings by type:
| March 31, 2025 | December 31, 2024 | |||||||||||||
| (in millions) | ||||||||||||||
| Short-Term: | ||||||||||||||
| FHLB advances | $ |
|
$ |
|
||||||||||
| Repurchase agreements |
|
|
||||||||||||
| Secured borrowings |
|
|
||||||||||||
| Total short-term borrowings | $ |
|
$ |
|
||||||||||
| Long-Term: | ||||||||||||||
| FHLB advances | $ |
|
$ |
|
||||||||||
| Credit linked notes, net |
|
|
||||||||||||
| Total long-term borrowings | $ |
|
$ |
|
||||||||||
| Total other borrowings | $ |
|
$ |
|
||||||||||
Short-Term Borrowings
Federal Funds Lines of Credit
The Company maintains uncommitted overnight federal fund lines of credit, which have rates comparable to the federal funds effective rate plus
0.10
% to
0.20
%. There were
no
outstanding borrowings on federal fund lines of credit as of March 31, 2025.
FHLB and FRB Advances
The Company also maintains secured overnight lines of credit with the FHLB and the FRB. The Company’s borrowing capacity is determined based on collateral pledged at the time of the borrowing, generally consisting of investment securities and loans. As of March 31, 2025 and December 31, 2024, the Company had additional available credit with the FHLB of approximately $
10.0
billion and $
8.7
billion respectively. The weighted average rate on short-term FHLB advances was
4.65
% and
4.77
% as of March 31, 2025 and December 31, 2024, respectively.
Total available credit with the FRB was $
12.3
billion and $
12.4
billion as of March 31, 2025 and December 31, 2024, respectively, of which no amounts were drawn.
Repurchase Agreements
Warehouse borrowing lines of credit are used to finance the acquisition of loans through the use of repurchase agreements. Repurchase agreements operate as financings under which the Company transfers loans to secure these borrowings. The borrowing amounts are based on the attributes of the collateralized loans and are defined in the repurchase agreement of each warehouse lender. The Company retains beneficial ownership of the transferred loans and will receive the loans from the lender upon full repayment of the borrowing. The repurchase agreements may require the Company to transfer additional assets to the lender in the event the estimated fair value of the existing transferred loans declines.
As of March 31, 2025 and December 31, 2024, the Company had access to approximately $
2.3
billion in uncommitted warehouse funding, of which
no
amounts were drawn.
Other repurchase facilities include overnight customer repurchase agreements. The total carrying value of these repurchase agreements was $
7
million and $
14
million as of March 31, 2025 and December 31, 2024, respectively.
Secured Borrowings
Secured borrowings consist of transfers of loans HFS not qualifying for sales accounting treatment. The weighted average interest rate on secured borrowings was
6.67
% and
6.30
% as of March 31, 2025 and December 31, 2024, respectively.
33
Long-Term Borrowings
FHLB Advances
The Company also enters into long-term advances with the FHLB. The Company's borrowing capacity is determined based on the collateral pledged at the time of the borrowing, consisting of the same pools of investment securities and loans pledged for the short-term FHLB advances. The interest rates on these advances are based on daily SOFR plus a fixed spread. The Company may redeem the advances at par plus accrued and unpaid interest plus a make-whole provision upon termination that is based on the interest rate difference between the then current advance interest rate and the interest rate on the terminated advance. After three months from the inception date of the advances, prepayments are no longer subject to the make-whole provision. The weighted average rate on these long-term FHLB advances was
4.80
% and
4.85
% as of March 31, 2025 and December 31, 2024, respectively. During the three months ended March 31, 2025, the Company exercised its call option and redeemed $
2.0
billion of these long-term FHLB advances.
The Company's outstanding long-term FHLB advances are detailed in the tables below:
| March 31, 2025 | ||||||||||||||||||||||||||
| Description | Issuance Date | Maturity Date | Interest Rate | Principal | ||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| FHLB advance | January 30, 2025 | April 30, 2026 |
SOFR +
|
$ |
|
|||||||||||||||||||||
| FHLB advance | January 31, 2025 | April 30, 2026 |
SOFR +
|
|
||||||||||||||||||||||
| Total | $ |
|
||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| Description | Issuance Date | Maturity Date | Interest Rate | Principal | ||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| FHLB advance | November 22, 2024 | February 24, 2026 |
SOFR +
|
$ |
|
|||||||||||||||||||||
| FHLB advance | December 5, 2024 | March 5, 2026 |
SOFR +
|
|
||||||||||||||||||||||
| FHLB advance | December 19, 2024 | March 19, 2026 |
SOFR +
|
|
||||||||||||||||||||||
| Total | $ |
|
||||||||||||||||||||||||
Credit Linked Notes
The Company entered into credit linked note transactions that effectively transfer the risk of first losses on reference pools of the Company's loans purchased under its residential mortgage purchase program to the purchasers of the notes. The principal and interest payable on these notes may be reduced by a portion of the Company's loss on such loans if one of the following occurs with respect to a covered loan: (i) realized losses incurred by the Company on a loan following a liquidation of the loan or certain other events, or (ii) a modification of the loan resulting in a reduction in payments. The aggregate losses, if any, for each payment date will be allocated to reduce the class principal amount and (for modifications) the current interest of the notes in reverse order of class priority. Losses on residential mortgages have not generally been significant. Monthly principal payments on the notes are based on the principal payments of the underlying mortgages.
34
The Company's outstanding credit linked note issuances are detailed in the tables below:
| March 31, 2025 | ||||||||||||||||||||||||||||||||
| Description | Issuance Date | Maturity Date | Interest Rate | Principal | Debt Issuance Costs | |||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||
| Residential mortgage loans (1) | December 12, 2022 | October 25, 2052 |
SOFR +
|
$ |
|
$ |
|
|||||||||||||||||||||||||
| Residential mortgage loans (2) | June 30, 2022 | April 25, 2052 |
SOFR +
|
|
|
|||||||||||||||||||||||||||
| Residential mortgage loans (3) | December 29, 2021 | July 25, 2059 |
SOFR +
|
|
|
|||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
||||||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| Description | Issuance Date | Maturity Date | Interest Rate | Principal | Debt Issuance Costs | |||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||
| Residential mortgage loans (1) | December 12, 2022 | October 25, 2052 |
SOFR +
|
$ |
|
$ |
|
|||||||||||||||||||||||||
| Residential mortgage loans (2) | June 30, 2022 | April 25, 2052 |
SOFR +
|
|
|
|||||||||||||||||||||||||||
| Residential mortgage loans (3) | December 29, 2021 | July 25, 2059 |
SOFR +
|
|
|
|||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
||||||||||||||||||||||||||||
(1) There are multiple classes of these notes, each with an interest rate of one-month SOFR plus a spread that ranges from
2.25
% to
11.00
% (or, a weighted average spread of
7.80
%) on a reference pool balance of $
1.7
billion as of March 31, 2025 and December 31, 2024.
(2) There are multiple classes of these notes, each with an interest rate of one-month SOFR plus a spread that ranges from
2.25
% to
15.00
% (or, a weighted average spread of
6.00
%) on a reference pool balance of $
3.4
billion as of March 31, 2025 and December 31, 2024.
(3) There are
six
classes of these notes, each with an interest rate of one-month SOFR plus a spread that ranges from
3.15
% to
8.50
% (or, a weighted average spread of
4.67
%) on a reference pool balance of $
3.5
billion as of March 31, 2025 and December 31, 2024.
35
9. QUALIFYING DEBT
Subordinated Debt
The Company's subordinated debt issuances are detailed in the tables below:
| March 31, 2025 | ||||||||||||||||||||||||||||||||
| Description | Issuance Date | Maturity Date | Interest Rate | Principal | Debt Issuance Costs | |||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||
| WAL fixed-to-variable-rate (1) | June 2021 | June 15, 2031 |
|
% | $ |
|
$ |
|
||||||||||||||||||||||||
| WAB fixed-to-variable-rate (2) | May 2020 | June 1, 2030 |
|
% |
|
|
||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
||||||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| Description | Issuance Date | Maturity Date | Interest Rate | Principal | Debt Issuance Costs | |||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||
| WAL fixed-to-variable-rate (1) | June 2021 | June 15, 2031 |
|
% | $ |
|
$ |
|
||||||||||||||||||||||||
| WAB fixed-to-variable-rate (2) | May 2020 | June 1, 2030 |
|
% |
|
|
||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
||||||||||||||||||||||||||||
(1) Notes are redeemable, in whole or in part, beginning on June 15, 2026 at their principal amount plus accrued and unpaid interest and has a fixed interest rate of
3.00
%. The notes also convert to a variable rate of three-month SOFR plus
225
basis points on this date.
(2) Debt is redeemable, in whole or in part, on or after June 1, 2025 at its principal amount plus accrued and unpaid interest and has a fixed interest rate of
5.25
% through June 1, 2025 and then converts to a variable rate per annum equal to three-month SOFR plus
512
basis points.
The carrying value of all subordinated debt issuances totaled $
820
million at March 31, 2025 and December 31, 2024.
Junior Subordinated Debt
The Company has formed or acquired through acquisition
eight
statutory business trusts, which exist for the exclusive purpose of issuing Cumulative Trust Preferred Securities.
With the exception of debt issued by Bridge Capital Trust I and Bridge Capital Trust II, junior subordinated debt is recorded at fair value at each reporting date due to the FVO election made by the Company under ASC 825. The Company did not make the FVO election for the junior subordinated debt acquired in the Bridge acquisition. Accordingly, the carrying value of these trusts does not reflect the current fair value of the debt and includes a fair market value adjustment established at acquisition that is being accreted over the remaining life of the trusts.
The carrying value of junior subordinated debt was
$
78
million and $
79
million as of March 31, 2025 and December 31, 2024, respectively, with maturity dates ranging from 2033 through 2037. The weighted average interest rate of all junior subordinated debt as of March 31, 2025 and December 31, 2024 was
6.89
% and
6.90
%, respectively.
In the event of certain changes or amendments to regulatory requirements or federal tax rules, the debt is redeemable in whole. The obligations under these instruments are fully and unconditionally guaranteed by the Company and rank subordinate and junior in right of payment to all other liabilities of the Company. Based on guidance issued by the FRB, the Company's securities continue to qualify as Tier 1 Capital.
36
10. STOCKHOLDERS' EQUITY
Stock-Based Compensation
Restricted Stock Awards
Restricted stock awards granted to employees generally vest over a
three-year
period and stock grants made to non-employee WAL directors generally vest over
one year
. The Company estimates the compensation cost for stock grants based upon the grant date fair value. Stock compensation expense is recognized on a straight-line basis over the requisite service period for the entire award. The aggregate grant date fair value for the restricted stock awards granted during the three months ended March 31, 2025 was $
48.0
million, compared to $
44.8
million for the three months ended March 31, 2024. Stock compensation expense related to restricted stock awards granted to employees is included in Salaries and employee benefits in the Consolidated Income Statement. For restricted stock awards granted to WAL directors, the related stock compensation expense is included in Legal, professional, and directors' fees. For the three months ended March 31, 2025, the Company recognized $
12.1
million in stock-based compensation expense related to employee and WAL director stock grants, compared to $
12.1
million for the three months ended March 31, 2024.
Performance Stock Units
The Company grants performance stock units to members of its executive management that do not vest unless the Company achieves certain performance measures over a
three-year
performance period. For the 2025 and 2024 awards, the performance measures are based on the Company’s relative return on equity and maintenance of a target CET1 ratio, and relative TSR performance. For the 2023 award, the performance measures are based on achievement of a specified cumulative EPS target and a TSR performance factor.
The number of shares issued will vary based on the performance measures that are achieved. The Company estimates the cost of performance stock units based upon the grant date fair value and expected vesting percentage over the
three-year
performance period. During the three months ended March 31, 2025 and 2024, the Company recognized stock-based compensation expense related to these performance stock units of $
1.6
million and $
1.0
million, respectively.
The
three-year
performance period for the 2022 grant ended on December 31, 2024. The Company did not meet the cumulative EPS and TSR performance measure for the performance period. As a result,
no
shares became fully vested.
The
three-year
performance period for the 2021 grant ended on December 31, 2023, and based on the Company's cumulative EPS and TSR performance measure for the performance period, these shares vested at
168
% of the target award under the terms of the grant. As a result,
129,942
shares became fully vested and were distributed to executive management in the first quarter of 2024.
Cash Settled Restricted Stock Units
The Company grants cash settled restricted stock units to members of its executive management that vest equally on a monthly basis over a
three-year
period. As the awards are settled in cash and are not dependent on the occurrence of a future event, these awards are classified as liabilities on the Consolidated Balance Sheet. At each vesting date, the Company settles the vested stock units in cash at the settlement date stock price. During the three months ended March 31, 2025 and 2024, the Company recognized compensation expense of $
0.3
million and $
0.1
million, respectively, related to these awards.
Deferred Stock Units
In 2024, the Company began granting deferred stock unit awards to certain members of its management team, which are intended to provide supplemental executive retirement benefits on an unfunded, unsecured basis. These awards can be settled in either stock or cash, at the Company's option. Participants are credited dividend equivalent units for any cash dividends paid with respect to the shares of stock underlying the stock units. These awards vest on the later of (i) the one-year anniversary of the grant date and (ii) the participant's satisfaction of age- and service-related eligibility criteria for a qualified retirement. The aggregate grant date fair value for these deferred stock unit awards granted during the three months ended March 31, 2025 was $
1.5
million. Stock compensation expense related to these deferred stock units is included in Salaries and employee benefits in the Consolidated Income Statement. For the three months ended March 31, 2025, the Company recognized $
1.6
million in stock-based compensation expense related to these stock grants. There were
no
such units outstanding during the three months ended March 31, 2024.
37
Preferred Stock
The Company issued and has outstanding
12,000,000
depositary shares, each representing a 1/400th ownership interest in a share of the Company’s
4.250
% Series A Fixed-Rate Reset Non-Cumulative Perpetual Preferred Shares, par value $
0.0001
per share, with a liquidation preference of $
25
per depositary share (equivalent to $
10,000
per share of Series A preferred stock). The dividend rate resets every
five years
beginning on September 30, 2026 to the five-year treasury rate as of the most recent reset dividend determination date plus
3.452
%. The Series A preferred stock is redeemable at the Company's option on or after September 30, 2026, on any dividend payment date at a redemption price of $
10,000
per share and only participates in the undistributed earnings of the Company if a dividend is declared. During the three months ended March 31, 2025 and 2024, the Company declared and paid a quarterly cash dividend of $
0.27
per depositary share, for a total dividend payment to preferred stockholders of $
3.2
million.
Cash Dividend on Common Shares
During the three months ended March 31, 2025, the Company declared and paid a quarterly cash dividend of $
0.38
per share, for a total dividend payment to stockholders of $
41.8
million. During the three months ended March 31, 2024, the Company declared and paid a quarterly cash dividend of $
0.37
per share for a total dividend payment to stockholders of $
40.7
million.
Treasury Shares
Treasury share purchases represent shares surrendered to the Company equal in value to the statutory payroll tax withholding obligations arising from the vesting of employee restricted stock awards. During the three months ended March 31, 2025, the Company purchased treasury shares of
121,485
at a weighted average price of $
89.01
per share. During the three months ended March 31, 2024, the Company purchased treasury shares of
122,597
, at a weighted average price of $
61.55
per share.
Noncontrolling Interest
BW Series B Preferred Stock Issuance
38
11. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table summarizes the changes in accumulated other comprehensive income (loss) by component, net of tax, for the periods indicated:
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||
| Unrealized holding gains (losses) on AFS securities | Unrealized holding losses on SERP | Unrealized holding gains (losses) on junior subordinated debt | Impairment loss on securities | Total | ||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ |
(
|
$ |
(
|
$ |
|
$ |
|
$ |
(
|
||||||||||||||||||||||
| Other comprehensive income before reclassifications |
|
|
|
|
|
|||||||||||||||||||||||||||
| Amounts reclassified from AOCI |
(
|
|
|
|
(
|
|||||||||||||||||||||||||||
| Net current-period other comprehensive income |
|
|
|
|
|
|||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ |
(
|
$ |
(
|
$ |
|
$ |
|
$ |
(
|
||||||||||||||||||||||
| Balance, December 31, 2023 | $ |
(
|
$ |
(
|
$ |
|
$ |
|
$ |
(
|
||||||||||||||||||||||
| Other comprehensive loss before reclassifications |
(
|
|
(
|
|
(
|
|||||||||||||||||||||||||||
| Amounts reclassified from AOCI |
|
|
|
|
|
|||||||||||||||||||||||||||
| Net current-period other comprehensive loss |
(
|
|
(
|
|
(
|
|||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ |
(
|
$ |
(
|
$ |
|
$ |
|
$ |
(
|
||||||||||||||||||||||
39
12. DERIVATIVES AND HEDGING ACTIVITIES
The Company is a party to various derivative instruments. The primary types of derivatives the Company uses are interest rate contracts, forward purchase and sale commitments, and interest rate futures. Generally, these instruments are used to help manage the Company's exposure to interest rate risk related to IRLCs and its inventory of loans HFS and MSRs and also to meet client financing and hedging needs.
Derivatives are recorded at fair value on the Consolidated Balance Sheet, after taking into account the effects of bilateral collateral and master netting agreements. These agreements allow the Company to settle all derivative contracts held with the same counterparty on a net basis, and to offset net derivative positions with related cash collateral, where applicable.
As of March 31, 2025 and December 31, 2024, the Company did not have any outstanding cash flow hedges.
Derivatives Designated in Hedge Relationships
The Company utilizes derivatives that have been designated as part of a hedge relationship in accordance with the applicable accounting guidance to minimize the exposure to changes in benchmark interest rates, which reduces asset sensitivity and volatility due to interest rate fluctuations, such that interest rate risk falls within Board approved limits. The primary derivative instruments used to manage interest rate risk are interest rate swaps, which convert the contractual interest rate index of agreed-upon amounts of assets and liabilities (i.e., notional amounts) from either a fixed rate to a variable rate, or from a variable rate to a fixed rate.
The Company has pay fixed/receive variable interest rate swaps designated as fair value hedges of certain fixed rate loans. As a result, the Company receives variable-rate interest payments in exchange for making fixed-rate payments over the lives of the contracts without exchanging the notional amounts. The variable-rate interest payments are based on SOFR plus a spread adjustment.
The Company also has pay fixed/receive variable interest rate swaps, designated as fair value hedges using the portfolio layer method to manage the exposure to changes in fair value associated with pools of fixed rate loans, resulting from changes in the designated benchmark interest rate (federal funds rate). These portfolio layer hedges provide the Company the ability to execute a fair value hedge of the interest rate risk associated with a portfolio of similar prepayable assets, whereby the last dollar amount estimated to remain in the portfolio of assets was identified as the hedged item. Under these interest rate swap contracts, the Company receives a variable rate and pays a fixed rate on the outstanding notional amount. During the year ended December 31, 2024, the Company terminated a portion of its portfolio layer method swaps. The terminated hedge had a notional value of $
500
million and a cumulative loan basis adjustment of $
4
million at the time of termination. The cumulative loan basis adjustment was allocated to the individual loans remaining within the closed pool and will be amortized over the remaining life of these loans through interest income.
The Company also had pay fixed/receive variable interest rate swaps, designated as fair value hedges using the last-of-layer method. Upon termination of these last-of-layer hedges in 2022, the cumulative basis adjustment on these hedges was allocated across the remaining loan pool and was being amortized over the remaining term. The terminated last-of-layer hedge basis adjustment was fully amortized as of December 31, 2024.
Derivatives Not Designated in Hedge Relationships
Management enters into certain contracts and agreements, including foreign exchange derivative contracts, back-to-back interest rate contracts, risk participation agreements and equity warrants, which are not designated as accounting hedges. Foreign exchange derivative contracts include spot, forward, forward window, and swap contracts. The purpose of these derivative contracts is to mitigate foreign currency risk on transactions entered into, or on behalf of customers. The Company's back-to-back interest rate contracts are used to allow customers to manage long-term interest rate risk. Contracts with customers, along with the related derivative trades the Company places, are both remeasured at fair value, and are referred to as economic hedges since they economically offset the Company's exposure.
The Company also uses derivative financial instruments to manage exposure to interest rate risk within its mortgage banking business related to IRLCs and its inventory of loans HFS and MSRs. The Company economically hedges the changes in fair value associated with changes in interest rates generally by utilizing forward purchase and sale commitments, interest rate futures and interest rate contracts.
Risk participation agreements are entered into with lead banks in certain loan syndications to share in the risk of default on interest rate swaps on participated loans. Equity warrants represent the right to buy shares in a company at a specified price and are acquired by the Company primarily in connection with negotiating credit facilities and certain other services to private, venture-backed companies in the technology industry.
40
Fair Value Hedges
As of March 31, 2025 and December 31, 2024, the following amounts are reflected on the Consolidated Balance Sheet related to cumulative basis adjustments for outstanding fair value hedges:
| March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||
| Carrying Value of Hedged Assets | Cumulative Fair Value Hedging Adjustment (1) | Carrying Value of Hedged Assets | Cumulative Fair Value Hedging Adjustment (1) | |||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Loans HFI, net of deferred loan fees and costs (2) | $ |
|
$ |
(
|
$ |
|
$ |
(
|
||||||||||||||||||
(1)
Included in the carrying value of the hedged assets.
(2)
Included portfolio layer method derivative instruments with $
4.0
billion designated as the hedged amount (from a closed portfolio of prepayable fixed rate loans with a carrying value of $
8.6
billion and $
8.7
billion) as of March 31, 2025 and December 31, 2024, respectively. The cumulative basis adjustment included in the carrying value of these hedged items totaled $
20
million and $
78
million as of March 31, 2025 and December 31, 2024, respectively.
For the Company's derivative instruments that are designated and qualify as fair value hedges, the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current period earnings. The loss or gain on the hedged item is recognized in the same line item as the offsetting loss or gain on the related interest rate swaps.
For loans, the gain or loss on the hedged item is included in interest income, as shown in the table below.
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| Income Statement Classification | Gain/(Loss) on Swaps | Gain/(Loss) on Hedged Item | Gain/(Loss) on Swaps | Gain/(Loss) on Hedged Item | ||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Interest income | $ |
(
|
$ |
|
$ |
|
$ |
(
|
||||||||||||||||||
In addition to the gains and losses on the Company's outstanding fair value hedges presented in the above table, the Company recognized less than $
0.1
million in interest income related to the amortization of the cumulative basis adjustment on its discontinued portfolio layer method hedges during the three months ended March 31, 2025 and $
3.0
million related to its discontinued last-of-layer hedges during the three months ended March 31, 2024.
41
Fair Values, Volume of Activity, and Gain/Loss Information Related to Derivative Instruments
The following table summarizes the fair value of the Company's derivative instruments on a gross basis as of March 31, 2025, December 31, 2024, and March 31, 2024. The change in the notional amounts of these derivatives from March 31, 2024 to March 31, 2025 indicates the volume of the Company's derivative transaction activity during these periods. The derivative asset and liability balances are presented on a gross basis, prior to the application of bilateral collateral and master netting agreements. Total derivative assets and liabilities are adjusted to take into account the impact of legally enforceable master netting agreements that allow the Company to settle all derivative contracts with the same counterparty on a net basis and to offset the net derivative position with the related cash collateral. Where master netting agreements are not in effect or are not enforceable under bankruptcy laws, the Company does not adjust those derivative amounts with counterparties.
| March 31, 2025 | December 31, 2024 | March 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value | Fair Value | Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||||||
|
Notional
Amount |
Derivative Assets | Derivative Liabilities |
Notional
Amount |
Derivative Assets | Derivative Liabilities |
Notional
Amount |
Derivative Assets | Derivative Liabilities | |||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivatives designated as hedging instruments: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value hedges | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate contracts | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency contracts | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
| Forward contracts |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Futures contracts (1) |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Interest rate lock commitments |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Interest rate contracts |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Risk participation agreements |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Equity warrants |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
| Margin |
|
|
(
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total, including margin | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
(1)
The Company enters into futures purchase and sales contracts that are subject to daily remargining and almost all of which are based on three-month SOFR to hedge against its MSR valuation exposure. The notional amount on these contracts is substantial as these contracts have a short duration and are intended to cover the longer duration of MSR hedges.
42
The fair value of derivative contracts, after taking into account the effects of master netting agreements, is included in Other assets or Other liabilities on the Consolidated Balance Sheet, as summarized in the table below:
| March 31, 2025 | December 31, 2024 | March 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross amount of recognized assets (liabilities) | Gross offset | Net assets (liabilities) | Gross amount of recognized assets (liabilities) | Gross offset | Net assets (liabilities) | Gross amount of recognized assets (liabilities) | Gross offset | Net assets (liabilities) | |||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivatives subject to master netting arrangements: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency contracts | $ |
|
$ | — | $ |
|
$ |
|
$ | — | $ |
|
$ |
|
$ | — | $ |
|
|||||||||||||||||||||||||||||||||||
| Forward contracts |
|
— |
|
|
— |
|
|
— |
|
||||||||||||||||||||||||||||||||||||||||||||
| Interest rate contracts |
|
— |
|
|
— |
|
|
— |
|
||||||||||||||||||||||||||||||||||||||||||||
| Margin |
|
— |
|
|
— |
|
|
— |
|
||||||||||||||||||||||||||||||||||||||||||||
| Netting | — |
(
|
(
|
— |
(
|
(
|
— |
(
|
(
|
||||||||||||||||||||||||||||||||||||||||||||
| $ |
|
$ |
(
|
$ |
|
$ |
|
$ |
(
|
$ |
|
$ |
|
$ |
(
|
$ |
|
||||||||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency contracts | $ |
|
$ | — | $ |
|
$ |
|
$ | — | $ |
|
$ |
(
|
$ | — | $ |
(
|
|||||||||||||||||||||||||||||||||||
| Forward contracts |
(
|
— |
(
|
(
|
— |
(
|
(
|
— |
(
|
||||||||||||||||||||||||||||||||||||||||||||
| Interest rate contracts |
(
|
— |
(
|
(
|
— |
(
|
(
|
— |
(
|
||||||||||||||||||||||||||||||||||||||||||||
| Margin |
|
— |
|
(
|
— |
(
|
(
|
— |
(
|
||||||||||||||||||||||||||||||||||||||||||||
| Netting | — |
|
|
— |
|
|
— |
|
|
||||||||||||||||||||||||||||||||||||||||||||
| $ |
(
|
$ |
|
$ |
(
|
$ |
(
|
$ |
|
$ |
(
|
$ |
(
|
$ |
|
$ |
(
|
||||||||||||||||||||||||||||||||||||
| Derivatives not subject to master netting arrangements: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency contracts | $ |
|
$ | — | $ |
|
$ |
|
$ | — | $ |
|
$ |
|
$ | — | $ |
|
|||||||||||||||||||||||||||||||||||
| Interest rate lock commitments |
|
— |
|
|
— |
|
|
— |
|
||||||||||||||||||||||||||||||||||||||||||||
| Interest rate contracts |
|
— |
|
|
— |
|
|
— |
|
||||||||||||||||||||||||||||||||||||||||||||
| Equity warrants |
|
— |
|
|
— |
|
|
— |
|
||||||||||||||||||||||||||||||||||||||||||||
| $ |
|
$ | — | $ |
|
$ |
|
$ | — | $ |
|
$ |
|
$ | — | $ |
|
||||||||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency contracts | $ |
|
$ | — | $ |
|
$ |
(
|
$ | — | $ |
(
|
$ |
|
$ | — | $ |
|
|||||||||||||||||||||||||||||||||||
| Forward contracts |
(
|
— |
(
|
(
|
— |
(
|
(
|
— |
(
|
||||||||||||||||||||||||||||||||||||||||||||
| Interest rate lock commitments |
(
|
— |
(
|
(
|
— |
(
|
(
|
— |
(
|
||||||||||||||||||||||||||||||||||||||||||||
| Interest rate contracts |
(
|
— |
(
|
(
|
— |
(
|
(
|
— |
(
|
||||||||||||||||||||||||||||||||||||||||||||
| $ |
(
|
$ | — | $ |
(
|
$ |
(
|
$ | — | $ |
(
|
$ |
(
|
$ | — | $ |
(
|
||||||||||||||||||||||||||||||||||||
| Total derivatives and margin | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | $ |
|
$ |
(
|
$ |
|
$ |
|
$ |
(
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||||||||||||||||||||||
| Liabilities |
(
|
|
(
|
(
|
|
(
|
(
|
|
(
|
||||||||||||||||||||||||||||||||||||||||||||
43
The following table summarizes the net gain (loss) on derivatives included in the non-interest income line items below:
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions) | ||||||||||||||
| Interest rate lock commitments | $ |
|
$ |
(
|
||||||||||
| Forward contracts |
(
|
|
||||||||||||
| Interest rate contracts |
|
(
|
||||||||||||
| Other contracts |
|
|
||||||||||||
| Net (loss) gain on derivatives | $ |
(
|
$ |
|
||||||||||
| Forward contracts | $ |
|
$ |
(
|
||||||||||
| Futures contracts |
(
|
|
||||||||||||
| Interest rate contracts |
|
(
|
||||||||||||
| Net gain (loss) on derivatives | $ |
|
$ |
(
|
||||||||||
Counterparty Credit Risk
13. EARNINGS PER SHARE
Diluted EPS is calculated using the weighted average outstanding common shares during the period, including common stock equivalents. Basic EPS is calculated using the weighted average outstanding common shares during the period.
The following table presents the calculation of basic and diluted EPS:
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions, except per share amounts) | ||||||||||||||
| Weighted average shares - basic |
|
|
||||||||||||
| Dilutive effect of stock awards |
|
|
||||||||||||
| Weighted average shares - diluted |
|
|
||||||||||||
| Net income available to common stockholders | $ |
|
$ |
|
||||||||||
| Earnings per Common Share: | ||||||||||||||
| Basic | $ |
|
$ |
|
||||||||||
| Diluted |
|
|
||||||||||||
44
14. INCOME TAXES
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.
As of March 31, 2025, the net DTA balance totaled $
272
million, a decrease of $
9
million from $
281
million at December 31, 2024. This overall decrease in the net DTA was primarily the result of increases in the MSR DTL and the fair market value of AFS securities, which were partially offset by an increase in credit carryovers.
Although realization is not assured, the Company believes that the realization of the recognized net DTA of $
272
million at March 31, 2025 is more-likely-than-not based on expectations as to future taxable income and based on available tax planning strategies that could be implemented if necessary to prevent a carryover from expiring.
At March 31, 2025 and December 31, 2024, the Company had
no
deferred tax valuation allowance.
LIHTC and renewable energy projects
The Company holds ownership interests in limited partnerships and limited liability companies that invest in affordable housing and renewable energy projects. These investments are designed to generate a return primarily through the realization of federal tax credits and deductions.
Investments in LIHTC and renewable energy totaled $
591
million and $
606
million as of March 31, 2025 and December 31, 2024, respectively. Unfunded LIHTC and renewable energy obligations are included in Other liabilities on the Consolidated Balance Sheet and totaled $
317
million and $
320
million as of March 31, 2025 and December 31, 2024, respectively.
15. COMMITMENTS AND CONTINGENCIES
Unfunded Commitments and Letters of Credit
The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and letters of credit. They involve, to varying degrees, elements of credit risk in excess of amounts recognized on the Consolidated Balance Sheet.
Lines of credit are obligations to lend money to a borrower. Credit risk arises when the borrower's current financial condition may indicate less ability to pay than when the commitment was originally made. In the case of letters of credit, the risk arises from the potential failure of the customer to perform according to the terms of a contract. In such a situation, the third party might draw on the letter of credit to pay for completion of the contract and the Company would look to its customer to repay these funds with interest. To minimize the risk, the Company uses the same credit policies in making commitments and conditional obligations as it would for a loan to that customer.
Letters of credit and financial guarantees are commitments issued by the Company to guarantee the performance of a customer to a third party in borrowing arrangements. The Company generally has recourse to recover from the customer any amounts paid under the guarantees.
A summary of the contractual amounts for unfunded commitments and letters of credit are as follows:
| March 31, 2025 | December 31, 2024 | |||||||||||||
| (in millions) | ||||||||||||||
|
Commitments to extend credit, including unsecured loan commitments of $
|
$ |
|
$ |
|
||||||||||
| Credit card commitments and financial guarantees |
|
|
||||||||||||
|
Letters of credit, including unsecured letters of credit of $
|
|
|
||||||||||||
| Total | $ |
|
$ |
|
||||||||||
Commitments to extend credit are agreements to lend to a customer provided there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company enters into credit arrangements that generally provide for the termination of advances in the event of a
45
covenant violation or other event of default. As commitments may expire without being fully drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the party. The commitments are collateralized by the same types of assets used as loan collateral.
The Company has exposure to credit losses from unfunded commitments and letters of credit. As funds have not been disbursed on these commitments, they are not reported as loans outstanding. Credit losses related to these commitments are included in Other liabilities as a separate loss contingency and are not included in the ACL reported in "Note 4. Loans, Leases and Allowance for Credit Losses" of these Notes to Unaudited Consolidated Financial Statements. This loss contingency for unfunded loan commitments and letters of credit was $
35.1
million
and $
39.5
million as of March 31, 2025 and December 31, 2024, respectively. Changes to this liability are adjusted through the provision for credit losses in the Consolidated Income Statement.
Commitments to Invest in Renewable Energy Projects
The Company has off-balance sheet commitments to invest in renewable energy projects, as described in "Note 14. Income Taxes" of these Notes to Unaudited Consolidated Financial Statements, subject to the underlying project meeting certain milestones. These conditional commitments totaled $
6
million as of March 31, 2025 and December 31, 2024.
Concentrations of Lending Activities
The Company does not have a single external customer from which it derives 10% or more of its revenues. The Company monitors concentrations of lending activities at the product and borrower relationship level. Commercial and industrial loans made up
44
% and
43
% of the Company's HFI loan portfolio as of March 31, 2025 and December 31, 2024, respectively. The Company's loan portfolio includes significant credit exposure to the CRE market. As of March 31, 2025 and December 31, 2024, CRE related loans accounted for approximately
30
% of total loans. Approximately
15
% and
16
% of CRE loans, excluding construction and land loans, were owner-occupied as of March 31, 2025 and December 31, 2024, respectively. No borrower relationships at both the commitment and funded loan level exceeded 5% of total loans HFI as of March 31, 2025 and December 31, 2024.
Contingencies
The Company is involved in various lawsuits of a routine nature that are being handled and defended in the ordinary course of the Company’s business. Expenses are being incurred in connection with these lawsuits, but in the opinion of management, based in part on consultation with outside legal counsel, the resolution of these lawsuits and associated defense costs will not have a material impact on the Company’s financial position, results of operations, or cash flows.
The fair value of an asset or liability is the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, the income approach, and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions market participants would use in pricing an asset or liability. ASC 825 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 825 are described in "Note 1. Summary of Significant Accounting Policies" of these Notes to Consolidated Financial Statements.
In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally-developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the Company’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. A more detailed description of the valuation methodologies used for assets and liabilities measured at fair value is set forth below.
46
Under ASC 825, the Company elected the FVO treatment for junior subordinated debt issued by WAL. This election is irrevocable and results in the recognition of unrealized gains and losses on the debt at each reporting date. These unrealized gains and losses are recognized in OCI rather than earnings. The Company did not elect FVO treatment for the junior subordinated debt assumed in the Bridge Capital Holdings acquisition.
The following table presents unrealized gains and losses from fair value changes on junior subordinated debt:
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions) | ||||||||||||||
| Unrealized gains (losses) | $ |
|
$ |
(
|
||||||||||
| Changes included in OCI, net of tax |
|
(
|
||||||||||||
Fair value on a recurring basis
Financial assets and financial liabilities measured at fair value on a recurring basis include the following:
AFS debt securities:
Securities classified as AFS are reported at fair value utilizing Level 1 and Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include quoted prices in active markets, dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the bond’s terms and conditions, among other things.
Equity securities:
Preferred stock and CRA investments are reported at fair value utilizing Level 1 inputs.
Independent pricing service:
The Company's independent pricing service provides pricing information on the majority of the Company's Level 1 and Level 2 AFS debt securities. For a small subset of securities, other pricing sources are used, including observed prices on publicly-traded securities and dealer quotes. Management independently evaluates the fair value measurements received from the Company's third-party pricing service through multiple review steps. First, management reviews what has transpired in the marketplace with respect to interest rates, credit spreads, volatility, and mortgage rates, among other things, and develops an expectation of changes to the securities' valuations from the previous quarter. Then, management selects a sample of investment securities and compares the values provided by its primary third-party pricing service to the market values obtained from secondary sources, including other pricing services and safekeeping statements, and evaluates those with notable variances. In instances where there are discrepancies in pricing from various sources and management expectations, management may manually price securities using currently observed market data to determine whether they can develop similar prices or may utilize bid information from broker dealers. Any remaining discrepancies between management’s review and the prices provided by the vendor are discussed with the vendor and/or the Company’s other valuation advisors.
Loans HFS
: Government-insured or guaranteed and agency-conforming 1-4 family residential loans HFS are salable into active markets. Accordingly, the fair value of these loans is based primarily on quoted market or contracted selling prices or a market price equivalent, which are categorized as Level 2 in the fair value hierarchy.
Mortgage servicing rights
: MSRs are measured based on valuation techniques using Level 3 inputs. The Company uses a discounted cash flow model that incorporates assumptions market participants would use in estimating the fair value of servicing rights, including, but not limited to, option adjusted spread, conditional prepayment rate, servicing fee rate, recapture rate, and cost to service.
Derivative financial instruments
: Forward contracts are measured based on valuation techniques using Level 2 inputs, such as quoted market prices, contracted selling prices, or a market price equivalent. Interest rate and foreign currency contracts are reported at fair value utilizing Level 2 inputs. The Company obtains dealer quotations to value its interest rate contracts. IRLCs are measured based on valuation techniques that consider loan type, underlying loan amount, maturity date, note rate, loan program, and expected settlement date, with Level 3 inputs for the servicing release premium and pull-through rate. These measurements are adjusted at the loan level to consider the servicing release premium and loan pricing adjustment specific to each loan. The base value is then adjusted for estimated pull-through rates. The pull-through rate and servicing fee multiple are unobservable inputs based on historical experience. Equity warrants are measured using a Black-Scholes option pricing model based on contractual strike price, expected term, the risk-free interest rate, and volatility, which may be adjusted for a lack of marketability. The volatility input is considered Level 3 as the underlying equity is not publicly traded and is determined using comparable publicly traded companies.
47
Junior subordinated debt:
The Company estimates the fair value of its junior subordinated debt using a discounted cash flow model which incorporates the effect of the Company’s own credit risk in the fair value of the liabilities (Level 3). The Company’s cash flow assumptions are based on contractual cash flows as the Company anticipates it will pay the debt according to its contractual terms.
The fair value of assets and liabilities measured at fair value on a recurring basis was determined using the following inputs:
| Fair Value Measurements at the End of the Reporting Period Using: | ||||||||||||||||||||||||||
|
Quoted Prices in Active Markets for Identical Assets
(Level 1) |
Significant Other Observable Inputs
(Level 2) |
Significant Unobservable Inputs
(Level 3) |
Fair Value | |||||||||||||||||||||||
| March 31, 2025 | (in millions) | |||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Available-for-sale debt securities | ||||||||||||||||||||||||||
| Residential MBS issued by GSEs and GNMA | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| U.S. Treasury securities |
|
|
|
|
||||||||||||||||||||||
| Private label residential MBS |
|
|
|
|
||||||||||||||||||||||
| CLO |
|
|
|
|
||||||||||||||||||||||
| Tax-exempt |
|
|
|
|
||||||||||||||||||||||
| Commercial MBS issued by GSEs and GNMA |
|
|
|
|
||||||||||||||||||||||
| Corporate debt securities |
|
|
|
|
||||||||||||||||||||||
| Other |
|
|
|
|
||||||||||||||||||||||
| Total AFS debt securities | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Equity securities | ||||||||||||||||||||||||||
| Preferred stock | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| CRA investments |
|
|
|
|
||||||||||||||||||||||
| Total equity securities | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Loans HFS (2) | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Mortgage servicing rights |
|
|
|
|
||||||||||||||||||||||
| Derivative assets (1) |
|
|
|
|
||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Junior subordinated debt (3) | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Derivative liabilities (1) |
|
|
|
|
||||||||||||||||||||||
(1)
See "Note 12. Derivatives and Hedging Activities." In addition, the carrying value of loans is decreased by $
32
million as of March 31, 2025 for the effective portion of the hedge, which relates to the fair value of the hedges put in place to mitigate against fluctuations in interest rates. Derivative assets and liabilities exclude margin of $
156
million and $(
31
) million, respectively.
(2)
Includes only the portion of loans HFS that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.
(3)
Includes only the portion of junior subordinated debt that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.
48
| Fair Value Measurements at the End of the Reporting Period Using: | ||||||||||||||||||||||||||
|
Quoted Prices in Active Markets for Identical Assets
(Level 1) |
Significant Other Observable Inputs
(Level 2) |
Significant Unobservable Inputs
(Level 3) |
Fair Value | |||||||||||||||||||||||
| December 31, 2024 | (in millions) | |||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Available-for-sale debt securities | ||||||||||||||||||||||||||
| Residential MBS issued by GSEs and GNMA | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| U.S. Treasury securities |
|
|
|
|
||||||||||||||||||||||
| Private label residential MBS |
|
|
|
|
||||||||||||||||||||||
| Tax-exempt |
|
|
|
|
||||||||||||||||||||||
| CLO |
|
|
|
|
||||||||||||||||||||||
| Commercial MBS issued by GSEs and GNMA |
|
|
|
|
||||||||||||||||||||||
| Corporate debt securities |
|
|
|
|
||||||||||||||||||||||
| Other |
|
|
|
|
||||||||||||||||||||||
| Total AFS debt securities | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Equity securities | ||||||||||||||||||||||||||
| Preferred stock | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| CRA investments |
|
|
|
|
||||||||||||||||||||||
| Total equity securities | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Loans - HFS (2) | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Mortgage servicing rights |
|
|
|
|
||||||||||||||||||||||
| Derivative assets (1) |
|
|
|
|
||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Junior subordinated debt (3) | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Derivative liabilities (1) |
|
|
|
|
||||||||||||||||||||||
(1)
See "Note 12. Derivatives and Hedging Activities." In addition, the carrying value of loans is decreased by $
96
million as of December 31, 2024 for the effective portion of the hedge, which relates to the fair value of the hedges put in place to mitigate against fluctuations in interest rates. Derivative assets and liabilities exclude margin of $
72
million and $
3
million, respectively.
(2)
Includes only the portion of loans HFS that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.
(3)
Includes only the portion of junior subordinated debt that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.
The change in Level 3 liabilities measured at fair value on a recurring basis included in OCI was as follows:
| Junior Subordinated Debt | ||||||||||||||
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions) | ||||||||||||||
| Beginning balance | $ |
(
|
$ |
(
|
||||||||||
| Change in fair value (1) |
|
(
|
||||||||||||
| Ending balance | $ |
(
|
$ |
(
|
||||||||||
(1)
Unrealized gains (losses) attributable to changes in the fair value of junior subordinated debt are recorded in OCI, net of tax, and totaled $
1.1
million and $(
0.5
) million for three months ended March 31, 2025 and 2024, respectively.
The significant unobservable inputs used in the fair value measurements of these Level 3 liabilities were as follows:
| March 31, 2025 | Valuation Technique | Significant Unobservable Inputs | Input Value | |||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Junior subordinated debt | $ |
|
Discounted cash flow | Implied credit rating of the Company |
|
% | ||||||||||||||||||||
| December 31, 2024 | Valuation Technique | Significant Unobservable Inputs | Input Value | |||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Junior subordinated debt | $ |
|
Discounted cash flow | Implied credit rating of the Company |
|
% | ||||||||||||||||||||
The significant unobservable inputs used in the fair value measurement of the Company’s junior subordinated debt as of March 31, 2025 and December 31, 2024 was the implied credit risk for the Company. The implied credit risk spread as of March 31, 2025 and December 31, 2024 was calculated as the difference between the average of the 10 and 15-year 'BB' rated financial indexes over the corresponding swap indexes.
49
As of March 31, 2025, the Company estimates the discount rate at
7.69
%, which represents an implied credit spread of
3.40
% plus three-month SOFR (
4.29
%). As of December 31, 2024, the Company estimated the discount rate at
7.43
%, which was a
3.12
% credit spread plus three-month SOFR (
4.31
%).
The change in Level 3 assets and liabilities measured at fair value on a recurring basis included in income was as follows:
| Three Months Ended March 31, 2025 | ||||||||||||||
| MSRs | IRLCs (1) | |||||||||||||
| (in millions) | ||||||||||||||
| Balance, beginning of period | $ |
|
$ |
(
|
||||||||||
| Purchases and additions |
|
|
||||||||||||
| Sales and payments |
(
|
— | ||||||||||||
| Settlement of IRLCs upon acquisition or origination of loans HFS | — |
(
|
||||||||||||
| Change in fair value |
(
|
|
||||||||||||
| Realization of cash flows |
(
|
— | ||||||||||||
| Balance, end of period | $ |
|
$ |
|
||||||||||
| Changes in unrealized gains for the period (2) | $ |
(
|
$ |
|
||||||||||
| Three Months Ended March 31, 2024 | ||||||||||||||
| MSRs | IRLCs (1) | |||||||||||||
| (in millions) | ||||||||||||||
| Balance, beginning of period | $ |
|
$ |
|
||||||||||
| Purchases and additions |
|
|
||||||||||||
| Sales and payments |
(
|
— | ||||||||||||
| Settlement of IRLCs upon acquisition or origination of loans HFS | — |
(
|
||||||||||||
| Change in fair value |
|
(
|
||||||||||||
| Realization of cash flows |
(
|
— | ||||||||||||
| Balance, end of period | $ |
|
$ |
|
||||||||||
| Changes in unrealized gains for the period (2) | $ |
|
$ |
|
||||||||||
(1) IRLC asset and liability positions are presented net.
(2) Amounts recognized as part of non-interest income.
50
The significant unobservable inputs used in the fair value measurements of these Level 3 assets and liabilities were as follows:
| March 31, 2025 | ||||||||||||||||||||
| Asset/liability | Key inputs | Range | Weighted average | |||||||||||||||||
| MSRs: | Option adjusted spread (in basis points) |
|
|
|||||||||||||||||
| Conditional prepayment rate (1) |
|
|
% | |||||||||||||||||
| Recapture rate |
|
|
% | |||||||||||||||||
| Servicing fee rate (in basis points) |
|
|
||||||||||||||||||
| Cost to service |
$
|
$ |
|
|||||||||||||||||
| IRLCs: | Servicing fee multiple |
|
|
|||||||||||||||||
| Pull-through rate |
|
|
% | |||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
| Asset/liability | Key inputs | Range | Weighted average | |||||||||||||||||
| MSRs: | Option adjusted spread (in basis points) |
|
|
|||||||||||||||||
| Conditional prepayment rate (1) |
|
|
% | |||||||||||||||||
| Recapture rate |
|
|
% | |||||||||||||||||
| Servicing fee rate (in basis points) |
|
|
||||||||||||||||||
| Cost to service |
$
|
$ |
|
|||||||||||||||||
| IRLCs: | Servicing fee multiple |
|
|
|||||||||||||||||
| Pull-through rate |
|
|
% | |||||||||||||||||
(1) Lifetime total prepayment speed annualized.
The following is a summary of the difference between the aggregate fair value and the aggregate UPB of loans HFS for which the FVO has been elected:
| March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||
| Fair value | UPB | Difference | Fair value | UPB | Difference | |||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||
| Loans HFS: | ||||||||||||||||||||||||||||||||||||||
| Current through 89 days delinquent | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||
| 90 days or more delinquent |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||
51
Fair value on a nonrecurring basis
Certain assets are measured at fair value on a nonrecurring basis. That is, the assets are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of credit deterioration).
The following table presents such assets carried on the Consolidated Balance Sheet by caption and by level within the ASC 825 hierarchy:
| Fair Value Measurements at the End of the Reporting Period Using | ||||||||||||||||||||||||||
| Total |
Quoted Prices in Active Markets for Identical Assets
(Level 1) |
Active Markets for Similar Assets
(Level 2) |
Unobservable Inputs
(Level 3) |
|||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| As of March 31, 2025: | ||||||||||||||||||||||||||
| Loans HFI | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Other assets acquired through foreclosure |
|
|
|
|
||||||||||||||||||||||
| As of December 31, 2024: | ||||||||||||||||||||||||||
| Loans HFI | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Other assets acquired through foreclosure |
|
|
|
|
||||||||||||||||||||||
For Level 3 assets measured at fair value on a nonrecurring basis as of period end, the significant unobservable inputs used in the fair value measurements were as follows:
| March 31, 2025 | Valuation Technique(s) | Significant Unobservable Inputs | Range | ||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Loans HFI | $ |
|
Collateral method | Third party appraisal | Costs to sell |
|
|||||||||||||||||||||||
| Discounted cash flow method | Discount rate | Contractual loan rate |
|
||||||||||||||||||||||||||
| Scheduled cash collections | Probability of default |
|
|||||||||||||||||||||||||||
| Proceeds from non-real estate collateral | Loss given default |
|
|||||||||||||||||||||||||||
| Other assets acquired through foreclosure |
|
Collateral method | Third party appraisal | Costs to sell |
|
||||||||||||||||||||||||
| December 31, 2024 | Valuation Technique(s) | Significant Unobservable Inputs | Range | ||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Loans HFI | $ |
|
Collateral method | Third party appraisal | Costs to sell |
|
|||||||||||||||||||||||
| Discounted cash flow method | Discount rate | Contractual loan rate |
|
||||||||||||||||||||||||||
| Scheduled cash collections | Probability of default |
|
|||||||||||||||||||||||||||
| Proceeds from non-real estate collateral | Loss given default |
|
|||||||||||||||||||||||||||
| Other assets acquired through foreclosure |
|
Collateral method | Third party appraisal | Costs to sell |
|
||||||||||||||||||||||||
Loans HFI:
Loans measured at fair value on a nonrecurring basis include collateral dependent loans. The specific reserves for these loans are based on collateral value, net of estimated disposition costs and other identified quantitative inputs. Collateral value is determined based on independent third-party appraisals or internally-developed discounted cash flow analyses. Appraisals may utilize a single valuation approach or a combination of approaches, including comparable sales and the income approach. Fair value is determined, where possible, using market prices derived from an appraisal or evaluation, which are considered to be Level 2. However, certain assumptions and unobservable inputs are often used by the appraiser, therefore qualifying the assets as Level 3 in the fair value hierarchy. In addition, when adjustments are made to an appraised value to reflect various factors such as the age of the appraisal or known changes in the market or the collateral, such valuation inputs are considered unobservable and the fair value measurement is categorized as a Level 3 measurement. Internal discounted cash flow analyses are also utilized to estimate the fair value of these loans, which considers internally-developed, unobservable inputs such as discount rates, default rates, and loss severity.
Total Level 3 collateral dependent loans had an estimated fair value of $
735
million and $
561
million at March 31, 2025 and December 31, 2024, respectively, net of a specific ACL of $
50
million and $
46
million at March 31, 2025 and December 31, 2024, respectively.
52
Other assets acquired through foreclosure:
Other assets acquired through foreclosure consist of properties acquired as a result of, or in-lieu-of, foreclosure. These assets are initially reported at the fair value determined by independent appraisals using appraised value less estimated cost to sell. Such properties are generally re-appraised every 12 months. Costs relating to the development or improvement of the assets are capitalized and costs relating to holding the assets are charged to expense.
Fair value is determined, where possible, using market prices derived from an appraisal or evaluation, which are considered to be Level 2. However, certain assumptions and unobservable inputs are often used by the appraiser, therefore qualifying the assets as Level 3 in the fair value hierarchy. When significant adjustments are based on unobservable inputs, such as when a current appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the resulting fair value measurement has been categorized as a Level 3 measurement. The Company had $
51
million and $
52
million of such assets at March 31, 2025 and December 31, 2024, respectively.
Fair Value of Financial Instruments
The estimated fair value of the Company’s financial instruments is as follows:
| March 31, 2025 | ||||||||||||||||||||||||||||||||
| Carrying Amount | Fair Value | |||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||
| Financial assets: | ||||||||||||||||||||||||||||||||
| Investment securities: | ||||||||||||||||||||||||||||||||
| HTM | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||
| AFS |
|
|
|
|
|
|||||||||||||||||||||||||||
| Equity |
|
|
|
|
|
|||||||||||||||||||||||||||
| Derivative assets (1) |
|
|
|
|
|
|||||||||||||||||||||||||||
| Loans HFS |
|
|
|
|
|
|||||||||||||||||||||||||||
| Loans HFI, net |
|
|
|
|
|
|||||||||||||||||||||||||||
| Mortgage servicing rights |
|
|
|
|
|
|||||||||||||||||||||||||||
| Accrued interest receivable |
|
|
|
|
|
|||||||||||||||||||||||||||
| Financial liabilities: | ||||||||||||||||||||||||||||||||
| Deposits | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||
| Other borrowings |
|
|
|
|
|
|||||||||||||||||||||||||||
| Qualifying debt |
|
|
|
|
|
|||||||||||||||||||||||||||
| Derivative liabilities (1) |
|
|
|
|
|
|||||||||||||||||||||||||||
| Accrued interest payable |
|
|
|
|
|
|||||||||||||||||||||||||||
(1) Derivative assets and liabilities exclude margin of $
156
million and $(
31
) million, respectively.
53
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| Carrying Amount | Fair Value | |||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||
| Financial assets: | ||||||||||||||||||||||||||||||||
| Investment securities: | ||||||||||||||||||||||||||||||||
| HTM | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||
| AFS |
|
|
|
|
|
|||||||||||||||||||||||||||
| Equity securities |
|
|
|
|
|
|||||||||||||||||||||||||||
| Derivative assets (1) |
|
|
|
|
|
|||||||||||||||||||||||||||
| Loans HFS |
|
|
|
|
|
|||||||||||||||||||||||||||
| Loans HFI, net |
|
|
|
|
|
|||||||||||||||||||||||||||
| Mortgage servicing rights |
|
|
|
|
|
|||||||||||||||||||||||||||
| Accrued interest receivable |
|
|
|
|
|
|||||||||||||||||||||||||||
| Financial liabilities: | ||||||||||||||||||||||||||||||||
| Deposits | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||
| Other borrowings |
|
|
|
|
|
|||||||||||||||||||||||||||
| Qualifying debt |
|
|
|
|
|
|||||||||||||||||||||||||||
| Derivative liabilities (1) |
|
|
|
|
|
|||||||||||||||||||||||||||
| Accrued interest payable |
|
|
|
|
|
|||||||||||||||||||||||||||
(1) Derivative assets and liabilities exclude margin of $
72
million and $
3
million, respectively.
Interest rate risk
The Company assumes interest rate risk (the risk to the Company’s earnings and capital from changes in interest rate levels) as a result of its normal operations. As a result, the fair values of the Company’s financial instruments, as well as its future net interest income, will change when interest rate levels change and that change may be either favorable or unfavorable to the Company.
Interest rate risk exposure is measured using interest rate sensitivity analysis to determine the Company's change in EVE and net interest income resulting from hypothetical changes in interest rates. If potential changes to EVE and earnings resulting from hypothetical interest rate changes are not within the limits established by the BOD, the BOD may direct management to adjust the asset and liability mix to bring interest rate risk within BOD-approved limits.
WAB has an ALCO charged with managing interest rate risk within the BOD-approved limits. Limits are structured to preclude an interest rate risk profile which does not conform to both management and BOD risk tolerances without BOD and ALCO approval. Interest rate risk is also evaluated at the Parent level, which is reported to the BOD and its Finance and Investment Committee.
Fair value of commitments
The estimated fair value of letters of credit outstanding at March 31, 2025 and December 31, 2024 approximates
zero
as there have been no significant changes in borrower creditworthiness. Loan commitments on which the committed interest rates are less than the current market rate are insignificant at March 31, 2025 and December 31, 2024.
54
17. SEGMENTS
Beginning with the annual period ending December 31, 2024, the Company adopted the guidance within ASU 2023-07,
Segment Reporting (Topic 280)
, which expanded disclosure requirements for significant segment expenses and other segment items. In connection with the adoption of this guidance, the components that comprise net interest income, which include interest income, interest expense, and funds transfer pricing adjustments, are presented in separate line items in the reportable segment income statement tables below. Salaries and employee benefits are also presented separately as these expenses were previously included within total non-interest expense. Income statement information for prior periods was recast to conform to the current presentation.
The Company's reportable segments are aggregated with a focus on products and services offered and consist of
three
reportable segments:
•
Commercial: provides commercial banking and treasury management products and services to small and middle-market businesses, specialized banking services to sophisticated commercial institutions and investors within niche industries, as well as financial services to the real estate industry.
•
Consumer Related: offers both commercial banking services to enterprises in consumer-related sectors and consumer banking services, such as residential mortgage banking.
•
Corporate & Other: consists of the Company's investment portfolio, Corporate borrowings and other related items, income and expense items not allocated to other reportable segments, and inter-segment eliminations.
The Company's segment reporting process begins with the assignment of all loan and deposit accounts directly to the segments where these products are originated and/or serviced. Equity capital is assigned to each segment based on the risk profile of their assets and liabilities. With the exception of goodwill, which is assigned a
100
% weighting, equity capital allocations ranged from
0
% to
25
% during the period. Any excess or deficient equity not allocated to segments based on risk is assigned to the Corporate & Other segment.
Net interest income, provision for credit losses, and non-interest expense amounts are recorded in their respective segments to the extent the amounts are directly attributable to those segments. Net interest income is recorded in each segment on a TEB with a corresponding increase in income tax expense, which is eliminated in the Corporate & Other segment.
Further, net interest income of a reportable segment includes a funds transfer pricing process that matches assets and liabilities with similar interest rate sensitivity and maturity characteristics. Using this funds transfer pricing methodology, liquidity is transferred between users and providers. A net user of funds has lending/investing in excess of deposits/borrowings and a net provider of funds has deposits/borrowings in excess of lending/investing. A segment that is a user of funds is charged for the use of funds, while a provider of funds is credited through funds transfer pricing, which is determined based on the average estimated life of the assets or liabilities in the portfolio. Residual funds transfer pricing mismatches are allocable to the Corporate & Other segment and presented in net interest income.
The net income amount for each reportable segment is further derived by the use of expense allocations. Certain expenses not directly attributable to a specific segment are allocated across all segments based on key metrics, such as number of employees, number of transactions processed for loans and deposits, and average loan and deposit balances. These types of expenses include information technology, operations, human resources, finance, risk management, credit administration, legal, and marketing.
Income taxes are applied to each segment based on estimated effective tax rates. Any difference in the corporate tax rate and the aggregate effective tax rates in the segments are adjusted in the Corporate & Other segment.
The assignment and allocation methodologies used in the segment reporting process discussed above change from time to time as systems are enhanced, methods for evaluating segment performance or product lines change or as business segments are realigned.
55
The following is a summary of operating segment information for the periods indicated:
| Balance Sheet: | Consolidated Company | Commercial | Consumer Related | Corporate & Other | ||||||||||||||||||||||
| At March 31, 2025: | (in millions) | |||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Cash, cash equivalents, and investment securities | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Loans HFS |
|
|
|
|
||||||||||||||||||||||
| Loans HFI, net of deferred fees and costs |
|
|
|
|
||||||||||||||||||||||
| Less: allowance for credit losses |
(
|
(
|
(
|
|
||||||||||||||||||||||
| Net loans HFI |
|
|
|
|
||||||||||||||||||||||
| Goodwill and other intangible assets, net |
|
|
|
|
||||||||||||||||||||||
| Other assets |
|
|
|
|
||||||||||||||||||||||
| Total assets | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Deposits | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Borrowings and qualifying debt |
|
|
|
|
||||||||||||||||||||||
| Other liabilities |
|
|
|
|
||||||||||||||||||||||
| Total liabilities |
|
|
|
|
||||||||||||||||||||||
| Allocated equity: |
|
|
|
|
||||||||||||||||||||||
| Total liabilities and equity | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Excess funds provided (used) | $ |
|
$ |
(
|
$ |
|
$ |
(
|
||||||||||||||||||
| Income Statement: | ||||||||||||||||||||||||||
| Three Months Ended March 31, 2025: | (in millions) | |||||||||||||||||||||||||
| Interest income | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Interest expense |
|
|
|
|
||||||||||||||||||||||
| Funds transfer pricing |
|
(
|
|
(
|
||||||||||||||||||||||
| Net interest income (expense) |
|
|
|
(
|
||||||||||||||||||||||
| Provision for credit losses |
|
|
|
(
|
||||||||||||||||||||||
| Net interest income (expense) after provision for credit losses |
|
|
|
(
|
||||||||||||||||||||||
| Non-interest income |
|
|
|
|
||||||||||||||||||||||
| Salaries and employee benefits |
|
|
|
|
||||||||||||||||||||||
| Other non-interest expense (1) |
|
|
|
(
|
||||||||||||||||||||||
| Income (loss) before provision for income taxes |
|
|
|
(
|
||||||||||||||||||||||
| Income tax expense |
|
|
|
(
|
||||||||||||||||||||||
| Net income (loss) | $ |
|
$ |
|
$ |
|
$ |
(
|
||||||||||||||||||
56
| Balance Sheet: | Consolidated Company | Commercial | Consumer Related | Corporate & Other | ||||||||||||||||||||||
| At December 31, 2024: | (in millions) | |||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Cash, cash equivalents, and investment securities | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Loans HFS |
|
|
|
|
||||||||||||||||||||||
| Loans HFI, net of deferred fees and costs |
|
|
|
|
||||||||||||||||||||||
| Less: allowance for credit losses |
(
|
(
|
(
|
|
||||||||||||||||||||||
| Net loans HFI |
|
|
|
|
||||||||||||||||||||||
| Goodwill and other intangible assets, net |
|
|
|
|
||||||||||||||||||||||
| Other assets |
|
|
|
|
||||||||||||||||||||||
| Total assets | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Deposits | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Borrowings and qualifying debt |
|
|
|
|
||||||||||||||||||||||
| Other liabilities |
|
|
|
|
||||||||||||||||||||||
| Total liabilities |
|
|
|
|
||||||||||||||||||||||
| Allocated equity: |
|
|
|
|
||||||||||||||||||||||
| Total liabilities and equity | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Excess funds provided (used) | $ |
|
$ |
(
|
$ |
|
$ |
(
|
||||||||||||||||||
| Income Statement: | ||||||||||||||||||||||||||
| Three Months Ended March 31, 2024: | (in millions) | |||||||||||||||||||||||||
| Interest income | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Interest expense |
|
|
|
|
||||||||||||||||||||||
| Funds transfer pricing |
|
(
|
|
(
|
||||||||||||||||||||||
| Net interest income |
|
|
|
|
||||||||||||||||||||||
| Provision for (recovery of) credit losses |
|
|
(
|
|
||||||||||||||||||||||
| Net interest income (expense) after provision for credit losses |
|
|
|
|
||||||||||||||||||||||
| Non-interest income |
|
|
|
|
||||||||||||||||||||||
| Salaries and employee benefits |
|
|
|
|
||||||||||||||||||||||
| Other non-interest expense (1) |
|
|
|
(
|
||||||||||||||||||||||
| Income (loss) before provision for income taxes |
|
|
|
(
|
||||||||||||||||||||||
| Income tax expense (benefit) |
|
|
|
(
|
||||||||||||||||||||||
| Net income (loss) | $ |
|
$ |
|
$ |
|
$ |
(
|
||||||||||||||||||
(1) The composition of other non-interest expense is consistent with Non-interest expense as presented in the Consolidated Income Statement.
18. REVENUE FROM CONTRACTS WITH CUSTOMERS
57
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations.
This discussion is designed to provide insight into management's assessment of significant trends related to the Company's consolidated financial condition, results of operations, liquidity, capital resources, and interest rate sensitivity. This Quarterly Report on Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2024 and the interim Unaudited Consolidated Financial Statements and Notes to Unaudited Consolidated Financial Statements hereto and financial information appearing elsewhere in this report. Unless the context requires otherwise, the terms "Company," "we," and "our" refer to Western Alliance Bancorporation and its wholly-owned subsidiaries on a consolidated basis.
Forward-Looking Information
Certain statements contained in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including without limitation, statements regarding our expectations with respect to our business, financial and operating results, including our deposits, liquidity and funding, changes in economic conditions and the related impact on the Company's business, and statements that are related to or are dependent on estimates or assumptions relating to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts.
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) ability to meet capital adequacy and liquidity requirements and the sufficiency of liquidity; 20) dependence on low-cost deposits; 21) risks related to representations and warranties made on third-party loan sales; 22) ability to borrow from the FHLB or the FRB; 23) a change in our creditworthiness; 24) information security breaches; 25) reliance on third parties to provide key components of our infrastructure; 26) perpetration of fraud; 27) ability to implement and improve our controls and processes to keep pace with growth; 28) risk of operating in a highly regulated industry and our ability to remain in compliance; 29) ability to adapt to technological change; 30) failure to comply with state and federal banking agency laws and regulations; 31) results of any tax audit findings, challenges to our tax positions, or adverse changes or interpretations of tax laws; 32) risks related to ownership and price of our preferred and common stock; 33) ability to continue to declare quarterly dividends; 34) additional regulatory requirements resulting from our continued growth; 35) management's estimates and projections of interest rates and interest rate policies; and 36) the execution of our business plan.
For more information regarding risks that may cause the Company's actual results to differ materially from any forward-looking statements, see “Risk Factors” in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2024 and “Risk Factors” in Part II, Item 1A of this Form 10-Q. All forward-looking statements that are made or attributable
58
to us are expressly qualified in their entirety by this cautionary notice. The forward-looking statements included herein are only made as of the date of this Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
Recent Market and Banking Industry Developments
CRE Exposure
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.
Financial Overview and Highlights
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.
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.
Financial Results Highlights for the First Quarter of 2025
•
Net income available to common stockholders of $195.9 million, compared to $174.2 million for the first quarter 2024
•
Diluted earnings per share of $1.79, compared to $1.60 per share for the first quarter 2024
•
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
•
PPNR of $277.6 million,
up 12.4%
from $247.0 million in the first quarter 2024
1
•
Total loans HFI of $54.8 billion
, up $1.1 billion, or 2.0%
, from December 31, 2024
•
Total deposits of $69.3 billion
, up $3.0 billion, or 4.5%,
from December 31, 2024
•
Total equity of $7.2 billion
, an increase of $508 million
from December 31, 2024
•
Nonperforming assets (nonaccrual loans and repossessed assets)
decreased
to 0.60%
of total assets, compared to 0.65% at December 31, 2024
•
Annualized net loan charge-offs to average loans outstanding of 0.20%, compared to 0.08% for the first quarter 2024
•
Net interest margin of 3.47%,
decreased from 3.60%
in the first quarter 2024
•
Tangible common equity ratio of 7.2%, consistent with December 31, 2024
1
•
Book value per common share of $60.03,
an increase
o
f 3.1% from $58.24 at December 31, 2024
•
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, 2024
1
•
Efficiency ratio of 63.5% in the first quarter 2025, compared to 65.2% in the first quarter 2024
1
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.
1
See Non-GAAP Financial Measures section beginning on page 62.
59
As a bank holding company, management focuses on key ratios in evaluating the Company's financial condition and results of operations.
Results of Operations and Financial Condition
A summary of the Company's results of operations, financial condition, and selected metrics are included in the following tables:
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions, except per share amounts) | ||||||||||||||
| Net income | $ | 199.1 | $ | 177.4 | ||||||||||
| Net income available to common stockholders | 195.9 | 174.2 | ||||||||||||
| Earnings per share - basic | 1.80 | 1.61 | ||||||||||||
| Earnings per share - diluted | 1.79 | 1.60 | ||||||||||||
| Return on average assets | 0.97 | % | 0.98 | % | ||||||||||
| Return on average equity | 11.7 | 11.5 | ||||||||||||
| Return on average tangible common equity (1) | 13.4 | 13.4 | ||||||||||||
| Net interest margin | 3.47 | 3.60 | ||||||||||||
(1)
See Non-GAAP Financial Measures section beginning on page 62.
| March 31, 2025 | December 31, 2024 | |||||||||||||
| (in millions) | ||||||||||||||
| Total assets | $ | 83,043 | $ | 80,934 | ||||||||||
| Loans HFS | 3,238 | 2,286 | ||||||||||||
| Loans HFI, net of deferred fees and costs | 54,761 | 53,676 | ||||||||||||
| Investment securities, net of allowance for credit losses | 15,868 | 15,095 | ||||||||||||
| Total deposits | 69,322 | 66,341 | ||||||||||||
| Other borrowings | 4,151 | 5,573 | ||||||||||||
| Qualifying debt | 898 | 899 | ||||||||||||
| Total equity | 7,215 | 6,707 | ||||||||||||
| Tangible common equity, net of tax (1) | 5,973 | 5,755 | ||||||||||||
(1)
See Non-GAAP Financial Measures section beginning on page 62.
Asset Quality
For all banks and bank holding companies, asset quality plays a significant role in the overall financial condition of the institution and results of operations. The Company measures asset quality in terms of nonaccrual loans as a percentage of gross loans and net charge-offs as a percentage of average loans. Net charge-offs are calculated as the difference between charged-off loans and recovery payments received on previously charged-off loans. The following table summarizes the Company's key asset quality metrics for loans HFI:
| March 31, 2025 | December 31, 2024 | |||||||||||||
| (dollars in millions) | ||||||||||||||
| Nonaccrual loans | $ | 451 | $ | 476 | ||||||||||
| Repossessed assets | 51 | 52 | ||||||||||||
| Non-performing assets | 681 | 528 | ||||||||||||
| Nonaccrual loans to funded loans | 0.82 | % | 0.89 | % | ||||||||||
| Nonaccrual and repossessed assets to total assets | 0.60 | 0.65 | ||||||||||||
| Allowance for loan losses to funded loans | 0.71 | 0.70 | ||||||||||||
| Allowance for credit losses to funded loans | 0.77 | 0.77 | ||||||||||||
| Allowance for loan losses to nonaccrual loans | 86 | 79 | ||||||||||||
| Allowance for credit losses to nonaccrual loans | 94 | 87 | ||||||||||||
| Net charge-offs to average loans outstanding (1) | 0.20 | 0.18 | ||||||||||||
(1)
Annualized on an actual/actual basis for the three months ended March 31, 2025. Actual year-to-date for the year ended December 31, 2024.
60
Asset and Deposit Growth
The Company’s assets and liabilities are comprised primarily of loans and deposits. Therefore, the ability to originate new loans and attract new deposits is fundamental to the Company’s growth.
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.
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.
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.
RESULTS OF OPERATIONS
The following table sets forth a summary financial overview:
| Three Months Ended March 31, | Increase (Decrease) | |||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| (in millions, except per share amounts) | ||||||||||||||||||||
| Consolidated Income Statement Data: | ||||||||||||||||||||
| Interest income | $ | 1,095.6 | $ | 1,055.0 | $ | 40.6 | ||||||||||||||
| Interest expense | 445.0 | 456.1 | (11.1) | |||||||||||||||||
| Net interest income | 650.6 | 598.9 | 51.7 | |||||||||||||||||
| Provision for credit losses | 31.2 | 15.2 | 16.0 | |||||||||||||||||
| Net interest income after provision for credit losses | 619.4 | 583.7 | 35.7 | |||||||||||||||||
| Non-interest income | 127.4 | 129.9 | (2.5) | |||||||||||||||||
| Non-interest expense | 500.4 | 481.8 | 18.6 | |||||||||||||||||
| Income before provision for income taxes | 246.4 | 231.8 | 14.6 | |||||||||||||||||
| Income tax expense | 47.3 | 54.4 | (7.1) | |||||||||||||||||
| Net income | 199.1 | 177.4 | 21.7 | |||||||||||||||||
| Dividends on preferred stock | 3.2 | 3.2 | — | |||||||||||||||||
| Net income available to common stockholders | $ | 195.9 | $ | 174.2 | $ | 21.7 | ||||||||||||||
| Earnings per share: | ||||||||||||||||||||
| Basic | $ | 1.80 | $ | 1.61 | $ | 0.19 | ||||||||||||||
| Diluted | 1.79 | 1.60 | 0.19 | |||||||||||||||||
61
Non-GAAP Financial Measures
The following discussion and analysis contains financial information determined by methods other than those prescribed by GAAP. The Company's management uses these non-GAAP financial measures in their analysis of the Company's performance. Management believes presentation of these non-GAAP financial measures provides useful supplemental information that is essential to a complete understanding of the operating results of the Company. Since the presentation of these non-GAAP performance measures and their impact differ between companies, these non-GAAP 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.
Pre-Provision Net Revenue
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.
The following table shows the components used in the calculation of PPNR:
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions) | ||||||||||||||
| Net interest income | $ | 650.6 | $ | 598.9 | ||||||||||
| Total non-interest income | 127.4 | 129.9 | ||||||||||||
| Net revenue | $ | 778.0 | $ | 728.8 | ||||||||||
| Total non-interest expense | 500.4 | 481.8 | ||||||||||||
| Pre-provision net revenue | $ | 277.6 | $ | 247.0 | ||||||||||
| Less: | ||||||||||||||
| Provision for credit losses | 31.2 | 15.2 | ||||||||||||
| Income tax expense | 47.3 | 54.4 | ||||||||||||
| Net income | $ | 199.1 | $ | 177.4 | ||||||||||
Efficiency Ratio
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:
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (dollars in millions) | |||||||||||
| Total non-interest expense | $ | 500.4 | $ | 481.8 | |||||||
| Less: Deposit costs | 136.8 | 137.0 | |||||||||
| Total non-interest expense, excluding deposit costs | 363.6 | 344.8 | |||||||||
| Divided by: | |||||||||||
| Total net interest income | 650.6 | 598.9 | |||||||||
| Plus: | |||||||||||
| Tax equivalent interest adjustment | 10.2 | 9.6 | |||||||||
| Total non-interest income | 127.4 | 129.9 | |||||||||
| Less: Deposit costs | 136.8 | 137.0 | |||||||||
| $ | 651.4 | $ | 601.4 | ||||||||
| Efficiency ratio - tax equivalent basis | 63.5 | % | 65.2 | % | |||||||
| Efficiency ratio - tax equivalent basis, adjusted for deposit costs | 55.8 | 57.3 | |||||||||
62
Tangible Common Equity and Return on Average Tangible Common Equity
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.
| March 31, 2025 | December 31, 2024 | ||||||||||
| (dollars and shares in millions) | |||||||||||
| Total stockholders' equity | $ | 7,215 | $ | 6,707 | |||||||
| Less: | |||||||||||
| Goodwill and intangible assets | 656 | 659 | |||||||||
| Preferred stock | 295 | 295 | |||||||||
| Noncontrolling interest in subsidiary | 293 | — | |||||||||
| Total tangible common stockholders' equity | 5,971 | 5,753 | |||||||||
| Plus: deferred tax - attributed to intangible assets | 2 | 2 | |||||||||
| Total tangible common equity, net of tax | $ | 5,973 | $ | 5,755 | |||||||
| Total assets | $ | 83,043 | $ | 80,934 | |||||||
| Less: goodwill and intangible assets, net | 656 | 659 | |||||||||
| Tangible assets | 82,387 | 80,275 | |||||||||
| Plus: deferred tax - attributed to intangible assets | 2 | 2 | |||||||||
| Total tangible assets, net of tax | $ | 82,389 | $ | 80,277 | |||||||
| Tangible common equity ratio | 7.2 | % | 7.2 | % | |||||||
| Common shares outstanding | 110.4 | 110.1 | |||||||||
| Book value per common share | $ | 60.03 | $ | 58.24 | |||||||
| Tangible book value per common share, net of tax | 54.10 | 52.27 | |||||||||
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (dollars in millions) | |||||||||||
| Net income available to common stockholders | $ | 195.9 | $ | 174.2 | |||||||
| Divided by: | |||||||||||
| Average stockholders' equity | $ | 6,899 | $ | 6,184 | |||||||
| Less: | |||||||||||
| Average goodwill and intangible assets | 658 | 668 | |||||||||
| Average preferred stock | 295 | 295 | |||||||||
| Average noncontrolling interest in subsidiary | 16 | — | |||||||||
| Average tangible common equity | $ | 5,930 | $ | 5,221 | |||||||
| Return on average tangible common equity | 13.4 | % | 13.4 | % | |||||||
63
Regulatory Capital
The following table presents certain financial measures related to regulatory capital under Basel III, which includes CET1 and total capital. The FRB and other banking regulators use CET1 and total capital as a basis for assessing a bank's capital adequacy; therefore, management believes it is useful to assess financial condition and capital adequacy using this same basis. Specifically, the total capital ratio takes into consideration the risk levels of assets and off-balance sheet financial instruments. In addition, management believes that the classified assets to CET1 plus allowance measure is an important regulatory metric for assessing asset quality.
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.
| March 31, 2025 | December 31, 2024 | ||||||||||
| (dollars in millions) | |||||||||||
| Common equity tier 1: | |||||||||||
| Common equity | $ | 6,627 | $ | 6,425 | |||||||
| Less: | |||||||||||
| Non-qualifying goodwill and intangibles | 640 | 644 | |||||||||
| Disallowed deferred tax asset | 40 | 4 | |||||||||
| AOCI related adjustments | (481) | (535) | |||||||||
| Unrealized gain on changes in fair value liabilities | 3 | 1 | |||||||||
| Common equity tier 1 | $ | 6,425 | $ | 6,311 | |||||||
| Divided by: Risk-weighted assets | $ | 57,699 | $ | 56,019 | |||||||
| Common equity tier 1 ratio | 11.1 | % | 11.3 | % | |||||||
| Common equity tier 1 | $ | 6,425 | $ | 6,311 | |||||||
| Plus: Preferred stock, trust preferred securities, and noncontrolling interest | 669 | 376 | |||||||||
| Tier 1 capital | $ | 7,094 | $ | 6,687 | |||||||
| Divided by: Tangible average assets | $ | 82,868 | $ | 82,691 | |||||||
| Tier 1 leverage ratio | 8.6 | % | 8.1 | % | |||||||
| Total capital: | |||||||||||
| Tier 1 capital | $ | 7,094 | $ | 6,687 | |||||||
| Plus: | |||||||||||
| Subordinated debt | 820 | 819 | |||||||||
| Adjusted allowances for credit losses | 435 | 416 | |||||||||
| Tier 2 capital | $ | 1,255 | $ | 1,235 | |||||||
| Total capital | $ | 8,349 | $ | 7,922 | |||||||
| Total capital ratio | 14.5 | % | 14.1 | % | |||||||
| Classified assets to tier 1 capital plus allowance: | |||||||||||
| Classified assets | $ | 1,195 | $ | 1,009 | |||||||
| Divided by: Tier 1 capital | 7,094 | 6,687 | |||||||||
| Plus: Adjusted allowances for credit losses | 435 | 416 | |||||||||
| Total Tier 1 capital plus adjusted allowances for credit losses | $ | 7,529 | $ | 7,103 | |||||||
| Classified assets to tier 1 capital plus allowance | 15.9 | % | 14.2 | % | |||||||
64
Net Interest Margin
The net interest margin is reported on a TEB. A tax equivalent adjustment is added to reflect interest earned on certain securities and loans that are exempt from federal and state income tax. The following tables set forth the average balances, interest income, interest expense, and average yield (on a fully TEB) for the periods indicated:
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||||||||
|
Average
Balance |
Interest |
Average
Yield / Cost |
Average
Balance |
Interest |
Average
Yield / Cost |
|||||||||||||||||||||||||||||||||
| (dollars in millions) | ||||||||||||||||||||||||||||||||||||||
| Interest earning assets | ||||||||||||||||||||||||||||||||||||||
| Loans HFS | $ | 4,300 | $ | 66.6 | 6.28 | % | $ | 2,416 | $ | 39.1 | 6.51 | % | ||||||||||||||||||||||||||
| Loans HFI: | ||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | 22,831 | 365.8 | 6.56 | 18,745 | 345.7 | 7.48 | ||||||||||||||||||||||||||||||||
| CRE - non-owner occupied | 10,011 | 175.1 | 7.10 | 9,468 | 185.1 | 7.87 | ||||||||||||||||||||||||||||||||
| CRE - owner occupied | 1,880 | 28.7 | 6.30 | 1,808 | 26.8 | 6.06 | ||||||||||||||||||||||||||||||||
| Construction and land development | 4,407 | 91.8 | 8.45 | 4,922 | 117.1 | 9.57 | ||||||||||||||||||||||||||||||||
| Residential real estate | 14,346 | 152.2 | 4.30 | 14,722 | 157.0 | 4.29 | ||||||||||||||||||||||||||||||||
| Consumer | 46 | 0.8 | 6.69 | 61 | 1.1 | 7.28 | ||||||||||||||||||||||||||||||||
| Total loans HFI (1), (2), (3) | 53,521 | 814.4 | 6.20 | 49,726 | 832.8 | 6.77 | ||||||||||||||||||||||||||||||||
| Investment securities: | ||||||||||||||||||||||||||||||||||||||
| Taxable | 13,020 | 143.5 | 4.47 | 10,717 | 121.1 | 4.54 | ||||||||||||||||||||||||||||||||
| Tax-exempt | 2,255 | 24.5 | 5.52 | 2,205 | 22.9 | 5.24 | ||||||||||||||||||||||||||||||||
| Total investment securities (1) | 15,275 | 168.0 | 4.63 | 12,922 | 144.0 | 4.66 | ||||||||||||||||||||||||||||||||
| Cash and other | 4,083 | 46.6 | 4.63 | 2,953 | 39.1 | 5.33 | ||||||||||||||||||||||||||||||||
| Total interest earning assets | 77,179 | 1,095.6 | 5.81 | 68,017 | 1,055.0 | 6.29 | ||||||||||||||||||||||||||||||||
| Non-interest earning assets | ||||||||||||||||||||||||||||||||||||||
| Cash and due from banks | 331 | 285 | ||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | (397) | (349) | ||||||||||||||||||||||||||||||||||||
| Bank owned life insurance | 1,015 | 186 | ||||||||||||||||||||||||||||||||||||
| Other assets | 4,720 | 4,542 | ||||||||||||||||||||||||||||||||||||
| Total assets | $ | 82,848 | $ | 72,681 | ||||||||||||||||||||||||||||||||||
| Interest bearing liabilities | ||||||||||||||||||||||||||||||||||||||
| Interest bearing deposits: | ||||||||||||||||||||||||||||||||||||||
| Interest bearing demand accounts | $ | 15,870 | $ | 99.9 | 2.55 | % | $ | 16,348 | $ | 122.0 | 3.00 | % | ||||||||||||||||||||||||||
| Savings and money market accounts | 21,206 | 164.8 | 3.15 | 15,247 | 129.9 | 3.43 | ||||||||||||||||||||||||||||||||
| Certificates of deposit | 10,018 | 113.6 | 4.60 | 10,129 | 128.7 | 5.11 | ||||||||||||||||||||||||||||||||
| Total interest bearing deposits | 47,094 | 378.3 | 3.26 | 41,724 | 380.6 | 3.67 | ||||||||||||||||||||||||||||||||
| Short-term borrowings | 1,722 | 20.8 | 4.89 | 3,715 | 53.8 | 5.82 | ||||||||||||||||||||||||||||||||
| Long-term debt | 2,652 | 36.6 | 5.60 | 444 | 12.2 | 11.06 | ||||||||||||||||||||||||||||||||
| Qualifying debt | 899 | 9.3 | 4.18 | 895 | 9.5 | 4.28 | ||||||||||||||||||||||||||||||||
| Total interest bearing liabilities | 52,367 | 445.0 | 3.45 | 46,778 | 456.1 | 3.92 | ||||||||||||||||||||||||||||||||
| Interest cost of funding earning assets | 2.34 | 2.69 | ||||||||||||||||||||||||||||||||||||
| Non-interest bearing liabilities | ||||||||||||||||||||||||||||||||||||||
| Non-interest bearing deposits | 22,097 | 18,183 | ||||||||||||||||||||||||||||||||||||
| Other liabilities | 1,485 | 1,536 | ||||||||||||||||||||||||||||||||||||
| Equity | 6,899 | 6,184 | ||||||||||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 82,848 | $ | 72,681 | ||||||||||||||||||||||||||||||||||
| Net interest income and margin (4) | $ | 650.6 | 3.47 | % | $ | 598.9 | 3.60 | % | ||||||||||||||||||||||||||||||
(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.
(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.
(3)
Includes non-accrual loans.
(4)
Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis.
65
| Three Months Ended March 31, | ||||||||||||||||||||
| 2025 versus 2024 | ||||||||||||||||||||
| Increase (Decrease) Due to Changes in (1) | ||||||||||||||||||||
| Volume | Rate | Total | ||||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Interest income: | ||||||||||||||||||||
| Loans HFS | $ | 29.2 | $ | (1.7) | $ | 27.5 | ||||||||||||||
| Loans HFI: | ||||||||||||||||||||
| Commercial and industrial | 65.5 | (45.4) | 20.1 | |||||||||||||||||
| CRE - non-owner occupied | 9.5 | (19.5) | (10.0) | |||||||||||||||||
| CRE - owner-occupied | 1.1 | 0.8 | 1.9 | |||||||||||||||||
| Construction and land development | (10.7) | (14.6) | (25.3) | |||||||||||||||||
| Residential real estate | (4.0) | (0.8) | (4.8) | |||||||||||||||||
| Consumer | (0.3) | — | (0.3) | |||||||||||||||||
| Total loans HFI | 61.1 | (79.5) | (18.4) | |||||||||||||||||
| Investment securities: | ||||||||||||||||||||
| Taxable | 25.4 | (3.0) | 22.4 | |||||||||||||||||
| Tax-exempt | 0.5 | 1.1 | 1.6 | |||||||||||||||||
| Total investment securities | 25.9 | (1.9) | 24.0 | |||||||||||||||||
| Cash and other | 12.9 | (5.4) | 7.5 | |||||||||||||||||
| Total interest income | 129.1 | (88.5) | 40.6 | |||||||||||||||||
| Interest expense: | ||||||||||||||||||||
| Interest bearing demand accounts | (3.0) | (19.1) | (22.1) | |||||||||||||||||
| Savings and money market accounts | 46.3 | (11.4) | 34.9 | |||||||||||||||||
| Certificates of deposit | (1.3) | (13.8) | (15.1) | |||||||||||||||||
| Total deposits | 42.0 | (44.3) | (2.3) | |||||||||||||||||
| Short-term borrowings | (24.1) | (8.9) | (33.0) | |||||||||||||||||
| Long-term debt | 30.5 | (6.1) | 24.4 | |||||||||||||||||
| Qualifying debt | — | (0.2) | (0.2) | |||||||||||||||||
| Total interest expense | 48.4 | (59.5) | (11.1) | |||||||||||||||||
| Net change | $ | 80.7 | $ | (29.0) | $ | 51.7 | ||||||||||||||
(1) Changes attributable to both volume and rate are designated as volume changes.
Comparison of interest income, interest expense and net interest margin
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.
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.
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.
66
Provision for Credit Losses
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.
Non-interest Income
The following table presents a summary of non-interest income:
| Three Months Ended March 31, | Increase (Decrease) | |||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Service charges and loan fees | $ | 37.2 | $ | 16.4 | $ | 20.8 | ||||||||||||||
| Net gain on loan origination and sale activities | 49.5 | 45.3 | 4.2 | |||||||||||||||||
| Net loan servicing revenue | 21.8 | 46.4 | (24.6) | |||||||||||||||||
| Income from bank owned life insurance | 11.4 | 1.0 | 10.4 | |||||||||||||||||
| Gain (loss) on sales of investment securities | 2.1 | (0.9) | 3.0 | |||||||||||||||||
| Fair value gain adjustments, net | 1.0 | 0.3 | 0.7 | |||||||||||||||||
| (Loss) income from equity investments | (4.8) | 17.1 | (21.9) | |||||||||||||||||
| Other income | 9.2 | 4.3 | 4.9 | |||||||||||||||||
| Total non-interest income | $ | 127.4 | $ | 129.9 | $ | (2.5) | ||||||||||||||
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.
67
Non-interest Expense
The following table presents a summary of non-interest expense:
| Three Months Ended March 31, | Increase (Decrease) | ||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| (in millions) | |||||||||||||||||
| Salaries and employee benefits | $ | 182.4 | $ | 154.9 | $ | 27.5 | |||||||||||
| Deposit costs | 136.8 | 137.0 | (0.2) | ||||||||||||||
| Data processing | 45.2 | 36.0 | 9.2 | ||||||||||||||
| Insurance | 37.9 | 58.9 | (21.0) | ||||||||||||||
| Legal, professional, and directors' fees | 28.9 | 30.1 | (1.2) | ||||||||||||||
| Occupancy | 17.2 | 17.5 | (0.3) | ||||||||||||||
| Loan servicing expenses | 16.4 | 15.0 | 1.4 | ||||||||||||||
| Business development and marketing | 5.9 | 5.5 | 0.4 | ||||||||||||||
| Loan acquisition and origination expenses | 5.2 | 4.8 | 0.4 | ||||||||||||||
| Other expense | 24.5 | 22.1 | 2.4 | ||||||||||||||
| Total non-interest expense | $ | 500.4 | $ | 481.8 | $ | 18.6 | |||||||||||
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.
Income Taxes
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.
68
Business Segment Results
The Company's reportable segments are aggregated with a focus on products and services offered and consist of three reportable segments:
•
Commercial: provides commercial banking and treasury management products and services to small and middle-market businesses, specialized banking services to sophisticated commercial institutions and investors within niche industries, as well as financial services to the real estate industry.
•
Consumer Related: offers both commercial banking services to enterprises in consumer-related sectors and consumer banking services, such as residential mortgage banking.
•
Corporate & Other: consists of the Company's investment portfolio, Corporate borrowings and other related items, income and expense items not allocated to other reportable segments, and inter-segment eliminations.
The following tables present selected reportable segment information:
| Consolidated Company | Commercial | Consumer Related | Corporate & Other | |||||||||||||||||||||||
| At March 31, 2025 | (in millions) | |||||||||||||||||||||||||
| Loans HFI, net of deferred fees and costs | $ | 54,761 | $ | 32,529 | $ | 22,232 | $ | — | ||||||||||||||||||
| Deposits | 69,322 | 25,099 | 37,636 | 6,587 | ||||||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||
| Loans HFI, net of deferred fees and costs | $ | 53,676 | $ | 31,544 | $ | 22,132 | $ | — | ||||||||||||||||||
| Deposits | 66,341 | 25,487 | 33,767 | 7,087 | ||||||||||||||||||||||
| Three Months Ended March 31, 2025 | (in millions) | |||||||||||||||||||||||||
| Income (loss) before provision for income taxes | $ | 246.4 | $ | 146.6 | $ | 164.0 | $ | (64.2) | ||||||||||||||||||
| Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||
| Income (loss) before provision for income taxes | $ | 231.8 | $ | 144.0 | $ | 92.9 | $ | (5.1) | ||||||||||||||||||
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BALANCE SHEET ANALYSIS
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.
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.
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.
Investment securities
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.
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.
The following table summarizes the carrying value of the Company's investment securities portfolio:
| March 31, 2025 | December 31, 2024 |
Increase
(Decrease) |
||||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Debt securities | ||||||||||||||||||||
| Residential MBS issued by GSEs and GNMA | $ | 6,555 | $ | 5,831 | $ | 724 | ||||||||||||||
| U.S. Treasury securities | 4,016 | 4,383 | (367) | |||||||||||||||||
| Tax-exempt | 2,187 | 2,195 | (8) | |||||||||||||||||
| Private label residential MBS | 1,132 | 1,123 | 9 | |||||||||||||||||
| CLO | 876 | 570 | 306 | |||||||||||||||||
| Commercial MBS issued by GSEs and GNMA | 546 | 437 | 109 | |||||||||||||||||
| Corporate debt securities | 385 | 386 | (1) | |||||||||||||||||
| Other | 70 | 69 | 1 | |||||||||||||||||
| Total debt securities | $ | 15,767 | $ | 14,994 | $ | 773 | ||||||||||||||
| Equity securities | ||||||||||||||||||||
| Preferred stock | $ | 86 | $ | 91 | $ | (5) | ||||||||||||||
| CRA investments | 27 | 26 | 1 | |||||||||||||||||
| Total equity securities | $ | 113 | $ | 117 | $ | (4) | ||||||||||||||
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.
70
Loans HFS
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.
Loans HFI
The table below summarizes the distribution of the Company’s held for investment loan portfolio:
| March 31, 2025 | December 31, 2024 |
Increase
(Decrease) |
||||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Warehouse lending | $ | 8,186 | $ | 8,207 | $ | (21) | ||||||||||||||
| Municipal & nonprofit | 1,621 | 1,620 | 1 | |||||||||||||||||
| Tech & innovation | 3,427 | 3,383 | 44 | |||||||||||||||||
| Equity fund resources | 865 | 884 | (19) | |||||||||||||||||
| Other commercial and industrial | 10,159 | 9,175 | 984 | |||||||||||||||||
| CRE - owner occupied | 1,637 | 1,675 | (38) | |||||||||||||||||
| Hotel franchise finance | 3,894 | 3,815 | 79 | |||||||||||||||||
| Other CRE - non-owner occupied | 6,391 | 6,342 | 49 | |||||||||||||||||
| Residential | 13,007 | 12,961 | 46 | |||||||||||||||||
| Residential - EBO | 918 | 972 | (54) | |||||||||||||||||
| Construction and land development | 4,491 | 4,468 | 23 | |||||||||||||||||
| Other | 165 | 174 | (9) | |||||||||||||||||
| Total loans HFI | 54,761 | 53,676 | 1,085 | |||||||||||||||||
| Allowance for credit losses | (389) | (374) | (15) | |||||||||||||||||
| Total loans HFI, net of allowance | $ | 54,372 | $ | 53,302 | $ | 1,070 | ||||||||||||||
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.
Concentrations of Lending Activities
The Company monitors concentrations of lending activities at the product and borrower relationship level. As of March 31, 2025 and December 31, 2024, no borrower relationships at both the commitment and funded loan level exceeded 5% of total loans HFI.
Commercial and industrial loans made up 44% and 43% of total loans HFI as of March 31, 2025 and December 31, 2024, respectively.
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.
71
The following tables present the composition by property type and weighted average LTV of the Company’s CRE non-owner occupied loans:
| March 31, 2025 | |||||||||||||||||||||||
| Amount | Percent of CRE-Non OO | Percent of Total HFI Loans | Weighted Average LTV (1) | ||||||||||||||||||||
| (dollars in millions) | |||||||||||||||||||||||
| Hotel | $ | 4,239 | 42.2 | % | 7.7 | % | 46.0 | % | |||||||||||||||
| Office | 2,377 | 23.7 | 4.3 | 69.4 | |||||||||||||||||||
| Retail | 781 | 7.8 | 1.4 | 55.5 | |||||||||||||||||||
| Multifamily | 648 | 6.4 | 1.2 | 39.0 | |||||||||||||||||||
| Industrial | 579 | 5.8 | 1.1 | 36.0 | |||||||||||||||||||
| Time share | 499 | 5.0 | 0.9 | 37.3 | |||||||||||||||||||
| Medical | 147 | 1.4 | 0.3 | 61.9 | |||||||||||||||||||
| Senior care | 98 | 1.0 | 0.2 | 39.6 | |||||||||||||||||||
| Other | 672 | 6.7 | 1.2 | 49.8 | |||||||||||||||||||
| Total CRE - non-owner occupied | $ | 10,040 | 100.0 | % | 18.3 | % | 51.2 | % | |||||||||||||||
(1) The weighted average LTVs in the above table are based on the most recent available information, if current appraisals are not available
.
| December 31, 2024 | |||||||||||||||||||||||
| Amount | Percent of CRE-Non OO | Percent of Total HFI Loans | Weighted Average LTV (1) | ||||||||||||||||||||
| (dollars in millions) | |||||||||||||||||||||||
| Hotel | $ | 4,167 | 42.3 | % | 7.8 | % | 46.7 | % | |||||||||||||||
| Office | 2,337 | 23.7 | 4.4 | 69.0 | |||||||||||||||||||
| Retail | 783 | 7.9 | 1.4 | 55.7 | |||||||||||||||||||
| Multifamily | 632 | 6.4 | 1.2 | 40.7 | |||||||||||||||||||
| Industrial | 580 | 5.9 | 1.1 | 38.9 | |||||||||||||||||||
| Time share | 467 | 4.7 | 0.9 | 33.6 | |||||||||||||||||||
| Medical | 145 | 1.5 | 0.3 | 61.5 | |||||||||||||||||||
| Senior care | 142 | 1.4 | 0.2 | 41.2 | |||||||||||||||||||
| Other | 615 | 6.2 | 1.1 | 50.2 | |||||||||||||||||||
| Total CRE - non-owner occupied | $ | 9,868 | 100.0 | % | 18.4 | % | 51.6 | % | |||||||||||||||
(1) The weighted average LTVs in the above table are based on the most recent available information, if current appraisals are not available
.
The following table presents the Company’s CRE non-owner occupied loans by origination year as of March 31, 2025:
| Origination Year | |||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Total | |||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||
| CRE - non-owner occupied | $ | 2,632 | $ | 1,690 | $ | 3,514 | $ | 960 | $ | 950 | $ | 294 | $ | 10,040 | |||||||||||||||||||||||||||
The following table presents the scheduled maturities of the Company’s CRE non-owner occupied loans as of March 31, 2025:
| (in millions) | |||||
| 2025 | $ | 2,187 | |||
| 2026 | 2,620 | ||||
| 2027 | 2,379 | ||||
| 2028 | 1,268 | ||||
| 2029 | 804 | ||||
| Thereafter | 782 | ||||
| Total | $ | 10,040 | |||
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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.
The office loan portfolio largely consists of value-add loans that require significant up-front cash equity contributions from institutional sponsors and large regional and national developers. The properties underlying these loans have stable business trends and low vacancy rates. To a large extent, the financing structures of these loans do not carry junior liens or mezzanine debt, which enables maximum flexibility when working with clients and sponsors. In addition to adhering to conservative underwriting standards, asset-specific credit risk is mitigated through continued sponsor support of projects by re-appraisal rights of the Company, re-margining requirements and ongoing debt service, and debt yield covenants.
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%.
Non-performing Assets
Total non-performing loans increased $26 million to $630 million at March 31, 2025, from $604 million at December 31, 2024.
| March 31, 2025 | December 31, 2024 | |||||||||||||
| (dollars in millions) | ||||||||||||||
| Total nonaccrual loans (1) | $ | 451 | $ | 476 | ||||||||||
| Loans past due 90 days or more on accrual status (2) | 44 | — | ||||||||||||
| Accruing restructured loans | 135 | 128 | ||||||||||||
| Total nonperforming loans | $ | 630 | $ | 604 | ||||||||||
| Other assets acquired through foreclosure, net | $ | 51 | $ | 52 | ||||||||||
| Nonaccrual HFI loans to funded HFI loans | 0.82 | % | 0.89 | % | ||||||||||
| Loans past due 90 days or more on accrual status to funded loans HFI (2) | 0.08 | — | ||||||||||||
(1)
Includes loan modifications to borrowers experiencing financial difficulty of $164 million and $169 million at March 31, 2025 and December 31, 2024, respectively.
(2)
Excludes government guaranteed residential mortgage loans of $275 million and $326 million at March 31, 2025 and December 31, 2024, respectively.
Interest income that would have been recorded under the original terms of nonaccrual loans was $8.0 million and $4.9 million for the three months ended March 31, 2025 and 2024, respectively.
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The composition of nonaccrual loans HFI by loan portfolio segment were as follows:
| March 31, 2025 | ||||||||||||||||||||
|
Nonaccrual
Balance |
Percent of Nonaccrual Balance |
Percent of
Total Loans HFI |
||||||||||||||||||
| (dollars in millions) | ||||||||||||||||||||
| Municipal & nonprofit | $ | 5 | 1.1 | % | 0.01 | % | ||||||||||||||
| Tech & innovation | 38 | 8.4 | 0.07 | |||||||||||||||||
| Equity fund resources | 1 | 0.2 | 0.00 | |||||||||||||||||
| Other commercial and industrial | 39 | 8.7 | 0.07 | |||||||||||||||||
| CRE - owner occupied | 3 | 0.7 | 0.01 | |||||||||||||||||
| Other CRE - non-owner occupied | 253 | 56.1 | 0.46 | |||||||||||||||||
| Residential | 23 | 5.1 | 0.04 | |||||||||||||||||
| Construction and land development | 87 | 19.3 | 0.16 | |||||||||||||||||
| Other | 2 | 0.4 | 0.00 | |||||||||||||||||
| Total non-accrual loans | $ | 451 | 100.0 | % | 0.82 | % | ||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
|
Nonaccrual
Balance |
Percent of Nonaccrual Balance |
Percent of
Total Loans HFI |
||||||||||||||||||
| (dollars in millions) | ||||||||||||||||||||
| Municipal & nonprofit | $ | 5 | 1.0 | % | 0.01 | % | ||||||||||||||
| Tech & innovation | 60 | 12.6 | 0.11 | |||||||||||||||||
| Equity fund resources | 1 | 0.2 | 0.00 | |||||||||||||||||
| Other commercial and industrial | 17 | 3.6 | 0.03 | |||||||||||||||||
| CRE - owner occupied | 5 | 1.0 | 0.01 | |||||||||||||||||
| Other CRE - non-owner occupied | 243 | 51.1 | 0.45 | |||||||||||||||||
| Residential | 88 | 18.5 | 0.17 | |||||||||||||||||
| Construction and land development | 56 | 11.8 | 0.11 | |||||||||||||||||
| Other | 1 | 0.2 | 0.00 | |||||||||||||||||
| Total non-accrual loans | $ | 476 | 100.0 | % | 0.89 | % | ||||||||||||||
Restructurings for Borrowers Experiencing Financial Difficulty
The following tables present the amortized cost basis of loans HFI that were modified during the period by loan portfolio segment:
| Amortized Cost Basis at March 31, 2025 | ||||||||||||||||||||||||||||||||
| Term Extension | Interest Rate Reduction | Payment Delay | Total | % of Total Class of Financing Receivable | ||||||||||||||||||||||||||||
| Three Months Ended | (in millions) | |||||||||||||||||||||||||||||||
| Tech & innovation | $ | 5 | $ | 1 | $ | 18 | $ | 24 | 0.7 | % | ||||||||||||||||||||||
| Other commercial and industrial | — | — | 85 | 85 | 0.8 | |||||||||||||||||||||||||||
| Other CRE - non-owner occupied | 46 | — | 107 | 153 | 2.4 | |||||||||||||||||||||||||||
| Construction and land development | — | — | 37 | 37 | 0.8 | |||||||||||||||||||||||||||
| Total | $ | 51 | $ | 1 | $ | 247 | $ | 299 | 0.5 | % | ||||||||||||||||||||||
| Amortized Cost Basis at March 31, 2024 | ||||||||||||||||||||||||||||||||
| Term Extension | Interest Rate Reduction | Payment Delay | Total | % of Total Class of Financing Receivable | ||||||||||||||||||||||||||||
| Three Months Ended | (dollars in millions) | |||||||||||||||||||||||||||||||
| Tech & innovation | $ | — | $ | — | $ | 30 | $ | 30 | 1.0 | % | ||||||||||||||||||||||
| Other commercial and industrial | 8 | — | — | 8 | 0.1 | |||||||||||||||||||||||||||
| CRE - owner occupied | 31 | — | — | 31 | 1.8 | |||||||||||||||||||||||||||
| Construction and land development | 39 | — | — | 39 | 0.8 | |||||||||||||||||||||||||||
| Total | $ | 78 | $ | — | $ | 30 | $ | 108 | 0.2 | % | ||||||||||||||||||||||
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The performance of these modified loans is monitored for 12 months following the modification. As of March 31, 2025, modified loans of $135 million were current with contractual payments and $164 million were on nonaccrual status. As of December 31, 2024, modified loans of $128 million were current with contractual payments and $169 million were on nonaccrual status.
In the normal course of business, the Company also modifies EBO loans, which are delinquent FHA, VA, or USDA insured or guaranteed loans repurchased under the terms of the GNMA MBS program and can be repooled or resold when loans are brought current either through the borrower's reperformance or completion of a loan modification. During the three months ended March 31, 2025 and 2024, the Company completed modifications of EBO loans with an amortized cost of $147 million and $90 million, respectively. These modifications consisted of term extensions, payment delays, and interest rate reductions. Certain of these loans were repooled or resold after modification and are no longer included in the pool of loan modifications being monitored for future performance. As of March 31, 2025, modified EBO loans consisted of $37 million in loans that were current to 89 days delinquent and $12 million in loans 90 days or more delinquent. As of December 31, 2024, modified EBO loans consisted of $29 million in loans that were current to 89 days delinquent and $11 million in loans 90 days or more delinquent.
Allowance for Credit Losses on Loans HFI
The ACL consists of an ACL on loans and on unfunded loan commitments. The ACL on AFS and HTM securities is estimated separately from loans and is discussed within the Investment Securities section.
The following table summarizes the allocation of the ACL on loans HFI by loan portfolio segment:
| March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | Percent of total allowance for credit losses | Percent of loan type to total loans HFI | Allowance for credit losses | Percent of total allowance for credit losses | Percent of loan type to total loans HFI | |||||||||||||||||||||||||||||||||
| (dollars in millions) | ||||||||||||||||||||||||||||||||||||||
| Warehouse lending | $ | 6.3 | 1.6 | % | 14.9 | % | $ | 6.4 | 1.7 | % | 15.3 | % | ||||||||||||||||||||||||||
| Municipal & nonprofit | 14.8 | 3.8 | 2.9 | 14.7 | 3.9 | 3.0 | ||||||||||||||||||||||||||||||||
| Tech & innovation | 44.9 | 11.6 | 6.3 | 55.9 | 15.0 | 6.3 | ||||||||||||||||||||||||||||||||
| Equity fund resources | 1.4 | 0.4 | 1.6 | 1.6 | 0.4 | 1.7 | ||||||||||||||||||||||||||||||||
| Other commercial and industrial | 91.7 | 23.6 | 18.6 | 77.8 | 20.8 | 17.1 | ||||||||||||||||||||||||||||||||
| CRE - owner occupied | 3.7 | 1.0 | 3.0 | 3.4 | 0.9 | 3.1 | ||||||||||||||||||||||||||||||||
| Hotel franchise finance | 33.2 | 8.5 | 7.1 | 35.3 | 9.4 | 7.1 | ||||||||||||||||||||||||||||||||
| Other CRE - non-owner occupied | 138.1 | 35.5 | 11.7 | 134.4 | 36.0 | 11.8 | ||||||||||||||||||||||||||||||||
| Residential | 19.7 | 5.1 | 23.7 | 19.7 | 5.3 | 24.1 | ||||||||||||||||||||||||||||||||
| Residential - EBO | — | — | 1.7 | — | — | 1.8 | ||||||||||||||||||||||||||||||||
| Construction and land development | 32.0 | 8.2 | 8.2 | 21.3 | 5.7 | 8.4 | ||||||||||||||||||||||||||||||||
| Other | 2.8 | 0.7 | 0.3 | 3.3 | 0.9 | 0.3 | ||||||||||||||||||||||||||||||||
| Total | $ | 388.6 | 100.0 | % | 100.0 | % | $ | 373.8 | 100.0 | % | 100.0 | % | ||||||||||||||||||||||||||
During the three months ended March 31, 2025 and 2024, annualized net loan charge-offs to average loans outstanding were 0.20% and 0.08%, respectively.
In addition to the ACL on funded loans HFI, the Company maintains a separate ACL related to off-balance sheet credit exposures, including unfunded loan commitments. This allowance balance totaled $35.1 million and $39.5 million at March 31, 2025 and December 31, 2024, respectively, and is included in Other liabilities on the Consolidated Balance Sheet.
75
Problem Loans
The Company classifies loans consistent with federal banking regulations using a nine category grading system. The following table presents information regarding potential and actual problem loans, consisting of loans graded as Special Mention, Substandard, Doubtful, and Loss, but which are still performing:
| March 31, 2025 | ||||||||||||||||||||||||||
| Number of Loans | Problem Loan Balance | Percent of Problem Loan Balance | Percent of Total Loans HFI | |||||||||||||||||||||||
| (dollars in millions) | ||||||||||||||||||||||||||
| Municipal & nonprofit | 2 | $ | 18 | 3.5 | % | 0.03 | % | |||||||||||||||||||
| Other commercial and industrial | 88 | 60 | 11.8 | 0.11 | ||||||||||||||||||||||
| CRE - owner occupied | 7 | 4 | 0.8 | 0.01 | ||||||||||||||||||||||
| Hotel franchise finance | 8 | 142 | 28.0 | 0.26 | ||||||||||||||||||||||
| Other CRE - non-owner occupied | 6 | 213 | 41.9 | 0.39 | ||||||||||||||||||||||
| Residential | 65 | 42 | 8.3 | 0.08 | ||||||||||||||||||||||
| Construction and land development | 3 | 27 | 5.3 | 0.05 | ||||||||||||||||||||||
| Other | 31 | 2 | 0.4 | 0.00 | ||||||||||||||||||||||
| Total | 210 | $ | 508 | 100.0 | % | 0.93 | % | |||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| Number of Loans | Problem Loan Balance | Percent of Problem Loan Balance | Percent of Total Loans HFI | |||||||||||||||||||||||
| (dollars in millions) | ||||||||||||||||||||||||||
| Municipal & nonprofit | 2 | $ | 18 | 3.7 | % | 0.03 | % | |||||||||||||||||||
| Other commercial and industrial | 89 | 121 | 24.8 | 0.23 | ||||||||||||||||||||||
| CRE - owner occupied | 9 | 7 | 1.4 | 0.01 | ||||||||||||||||||||||
| Hotel franchise finance | 8 | 112 | 22.9 | 0.21 | ||||||||||||||||||||||
| Other CRE - non-owner occupied | 9 | 136 | 27.8 | 0.25 | ||||||||||||||||||||||
| Residential | 169 | 92 | 18.8 | 0.17 | ||||||||||||||||||||||
| Other | 33 | 3 | 0.6 | 0.01 | ||||||||||||||||||||||
| Total | 319 | $ | 489 | 100.0 | % | 0.91 | % | |||||||||||||||||||
76
Mortgage Servicing Rights
The fair value of the Company's MSRs related to residential mortgage loans totaled $1.2 billion and $1.1 billion as of March 31, 2025 and December 31, 2024, respectively.
The following is a summary of the UPB of loans underlying the Company's MSR portfolio by type:
| March 31, 2025 | December 31, 2024 | |||||||||||||
| (in millions) | ||||||||||||||
| FNMA and FHLMC | $ | 48,056 | $ | 42,908 | ||||||||||
| GNMA | 18,973 | 14,980 | ||||||||||||
| Non-agency | 3,534 | 3,201 | ||||||||||||
| Total unpaid principal balance of loans | $ | 70,563 | $ | 61,089 | ||||||||||
Other Assets Acquired through Foreclosure
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.
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.
Goodwill and Other Intangible Assets
Goodwill represents the excess consideration paid for net assets acquired in a business combination over their fair value. Goodwill and other intangible assets acquired in a business combination that are determined to have an indefinite useful life are not subject to amortization, but are subsequently evaluated for impairment at least annually. The Company has goodwill and intangible assets totaling
$656 million
and
$659 million
at March 31, 2025 and December 31, 2024, respectively.
The Company performs its annual goodwill and intangible assets impairment tests as of October 1 each year, or more often if events or circumstances indicate the carrying value may not be recoverable. During the three months ended March 31, 2025 and 2024, there were no events or circumstances that indicated an interim impairment test of goodwill or other intangible assets was necessary.
Deferred Tax Assets
As of March 31, 2025, the net DTA balance totaled $272 million,
a decrease of $9 million from $281 million at December 31, 2024.
This overall decrease in the net DTA was primarily the result of increases in the MSR DTL and the fair market value of AFS securities, which were partially offset by an increase in credit carryovers.
The Company had no deferred tax valuation allowance as of March 31, 2025 and
December 31, 2024
.
Bank Owned Life Insurance
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.
Deposits
Deposits are the primary source for funding the Company's asset growth. Total deposit
s increased to $69.3 billion at March 31, 2025, from $66.3 billion
at December 31, 2024, an increase of $3.0 billion, or 4.5%. By deposit type, the increase in deposits is attributable to increases of $3.2 billion in non-interest bearing deposits and $520 million in savings and money market accounts, partially offset by decreases of $371 million in interest bearing demand deposits, and $331 million in certificates of deposit.
WAB is a participant in the IntraFi Network, a network that offers deposit placement services such as CDARS and ICS, which offer products that qualify large deposits for FDIC insurance. At March 31, 2025, the Company had $13.3 billion of these reciprocal deposits, compared to $14.0 billion at December 31, 2024. At March 31, 2025 and December 31, 2024, the Company also had wholesale brokered deposits of $6.2 billion and $6.9 billion, respectively.
In addition, deposits for which the Company provides account holders with earnings credits or referral fees totaled $24.1 billion and $20.7 billion at March 31, 2025 and December 31, 2024, respectively. Costs related to these deposits are primarily reported as Deposit costs in non-interest expense. Deposit costs included $129.9 million and $131.2 million in deposit related costs on
77
these deposits for the three months ended March 31, 2025 and 2024, respectively. Th
e decrease in these costs from the
prior year is due to a decrease in average ECR related deposits and rates.
The average balances and weighted average rates paid on deposits are presented below:
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| Average Balance | Rate | Average Balance | Rate | |||||||||||||||||||||||
| (dollars in millions) | ||||||||||||||||||||||||||
| Interest bearing demand accounts | $ | 15,870 | 2.55 | % | $ | 16,348 | 3.00 | % | ||||||||||||||||||
| Savings and money market accounts | 21,206 | 3.15 | 15,247 | 3.43 | ||||||||||||||||||||||
| Certificates of deposit | 10,018 | 4.60 | 10,129 | 5.11 | ||||||||||||||||||||||
| Total interest bearing deposits | 47,094 | 3.26 | 41,724 | 3.67 | ||||||||||||||||||||||
| Non-interest bearing deposits | 22,097 | — | 18,183 | — | ||||||||||||||||||||||
| Total deposits | $ | 69,191 | 2.22 | % | $ | 59,907 | 2.56 | % | ||||||||||||||||||
Other Borrowings
Short-Term Borrowings
The Company utilizes short-term borrowed funds to support short-term liquidity needs. The majority of these short-term borrowed funds consist of advances from the FHLB, repurchase agreements, and federal funds purchased from correspondent banks or the FHLB. The Company’s borrowing capacity with the FHLB is determined based on collateral pledged, generally consisting of securities and loans. In addition, the Company has repurchase facilities, collateralized by securities or loans sold under agreements to repurchase, including assets sold under agreements to repurchase, which are reflected at the amount of cash received in connection with the transaction, and may require additional collateral based on the fair value of the underlying assets. Total short-term borrowings decreased $615 million to $2.5 billion at March 31, 2025, from $3.2 billion at December 31, 2024, driven primarily by a reduction in FHLB advances
Long-Term Borrowings
The Company's long-term borrowings consist of long-term FHLB borrowings and credit linked notes, inclusive of issuance costs. Total long-term borrowings decreased $807 million to $1.6 billion at March 31, 2025, from $2.4 billion at December 31, 2024, driven primarily by a reduction in long-term FHLB advances.
Qualifying Debt
Qualifying debt consists of subordinated debt and junior subordinated debt, inclusive of issuance costs and fair market value adjustments. At March 31, 2025, the carrying value of qualifying debt was $898 million, compared to $899 million at December 31, 2024.
78
Capital Resources
The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements could trigger certain mandatory or discretionary actions that, if undertaken, could have a direct material effect on the Company’s business and financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance sheet items (discussed in "Note 15. Commitments and Contingencies" to the Unaudited Consolidated Financial Statements) as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
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 in 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.
As of March 31, 2025 and December 31, 2024, the Company and the Bank exceeded the capital levels necessary to be classified as well-capitalized, as defined by the various banking agencies. The actual capital amounts and ratios for the Company and the Bank are presented in the following tables:
| Total Capital | Tier 1 Capital | Risk-Weighted Assets | Tangible Average Assets | Total Capital Ratio | Tier 1 Capital Ratio | Tier 1 Leverage Ratio |
Common Equity
Tier 1 |
|||||||||||||||||||||||||||||||||||||||||||
| (dollars in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| WAL | $ | 8,349 | $ | 7,094 | $ | 57,699 | $ | 82,868 | 14.5 | % | 12.3 | % | 8.6 | % | 11.1 | % | ||||||||||||||||||||||||||||||||||
| WAB | 7,851 | 7,190 | 57,626 | 82,791 | 13.6 | 12.5 | 8.7 | 12.0 | ||||||||||||||||||||||||||||||||||||||||||
| Well-capitalized ratios | 10.0 | 8.0 | 5.0 | 6.5 | ||||||||||||||||||||||||||||||||||||||||||||||
| Minimum capital ratios | 8.0 | 6.0 | 4.0 | 4.5 | ||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| WAL | $ | 7,922 | $ | 6,687 | $ | 56,019 | $ | 82,691 | 14.1 | % | 11.9 | % | 8.1 | % | 11.3 | % | ||||||||||||||||||||||||||||||||||
| WAB | 7,444 | 6,803 | 55,983 | 82,562 | 13.3 | 12.2 | 8.2 | 12.2 | ||||||||||||||||||||||||||||||||||||||||||
| Well-capitalized ratios | 10.0 | 8.0 | 5.0 | 6.5 | ||||||||||||||||||||||||||||||||||||||||||||||
| Minimum capital ratios | 8.0 | 6.0 | 4.0 | 4.5 | ||||||||||||||||||||||||||||||||||||||||||||||
The Company and the Bank are also subject to liquidity and other regulatory requirements as administered by the federal banking agencies. These agencies have broad powers and at their discretion, could limit or prohibit the Company's payment of dividends, payment of certain debt service and issuance of capital stock and debt as they deem appropriate and as such, actions by the agencies could have a direct material effect on the Company’s business and financial statements.
The Company is also required to maintain specified levels of capital to remain in good standing with certain federal government agencies, including FNMA, FHLMC, GNMA, and HUD. These capital requirements are generally tied to the unpaid balances of loans included in the Company's servicing portfolio or loan production volume. Noncompliance with these capital requirements can result in various remedial actions up to, and including, removing the Company's ability to sell loans to and service loans on behalf of the respective agency. The Company believes that it is in compliance with these requirements as of March 31, 2025.
79
Critical Accounting Estimates
Critical accounting estimates are defined as those that are reflective of significant judgments and uncertainties and could potentially result in materially different results under different assumptions and conditions. The critical accounting estimates upon which the Company's financial condition and results of operations depend, and which involve the most complex subjective decisions or assessments, are included in the discussion entitled "Critical Accounting Policies" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and all amendments thereto, as filed with the SEC. There were no material changes to the critical accounting policies disclosed in the Annual Report on Form 10-K.
Liquidity
Liquidity is the ongoing ability to accommodate liability maturities and deposit withdrawals, fund asset growth and business operations, and meet contractual obligations through unconstrained access to funding at reasonable market rates. Liquidity management involves forecasting funding requirements and maintaining sufficient capacity to meet the needs and accommodate fluctuations in asset and liability levels due to changes in the Company's business operations or unanticipated events.
The ability to have readily available funds sufficient to repay fully maturing liabilities is of primary importance to depositors, creditors, and regulators. The Company's liquidity, represented by cash and amounts due from banks, loans HFS, and non-pledged marketable securities, is a result of the Company's operating, investing, and financing activities and related cash flows. The Company actively monitors and manages liquidity, and no less than quarterly will estimate probable liquidity needs on a 12-month horizon. Liquidity needs can also be met through short-term borrowings or the disposition of short-term assets.
The Company has borrowing capacity with the FHLB and FRB from pledged loans and securities and warehouse borrowing lines of credit. The borrowing capacity, outstanding borrowings, and available credit as of March 31, 2025 are presented in the following table:
| March 31, 2025 | ||||||||
| (in millions) | ||||||||
| FHLB: | ||||||||
| Borrowing capacity | $ | 14,733 | ||||||
| Outstanding borrowings | 3,700 | |||||||
| Letters of credit | 1,039 | |||||||
| Total available credit | $ | 9,994 | ||||||
| FRB: | ||||||||
| Borrowing capacity | $ | 12,298 | ||||||
| Outstanding borrowings | — | |||||||
| Total available credit | $ | 12,298 | ||||||
| Warehouse borrowings: | ||||||||
| Borrowing capacity | $ | 2,250 | ||||||
| Outstanding borrowings | — | |||||||
| Total available credit | $ | 2,250 | ||||||
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:
| Outstanding Balance | ||||||||
| (in millions) | ||||||||
| Unsecured fed funds credit lines at correspondent banks | $ | — | ||||||
The Company has a formal liquidity policy and, in the opinion of management, its liquid assets are considered adequate to meet financial obligations and support client activity during normal and stressed operating conditions. At March 31, 2025, there were $15.6 billion in liquid assets, comprised of $2.3 billion in cash on deposit at the FRB and $13.3 billion in securities not currently used as collateral for borrowings or other purposes. At December 31, 2024, the Company maintained $15.9 billion in liquid assets, comprised of $3.3 billion in cash on deposit at the FRB and $12.6 billion in liquid securities not currently used as collateral for borrowings or other purposes.
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The Parent maintains liquidity that would be sufficient to fund its operations and certain non-bank affiliate operations for an extended period should funding from normal sources be disrupted. In the Company's analysis of Parent liquidity, it is assumed the Parent is unable to generate funds from additional debt or equity issuances, receives no dividend income from subsidiaries and does not pay dividends to stockholders, while continuing to make non-discretionary payments needed to maintain operations and repayment of contractual principal and interest payments owed by the Parent and affiliated companies. Under this scenario, the amount of time the Parent and its non-bank subsidiary can operate and meet all obligations before the current liquid assets are exhausted is considered as part of the Parent liquidity analysis. Management believes the Parent maintains adequate liquidity capacity to operate without additional funding from new sources for over twelve months.
WAB maintains sufficient funding capacity to address large increases in funding requirements, such as deposit outflows. This capacity is comprised of liquidity derived from a reduction in asset levels and various secured funding sources. On a long-term basis, the Company’s liquidity will be met by changing the relative distribution of its asset portfolios (for example, by reducing investment or loan volumes, or selling or encumbering assets). Further, the Company can increase liquidity by soliciting higher levels of deposit accounts through promotional activities and/or borrowing from correspondent banks, the FHLB of San Francisco, and the FRB. At March 31, 2025, the Company's long-term liquidity needs primarily relate to funds required to support loan originations, commitments, and deposit withdrawals, which can be met by cash flows from investment payments and maturities, and investment sales, if necessary.
The Company’s liquidity is comprised of three primary classifications: 1) cash flows from operating activities; 2) cash flows used in investing activities; and 3) cash flows provided by financing activities. Net cash provided by or used in operating activities consists primarily of net income, adjusted for changes in certain other asset and liability accounts and certain non-cash income and expense items, such as the provision for credit losses, investment and other amortization and depreciation. For the three months ended March 31, 2025 and 2024, net cash used in operating activities totaled $1.7 billion and $306.5 million, respectively.
The Company's primary investing activities are the origination of real estate and commercial loans, the collection of repayments of these loans, and the purchase and sale of securities. The Company's net cash used in investing activities has been primarily influenced by its loan and securities activities. During the three months ended March 31, 2025, the Company's cash balance decreased by $1.1 billion as a result of a net increase in loans, compared to a decrease in cash of $525.7 million during the three months ended March 31, 2024 from a smaller net increase in loans. A net increase in investment securities drove a $629.1 million cash outflow for the three months ended March 31, 2025, which contributed to the decrease in the Company's cash balance during the period. A net increase in investment securities drove $3.3 billion of cash outflows for the three months ended March 31, 2024.
Net cash provided by financing activities was impacted significantly by deposit levels. During the three months ended March 31, 2025, net deposits increased $3.0 billion, compared to an increase of $6.9 billion during the three months ended March 31, 2024.
Fluctuations in core deposit levels may increase the Company's need for liquidity as certificates of deposit mature or are withdrawn before maturity, and as non-maturity deposits, such as checking and savings account balances, are withdrawn. Additionally, the Company is exposed to the risk that customers with large deposit balances will withdraw all or a portion of such deposits, due in part to the FDIC limitations on the amount of insurance coverage provided to depositors. To partially mitigate uninsured deposit risk, the Company participates in reciprocal deposit programs, such as CDARS and ICS, which allow an individual customer to invest up to $50 million and $265 million, respectively, through one participating financial institution or, a combined total of $315 million per individual customer, with the entire amount being covered by FDIC insurance. As of March 31, 2025, the Company has $1.8 billion of CDARS and $9.6 billion of ICS deposits.
As of March 31, 2025, the Company has $6.2 billion of wholesale brokered deposits outstanding. Brokered deposits are generally considered to be deposits that have been received from a third party who is engaged in the business of placing deposits on behalf of others. A traditional deposit broker will direct deposits to the banking institution offering the highest interest rate available. Federal banking laws and regulations place restrictions on depository institutions regarding brokered deposits because of the general concern these deposits are not relationship based and are at a greater risk of being withdrawn and placed on deposit at another institution offering a higher interest rate, thus posing liquidity risk for institutions that gather brokered deposits in significant amounts.
Federal and state banking regulations place certain restrictions on dividends paid. The total amount of dividends which may be paid at any date is generally limited to the retained earnings of the bank. Dividends paid by WAB to the Parent would be prohibited if the effect thereof would cause the Bank’s capital to be reduced below applicable minimum capital requirements. During the three months ended March 31, 2025, WAB paid dividends to the Parent of $60 million.
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Item 3.
Quantitative and Qualitative Disclosures about Market Risk.
Market risk is the risk of loss in a financial instrument arising from adverse changes in market prices and rates, foreign currency exchange rates, commodity prices, and equity prices. The Company's market risk arises primarily from interest rate risk inherent in its lending, investing, and deposit taking activities. To that end, management actively monitors and manages the Company's interest rate risk exposure.
Management uses various asset/liability strategies to manage the re-pricing characteristics of the Company's assets and liabilities, all of which are designed to ensure that exposure to interest rate fluctuations is within the Company's guidelines of acceptable levels of risk-taking. Hedging strategies, including the terms and pricing of loans and deposits and management of the deployment of its securities, are used to reduce mismatches in interest rate re-pricing opportunities of portfolio assets and their funding sources. Derivatives in a hedging relationship are also used to minimize the Company's exposure to changes in benchmark interest rates and volatility of net interest income and EVE to interest rate fluctuations, with their impact reflected in the model results discussed below.
Interest rate risk is addressed by ALCO, which includes members of executive management, finance, and operations. ALCO monitors interest rate risk by analyzing the potential impact on EVE and earnings from potential changes in interest rates and considers the impact of alternative strategies or changes in balance sheet structure. The Company manages its balance sheet in part to keep the potential impact on EVE and earnings within acceptable ranges despite changes in interest rates.
The Company's exposure to interest rate risk is reviewed at least quarterly by ALCO. Interest rate risk exposure is measured using interest rate sensitivity analysis to determine its change in both EVE and earnings in the event of hypothetical changes in interest rates. If potential changes to EVE and earnings resulting from hypothetical interest rate changes are not within the limits established by the BOD or ALCO determines that interest rate exposures should be reduced, ALCO will either take hedging actions or adjust the asset and liability mix to bring interest rate risk within BOD-approved limits or in line with ALCO's proposed reduction. ALCO may also decide the best course of action for a limit breach is to accept the breach and present justification to the BOD. If the BOD does not agree to accept the limit breach, it will direct ALCO to remediate the breach. The Company's EaR and EVE exposure limits are approved by the BOD on an annual basis, or more often if market conditions warrant. During the three months ended March 31, 2025, there have been no changes to the Company's exposure limits.
Net Interest Income Simulation.
To measure interest rate risk at March 31, 2025, the Company used a simulation model to project changes in net interest income resulting from forecasted changes in interest rates. This analysis calculates the difference between a baseline net interest income forecast using forward yield curves, compared to forecasted net interest income results from an immediate, parallel shift in rates upward or downward, along with other scenarios directed by ALCO. The simulation model includes various assumptions regarding re-pricing relationships for each of the Company's products. Many of the Company's assets are variable rate loans, which are assumed to re-price at the next rate reset period and proportional to the change in market rates, depending on their contracted index, including the impact of caps or floors. The simulation model also incorporates prepayment assumptions for applicable loans and investments with such optionality. The Company's non-term deposit products re-price with a certain beta to underlying market rate changes. These betas are derived separately by deposit product and are based on both observed and projected market rate and balance trends. Current product-level deposit beta assumptions range between 45% to 91%, depending on product, with an average interest bearing deposit beta of 56%.
This analysis illustrates the impact of changes in net interest income for the given set of rate changes and assumptions. It does not account for all factors that could impact the Company's results, including changes by management to mitigate interest rate changes or secondary factors, such as changes to the Company's credit risk profile as interest rates change. The results will also be impacted by seasonality in the balance sheet. Furthermore, loan prepayment rate estimates and spread relationships change regularly. Interest rate changes impact actual loan prepayment speeds and these changes may result in differences in the market estimates incorporated in this analysis. These assumptions are inherently uncertain and as a result, actual results may differ from simulated results due to factors such as timing, magnitude and frequency of interest rate changes as well as changes in market conditions, customer behavior, management strategies, and changes that vary significantly from the modeled assumptions may have a significant effect on the Company's actual net interest income.
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The table below presents the changes in net interest income that would occur in response to an instantaneous and sustained increase or decrease (shock) in market interest rates based on a dynamic balance sheet. In addition, the table provides results from additional scenarios in response to gradual, parallel changes (ramp) in market interest rates over twelve months. The Company continues to evaluate the scenarios that are presented as interest rates change and will update these scenario disclosures as appropriate.
Sensitivity of Net Interest Income
| Down 200 | Down 100 | Up 100 | Up 200 | |||||||||||||||||||||||
| (change in basis points from Base) | ||||||||||||||||||||||||||
| Parallel Shock Scenario | (9.8) | % | (5.3) | % | 5.7 | % | 11.4 | % | ||||||||||||||||||
| Gradual Ramp Scenario | (4.8) | % | (2.5) | % | 3.0 | % | 5.7 | % | ||||||||||||||||||
Earnings-at-Risk.
In addition, certain rate-sensitive non-interest income and expense items are also subject to market risk, including mortgage banking and servicing income and ECR deposit costs. Mortgage originations and prepayments are sensitive to interest rates and therefore, mortgage banking and servicing income can be impacted by volatility in interest rates. The Company’s EaR simulation model expands on its net interest income simulation, as described above, by incorporating these non-interest income and expenses amounts to measure the impact of forecasted changes in interest rates on earnings (defined as net interest income plus rate-sensitive non-interest income and expense). In the Company’s EaR simulation model as of March 31, 2025, deposits eligible for ECRs re-price with a beta assumption of 74% to underlying market rate changes, and total non-maturity deposits, inclusive of ECRs, re-price with a weighted average beta assumption of 62%. As a result of the higher deposit betas on deposits eligible for ECRs, in the down simulation scenarios, the Company will benefit from lower deposit costs. In a shock down 100 basis points scenario, ECR related deposit costs would decrease 23% from the baseline forecast over the next twelve months. At March 31, 2025, the Company’s earnings exposure for the next twelve months related to these hypothetical changes in market interest rates was within the Company’s current limits.
Economic Value of Equity.
The Company measures the impact of market interest rate changes on the NPV of estimated cash flows from its assets, liabilities, and off-balance sheet items, defined as EVE, using a simulation model. The Company's simulation model focuses on parallel interest rate shocks and takes into account assumptions related to loan prepayment trends that are sourced using a combination of third-party prepayment models and internal historical experience, terminal maturity for non-maturity deposits, decay attrition, and pricing sensitivity derived from the Company's data and other internally-developed analysis and models. These assumptions are reviewed at least annually and are adjusted periodically to reflect changes in market conditions and the Company's balance sheet composition. As simulated model results are based on a number of assumptions outlined above, including forecasted market conditions, actual amounts may differ significantly from the projections set forth below should market conditions vary from the underlying assumptions.
This simulation model assesses the changes in the market value of interest rate sensitive financial instruments that would occur in response to an instantaneous and sustained increase or decrease (shock) in market interest rates. The Company continues to evaluate the scenarios that are presented as interest rates change and will update these scenario disclosures as appropriate.
The following table shows the Company's projected change in EVE for this set of rate shocks at March 31, 2025:
Economic Value of Equity
| Interest Rate Scenario | ||||||||||||||||||||||||||
| Down 200 | Down 100 | Up 100 | Up 200 | |||||||||||||||||||||||
| (change in basis points from Base) | ||||||||||||||||||||||||||
| % Change | 0.6 | % | 1.5 | % | (2.2) | % | (4.4) | % | ||||||||||||||||||
At March 31, 2025, the Company's EVE exposure related to these hypothetical changes in market interest rates was within the Company's current limits.
Derivative Contracts.
In the normal course of business, the Company uses derivative instruments to meet the needs of its customers and manage exposure to fluctuations in interest rates. For additional discussion on how derivatives in a hedging relationship (fair value hedges) are used to manage the Company's interest rate risk, see "Note 12. Derivatives and Hedging Activities" to the Unaudited Consolidated Financial Statements.
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Item 4.
Controls and Procedures.
Evaluation of Disclosure Controls
Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, the CEO and CFO have concluded that the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, as amended, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Additionally, the Company's disclosure controls and procedures were also effective in ensuring that information required to be disclosed by the Company in the reports it files or is subject to under the Exchange Act is accumulated and communicated to the Company's management, including the CEO and CFO, to allow timely decisions regarding required disclosures.
Changes in Internal Control over Financial Reporting
There have not been any changes in the Company's internal control over financial reporting during the quarter ended March 31, 2025, which have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1.
Legal Proceedings.
There are no material pending legal proceedings to which the Company is a party or to which any of its properties are subject. There are no material proceedings known to the Company to be contemplated by any governmental authority. From time to time, the Company is involved in a variety of litigation matters in the ordinary course of its business and anticipates that it will become involved in new litigation matters in the future.
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Item 1A.
Risk Factors.
The following risk factor, which was included in Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2024, has been revised and supersedes the version included therein. There have not been any other material changes to the risk factors previously disclosed in Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2024.
Offerings of debt, which would be senior to our common stock upon liquidation, and/or preferred equity securities that may be senior to our common stock for purposes of dividend distributions or upon liquidation, may adversely affect the market price of our common stock.
We may from time to time issue debt securities, borrow money through other means, or issue preferred stock. We may also borrow money from the FRB, the FHLB, other financial institutions, and other lenders. At December 31, 2024, we had outstanding subordinated debt, senior secured and unsecured debt, and short-term borrowings. We also have outstanding depositary shares representing Series A preferred stock, which is senior to our common stock. BW has outstanding preferred stock as well, which is pari passu with our Series A preferred stock and is conditionally exchangeable into preferred stock of WAB upon receipt of a directive from an appropriate federal regulatory authority upon the occurrence of certain specified exchange events. All of these securities or borrowings have priority over our common stock in a liquidation, which could affect the market price of our stock.
Our BOD is authorized to issue one or more classes or series of preferred stock from time to time without any action on the part of the stockholders, Our BOD also has the power, without stockholder approval, to set the terms of any such classes or series of preferred stock that may be issued, including voting rights, dividend rights, and preferences over our common stock with respect to dividends or upon our dissolution, winding-up, and liquidation and other terms. If we or any of our subsidiaries issue additional preferred stock in the future that has a preference over our common stock, with respect to the payment of dividends or upon liquidation, dissolution, or winding up, or if we issue preferred stock with voting rights that dilute the voting power of our common stock and/or the rights of holders of our common stock, the market price of our common stock could be adversely affected.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
Issuer Purchases of Equity Securities
The following table provides information about the Company's purchases of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act for the periods indicated:
| Period | Total Number of Shares Purchased (1)(2) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs | ||||||||||||||||||||||
| January 1-31, 2025 | 14 | $ | 89.73 | — | $ | — | ||||||||||||||||||||
| February 1-28, 2025 | 121,197 | 89.02 | — | — | ||||||||||||||||||||||
| March 1-31, 2025 | 274 | 88.08 | — | — | ||||||||||||||||||||||
| Total | 121,485 | $ | 89.01 | — | $ | — | ||||||||||||||||||||
(1) Shares purchased during the period were transferred to the Company from employees in satisfaction of minimum tax withholding obligations associated with the vesting of restricted stock awards during the period.
(2) The Company currently does not have a common stock repurchase program.
Item 5.
Other Information
Insider Adoption or Termination of Trading Arrangements
During the quarter ended March 31, 2025,
none
of our directors or officers informed us of the adoption or termination of any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K.
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Item 6.
Exhibits
EXHIBITS
| 3.1 | ||||||||
| 3.2 | ||||||||
| 3.3 | ||||||||
| 3.4 | ||||||||
| 3.5 | ||||||||
| 3.6 | ||||||||
| 4.1 | ||||||||
| 10.1 | ||||||||
| 31.1* | ||||||||
| 31.2* | ||||||||
| 32** | ||||||||
| 101* |
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024, (ii) the Consolidated Income Statements for the three months ended March 31, 2025 and 2024, (iii) the Consolidated Statements of Comprehensive Income for the three months ended March 31, 2025 and 2024, (iv) the Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2025 and 2024, (v) the Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024, and (vi) the Notes to Unaudited Consolidated Financial Statements. (Pursuant to Rule 406T of Regulation S-T, this information is deemed furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.).
|
|||||||
| 104* |
The cover page of Western Alliance Bancorporation’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, formatted in Inline XBRL (contained in Exhibit 101).
|
|||||||
* Filed herewith.
** Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| WESTERN ALLIANCE BANCORPORATION | ||||||||||||||
| May 1, 2025 | By: | /s/ Kenneth A. Vecchione | ||||||||||||
| Kenneth A. Vecchione | ||||||||||||||
| President and Chief Executive Officer | ||||||||||||||
| May 1, 2025 | By: | /s/ Dale Gibbons | ||||||||||||
| Dale Gibbons | ||||||||||||||
| Vice Chairman and Chief Financial Officer | ||||||||||||||
| May 1, 2025 | By: | /s/ Ben Mucha | ||||||||||||
| Ben Mucha | ||||||||||||||
| Chief Accounting Officer | ||||||||||||||
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TABLE OF CONTENTS
Part I. Financial InformationprintItem 1. Financial StatementsprintItem 2. Management's Discussion and Analysis Of Financial Condition and Results Of OperationsprintItem 3. Quantitative and Qualitative Disclosures About Market RiskprintItem 4. Controls and ProceduresprintPart II. Other InformationprintItem 1. Legal ProceedingsprintItem 1A. Risk FactorsprintItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsprintItem 5. Other InformationprintItem 6. Exhibitsprint