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8-K

Western Alliance Bancorporation (WAL)

8-K 2020-10-22 For: 2020-10-22
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Added on April 09, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  October 22, 2020

WESTERN ALLIANCE BANCORPORATION

(Exact name of registrant as specified in its charter)

Delaware 001-32550 88-0365922
(State or other jurisdiction<br>of incorporation) (Commission<br>File Number) (IRS Employer<br>Identification No.)

One E. Washington Street, Phoenix, Arizona  85004

(Address of principal executive offices)               (Zip Code)

(602) 389-3500

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.0001 Par Value WAL New York Stock Exchange
6.25% Subordinated Debentures due 2056 WALA New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

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. ¨

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On October 22, 2020, Western Alliance Bancorporation (the “Company”) issued a press release reporting results for the fiscal quarter ended September 30, 2020 and posted on its website its third quarter 2020 Earnings Conference Call Presentation, which contains certain additional historical and forward-looking information relating to the Company.  Copies of the press release and presentation slides are attached hereto as Exhibits 99.1 and 99.2, respectively.

The information in this report (including Exhibits 99.1 and 99.2 hereto) is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, is not subject to the liabilities of that section and is not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such filing.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits.

99.1 Press Release dated October 22, 2020.
99.2 Third Quarter 2020 Earnings Conference Call dated October 23, 2020.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

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 hereunto duly authorized.

WESTERN ALLIANCE BANCORPORATION
(Registrant)
/s/ Dale Gibbons
Dale Gibbons
Executive Vice President and
Chief Financial Officer
Date: October 22, 2020

Document

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

PHOENIX--(BUSINESS WIRE)--October 22, 2020

THIRD QUARTER 2020 FINANCIAL RESULTS

Net income Earnings per share PPNR^1^ Net interest margin Efficiency ratio^1^ Book value per <br>common share
$135.8 million $1.36 $181.3 million 3.71% 39.7% $31.98
$29.03^1^, excluding<br><br>goodwill and intangibles CEO COMMENTARY:
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“The flexibility of Western Alliance’s diversified business model drove the Company’s record third quarter performance,” said Kenneth A. Vecchione, President and Chief Executive Officer. “Our deep segment and product expertise enables us to pivot our business in response to a changing external environment and we continue to prove that we can achieve industry-leading profitability and growth, while maintaining prudent credit risk management. Net income of $135.8 million and earnings per share of $1.36 are each up over 45% from the prior quarter, benefiting from a decline in the provision for credit losses of $77.3 million as the macroeconomic outlook improved and the Company grew loans in low-risk asset classes. In addition, return on average tangible common equity^1^ of 18.7% for the quarter continues to be among the highest in the industry.”<br><br><br><br>"The Company produced another quarter of sizable loan and deposit growth of $985 million and $1.3 billion, respectively. While deposit growth ($314 million over loan growth) provides a stable base for asset expansion in future quarters, it added transitory pressure on net interest margin, which declined 48 basis points from the prior quarter to 3.71%, largely as a result of excess liquidity that had not been fully deployed at quarter-end. Nonperforming assets to total assets remained stable at 0.47%, attributable to the Company’s timely credit mitigation actions that also resulted in a decline in loan deferrals to 5.0% of total loans. Capital levels also remain strong with a tangible common equity ratio^1^ of 8.9% and a total ACL to funded loans ratio of 1.46%, excluding PPP loans.” LINKED-QUARTER BASIS YEAR-OVER-YEAR
--- ---
FINANCIAL HIGHLIGHTS:

▪Net income of $135.8 million and earnings per share of $1.36, compared to $93.3 million and $0.93, respectively

▪Net revenue of $305.3 million, a decrease of 4.5%, or $14.3 million, compared to an increase in non-interest expenses of 8.1%, or $9.3 million

▪Pre-provision net revenue^1^ of $181.3 million, down $23.6 million from $204.9 million

▪Effective tax rate of 18.50%, compared to 17.36%

▪Net income of $135.8 million and earnings per share of $1.36, up 6.6% and 9.7%, from $127.4 million and $1.24, respectively

▪Net revenue of $305.3 million, an increase of 6.8%, or $19.5 million, compared to a decrease in non-interest expenses of $2.1 million

▪Pre-provision net revenue^1^ of $181.3 million, up $21.5 million from $159.7 million

▪Effective tax rate of 18.50%, compared to 18.30%

FINANCIAL POSITION RESULTS:

▪Total loans of $26.0 billion, up $985 million, or 15.6% annualized

▪Total deposits of $28.8 billion, up $1.3 billion, or 18.8% annualized

▪Stockholders' equity of $3.2 billion, up $122 million

▪Increase in total loans of $5.9 billion, or 29.1%

▪Increase in total deposits of $6.4 billion, or 28.5%

▪Increase in stockholders' equity of $301 million

LOANS AND ASSET QUALITY:

▪Nonperforming assets (nonaccrual loans and repossessed assets) to total assets of 0.47%, flat from the prior quarter

▪Annualized net loan charge-offs to average loans outstanding of 0.13%, compared to 0.09%

▪Nonperforming assets to total assets of 0.47%, compared to 0.25%

▪Annualized net loan charge-offs (recoveries) to average loans outstanding of 0.13%, compared to (0.01)%

KEY PERFORMANCE METRICS:

▪Net interest margin of 3.71%, compared to 4.19%

▪Return on average assets and on tangible common equity^1^ of 1.66% and 18.73%, compared to 1.22% and 13.60%, respectively

▪Tangible common equity ratio^1^ of 8.9%, flat from the prior quarter

▪Tangible book value per share^1^, net of tax, of $29.03, an increase of 4.3% from $27.84

▪Efficiency ratio^1^ of 39.7%,^^compared to 35.1%

▪Net interest margin of 3.71%, compared to 4.41%

▪Return on average assets and on tangible common equity^1^ of 1.66% and 18.73%, compared to 1.94% and 19.41%, respectively

▪Tangible common equity ratio^1^ of 8.9%, compared to 10.1%

▪Tangible book value per share^1^, net of tax, of $29.03, an increase of 13.4% from $25.60

▪Efficiency ratio^1^ of 39.7%, compared to 43.2%

^1^See reconciliation of Non-GAAP Financial Measures on page 20.^^

Income Statement

Net interest income was $284.7 million in the third quarter 2020, a decrease of $13.7 million from $298.4 million in the second quarter 2020, and an increase of $18.3 million, or 6.9%, compared to the third quarter 2019. Net interest income was impacted by changes in prepayment assumptions on PPP loans, which resulted in reversal of $6.4 million of net deferred loan fee accretion on PPP loans recognized in the prior quarter and a decrease of $4.2 million in current quarter accretion.

Provision for credit losses^2^ was $14.7 million in the third quarter 2020, a decrease of $77.3 million from $92.0 million in the second quarter 2020, and an increase of $10.9 million from $3.8 million in the third quarter 2019. The significant decrease in the provision for credit losses during the third quarter 2020 is due to improvement in economic forecasts relative to June 30, 2020 and concentration of loan growth in portfolio segments with lower expected loss rates. The CECL standard, adopted by the Company in the first quarter of 2020, changes the methodology for estimating credit losses on financial instruments from an incurred loss model to an expected total loss model. This results in the recognition of expected losses over the life of a loan at the time that the loan is originated, rather than after a loss has been incurred, which results in an acceleration in the timing of loss recognition. Further, as the Company's CECL models incorporate historical experience, current conditions, and reasonable and supportable forecasts in measuring expected credit losses, the current uncertainty in the overall economy contributed to an increased provision for credit losses for 2020.

The Company’s net interest margin in the third quarter 2020 was 3.71%, a decrease from 4.19% in the second quarter 2020 and from 4.41% in the third quarter 2019. The decrease in net interest margin from the prior periods is largely a result of excess liquidity from deposit growth that has outpaced loan growth as well as a decrease in net deferred loan fee accretion on PPP loans from the prior quarter, as discussed above. These drivers of net interest margin compression during the quarter are expected to be temporary in nature and will taper off over time.

Non-interest income was $20.6 million for the third quarter 2020, compared to $21.3 million for the second quarter 2020, and $19.4 million for the third quarter 2019.

Net revenue was $305.3 million for the third quarter 2020, a decrease of $14.3 million, compared to $319.7 million for the second quarter 2020, and an increase of $19.5 million, or 6.8%, compared to $285.9 million for the third quarter 2019.^^

Non-interest expense was $124.1 million for the third quarter 2020, compared to $114.8 million for the second quarter 2020, and $126.2 million for the third quarter 2019. The Company’s efficiency ratio^1^ was 39.7% for the third quarter 2020, compared to 35.1% in the second quarter 2020, and 43.2% for the third quarter 2019.

Income tax expense was $30.8 million for the third quarter 2020, compared to $19.6 million for the second quarter 2020, and $28.5 million for the third quarter 2019. The increase in income tax expense from the prior quarter is primarily the result of an increase in pre-tax income during the third quarter 2020 in conjunction with a marginal increase in the effective tax rate.

Net income was $135.8 million for the third quarter 2020, an increase of $42.5 million from $93.3 million for the second quarter 2020, and an increase of $8.4 million, or 6.6%, from $127.4 million for the third quarter 2019. Earnings per share was $1.36 for the third quarter 2020, compared to $0.93 for the second quarter 2020, and $1.24 for the third quarter 2019. As discussed above, the increase in net income and earnings per share for the third quarter 2020 compared to the prior quarter was driven by the decrease in the provision for credit losses.

The Company views its pre-provision net revenue^1^ ("PPNR") as a key metric for assessing the Company’s earnings power, which it defines as net revenue less non-interest expense. For the third quarter 2020, the Company’s PPNR^1^ was $181.3 million, down $23.6 million from $204.9 million in the second quarter 2020, and up $21.5 million from $159.7 million in the third quarter 2019. PPNR for the second quarter 2020 benefited from a $5.6 million gain related to restructuring of the Company's bank owned life insurance as well as recognition of $13.9 million in net deferred fee accretion and $5.6 million in cost deferrals related to PPP loans. ^^

The Company had 1,885 full-time equivalent employees and 49 offices at September 30, 2020, compared to 1,851 employees and 47 offices at June 30, 2020, and 1,814 employees and 47 offices at September 30, 2019.

^1^See reconciliation of Non-GAAP Financial Measures on page 20.

^2^    Upon adoption of CECL on January 1, 2020, Provision for credit losses has been modified to also include amounts related to unfunded loan commitments and investment securities. Prior period amounts have been restated to conform to the current presentation.

Balance Sheet

Gross loans totaled $26.0 billion at September 30, 2020, an increase of $985 million from $25.0 billion at June 30, 2020, and an increase of $5.9 billion from $20.2 billion at September 30, 2019. By loan type, the largest increases from the prior quarter include $892 million in commercial and industrial loans and $103 million in construction and land development loans. From September 30, 2019, the largest increases in the loan balance were driven by commercial and industrial loans of $4.9 billion (includes $1.7 billion of PPP loans), residential real estate loans of $525 million, and CRE non-owner occupied loans of $376 million. The Company's allowance for credit losses on loans consists of an allowance for funded loans and an allowance for unfunded loan commitments. At September 30, 2020, the allowance for loan losses to loans held for investment was 1.19%, compared to 1.24% at June 30, 2020, and 0.82% at September 30, 2019. The allowance for credit losses, which includes the allowance for unfunded loan commitments, to loans held for investment was 1.37% at September 30, 2020, compared to 1.39% at June 30, 2020, and 0.86% at September 30, 2019.

Deposits totaled $28.8 billion at September 30, 2020, an increase of $1.3 billion from $27.5 billion at June 30, 2020, and an increase of $6.4 billion from $22.4 billion at September 30, 2019. By deposit type, the largest increases from the prior quarter include $777 million from non-interest bearing demand deposits and $752 million from savings and money market accounts. These increases were offset by a decrease in certificates of deposit of $276 million. From September 30, 2019, deposits increased across most deposit types, with increases in non-interest bearing demand deposits of $4.3 billion, savings and money market accounts of $1.5 billion, and interest-bearing demand deposits of $1.0 billion. These increases were partially offset by a decrease in certificates of deposit of $416 million. Non-interest bearing deposits were $13.0 billion at September 30, 2020, compared to $12.2 billion at June 30, 2020, and $8.8 billion at September 30, 2019.

The table below shows the Company's deposit types as a percentage of total deposits:

Sep 30, 2020 Jun 30, 2020 Sep 30, 2019
Non-interest bearing 45.1 % 44.4 % 39.0 %
Savings and money market 36.7 35.7 40.4
Interest-bearing demand 12.3 12.7 11.2
Certificates of deposit 5.9 7.2 9.4

The Company’s ratio of loans to deposits was 90.2% at September 30, 2020, compared to 90.9% at June 30, 2020, and 89.8% at September 30, 2019.

Borrowings were $10 million at September 30, 2020 and June 30, 2020, and zero at September 30, 2019. The increase in borrowings from September 30, 2019 is due to an increase in short-term borrowings from the FHLB.

Qualifying debt totaled $619 million at September 30, 2020, compared to $618 million at June 30, 2020, and $389 million at September 30, 2019. The increase in qualifying debt from September 30, 2019 is primarily due to the issuance of $225 million in subordinated debt in May 2020.

Stockholders’ equity was $3.2 billion at September 30, 2020, compared to $3.1 billion at June 30, 2020, and $2.9 billion at September 30, 2019. The increase in stockholders' equity from September 30, 2019 is primarily a function of net income, partially offset by share repurchases and dividends to shareholders as well as the adoption impact of CECL. During the third quarter 2020, the Company's Board of Directors approved a cash dividend of $0.25 per share. The dividend payment to shareholders totaled $25.2 million, and was paid on August 27, 2020.

At September 30, 2020, tangible common equity, net of tax, was 8.9% of tangible assets^1^ and total capital was 13.0% of risk-weighted assets. The Company’s tangible book value per share^1^ was $29.03 at September 30, 2020, up 13.4% from September 30, 2019.

Total assets increased 4.5% to $33.3 billion at September 30, 2020, from $31.9 billion at June 30, 2020, and increased 26.6% from $26.3 billion at September 30, 2019. The increase in total assets from the prior year was driven by organic loan and deposit growth.

Asset Quality

The provision for credit losses totaled $14.7 million for the third quarter 2020, compared to $92.0 million for the second quarter 2020, and $3.8 million for the third quarter 2019. Net loan charge-offs (recoveries) in the third quarter 2020 were $8.2 million, or 0.13% of average loans (annualized), compared to $5.5 million, or 0.09%, in the second quarter 2020, and $(0.6) million, or (0.01)%, in the third quarter 2019.

Nonaccrual loans increased $6.8 million to $146.5 million during the quarter and increased $96.1 million from September 30, 2019. Loans past due 90 days and still accruing interest were $28.1 million at September 30, 2020, compared to zero at June 30, 2020 and September 30, 2019. Loans past due 30-89 days and still accruing interest totaled $24.3 million at September 30, 2020, an increase from $9.3 million at June 30, 2020, and a decrease from $29.5 million at September 30, 2019.

Repossessed assets totaled $8.6 million at September 30, 2020, a decrease of $0.8 million from $9.4 million at June 30, 2020, and a decrease of $6.9 million from $15.5 million at September 30, 2019. Classified assets totaled $325.7 million at September 30, 2020, an increase of $27.2 million from $298.5 million at June 30, 2020, and an increase of $105.2 million from $220.4 million at September 30, 2019.

The ratio of classified assets to Tier 1 capital plus the allowance for credit losses, a common regulatory measure of asset quality, was 9.9% at September 30, 2020, compared to 9.5% at June 30, 2020, and 7.8% at September 30, 2019.

^1^     See reconciliation of Non-GAAP Financial Measures on page 20.

Segment Highlights

The Company's reportable segments are aggregated primarily based on geographic location, services offered, and markets served. The Company's regional segments, which include Arizona, Nevada, Southern California, and Northern California, provide full service banking and related services to their respective markets. The operations from the regional segments correspond to the following banking divisions: Alliance Bank of Arizona, Bank of Nevada and First Independent Bank, Torrey Pines Bank, and Bridge Bank.

The Company's National Business Lines ("NBL") segments provide specialized banking services to niche markets. The Company's NBL reportable segments include Homeowner Associations ("HOA") Services, Hotel Franchise Finance ("HFF"), Public & Nonprofit Finance, Technology & Innovation, and Other NBLs. These NBLs are managed centrally and are broader in geographic scope than our other segments, though still predominately located within our core market areas.

The Corporate & Other segment consists of the Company's investment portfolio, Corporate borrowings and other related items, income and expense items not allocated to our other reportable segments, and inter-segment eliminations.

Key management metrics for evaluating the performance of the Company's Arizona, Nevada, Southern California, Northern California, and NBL segments include loan and deposit growth, asset quality, and pre-tax income.

The regional segments reported gross loan balances of $11.2 billion at September 30, 2020, a decrease of $33 million during the quarter, and an increase of $1.5 billion during the last twelve months. The decline in loans during the quarter was driven by decreases in the Nevada and Southern California segments of $76 million and $46 million, respectively. These decreases were partially offset by increases in the Arizona and Northern California segments of $51 million and $38 million, respectively. During the last twelve months, each of the regional segments reported loan growth, with increases in the Northern California, Nevada, Arizona, and Southern California segments of $560 million, $433 million, $420 million, and $70 million, respectively. Total deposits for the regional segments were $19.5 billion, an increase of $1.5 billion during the quarter, and an increase of $4.3 billion during the last twelve months. The increase in deposits during the quarter was spread across all regional segments, with the largest increases in the Arizona and Southern California segments of $913 million and $478 million, respectively. The growth in deposits over the last twelve months was spread across all regional segments with increases in the Arizona, Southern California, Northern California, and Nevada segments of $2.6 billion, $749 million, $470 million, and $465 million, respectively.

Pre-tax income for the regional segments was $116.1 million for the three months ended September 30, 2020, an increase of $33.3 million from the three months ended June 30, 2020, and an increase of $12.1 million from the three months ended September 30, 2019. The increase in pre-tax income during the quarter was primarily attributable to increases in the Arizona and Southern California segments of $22.9 million and $9.5 million, respectively. These increases were partially offset by a decrease in the Nevada segment of $0.7 million. Pre-tax income from the three months ended September 30, 2019 was driven by increases in the Arizona and Northern California segments of $14.5 million and $3.2 million, respectively, which were partially offset by decreases in the Nevada and Southern California segments of $3.4 million and $2.1 million, respectively. For the nine months ended September 30, 2020, the regional segments reported total pre-tax income of $287.9 million, a decrease of $1.2 million compared to the nine months ended September 30, 2019. The decrease was driven by decreases in the Southern California and Nevada segments of $12.7 million and $4.6 million, respectively. These decreases were partially offset by increases in the Arizona and Northern California segments of $14.4 million and $1.6 million, respectively.

The NBL segments reported gross loan balances of $14.8 billion at September 30, 2020, an increase of $1.0 billion during the quarter, and an increase of $4.4 billion during the last twelve months. Each of the NBL segments reported loan growth during the quarter, with the largest increases in the Other NBLs and Technology & Innovation segments of $829 million and $123 million, respectively. During the last twelve months, each of the NBL segments reported loan growth, with the Other NBLs, Technology & Innovation, HFF, and Public & Nonprofit Finance segments contributing the largest increases of $3.1 billion, $952 million, $203 million, and $104 million, respectively. Total deposits for the NBL segments were $8.4 billion, an increase of $247 million during the quarter, and an increase of $2.0 billion during the last twelve months. The increase in deposits from the prior quarter is primarily attributable to the Technology & Innovation segment, which increased deposits by $230 million. The increase in deposits of $2.0 billion during the last twelve months is attributable to growth in the Technology & Innovation and HOA Services segments of $1.4 billion and $646 million, respectively.

Pre-tax income for the NBL segments was $109.1 million for the three months ended September 30, 2020, an increase of $34.3 million from the three months ended June 30, 2020, and an increase of $38.0 million from the three months ended September 30, 2019. The increase in pre-tax income from the prior quarter was driven by increases in the Technology & Innovation and HFF segments of $25.4 million and $16.1 million, respectively. These increases were partially offset by decreases in the Other NBLs and HOA Services segments of $4.7 million and $3.6 million, respectively. The drivers of the increase in pre-tax income from the same period in the prior year were the Technology & Innovation and Other NBLs segments, which had increases of $22.3 million and $17.8 million, respectively. Pre-tax income for the NBL segments for the nine months ended September 30, 2020 totaled $231.9 million, an increase of $41.2 million compared to the nine months ended September 30, 2019. The Other NBLs, Technology & Innovation, and HOA Services segments each reported an increase in pre-tax income of $47.4 million, $18.8 million, and $3.3 million, respectively. These increases in pre-tax income were offset by decreases in the HFF and Public & Nonprofit Finance segments of $24.4 million and $4.0 million, respectively.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live webcast to discuss its third quarter 2020 financial results at 12:00 p.m. ET on Friday, October 23, 2020. Participants may access the call by dialing 1-888-317-6003 and using passcode 4467607 or via live audio webcast using the website link https://services.choruscall.com/links/wal201016.html. The webcast is also available via the Company’s website at www.westernalliancebancorporation.com. Participants should log in at least 15 minutes early to receive instructions. The call will be recorded and made available for replay after 2:00 p.m. ET October 23rd through 9:00 a.m. ET November 23rd by dialing 1-877-344-7529 passcode: 10148637.

Reclassifications

Certain amounts in the Consolidated Income Statements for the prior periods have been reclassified to conform to the current presentation. The reclassifications have no effect on net income or stockholders’ equity as previously reported.

Use of Non-GAAP Financial Information

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

Adoption of Accounting Standards

During the first quarter of 2020, the Company adopted the Accounting Standards Updates ("ASU") related to credit losses, which include ASU 2016-13, Measurement of Credit Losses on Financial Instruments, ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, ASU 2019-05, Financial Instruments - Credit Losses, and ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses.

The new standards significantly change the impairment model for most financial assets that are measured at amortized cost, including off-balance sheet credit exposures, from an incurred loss model to an expected loss model. The amendments in ASU 2016-13 require that an organization measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The Company adopted the amendments within ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. The Company recorded a cumulative effect adjustment to retained earnings, which resulted in a total decrease to retained earnings of $24.9 million as of January 1, 2020. This adjustment was due primarily to expected total losses under the new model in the Company's loan portfolio and its off-balance sheet credit exposures.

Cautionary Note Regarding Forward-Looking Statements

This release contains forward-looking statements that relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Examples of forward-looking statements include, among others, statements we make regarding our expectations with regard to our business, financial and operating results, future economic performance and dividends, and the impact of the COVID-19 pandemic and related economic conditions. The forward-looking statements contained herein reflect our current views about future events and financial performance and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from historical results and those expressed in any forward-looking statement. Some factors that could cause actual results to differ materially from historical or expected results include, among others: the risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 as filed with the Securities and Exchange Commission; the potential adverse effects of the ongoing COVID-19 pandemic and any governmental or societal responses thereto, or other unusual and infrequently occurring events; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; inflation, interest rate, market and monetary fluctuations; increases in competitive pressures among financial institutions and businesses offering similar products and services; higher defaults on our loan portfolio than we expect; changes in management’s estimate of the adequacy of the allowance for credit losses; legislative or regulatory changes including in response to the COVID-19 pandemic such as the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) and the rules and regulations that may be promulgated thereunder; or changes in accounting principles, policies or guidelines (including changes related to CECL); supervisory actions by regulatory agencies which may limit our ability to pursue certain growth opportunities, including expansion through acquisitions; additional regulatory requirements resulting from our continued growth; management’s estimates and projections of interest rates and interest rate policy; the execution of our business plan; and other factors affecting the financial services industry generally or the banking industry in particular.

Any forward-looking statement made by us in this release is based only on information currently available to us and speaks only as of the date on which it is made. We do not intend and disclaim any duty or obligation to update or revise any industry information or forward-looking statements, whether written or oral, that may be made from time to time, set forth in this press release to reflect new information, future events or otherwise.

About Western Alliance Bancorporation

With more than $30 billion in assets, Western Alliance Bancorporation (NYSE:WAL) is one of the country’s top-performing banking companies. The company has ranked in the top 10 on the Forbes “Best Banks in America” list for five consecutive years, 2016-2020, and was named #1 best-performing of the 50 largest public U.S. banks for 2019 by S&P Global Market Intelligence. Its primary subsidiary, Western Alliance Bank, Member FDIC, helps business clients realize their ambitions with local teams of experienced bankers who deliver superior service and a full spectrum of customized loan, deposit and treasury management capabilities. Business clients also benefit from a powerful array of specialized financial services that provide strong expertise and tailored solutions for a wide variety of industries and sectors. A national presence with a regional footprint, Western Alliance Bank operates individually branded, full-service banking divisions and has offices in key markets nationwide. For more information, visit westernalliancebank.com.

Western Alliance Bancorporation and Subsidiaries
Summary Consolidated Financial Data
Unaudited
Selected Balance Sheet Data:
As of September 30,
2020 2019 Change %
(in millions)
Total assets $ 33,335.5 $ 26,324.2 26.6 %
Gross loans, net of deferred fees 26,014.0 20,152.8 29.1
Investment securities 4,701.1 4,148.1 13.3
Total deposits 28,843.4 22,440.8 28.5
Qualifying debt 618.8 388.9 59.1
Stockholders' equity 3,224.0 2,923.0 10.3
Tangible common equity, net of tax (1) 2,926.7 2,627.1 11.4
Selected Income Statement Data:
For the Three Months Ended September 30, For the Nine Months Ended September 30,
2020 2019 Change % 2020 2019 Change %
(in thousands, except per share data) (in thousands, except per share data)
Interest income $ 304,843 $ 315,608 (3.4) % $ 930,297 $ 909,624 2.3 %
Interest expense 20,105 49,186 (59.1) 78,139 141,185 (44.7)
Net interest income 284,738 266,422 6.9 852,158 768,439 10.9
Provision for credit losses 14,661 3,803 NM 157,837 15,303 NM
Net interest income after provision for credit losses 270,077 262,619 2.8 694,321 753,136 (7.8)
Non-interest income 20,606 19,441 6.0 46,985 49,069 (4.2)
Non-interest expense 124,092 126,152 (1.6) 359,372 352,279 2.0
Income before income taxes 166,591 155,908 6.9 381,934 449,926 (15.1)
Income tax expense 30,822 28,533 8.0 68,929 78,819 (12.5)
Net income $ 135,769 $ 127,375 6.6 $ 313,005 $ 371,107 (15.7)
Diluted earnings per share $ 1.36 $ 1.24 9.7 $ 3.11 $ 3.59 (13.4)

(1)    See Reconciliation of Non-GAAP Financial Measures.

NM    Changes +/- 100% are not meaningful.

Western Alliance Bancorporation and Subsidiaries
Summary Consolidated Financial Data
Unaudited
Common Share Data:
At or For the Three Months Ended September 30, For the Nine Months Ended September 30,
2020 2019 Change % 2020 2019 Change %
Diluted earnings per share $ 1.36 $ 1.24 9.7 % $ 3.11 $ 3.59 (13.4) %
Book value per common share 31.98 28.48 12.3
Tangible book value per share, net of tax (1) 29.03 25.60 13.4
Average shares outstanding <br>(in thousands):
Basic 99,850 102,041 (2.1) 100,322 103,024 (2.6)
Diluted 100,059 102,451 (2.3) 100,574 103,468 (2.8)
Common shares outstanding 100,825 102,639 (1.8) Selected Performance Ratios:
--- --- --- --- --- --- --- --- --- --- --- --- ---
Return on average assets (2) 1.66 % 1.94 % (14.4) % 1.38 % 2.03 % (32.0) %
Return on average tangible common equity (1, 2) 18.73 19.41 (3.5) 14.90 19.86 (25.0)
Net interest margin (2) 3.71 4.41 (15.9) 4.03 4.56 (11.6)
Efficiency ratio - tax equivalent basis (1) 39.71 43.16 (8.0) 39.07 42.13 (7.3)
Loan to deposit ratio 90.19 89.80 0.4
Asset Quality Ratios:
Net charge-offs (recoveries) to average loans outstanding (2) 0.13 % (0.01) % (1,400.0) 0.06 % 0.02 % NM
Nonaccrual loans to funded loans 0.56 0.25 NM
Nonaccrual loans and repossessed assets to total assets 0.47 0.25 88.0
Allowance for loan losses to funded loans 1.19 0.82 45.1
Allowance for loan losses to nonaccrual loans 212.03 327.83 (35.3) Capital Ratios:
--- --- --- --- --- --- ---
Sep 30, 2020 Jun 30, 2020 Sep 30, 2019
Tangible common equity (1) 8.9 % 8.9 % 10.1 %
Common Equity Tier 1 (3) 10.0 10.2 10.3
Tier 1 Leverage ratio (3) 9.3 9.5 10.4
Tier 1 Capital (3) 10.3 10.5 10.6
Total Capital (3) 13.0 13.4 12.6

(1)    See Reconciliation of Non-GAAP Financial Measures.

(2)    Annualized on an actual/actual basis for periods less than 12 months.

(3)    Capital ratios for September 30, 2020 are preliminary.

NM    Changes +/- 100% are not meaningful.

Western Alliance Bancorporation and Subsidiaries
Condensed Consolidated Income Statements
Unaudited
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(dollars in thousands, except per share data)
Interest income:
Loans $ 276,623 $ 278,932 $ 843,085 $ 808,099
Investment securities 27,403 29,660 83,024 87,694
Other 817 7,016 4,188 13,831
Total interest income 304,843 315,608 930,297 909,624
Interest expense:
Deposits 12,215 43,354 59,736 121,030
Qualifying debt 7,872 5,785 17,833 17,898
Borrowings 18 47 570 2,257
Total interest expense 20,105 49,186 78,139 141,185
Net interest income 284,738 266,422 852,158 768,439
Provision for credit losses (1) 14,661 3,803 157,837 15,303
Net interest income after provision for credit losses 270,077 262,619 694,321 753,136
Non-interest income:
Service charges and fees 5,913 5,888 17,447 17,121
Card income 1,873 1,729 4,768 5,195
Foreign currency income 1,755 1,321 4,242 3,564
Income from bank owned life insurance 1,345 979 8,977 2,938
Income from equity investments 1,186 3,742 6,263 6,619
Lending related income and gains (losses) on sale of loans, net 705 539 2,072 1,343
Gain (loss) on sales of investment securities — 3,152 230 3,152
Fair value gain (loss) adjustments on assets measured at fair value, net 5,882 222 (986) 4,628
Other 1,947 1,869 3,972 4,509
Total non-interest income 20,606 19,441 46,985 49,069
Non-interest expenses:
Salaries and employee benefits 78,757 70,978 220,455 205,328
Legal, professional, and directors' fees 10,034 8,248 31,105 26,885
Occupancy 9,426 8,263 25,752 24,251
Data processing 8,864 7,095 26,044 20,563
Deposit costs 3,246 11,537 14,098 24,930
Insurance 3,064 3,071 9,506 8,691
Loan and repossessed asset expenses 1,771 1,953 5,280 5,419
Business development 950 1,443 4,062 4,972
Marketing 848 842 2,621 2,640
Card expense 505 548 1,631 1,892
Intangible amortization 373 387 1,120 1,161
Net loss (gain) on sales and valuations of repossessed and other assets 123 3,379 (1,335) 2,856
Other 6,131 8,408 19,033 22,691
Total non-interest expense 124,092 126,152 359,372 352,279
Income before income taxes 166,591 155,908 381,934 449,926
Income tax expense 30,822 28,533 68,929 78,819
Net income $ 135,769 $ 127,375 $ 313,005 $ 371,107
Earnings per share:
Diluted shares 100,059 102,451 100,574 103,468
Diluted earnings per share $ 1.36 $ 1.24 $ 3.11 $ 3.59

(1)    Upon adoption of CECL on January 1, 2020, provision for credit losses has been modified to also include amounts related to unfunded loan commitments and investment securities. Prior period amounts have been restated to conform to the current presentation.

Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Income Statements
Unaudited
Three Months Ended
Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019
(in thousands, except per share data)
Interest income:
Loans $ 276,623 $ 289,576 $ 276,886 $ 284,971 $ 278,932
Investment securities 27,403 28,254 27,367 28,194 29,660
Other 817 408 2,963 2,255 7,016
Total interest income 304,843 318,238 307,216 315,420 315,608
Interest expense:
Deposits 12,215 15,005 32,516 37,374 43,354
Qualifying debt 7,872 4,712 5,249 5,492 5,785
Borrowings 18 121 431 581 47
Total interest expense 20,105 19,838 38,196 43,447 49,186
Net interest income 284,738 298,400 269,020 271,973 266,422
Provision for credit losses (1) 14,661 92,000 51,176 3,964 3,803
Net interest income after provision for credit losses 270,077 206,400 217,844 268,009 262,619
Non-interest income:
Service charges and fees 5,913 5,130 6,404 6,233 5,888
Card income 1,873 1,178 1,717 1,784 1,729
Foreign currency income 1,755 1,159 1,328 1,423 1,321
Income from bank owned life insurance 1,345 6,670 962 963 979
Income from equity investments 1,186 1,311 3,766 1,671 3,742
Lending related income and gains (losses) on sale of loans, net 705 719 648 1,815 539
Gain (loss) on sales of investment securities — 158 72 — 3,152
Fair value gain (loss) adjustments on assets measured at fair value, net 5,882 4,432 (11,300) 491 222
Other 1,947 513 1,512 1,647 1,869
Total non-interest income 20,606 21,270 5,109 16,027 19,441
Non-interest expenses:
Salaries and employee benefits 78,757 69,634 72,064 73,946 70,978
Legal, professional, and directors' fees 10,034 10,669 10,402 10,124 8,248
Occupancy 9,426 8,101 8,225 8,256 8,263
Data processing 8,864 8,577 8,603 10,014 7,095
Deposit costs 3,246 3,514 7,338 6,789 11,537
Insurance 3,064 3,444 2,998 3,233 3,071
Loan and repossessed asset expenses 1,771 2,047 1,462 2,152 1,953
Business development 950 831 2,281 2,071 1,443
Marketing 848 869 904 1,559 842
Card expense 505 383 743 454 548
Intangible amortization 373 374 373 386 387
Net loss (gain) on sales and valuations of repossessed and other assets 123 (6) (1,452) 962 3,379
Other 6,131 6,362 6,540 9,789 8,408
Total non-interest expense 124,092 114,799 120,481 129,735 126,152
Income before income taxes 166,591 112,871 102,472 154,301 155,908
Income tax expense 30,822 19,599 18,508 26,236 28,533
Net income $ 135,769 $ 93,272 $ 83,964 $ 128,065 $ 127,375
Earnings per share:
Diluted shares 100,059 99,993 101,675 102,138 102,451
Diluted earnings per share $ 1.36 $ 0.93 $ 0.83 $ 1.25 $ 1.24

(1)    Upon adoption of CECL on January 1, 2020, provision for credit losses has been modified to also include amounts related to unfunded loan commitments and investment securities. Prior period amounts have been restated to conform to the current presentation.

Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Balance Sheets
Unaudited
Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019
(in millions)
Assets:
Cash and due from banks $ 1,418.7 $ 1,518.5 $ 415.7 $ 434.6 $ 872.1
Investment securities 4,701.1 4,193.8 4,355.3 4,036.6 4,148.1
Loans held for sale 20.8 20.2 20.9 21.8 21.8
Loans held for investment:
Commercial and industrial 13,648.6 12,756.8 11,204.3 9,382.0 8,707.8
Commercial real estate - non-owner occupied 5,407.4 5,344.3 5,292.7 5,245.6 5,031.3
Commercial real estate - owner occupied 2,213.5 2,257.1 2,289.0 2,316.9 2,299.8
Construction and land development 2,300.5 2,197.5 2,059.4 1,952.2 2,155.6
Residential real estate 2,387.1 2,404.8 2,239.7 2,147.7 1,862.5
Consumer 36.1 48.7 60.2 57.1 74.0
Gross loans, net of deferred fees 25,993.2 25,009.2 23,145.3 21,101.5 20,131.0
Allowance for credit losses (310.5) (310.5) (235.3) (167.8) (165.0)
Loans, net 25,682.7 24,698.7 22,910.0 20,933.7 19,966.0
Premises and equipment, net 128.3 127.8 125.9 125.8 125.0
Operating lease right-of-use asset 71.4 70.3 72.3 72.6 74.5
Other assets acquired through foreclosure, net 8.6 9.4 10.6 13.9 15.5
Bank owned life insurance 175.5 174.9 175.0 174.0 173.1
Goodwill and other intangibles, net 299.0 296.9 297.2 297.6 298.0
Other assets 829.4 795.9 775.3 711.3 630.1
Total assets $ 33,335.5 $ 31,906.4 $ 29,158.2 $ 26,821.9 $ 26,324.2
Liabilities and Stockholders' Equity:
Liabilities:
Deposits
Non-interest bearing demand deposits $ 13,013.0 $ 12,236.0 $ 9,886.5 $ 8,537.9 $ 8,755.7
Interest bearing:
Demand 3,554.6 3,508.1 3,578.8 2,760.9 2,509.4
Savings and money market 10,574.9 9,823.2 8,978.1 9,120.7 9,058.4
Certificates of deposit 1,700.9 1,977.3 2,387.3 2,377.0 2,117.3
Total deposits 28,843.4 27,544.6 24,830.7 22,796.5 22,440.8
Customer repurchase agreements 19.7 25.4 23.0 16.7 15.0
Total customer funds 28,863.1 27,570.0 24,853.7 22,813.2 22,455.8
Borrowings 10.0 10.0 308.0 — —
Qualifying debt 618.8 617.7 389.9 393.6 388.9
Operating lease liability 78.6 76.9 78.7 78.1 79.8
Accrued interest payable and other liabilities 541.0 529.4 528.3 520.3 476.7
Total liabilities 30,111.5 28,804.0 26,158.6 23,805.2 23,401.2
Stockholders' Equity:
Common stock and additional paid-in capital 1,312.4 1,306.3 1,300.3 1,311.4 1,305.5
Retained earnings 1,833.0 1,722.4 1,661.8 1,680.3 1,581.9
Accumulated other comprehensive income 78.6 73.7 37.5 25.0 35.6
Total stockholders' equity 3,224.0 3,102.4 2,999.6 3,016.7 2,923.0
Total liabilities and stockholders' equity $ 33,335.5 $ 31,906.4 $ 29,158.2 $ 26,821.9 $ 26,324.2
Western Alliance Bancorporation and Subsidiaries
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Changes in the Allowance For Credit Losses on Loans
Unaudited
Three Months Ended
Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019
(in thousands)
Allowance for loan losses
Balance, beginning of period $ 310,550 $ 235,329 $ 167,797 $ 165,021 $ 160,409
Beginning balance adjustment from adoption of CECL — — 19,128 — —
Provision for credit losses (1) 8,204 80,685 45,241 4,000 4,000
Recoveries of loans previously charged-off:
Commercial and industrial 212 586 1,299 744 2,549
Commercial real estate - non-owner occupied — (365) 1,931 4 —
Commercial real estate - owner occupied 5 3 4 5 8
Construction and land development 6 7 10 10 17
Residential real estate 355 18 12 161 131
Consumer 1 10 4 6 6
Total recoveries 579 259 3,260 930 2,711
Loans charged-off:
Commercial and industrial 7,137 4,795 97 2,028 1,950
Commercial real estate - non-owner occupied 1,246 885 — — —
Commercial real estate - owner occupied 83 43 — — 139
Construction and land development — — — — —
Residential real estate 307 — — — 9
Consumer — — — 126 1
Total loans charged-off 8,773 5,723 97 2,154 2,099
Net loan charge-offs (recoveries) 8,194 5,464 (3,163) 1,224 (612)
Balance, end of period $ 310,560 $ 310,550 $ 235,329 $ 167,797 $ 165,021
Allowance for unfunded loan commitments
Balance, beginning of period $ 36,292 $ 29,644 $ 8,955 $ 8,991 $ 9,188
Beginning balance adjustment from adoption of CECL — — 15,089 — —
Provision for credit losses (1) 8,142 6,648 5,600 (36) (197)
Balance, end of period (2) $ 44,434 $ 36,292 $ 29,644 $ 8,955 $ 8,991
Components of the allowance for credit losses on loans
Allowance for loan losses $ 310,560 $ 310,550 $ 235,329 $ 167,797 $ 165,021
Allowance for unfunded loan commitments 44,434 36,292 29,644 8,955 8,991
Total allowance for credit losses on loans $ 354,994 $ 346,842 $ 264,973 $ 176,752 $ 174,012
Net charge-offs (recoveries) to average loans - annualized 0.13 % 0.09 % (0.06) % 0.02 % (0.01) %
Allowance for loan losses to funded loans 1.19 % 1.24 % 1.02 % 0.80 % 0.82 %
Allowance for credit losses to funded loans 1.37 1.39 1.14 0.84 0.86
Allowance for loan losses to nonaccrual loans 212.03 222.26 271.83 299.81 327.83
Allowance for credit losses to nonaccrual loans 242.36 248.24 306.07 315.81 345.69

(1)    Upon adoption of CECL on January 1, 2020, the provision for credit losses presented in the income statement has been modified to include amounts related to unfunded loan commitments and investment securities. The above tables reflect the provision for credit losses on funded and unfunded loans. A recovery of credit losses on investment securities totaled $1.7 million, resulting in an ending allowance for credit losses on investment securities of $6.0 million.

(2)    The allowance for unfunded loan commitments is included as part of accrued interest payable and other liabilities on the balance sheet.

Western Alliance Bancorporation and Subsidiaries
Asset Quality Metrics
Unaudited
Three Months Ended
Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019
(in thousands)
Nonaccrual loans $ 146,472 $ 139,721 $ 86,573 $ 55,968 $ 50,338
Nonaccrual loans to funded loans 0.56 % 0.56 % 0.37 % 0.27 % 0.25 %
Repossessed assets $ 8,591 $ 9,424 $ 10,647 $ 13,850 $ 15,483
Nonaccrual loans and repossessed assets to total assets 0.47 % 0.47 % 0.33 % 0.26 % 0.25 %
Loans past due 90 days, still accruing $ 28,129 $ — $ — $ — $ —
Loans past due 90 days and still accruing to funded loans 0.11 % — % — % — % — %
Loans past due 30 to 89 days, still accruing $ 24,259 $ 9,267 $ 38,461 $ 14,479 $ 29,502
Loans past due 30 to 89 days, still accruing to funded loans 0.09 % 0.04 % 0.17 % 0.07 % 0.15 %
Special mention loans $ 476,839 $ 395,537 $ 104,220 $ 180,479 $ 233,835
Special mention loans to funded loans 1.83 % 1.58 % 0.45 % 0.86 % 1.16 %
Classified loans on accrual $ 170,546 $ 149,298 $ 149,812 $ 91,286 $ 139,576
Classified loans on accrual to funded loans 0.66 % 0.60 % 0.65 % 0.43 % 0.69 %
Classified assets $ 325,659 $ 298,493 $ 247,082 $ 171,246 $ 220,423
Classified assets to total assets 0.98 % 0.94 % 0.85 % 0.64 % 0.84 %
Western Alliance Bancorporation and Subsidiaries
--- --- --- --- --- --- --- --- ---
Analysis of Average Balances, Yields and Rates
Unaudited
Three Months Ended
September 30, 2020 June 30, 2020
Average Balance Interest Average Yield / <br>Cost Average Balance Interest Average Yield /<br>Cost
( in millions) ( in thousands) ( in millions) ( in thousands)
Interest earning assets
Loans:
Commercial and industrial 4.17 % 12,318.3 4.73 %
CRE - non-owner occupied 5,393.1 63,813 4.72 5,345.0 65,609 4.95
CRE - owner occupied 2,232.7 26,645 4.85 2,273.7 27,517 4.97
Construction and land development 2,209.3 32,293 5.83 2,128.5 30,900 5.86
Residential real estate 2,396.0 23,358 3.88 2,329.4 22,970 3.97
Consumer 38.5 473 4.89 53.7 695 5.21
Loans held for sale 20.3 — — 21.7 — —
Total loans (1), (2), (3) 24,977.8 276,623 4.47 24,470.3 289,576 4.82
Securities:
Securities - taxable 2,811.6 14,769 2.09 2,781.3 16,254 2.35
Securities - tax-exempt 1,556.4 12,634 4.07 1,403.3 12,000 4.34
Total securities (1) 4,368.0 27,403 2.79 4,184.6 28,254 3.02
Cash and other 1,926.4 817 0.17 671.4 408 0.24
Total interest earning assets 31,272.2 304,843 3.97 29,326.3 318,238 4.46
Non-interest earning assets
Cash and due from banks 163.8 162.0
Allowance for credit losses (325.0) (271.2)
Bank owned life insurance 175.0 186.6
Other assets 1,237.4 1,221.8
Total assets
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts 0.16 % 0.18 %
Savings and money market 10,170.1 5,661 0.22 9,428.4 5,564 0.24
Certificates of deposit 1,845.5 5,091 1.10 2,150.5 7,876 1.47
Total interest-bearing deposits 15,651.9 12,215 0.31 15,074.3 15,005 0.40
Short-term borrowings 36.0 18 0.20 267.4 121 0.18
Qualifying debt 616.2 7,872 5.08 489.0 4,712 3.88
Total interest-bearing liabilities 16,304.1 20,105 0.49 15,830.7 19,838 0.50
Interest cost of funding earning assets 0.26 0.27
Non-interest-bearing liabilities
Non-interest-bearing demand deposits 12,422.2 11,130.0
Other liabilities 617.0 608.7
Stockholders’ equity 3,180.1 3,056.1
Total liabilities and stockholders' equity
Net interest income and margin (4) 3.71 % 4.19 %

All values are in US Dollars.

(1)     Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $7.2 million and $7.0 million for the three months ended September 30, 2020 and June 30, 2020, respectively.

(2)    Included in the yield computation are net loan fees of $18.2 million and $27.8 million for the three months ended September 30, 2020 and June 30, 2020, 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.

Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields and Rates
Unaudited
Three Months Ended
September 30, 2020 September 30, 2019
Average Balance Interest Average Yield / <br>Cost Average Balance Interest Average Yield /<br>Cost
( in millions) ( in thousands) ( in millions) ( in thousands)
Interest earning assets
Loans:
Commercial and industrial 4.17 % 5.72 %
CRE - non-owner occupied 5,393.1 63,813 4.72 4,722.2 69,421 5.85
CRE - owner occupied 2,232.7 26,645 4.85 2,259.6 30,099 5.38
Construction and land development 2,209.3 32,293 5.83 2,226.3 39,177 7.00
Residential real estate 2,396.0 23,358 3.88 1,701.6 20,913 4.88
Consumer 38.5 473 4.89 69.5 990 5.65
Loans held for sale 20.3 — — 0.2 — —
Total loans (1), (2), (3) 24,977.8 276,623 4.47 19,402.4 278,932 5.79
Securities:
Securities - taxable 2,811.6 14,769 2.09 3,073.1 20,575 2.66
Securities - tax-exempt 1,556.4 12,634 4.07 1,062.1 9,085 4.30
Total securities (1) 4,368.0 27,403 2.79 4,135.2 29,660 3.08
Cash and other 1,926.4 817 0.17 1,009.9 7,016 2.76
Total interest earning assets 31,272.2 304,843 3.97 24,547.5 315,608 5.20
Non-interest earning assets
Cash and due from banks 163.8 346.8
Allowance for credit losses (325.0) (162.6)
Bank owned life insurance 175.0 172.5
Other assets 1,237.4 1,094.2
Total assets
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts 0.16 % 0.81 %
Savings and money market 10,170.1 5,661 0.22 8,456.5 26,608 1.25
Certificates of deposit 1,845.5 5,091 1.10 2,250.4 11,685 2.06
Total interest-bearing deposits 15,651.9 12,215 0.31 13,195.5 43,354 1.30
Short-term borrowings 36.0 18 0.20 17.5 47 1.07
Qualifying debt 616.2 7,872 5.08 387.8 5,785 5.92
Total interest-bearing liabilities 16,304.1 20,105 0.49 13,600.8 49,186 1.43
Interest cost of funding earning assets 0.26 0.79
Non-interest-bearing liabilities
Non-interest-bearing demand deposits 12,422.2 8,916.6
Other liabilities 617.0 579.6
Stockholders’ equity 3,180.1 2,901.4
Total liabilities and stockholders' equity
Net interest income and margin (4) 3.71 % 4.41 %

All values are in US Dollars.

(1)    Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $7.2 million and $6.4 million for the three months ended September 30, 2020 and 2019, respectively.

(2)    Included in the yield computation are net loan fees of $18.2 million and $13.4 million for the three months ended September 30, 2020 and 2019, 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.

Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields and Rates
Unaudited
Nine Months Ended
September 30, 2020 September 30, 2019
Average Balance Interest Average Yield / <br>Cost Average Balance Interest Average Yield /<br>Cost
( in millions) ( in thousands) ( in millions) ( in thousands)
Interest earning assets
Loans:
Commercial and industrial 4.69 % 5.88 %
CRE - non-owner occupied 5,325.6 198,335 4.99 4,468.4 199,372 5.98
CRE - owner occupied 2,262.4 83,353 5.02 2,279.9 90,113 5.39
Construction and land development 2,115.0 95,451 6.05 2,210.2 118,687 7.20
Residential real estate 2,294.9 67,122 3.91 1,535.9 56,275 4.90
Consumer 49.2 1,922 5.22 64.5 2,844 5.90
Loans held for sale 21.3 324 2.03 0.1 — —
Total loans (1), (2), (3) 23,624.9 843,085 4.83 18,514.6 808,099 5.92
Securities:
Securities - taxable 2,826.0 48,271 2.28 2,865.6 60,641 2.83
Securities - tax-exempt 1,376.6 34,753 4.25 979.7 27,053 4.62
Total securities (1) 4,202.6 83,024 2.93 3,845.3 87,694 3.29
Cash and other 1,136.2 4,188 0.49 700.7 13,831 2.64
Total interest earning assets 28,963.7 930,297 4.39 23,060.6 909,624 5.38
Non-interest earning assets
Cash and due from banks 173.9 225.9
Allowance for credit losses (263.2) (157.8)
Bank owned life insurance 178.7 171.4
Other assets 1,206.1 1,098.6
Total assets
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts 0.29 % 0.86 %
Savings and money market 9,546.3 28,875 0.40 7,854.9 73,283 1.25
Certificates of deposit 2,113.0 23,331 1.47 2,114.6 31,553 1.99
Total interest-bearing deposits 15,070.2 59,736 0.53 12,481.4 121,030 1.30
Short-term borrowings 150.1 570 0.51 129.4 2,257 2.33
Qualifying debt 500.5 17,833 4.76 376.2 17,898 6.36
Total interest-bearing liabilities 15,720.8 78,139 0.66 12,987.0 141,185 1.45
Interest cost of funding earning assets 0.36 0.82
Non-interest-bearing liabilities
Non-interest-bearing demand deposits 10,813.2 8,118.8
Other liabilities 622.9 495.6
Stockholders’ equity 3,102.3 2,797.3
Total liabilities and stockholders' equity
Net interest income and margin (4) 4.03 % 4.56 %

All values are in US Dollars.

(1)    Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $20.6 million and $18.7 million for the nine months ended September 30, 2020 and 2019, respectively.

(2)    Included in the yield computation are net loan fees of $61.5 million and $37.9 million for the nine months ended September 30, 2020 and 2019, respectively.

(3)    Includes non-accrual loans.

(4)    Net interest margin is computed by dividing net interest income by total average earning assets.

Western Alliance Bancorporation and Subsidiaries
Operating Segment Results
Unaudited
Balance Sheet: Regional Segments
Consolidated Company Arizona Nevada Southern California Northern California
At September 30, 2020: (dollars in millions)
Assets:
Cash, cash equivalents, and investment securities $ 6,119.8 $ 1.5 $ 8.8 $ 1.8 $ 2.3
Loans, net of deferred loan fees and costs 26,014.0 4,388.1 2,612.2 2,376.7 1,785.8
Less: allowance for credit losses (310.5) (57.0) (36.4) (31.5) (19.3)
Total loans 25,703.5 4,331.1 2,575.8 2,345.2 1,766.5
Other assets acquired through foreclosure, net 8.6 — 8.5 — —
Goodwill and other intangible assets, net 299.0 — 23.2 — 153.9
Other assets 1,204.6 47.8 60.1 16.2 20.1
Total assets $ 33,335.5 $ 4,380.4 $ 2,676.4 $ 2,363.2 $ 1,942.8
Liabilities:
Deposits $ 28,843.4 $ 8,541.5 $ 4,733.9 $ 3,502.0 $ 2,741.1
Borrowings and qualifying debt 628.8 — — — —
Other liabilities 639.3 28.7 18.8 8.6 20.0
Total liabilities 30,111.5 8,570.2 4,752.7 3,510.6 2,761.1
Allocated equity: 3,224.0 576.4 343.7 281.2 361.5
Total liabilities and stockholders' equity $ 33,335.5 $ 9,146.6 $ 5,096.4 $ 3,791.8 $ 3,122.6
Excess funds provided (used) — 4,766.2 2,420.0 1,428.6 1,179.8
No. of offices 49 10 16 9 3
No. of full-time equivalent employees 1,885 114 88 122 119
Income Statement:
Three Months Ended September 30, 2020: (in thousands)
Net interest income $ 284,738 $ 83,492 $ 46,625 $ 35,656 $ 28,353
Provision for (recovery of) credit losses 14,661 9,830 8,548 5,213 1,856
Net interest income after provision for credit losses 270,077 73,662 38,077 30,443 26,497
Non-interest income 20,606 1,771 2,391 1,186 2,381
Non-interest expense (124,092) (17,644) (15,800) (14,020) (12,885)
Income (loss) before income taxes 166,591 57,789 24,668 17,609 15,993
Income tax expense (benefit) 30,822 14,447 5,180 4,930 4,478
Net income $ 135,769 $ 43,342 $ 19,488 $ 12,679 $ 11,515
Nine Months Ended September 30, 2020: (in thousands)
Net interest income $ 852,158 $ 229,701 $ 139,328 $ 104,348 $ 85,345
Provision for (recovery of) credit losses 157,837 46,623 25,015 23,750 12,680
Net interest income after provision for credit losses 694,321 183,078 114,313 80,598 72,665
Non-interest income 46,985 4,943 7,355 3,269 6,450
Non-interest expense (359,372) (58,674) (44,414) (43,216) (38,460)
Income (loss) before income taxes 381,934 129,347 77,254 40,651 40,655
Income tax expense (benefit) 68,929 32,207 16,164 11,241 11,340
Net income $ 313,005 $ 97,140 $ 61,090 $ 29,410 $ 29,315
Western Alliance Bancorporation and Subsidiaries
--- --- --- --- --- --- --- --- --- --- --- --- ---
Operating Segment Results
Unaudited
Balance Sheet: National Business Lines
HOA <br>Services Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance Other NBLs Corporate & Other
At September 30, 2020: (dollars in millions)
Assets:
Cash, cash equivalents, and investment securities $ — $ — $ — $ — $ 26.6 $ 6,078.8
Loans, net of deferred loan fees and costs 280.0 1,686.7 2,329.3 2,099.3 8,451.8 4.1
Less: allowance for credit losses (2.3) (17.9) (41.5) (40.7) (63.9) —
Total loans 277.7 1,668.8 2,287.8 2,058.6 8,387.9 4.1
Other assets acquired through foreclosure, net — — — — 0.1 —
Goodwill and other intangible assets, net — — 119.3 0.1 2.5 —
Other assets 5.4 11.9 9.2 33.4 110.3 890.2
Total assets $ 283.1 $ 1,680.7 $ 2,416.3 $ 2,092.1 $ 8,527.4 $ 6,973.1
Liabilities:
Deposits $ 3,697.9 $ — $ 4,646.4 $ — $ 61.4 $ 919.2
Borrowings and qualifying debt — — — — — 628.8
Other liabilities (2.7) 91.8 5.4 0.9 56.8 411.0
Total liabilities 3,695.2 91.8 4,651.8 0.9 118.2 1,959.0
Allocated equity: 104.9 130.3 397.5 167.5 673.2 187.8
Total liabilities and stockholders' equity $ 3,800.1 $ 222.1 $ 5,049.3 $ 168.4 $ 791.4 $ 2,146.8
Excess funds provided (used) 3,517.0 (1,458.6) 2,633.0 (1,923.7) (7,736.0) (4,826.3)
No. of offices 1 1 10 1 5 (7)
No. of full-time equivalent employees 73 11 79 16 93 1,170
Income Statement:
Three Months Ended September 30, 2020: (in thousands)
Net interest income $ 22,184 $ 2,800 $ 48,013 $ 12,536 $ 46,582 $ (41,503)
Provision for (recovery of) credit losses (138) 781 (9,048) 2,200 (2,706) (1,875)
Net interest income after provision for credit losses 22,322 2,019 57,061 10,336 49,288 (39,628)
Non-interest income 134 — 3,126 — 2,924 6,693
Non-interest expense (9,896) (1,724) (11,530) (2,596) (12,335) (25,662)
Income (loss) before income taxes 12,560 295 48,657 7,740 39,877 (58,597)
Income tax expense (benefit) 2,889 68 11,191 1,780 9,172 (23,313)
Net income $ 9,671 $ 227 $ 37,466 $ 5,960 $ 30,705 $ (35,284)
Nine Months Ended September 30, 2020: (in thousands)
Net interest income $ 67,740 $ 6,351 $ 137,436 $ 39,442 $ 128,096 $ (85,629)
Provision for (recovery of) credit losses (2,198) 553 25,471 27,530 (4,737) 3,150
Net interest income after provision for credit losses 69,938 5,798 111,965 11,912 132,833 (88,779)
Non-interest income 350 — 9,247 — 4,108 11,263
Non-interest expense (29,965) (5,114) (36,188) (7,353) (35,674) (60,314)
Income (loss) before income taxes 40,323 684 85,024 4,559 101,267 (137,830)
Income tax expense (benefit) 9,361 380 19,461 893 23,083 (55,201)
Net income $ 30,962 $ 304 $ 65,563 $ 3,666 $ 78,184 $ (82,629)
Western Alliance Bancorporation and Subsidiaries
--- --- --- --- --- --- --- --- --- --- ---
Operating Segment Results
Unaudited
Balance Sheet: Regional Segments
Consolidated Company Arizona Nevada Southern California Northern California
At December 31, 2019: (dollars in millions)
Assets:
Cash, cash equivalents, and investment securities $ 4,471.2 $ 1.8 $ 9.0 $ 2.3 $ 2.2
Loans, net of deferred loan fees and costs 21,123.3 3,847.9 2,252.5 2,253.9 1,311.2
Less: allowance for credit losses (167.8) (31.6) (18.0) (18.3) (9.7)
Total loans 20,955.5 3,816.3 2,234.5 2,235.6 1,301.5
Other assets acquired through foreclosure, net 13.9 — 13.0 0.9 —
Goodwill and other intangible assets, net 297.6 — 23.2 — 154.6
Other assets 1,083.7 48.6 59.4 15.0 19.8
Total assets $ 26,821.9 $ 3,866.7 $ 2,339.1 $ 2,253.8 $ 1,478.1
Liabilities:
Deposits $ 22,796.5 $ 5,384.7 $ 4,350.1 $ 2,585.3 $ 2,373.6
Borrowings and qualifying debt 393.6 — — — —
Other liabilities 615.1 17.8 11.9 1.2 15.9
Total liabilities 23,805.2 5,402.5 4,362.0 2,586.5 2,389.5
Allocated equity: 3,016.7 453.6 301.0 253.3 312.5
Total liabilities and stockholders' equity $ 26,821.9 $ 5,856.1 $ 4,663.0 $ 2,839.8 $ 2,702.0
Excess funds provided (used) — 1,989.4 2,323.9 586.0 1,223.9
No. of offices 47 10 16 9 3
No. of full-time equivalent employees 1,835 108 89 120 112
Income Statements:
Three Months Ended September 30, 2019: (in thousands)
Net interest income $ 266,422 $ 68,828 $ 40,565 $ 33,630 $ 23,504
Provision for (recovery of) credit losses 3,803 103 (62) (189) 218
Net interest income (expense) after provision for credit losses 262,619 68,725 40,627 33,819 23,286
Non-interest income 19,441 1,821 2,677 1,079 1,917
Non-interest expense (126,152) (27,241) (15,211) (15,185) (12,379)
Income (loss) before income taxes 155,908 43,305 28,093 19,713 12,824
Income tax expense (benefit) 28,533 10,826 5,899 5,520 3,591
Net income $ 127,375 $ 32,479 $ 22,194 $ 14,193 $ 9,233
No. of offices 47 10 16 9 3
No. of full-time equivalent employees 1,814 106 89 121 116
Nine Months Ended September 30, 2019: (in thousands)
Net interest income $ 768,439 $ 183,772 $ 119,191 $ 95,751 $ 70,533
Provision for (recovery of) credit losses 15,303 1,705 166 611 (653)
Net interest income (expense) after provision for credit losses 753,136 182,067 119,025 95,140 71,186
Non-interest income 49,069 5,050 7,926 3,054 6,299
Non-interest expense (352,279) (72,183) (45,099) (44,890) (38,419)
Income (loss) before income taxes 449,926 114,934 81,852 53,304 39,066
Income tax expense (benefit) 78,819 28,733 17,189 14,925 10,939
Net income $ 371,107 $ 86,201 $ 64,663 $ 38,379 $ 28,127
Western Alliance Bancorporation and Subsidiaries
--- --- --- --- --- --- --- --- --- --- --- --- ---
Operating Segment Results
Unaudited
Balance Sheet: National Business Lines
HOA <br>Services Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance Other NBLs Corporate & Other
At December 31, 2019: (dollars in millions)
Assets:
Cash, cash equivalents, and investment securities $ — $ — $ — $ — $ 10.1 $ 4,445.8
Loans, net of deferred loan fees and costs 237.2 1,635.6 1,552.0 1,930.8 6,098.7 3.5
Less: allowance for credit losses (2.0) (13.7) (12.6) (12.6) (49.3) —
Total loans 235.2 1,621.9 1,539.4 1,918.2 6,049.4 3.5
Other assets acquired through foreclosure, net — — — — — —
Goodwill and other intangible assets, net — — 119.7 0.1 — —
Other assets 1.2 18.3 7.3 8.8 64.3 841.0
Total assets $ 236.4 $ 1,640.2 $ 1,666.4 $ 1,927.1 $ 6,123.8 $ 5,290.3
Liabilities:
Deposits $ 3,210.1 $ 0.1 $ 3,771.5 $ — $ 36.9 $ 1,084.2
Borrowings and qualifying debt — — — — — 393.6
Other liabilities 1.8 52.9 0.1 — 2.8 510.7
Total liabilities 3,211.9 53.0 3,771.6 — 39.7 1,988.5
Allocated equity: 84.5 131.6 317.5 158.5 494.3 509.9
Total liabilities and stockholders' equity $ 3,296.4 $ 184.6 $ 4,089.1 $ 158.5 $ 534.0 $ 2,498.4
Excess funds provided (used) 3,060.0 (1,455.6) 2,422.7 (1,768.6) (5,589.8) (2,791.9)
No. of offices 1 1 9 1 4 (7)
No. of full-time equivalent employees 75 12 76 16 75 1,152
Income Statement:
Three Months Ended September 30, 2019: (in thousands)
Net interest income $ 21,974 $ 3,394 $ 33,932 $ 12,845 $ 32,935 $ (5,185)
Provision for (recovery of) credit losses 60 (191) 895 1,956 1,210 (197)
Net interest income (expense) after provision for credit losses 21,914 3,585 33,037 10,889 31,725 (4,988)
Non-interest income 84 — 5,422 — 1,708 4,733
Non-interest expense (9,769) (1,845) (12,068) (2,197) (11,320) (18,937)
Income (loss) before income taxes 12,229 1,740 26,391 8,692 22,113 (19,192)
Income tax expense (benefit) 2,813 400 6,070 1,999 5,086 (13,671)
Net income $ 9,416 $ 1,340 $ 20,321 $ 6,693 $ 17,027 $ (5,521)
No. of offices 1 1 9 1 4 (7)
No. of full-time equivalent employees 76 12 73 15 69 1,137
Nine Months Ended September 30, 2019: (in thousands)
Net interest income $ 64,520 $ 10,278 $ 91,871 $ 39,279 $ 88,212 $ 5,032
Provision for (recovery of) credit losses 27 (136) 2,635 3,587 6,558 803
Net interest income (expense) after provision for credit losses 64,493 10,414 89,236 35,692 81,654 4,229
Non-interest income 268 — 10,946 — 3,915 11,611
Non-interest expense (27,777) (5,683) (33,971) (6,757) (31,729) (45,771)
Income (loss) before income taxes 36,984 4,731 66,211 28,935 53,840 (29,931)
Income tax expense (benefit) 8,506 1,088 15,229 6,655 12,383 (36,828)
Net income $ 28,478 $ 3,643 $ 50,982 $ 22,280 $ 41,457 $ 6,897
Western Alliance Bancorporation and Subsidiaries
---
Reconciliation of Non-GAAP Financial Measures
Unaudited Pre-Provision Net Revenue by Quarter:
--- --- --- --- --- --- --- --- --- --- ---
Three Months Ended
9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019
(in thousands)
Total non-interest income $ 20,606 $ 21,270 $ 5,109 $ 16,027 $ 19,441
Net interest income 284,738 298,400 269,020 271,973 266,422
Net revenue $ 305,344 $ 319,670 $ 274,129 $ 288,000 $ 285,863
Total non-interest expense 124,092 114,799 120,481 129,735 126,152
Pre-provision net revenue (1) $ 181,252 $ 204,871 $ 153,648 $ 158,265 $ 159,711
Less:
Provision for credit losses 14,661 92,000 51,176 3,964 3,803
Income tax expense 30,822 19,599 18,508 26,236 28,533
Net income $ 135,769 $ 93,272 $ 83,964 $ 128,065 $ 127,375 Efficiency Ratio by Quarter:
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Total non-interest expense $ 124,092 $ 114,799 $ 120,481 $ 129,735 $ 126,152
Divided by:
Total net interest income 284,738 298,400 269,020 271,973 266,422
Plus:
Tax equivalent interest adjustment 7,188 6,997 6,453 6,359 6,423
Total non-interest income 20,606 21,270 5,109 16,027 19,441
$ 312,532 $ 326,667 $ 280,582 $ 294,359 $ 292,286
Efficiency ratio - tax equivalent basis (2) 39.7 % 35.1 % 42.9 % 44.1 % 43.2 %
Tangible Common Equity:
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019
(dollars and shares in thousands)
Total stockholders' equity $ 3,224,046 $ 3,102,414 $ 2,999,633 $ 3,016,748 $ 2,923,063
Less: goodwill and intangible assets 298,987 296,860 297,234 297,607 297,994
Total tangible common equity 2,925,059 2,805,554 2,702,399 2,719,141 2,625,069
Plus: deferred tax - attributed to intangible assets 1,689 1,796 1,861 1,921 2,005
Total tangible common equity, net of tax $ 2,926,748 $ 2,807,350 $ 2,704,260 $ 2,721,062 $ 2,627,074
Total assets $ 33,335,506 $ 31,906,396 $ 29,158,227 $ 26,821,948 $ 26,324,245
Less: goodwill and intangible assets, net 298,987 296,860 297,234 297,607 297,994
Tangible assets 33,036,519 31,609,536 28,860,993 26,524,341 26,026,251
Plus: deferred tax - attributed to intangible assets 1,689 1,796 1,861 1,921 2,005
Total tangible assets, net of tax $ 33,038,208 $ 31,611,332 $ 28,862,854 $ 26,526,262 $ 26,028,256
Tangible common equity ratio (3) 8.9 % 8.9 % 9.4 % 10.3 % 10.1 %
Common shares outstanding 100,825 100,849 101,153 102,524 102,639
Tangible book value per share, net of tax (3) $ 29.03 $ 27.84 $ 26.73 $ 26.54 $ 25.60
Non-GAAP Financial Measures Footnotes
--- ---
(1) We believe this non-GAAP measurement is a key indicator of the earnings power of the Company.
(2) We believe this non-GAAP ratio provides a useful metric to measure the efficiency of the Company.
(3) We believe this non-GAAP metric provides an important metric with which to analyze and evaluate financial condition and capital strength. In addition, we believe that use of tangible equity and tangible assets improves the comparability to other institutions that have not engaged in acquisitions that resulted in recorded goodwill and other intangibles.

CONTACT:

Western Alliance Bancorporation

Dale Gibbons, 602-952-5476

20

walq32020earningspresent

EARNINGS CALL 3rd QUARTER 2020 October 23, 2020

Forward-Looking Statements This release contains forward-looking statements that relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Examples of forward-looking statements include, among others, statements we make regarding our expectations with regard to our business, financial and operating results, future economic performance and dividends, and the impact of the COVID-19 pandemic and related economic conditions. The forward-looking statements contained herein reflect our current views about future events and financial performance and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from historical results and those expressed in any forward-looking statement. Some factors that could cause actual results to differ materially from historical or expected results include, among others: the risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 as filed with the Securities and Exchange Commission; the potential adverse effects of the ongoing COVID-19 pandemic and any governmental or societal responses thereto, or other unusual and infrequently occurring events; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; inflation, interest rate, market and monetary fluctuations; increases in competitive pressures among financial institutions and businesses offering similar products and services; higher defaults on our loan portfolio than we expect; changes in management’s estimate of the adequacy of the allowance for credit losses; legislative or regulatory changes including in response to the COVID-19 pandemic such as the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) and the rules and regulations that may be promulgated thereunder; or changes in accounting principles, policies or guidelines (including changes related to CECL); supervisory actions by regulatory agencies which may limit our ability to pursue certain growth opportunities, including expansion through acquisitions; additional regulatory requirements resulting from our continued growth; management’s estimates and projections of interest rates and interest rate policy; the execution of our business plan; and other factors affecting the financial services industry generally or the banking industry in particular. Any forward-looking statement made by us in this release is based only on information currently available to us and speaks only as of the date on which it is made. We do not intend and disclaim any duty or obligation to update or revise any industry information or forward-looking statements, whether written or oral, that may be made from time to time, set forth in this press release to reflect new information, future events or otherwise. Non-GAAP Financial Measures This presentation contains both financial measures based on GAAP and non-GAAP based financial measures, which are used where management believes them to be helpful in understanding the Company’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the Company's press release as of and for the quarter ended September 30, 2020. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. 2 2

3rd Quarter 2020 | Financial Highlights Q3-20 Q2-20 Q3-19 Earnings & Profitability Net Interest Income $ 284.7 $ 298.4 $ 266.4 Net Income EPS Pre Provision Net Revenue1 181.3 204.9 159.7 Net Income 135.8 93.3 127.4 $135.8 million $1.36 EPS 1.36 0.93 1.24 Net Interest Margin 3.71% 4.19% 4.41% Efficiency Ratio1 39.7 35.1 43.2 1 1 ROAA 1.66 1.22 1.94 PPNR ROTCE ROTCE1 18.73 13.60 19.41 $181.3 million 18.73% Balance Sheet & Capital Total Loans, Gross $ 26,014 $ 25,029 $ 20,153 Total Deposits 28,843 27,545 22,441 Loan Growth Deposit Growth CET1 Ratio 10.0% 10.2% 10.3% TCE Ratio1 8.9% 8.9% 10.1% Tangible Book Value per Share1 $ 29.03 $ 27.84 $ 25.60 $985 million $1.3 billion Asset Quality 15.6%, annualized 18.8%, annualized Provision for Credit losses2 $ 14.7 $ 92.0 $ 3.8 Net Charge-Offs (Recoveries) 8.2 5.5 0.6 Tangible Book Provision in Excess of Net Charge-Offs 6.5 86.5 4.4 Value per Total Loan ACL/ Net Charge-Offs (Recoveries) / Avg. Loans 0.13% 0.09% (0.01)% Share1 Funded Loans Total Loan ACL / Funded Loans 1.37 1.39 0.86 NPAs3 / Total Assets 0.47 0.47 0.25 $29.03 1.37% 3 Dollars in millions, except EPS 1) Refer to slide 2 for further discussion of Non-GAAP financial measures. 2) Upon adoption of CECL on January 1, 2020, Provision for Credit Losses has been modified to also include amounts related to unfunded loan 3 commitments and investment securities. Prior period amounts have been restated to conform to the current presentation. 3 3) Nonperforming assets includes nonaccrual loans and repossessed assets.

Quarterly Consolidated Financial Results Q3-20 Q2-20 Q3-19 Q3 2020 Highlights Interest Income $ 304.8 $ 318.2 $ 315.6 1• Net Interest Income decreased $13.7 Interest Expense (20.1) (19.8) (49.2) million primarily as a result of changes in Net Interest Income $ 284.7 1 $ 298.4 $ 266.4 prepayment assumptions on PPP loans that resulted in reversal of $6.4 million in Gain on Sales & Valuation of Assets 5.9 2 4.6 3.4 net deferred loan fee accretion recognized BOLI Enhancement — 5.6 — in Q2-20 and a decrease of $4.2 million in Other 14.7 11.1 16.1 current quarter accretion Non-Interest Income $ 20.6 $ 21.3 $ 19.4 2• Gain on Sales and Valuation of Assets Net Revenue $ 305.3 $ 319.7 $ 285.8 consists of FMV gains of $5.9 million on Salaries and Employee Benefits (78.8) 3 (69.6) (71.0) equity securities and HFS loans Deposit Costs (3.2) (3.5) (11.5) 3• Salaries & Employee benefits increased Loss on OREO (0.1) — (3.4) primarily related to short-term incentive Other (42.0) (41.7) (40.3) accruals and a decrease in deferred compensation expense on PPP loan Non-Interest Expense $ (124.1) $ (114.8) $ (126.1) originations Pre-Provision Net Revenue1 $ 181.3 4 $ 204.9 $ 159.7 4• PPNR decreased $23.6 million primarily 2 Provision for Credit Losses (14.7) 5 (92.0) (3.8) as a result of a reduction in net interest Pre-Tax Income $ 166.6 $ 112.9 $ 155.9 income Income Tax (30.8) (19.6) (28.5) 5• Provision for Credit Losses decreased Net Income $ 135.8 $ 93.3 $ 127.4 $77.3 million due to improvement in Diluted Shares 100.1 100.0 102.5 economic forecasts relative to June 30 and loan growth in segments with lower Earnings Per Share $ 1.36 $ 0.93 $ 1.24 loss rates 4 Dollars in millions, except EPS 1) Refer to slide 2 for further discussion of Non-GAAP financial measures. 2) Upon adoption of CECL on January 1, 2020, Provision for Credit Losses has been modified to also include amounts related to unfunded 4 loan commitments and investment securities. Prior period amounts have been restated to conform to the current presentation.

Net Interest Drivers Q3 2020 Highlights $9.0 Total Investments and Yield Spot$40.0 4.00% Loans and Yield Spot Rate Rate6.50% $8.0 $35.0 5.79% 5.58% • Loan yields fell 35bps 2.83%3.50% 5.27% 4.50%5.50% $7.0 3.08% $30.0 4.82% following declines across 2.96% 2.98% 3.02% 4.47% $6.0 3.00% 4.50% most loan types, mainly driven 2.79% $25.0 $5.0 $25.0 $26.0 3.50% by loan mix and lower PPP $20.02.50% $23.2 $4.0 $21.1 yields $4.4 $4.7 $20.2 2.50% $4.1 $4.2 $15.0 $3.0 $4.0 2.00% • Yield on PPP loans of 1.76% $10.0 1.50% $2.0 (5.02% in Q2) includes 1.50% $1.0 $5.0 0.50% prepayment assumptions $0.0 $0.01.00% -0.50% related to forgivable amounts Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 • Cost of interest-bearing deposits decreased 9bps due Interest Bearing Deposits Spot Deposits, Borrowings, and Spot Rate Rate to repricing efforts in a lower $25.0 and Cost $40.0 Cost of Liability Funding 1.50% 0.27%1.50% 0.25% rate environment, driving total 0.87% $35.0 0.75% 0.64% 1.00% 1.30% 1.00% cost of funds down 2bps to $20.0 1.08% 0.30% 0.28% 0.50% 0.90% $30.0 0.28% 0.40% 0.31% 0.50% 0.00% $15.0 $25.0 -0.50% − Spot rate for cost of 0.00% $12.2 $13.0 $20.0 $9.9 -1.00% interest-bearing deposits $10.0 $15.8 -0.50% $8.8 $8.5 -1.50% of 27bps (15bps, including $14.9 $15.3 $15.0 $14.3 -2.00% non-interest DDA) driven $13.7 $10.0-1.00% $15.8 by posted rate changes $5.0 $13.7 -2.50% -1.50% $14.3 $14.9 $15.3 $5.0 -3.00% and pushing out high cost $0.0 -2.00%$0.0 -3.50% deposits Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 5 Dollars in billions, unless otherwise indicated Non-Interest Bearing Deposits Total Borrowings 5

Net Interest Income Net Interest Income, NIM, and Impacts on Quarterly NIM Average Interest Earning Assets Components NIM $298.4 7.50% $300.0 Q2 - 20 4.19 % $284.7 6.50% Impact of PPP Loans (0.13) $280.0 $272.0 $266.4 $269.0 Excess Liquidity (0.21) 5.50% $260.0 Loan Rates (0.09) 4.41% 4.39% 4.22% 4.19% 4.50% 3.84% Investment Yields (0.05) $240.0 4.15% Q3 - 20 3.71 % 3.50% 3.71% $220.0 2.50% $24,548 $25,147 $26,267 $29,326 $31,272 $200.0 1.50% Q3 2020 Highlights Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 • Higher liquidity levels from strong deposit growth and Net Interest Income Net Interest Margin PPP deferred fee recognition drove 48bps decline in NIM ex.PPP Avg. Int. Earning Assets NIM Forecasted Accretion on PPP Loans • NIM contraction driven by the reversal of PPP revenue $15.0 $13.9 Net PPP loan fees of $42.9MM received in Q2-20 will and excess liquidity are transitory and should mitigate be recognized over the estimated life of these loans over time $10.0 − Change in timing of PPP forgiveness assumptions $5.0 $6.9 $6.7 (-13bps) $4.7 $3.3 $4.3 $2.8 − Higher avg. liquidity relative to loans (-21bps) $0.0 Q2-20 Q3-20 Q4-20E Q1-21E Q2-21E Q3-21E Q4-21E • Continue to have asymmetric interest rate sensitivity Current Assumptions 6 Dollars in millions 6

Expenses and Efficiency1 Expenses and Efficiency Ratio Q3 2020 Highlights 50.0% 1 $180.0 • Efficiency ratio increased 460bps to 39.7% 44.1% compared to the prior quarter and decreased 43.2% 45.0% $160.0 42.9% 350bps from the same period last year 39.7% 1 $140.0 40.0% • Higher efficiency ratio was driven by higher compensation costs and a decline in net interest 35.1% $129.7 income resulting from PPP fee recognition $120.0 $124.1 35.0% $126.2 $120.5 $114.8 $100.0 • Excluding PPP net loan fees and interest, 30.0% efficiency ratio1 is 40.7% $80.0 25.0% $60.0 20.0% $40.0 15.0% $20.0 $0.0 10.0% Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Non-Interest Expenses Efficiency Ratio 7 Dollars in millions 1) Refer to slide 2 for further discussion of Non-GAAP financial measures. 7 7

Pre-Provision Net Revenue1, Net Income, and ROA 2.69% Q3 2020 Highlights $300.0 2.44% 2.37% 2.50% 2.24% 2.22% • PPNR ROA1 decreased 47 basis points from 1.94% 1.92% the prior quarter and decreased 22 basis $250.0 1.66% points from Q3-19 1.50% 1.22% 1.22% • ROA increased 44 basis points from the prior $200.0 quarter and decreased 28 basis points from $204.9 Q3-19 $181.3 0.50% $150.0 $158.3 $159.7 $153.6 $127.4 -0.50% $135.8 $100.0 $128.1 $93.3 -1.50% $50.0 $84.0 $0.0 -2.50% Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 PPNR Net Income PPNR ROA ROA 8 Dollars in millions 1) Refer to slide 2 for further discussion of Non-GAAP financial measures. 8

Consolidated Balance Sheet Q3-20 Q2-20 Q3-19 Q3 2020 Highlights Investments & Cash $ 6,120 $ 5,712 $ 5,020 1• Loans increased $985 million (3.9%) Loans 26,014 1 25,029 20,153 over prior quarter and $5.9 billion Allowance for Credit Losses (311) (311) (165) (29.1%) over prior year Other Assets 1, 513 1,476 1,316 2• Deposits increased $1.3 billion (4.7%) over prior quarter and $6.4 billion Total Assets $ 33,336 $ 31,906 $ 26,324 (28.5%) over prior year 3• Shareholders' Equity increased $122 2 Deposits $ 28,843 $ 27,545 $ 22,441 million over prior quarter and Borrowings 649 653 404 increased $301 million over prior year Other Liabilities 620 606 556 as a function of Net Income, partially Total Liabilities $ 30,112 $ 28,804 $ 23,401 offset by share repurchases, dividends and the adoption impact of Shareholders' Equity 3,224 3 3,102 2,923 CECL Total Liabilities and Equity $ 33,336 $ 31,906 $ 26,324 •4 Tangible Book Value/Share1 increased $1.19 (4.3%) over prior quarter and 1 Tangible Book Value Per Share $ 29.03 4 $ 27.84 $ 25.60 $3.43 (13.4%) over prior year 9 Dollars in millions 1) Refer to slide 2 for further discussion of Non-GAAP financial measures. 9

Five Quarter Loan Growth and Composition $5.9 Billion Year Over Year Growth Highlights Total Loans: Quarter-over-quarter Total Loans $20.2 $21.1 $23.1 $25.0 $26.0 loan growth of $985 million driven by Qtr. Change +$0.9 +$1.0 +$2.0 +$1.9 +$1.0 (in millions): C&I $ 892 $2.4 9.3% Construction & Land 103 $2.5 8.8% CRE, Non-OO 63 $2.3 $2.3 $2.2 Offset by decrease in: $2.2 $2.1 CRE, OO (43) $1.9 9.6% $5.4 20.8% Commercial & $2.0 $5.3 Residential & Consumer (30) $2.2 10.7% Industrial $5.3 Total $ 985 $2.2 8.5% $5.2 CRE, Owner $5.0 $2.3 Year-over-year loan growth of $5.9 Occupied 25.0% $2.3 billion driven by (in millions): $2.3 C&I1 $ 4,940 CRE, Non-Owner $2.3 11.4% Occupied Residential & Consumer 486 52.6% CRE, Non-OO 376 Construction & $12.8 $13.7 Land $11.2 Construction & Land 145 $9.4 $8.7 43.3% Offset by decrease in: Residential & CRE, OO (86) Consumer Total $ 5,861 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 10 Dollars in billions, unless otherwise indicated 1) Includes $1.7 billion of PPP loans as of September 30, 2020. 1010

Five Quarter Deposit Growth and Composition $6.4 Billion Year Over Year Growth Highlights Total Deposits $22.4 $22.8 $24.8 $27.5 $28.8 Quarter-over-quarter deposit growth of $1.3 billion driven by (in millions): Qtr. Change +$1.0 +$0.4 +$2.0 +$2.7 +$1.3 Non-Interest Bearing DDA $ 777 Savings and MMDA 752 $1.7 5.9% Interest-Bearing DDA 46 $2.0 Offset by decreases in: CDs (276) $2.4 Total $ 1,299 $10.6 $2.1 9.4% $2.4 36.7% $9.8 Year-over-year deposit growth of $6.4 $9.0 billion driven by (in millions): $9.1 40.4% $9.1 Non-Interest Bearing DDA $ 4,257 Non-Interest $3.6 12.3% Savings and MMDA 1,517 Bearing DDA $3.5 Interest-Bearing DDA 1,045 $3.5 Interest Bearing Offset by decreases in: DDA $2.5 11.2% $2.8 CDs (416) Savings and $13.0 Total $ 6,403 MMDA $12.2 45.1% $9.9 $8.7 39.0% $8.5 CDs Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 11 Dollars in billions, unless otherwise indicated 1111

Payment Deferral Update COVID Related Loan Payment Deferrals Q3 2020 Highlights COVID Loan Deferrals June 30, 2020 September 30, 2020 • Declining need for customer relief % of % of % Deferrals Portfolio Deferrals Outstanding Portfolio Reduction • Deferrals declined $1.6bn or 55% Hotel Franchise Finance $1,695 82.9% $928 $2,099 44.2% (45%) during Q3 Gaming 190 37.3% 18 510 3.6% (90%) − 98% of expired deferrals are CRE Investor 498 15.6% 168 3,229 5.2% (66%) current CRE Owner-Occupied 137 6.6% 15 2,014 0.8% (89%) − New requests since early July Residential Real Estate 180 7.5% 128 2,387 5.3% (29%) have been minimal C&I 108 1.1% 37 11,010 0.3% (65%) − Excluding the HFF portfolio, Construction 45 2.2% 1 2,195 0.1% (97%) deferrals account for 1.6% of the loan portfolio Tech & Innovation 16 0.7% 8 2,321 0.4% (47%) Other 5 1.7% 0 247 0.0% (100%) • Expected that $1.1 billion of Total $2,873 11.5% $1,304 $26,014 5.0% (55%) remaining deferrals will expire during Q4 and resume paying as originally agreed 12 Dollars in millions 1212

Asset Quality Classified Assets Q3 2020 Highlights $350 $326 $298 • Total Classified Assets of $326 million (0.98% to Total Assets) $300 increased $28 million in Q3 $247 $250 $171 $205 $149 – Non-Performing Loans + OREO of $155 million (47bps $200 to Total Assets) an increase of $6 million in Q3 $161 $150 $150 $139 • Special Mention loans increased $81 million, primarily driven $91 $100 by previously identified segments particularly impacted by $140 $146 $86 COVID, such as hotel and travel $50 $50 $56 $0 $16 $14 $11 $9 $9 • Over last 5+ years, less than 1% of Special Mention loans Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 have migrated to loss OREO Non-Performing Loans 1 Classified Accruing Loans Special Mention Loans Asset Quality Ratios 2.50% $600 1.83% 0.98% 1.58% 1.00% 0.94% $500 1.16% 0.84% 0.85% 0.86% 1.50% $400 0.45% $477 0.64% $300 $396 0.50% 0.47% 0.47% 0.50% 0.33% $200 0.25% 0.26% $234 -0.50% $100 $180 $104 $0 0.00%-1.50% Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Special Mention Loans SM to Funded Loans Classified Assets to Total Assets 13 Dollars in millions Non-Performing Loans + OREO to Total Assets 1) Includes HFS loans 1313

CECL and Allowance for Credit Losses (“ACL”) ACL Reserve Build Q3 2020 Highlights • Provision expense of $14.7 million for Q3, primarily driven by balance sheet growth • Total ACL balance of $361 million represents an increase of $7 million from Q2, primarily due to growth in unfunded commitments from Q3 loan origination activity Q2-20 Balance Sheet Outlook Net Charge- Q3-20 Growth Adjustment Offs & Other • Loan ACL balance of $355 million, Allowance for Credit Losses increased $8 million from Q2 $400 $354 $361 $350 $7 $6 $36 $44 $300 $268 $3 $250 $30 $200 $181 $184 $7 $9 $7 $9 $150 $311 $311 $235 $100 $165 $168 $50 $0 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Allowance for Loan & Lease Losses Unfunded Loan Commits. 1 Credit Discounts HTM Securities 14 Dollars in millions 1) Included as a component of other liabilities on the balance sheet 1414

Credit Losses and ACL Ratios Loan ACL Adequacy Ratios Q3 2020 Highlights 3.00% 150% • Total Loan ACL / Funded Loans decreased 2bps to 1.37% in 2.50% 120% 120% 130% Q3 as a result of reduced provision expense 112% 2.00% 112% 110% − Excluding PPP at 1.46% 92% 1.50% 1.39% 90% • Total Provision Expense decreased to $14.7 million, driven by 1.14% 1.37% loan growth in lower loss segments and improved 0.86% 1.00% 0.84% 70% macroeconomic factors 0.50% 50% • Net Charge-Offs of $8.2 million (13bps) compared to $5.5 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 million, 9bps, in Q2-20 Total Loan ACL / Funded Loans Total Loan ACL / Non-Performing Loans + Classified Loans Provision for Loan Credit Losses1 Gross Charge-offs and Recoveries $8.8 $6.6 Gross Charge-Offs Recoveries $8.0 $6.0 $5.7 $5.6 $4.0 $80.7 $45.2 $2.0 $2.1 $2.2 $0.1 $0.0 $8.1 $4.0 $4.0 ($0.2) ($0.6) $8.2 ($2.0)-$2.0 ($0.9) ($0.2) ($4.0)-$4.0 ($2.7) Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 ($3.3) ($6.0)-$6.0 For Unfunded Commitments 2 For Loan Losses Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 15 Dollars in millions ($8.0) 1) Does not include provision for (reversal of) credit losses on HTM Investment Securities of $0.3MM Q1-20, $4.7MM Q2-20 and ($1.7MM) Q3-20 1515 2) Included as a component of provision for credit losses in the income statement

Capital Accumulation Robust Capital Levels Q3 2020 Highlights 11.3% 11.2% 11.0% 11.1% Common Equity Tier 1 10.6% 10.3% 10.2% • CET1 remains strong at 10.0% 10.0% 10.1% 10.3% 10.0% Tangible Common Equity / Tangible Assets1 9.1% 9.4% 9.0% 8.9% 8.9% • TCE / TA flat from the prior quarter at 8.9% 8.6% 8.0% − Excluding PPP loans 9.3% Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 1 1 1 Tangible Book Value per Share CET1 Peer CET1 TCE/TA Peer TCE/TA Long Term Growth in TBV per Share1 • Q3 TBVPS grew $1.19 to $29.03, or 13.4% year- WAL over-year WAL with Dividends Added Back 197% • Tangible book value per share has increased 3x Peer Avg 185% Peer Avg with Dividends Added Back that of peers over the last 5 and a half years 81% 61% 2014 2015 2016 2017 2018 2019 MRQ 2 16 1) Refer to slide 2 for further discussion of Non-GAAP financial measures 2) MRQ is Q3-20 for WAL and Q2-20 for WAL Peers Note: Peers consist of 65 major exchange traded banks with total assets between $15B and $150B as of June 30, 2020, 1616 excluding target banks of pending acquisitions; S&P Global Market Intelligence.

Selected Portfolios Hotel Franchise Finance ($2.1 bn) Tech & Innovation: Investor Dependent ($1.3 bn) Financial flexibility is maximized Primarily focused on established Statistics Statistics through deep industry expertise, strong growth companies with successful Loan ACL / Funded operating partners, and conservative Loan ACL / Funded products and strong investor support, Loans: 2.01% underwriting structure Loans: 2.75% which provides greater flexibility • National occupancy reaching ~49% for • Significant sponsor support continues Classified / Loans: all hotels (end of September) Classified / Loans: − Since 3/1/20, 65 clients raised 1.32% 3.74% − With low leverage, select service $1.7 Bn in capital Deferrals of $928 MM hotels can cover operating Deferrals of $8 MM • 87% of loans have >6 months liquidity (44%) expenses at ~40% - 50% (<1%) as companies are reducing burn and occupancy expanding their deposit balances • Strong and sophisticated sponsor • Deposits to loans grew from 2.5:1 at backing provides ongoing support Q2 to 3:1 by the end of Q3 CRE: Retail ($674 mm) Gaming ($510 mm) Statistics Limited merchandise strip retail Statistics Focused on off-strip, middle market exposure primarily focus on local gaming-linked companies driven by Loan ACL / Funded services Loan ACL / Funded local demand factors Loans: 1.91% • No destination mall exposure Loans: 2.69% • 100% of locations are open for • National averages of rent collections for operation Classified / Loans: Classified / Loans: All casino borrowers are performing at 1.33% CRE Retail shopping center tenants 0.0% • Statistics have increased from ~50% in May to or above plan upon reopening LoanDeferrals ACL / Funded of $31 Loans: MM ~80% in August Deferrals of $18 MM 2.79%(5%) – Throughout 2020, WAL’s portfolio (4%) Adv. Graded / Loans: has modestly exceeded the 6.9% national averages 17 1717

Management Outlook • Balance Sheet Growth • Interest Margin • Pre-Provision Net Revenue • Asset Quality • Capital and Liquidity 18 1818

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