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The Company recorded a provision for credit losses of $31.2 million in the first quarter 2025, a decrease of $28.8 million from $60.0 million in the fourth quarter 2024, and an increase of $16.0 million from $15.2 million in the first quarter 2024. The provision for credit losses during the first quarter 2025 is primarily reflective of net charge-offs of $25.8 million and loan growth, as well as incremental qualitative adjustments on the CRE and construction portfolios.

The Company’s net interest margin in the first quarter 2025 was 3.47%, a decrease from 3.48% in the fourth quarter 2024, and a decrease from 3.60% in the first quarter 2024. The decrease in net interest margin from the fourth quarter 2024 was driven by lower yields on interest earning assets, partially offset by lower rates on interest-bearing liabilities due to a reduction in the federal funds target rate. The decrease in net interest margin from the first quarter 2024 was driven primarily by higher loan and securities balances, coupled with a lower rate environment that reduced yields on interest earning assets.

Non-interest income was $127.4 million for the first quarter 2025, compared to $171.9 million for the fourth quarter 2024, and $129.9 million for the first quarter 2024. The $44.5 million decrease in non-interest income from the fourth quarter 2024 was primarily due to decreases in net gain on loan origination and sale activities of $18.4 million, income from equity investments of $15.9 million, and other non-interest income of $5.6 million. The $2.5 million decrease in non-interest income from the first quarter 2024 was primarily driven by decreases in net loan servicing revenue and income from equity investments, partially offset by increases in service charges and loan fees and income from bank owned life insurance.

Net revenue totaled $778.0 million for the first quarter 2025, a decrease of $60.4 million or 7.2%, compared to $838.4 million for the fourth quarter 2024, and an increase of $49.2 million or 6.8%, compared to $728.8 million for the first quarter 2024.

Non-interest expense was $500.4 million for the first quarter 2025, compared to $519.0 million for the fourth quarter 2024, and $481.8 million for the first quarter 2024. The $18.6 million decrease in non-interest expense from the fourth quarter 2024 is due primarily to a decrease of $37.7 million in deposit costs driven by lower ECR rates, partially offset by an increase in salaries and employee benefits of $17.0 million. The $18.6 million increase in non-interest expense from the first quarter 2024 is primarily attributable to increased salaries and employee benefits of $27.5 million and data processing costs of $9.2 million. These increases were partially offset by decreased insurance costs of $21.0 million largely related to the FDIC special assessment charge of $17.6 million recognized in the first quarter 2024. The Company’s efficiency ratio, adjusted for deposit costs¹, was 55.8% for the first quarter 2025, compared to 51.1% in the fourth quarter 2024, and 57.3% for the first quarter 2024.

Income tax expense was $47.3 million for the first quarter 2025, compared to $42.5 million for the fourth quarter 2024, and $54.4 million for the first quarter 2024. The increase in income tax expense from the fourth quarter 2024 is primarily related to decreased investment tax credit benefits and tax-exempt income. The decrease in income tax expense from the first quarter 2024 is primarily related to decreased nondeductible insurance premiums and increased investment tax credit benefits.

Net income was $199.1 million for the first quarter 2025, a decrease of $17.8 million from $216.9 million for the fourth quarter 2024, and an increase of $21.7 million from $177.4 million for the first quarter 2024. Earnings per share totaled $1.79 for the first quarter 2025, compared to $1.95 for the fourth quarter 2024, and $1.60 for the first quarter 2024.

The Company views its pre-provision net revenue¹ ("PPNR") as a key metric for assessing the Company’s earnings power, which it defines as net revenue less non-interest expense. For the first quarter 2025, the Company’s PPNR¹ was $277.6 million, down $41.8 million from $319.4 million in the fourth quarter 2024, and up $30.6 million from $247.0 million in the first quarter 2024.

The Company had 3,562 full-time equivalent employees and 56 offices at March 31, 2025, compared to 3,524 full-time equivalent employees and 56 offices at December 31, 2024, and 3,312 full-time equivalent employees and 56 offices at March 31, 2024.

Balance Sheet

HFI loans, net of deferred fees, totaled $54.8 billion at March 31, 2025, compared to $53.7 billion at December 31, 2024, and $50.7 billion at March 31, 2024. The increase in HFI loans of $1.1 billion from the prior quarter was primarily driven by increases of $989 million and $172 million in commercial and industrial and commercial real estate non-owner occupied loans, respectively. The increase in HFI loans of $4.1 billion from March 31, 2024 was primarily driven by increases of $4.4 billion and $403 million in commercial and industrial and commercial real estate non-owner occupied loans, respectively, partially offset by decreases of $349 million and $277 million in residential real estate and construction and land development loans, respectively. HFS loans totaled $3.2 billion at March 31, 2025, compared to $2.3 billion at December 31, 2024, and $1.8 billion at March 31, 2024.

The Company's allowance for credit losses on HFI loans consists of an allowance for funded HFI loans and an allowance for unfunded loan commitments. The allowance for loan losses to funded HFI loans ratio was 0.71%, 0.70%, and 0.67% at March 31, 2025, December 31, 2024, and March 31, 2024, respectively. The allowance for credit losses, which includes the allowance for unfunded loan commitments, to funded HFI loans ratio was 0.77% at March 31, 2025 and December 31, 2024, and 0.74% at March 31, 2024. The Company is a party to credit linked note transactions which effectively transfer a portion of the risk of losses on reference pools of loans to the purchasers of the notes. The Company is protected from first credit losses on reference pools of loans totaling $8.5 billion, $8.6 billion, and $9.0 billion as of March 31, 2025, December 31, 2024, and March 31, 2024, respectively, under these transactions. However, as these note transactions are considered to be free standing credit enhancements, the allowance for credit losses cannot be reduced by the expected credit losses that may be mitigated by these notes. Accordingly, the allowance for loan and credit losses ratios include an allowance related to these pools of loans of $11.9 million as of March 31, 2025, $11.4 million as of December 31, 2024, and $14.2 million as of March 31, 2024. The allowance for credit losses to funded HFI loans ratio, adjusted to reduce the HFI loan balance by the amount of loans in covered reference pools, was 0.92% at March 31, 2025 and December 31, 2024, and 0.90% at March 31, 2024.

Deposits totaled $69.3 billion at March 31, 2025, an increase of $3.0 billion from $66.3 billion at December 31, 2024, and an increase of $7.1 billion from $62.2 billion at March 31, 2024. By deposit type, the increase from the prior quarter is attributable to increases of $3.2 billion and $520 million from non-interest bearing and savings and money market deposits, respectively, partially offset by decreases of $371 million from interest-bearing demand deposits and $331 million from certificates of deposits. From March 31, 2024, savings and money market deposits increased $5.5 billion and non-interest bearing deposits increased $3.6 billion, while interest-bearing demand deposits decreased $1.5 billion and certificates of deposit decreased $592 million. Non-interest bearing deposits were $22.0 billion at March 31, 2025, compared to $18.8 billion at December 31, 2024, and $18.4 billion at March 31, 2024.

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

The Company’s ratio of HFI loans to deposits was 79.0% at March 31, 2025, compared to 80.9% at December 31, 2024, and 81.5% at March 31, 2024.

Borrowings totaled $4.2 billion at March 31, 2025, $5.6 billion at December 31, 2024, and $6.2 billion at March 31, 2024. Borrowings decreased $1.4 billion from December 31, 2024 primarily due to decreases of $807 million in long-term and $615 million in short-term borrowings. The decrease in borrowings from March 31, 2024 is primarily due to a decrease in short-term borrowings of $3.2 billion, partially offset by an increase in long term borrowings of $1.2 billion.

Total equity was $7.2 billion at March 31, 2025, compared to $6.7 billion at December 31, 2024 and $6.2 billion at March 31, 2024. The increase in total equity from the prior quarter was due primarily to issuance of preferred stock from the Company's REIT subsidiary and net income of $199.1 million. Proceeds from the REIT preferred stock issuance totaled $293 million, net of issuance costs, and was recognized as a noncontrolling interest in subsidiary. These increases were offset in part by dividends to shareholders as cash dividends of $41.8 million ($0.38 per common share) and $3.2 million ($0.27 per depository share) were paid to stockholders during the first quarter 2025. The increase in equity from March 31, 2024 was primarily driven by the issuance of preferred stock from the Company's REIT subsidiary, net income, and net unrealized fair value gains on available-for-sale securities recorded in other comprehensive loss, net of tax, partially offset by dividends to stockholders.

The Company's common equity tier 1 capital ratio was 11.1% at March 31, 2025, compared to 11.3%, and 11.0% at December 31, 2024 and March 31, 2024, respectively. At March 31, 2025, tangible common equity, net of tax¹, was 7.2% of tangible assets¹ and total capital was 14.5% of risk-weighted assets. The Company’s tangible book value per share¹ was $54.10 at March 31, 2025, an increase of 3.5% from $52.27 at December 31, 2024, and an increase of 14.4% from $47.30 at March 31, 2024. The increase in tangible book value per share from December 31, 2024 and March 31, 2024 is primarily attributable to net income.

Total assets increased $2.1 billion, or 2.6%, to $83.0 billion at March 31, 2025 from $80.9 billion at December 31, 2024, and increased 7.9% from $77.0 billion at March 31, 2024. The increase in total assets from December 31, 2024 was primarily driven by increases in HFI and HFS loans coupled with investment securities, partially offset by a decrease in cash and due from banks. The increase in total assets from March 31, 2024 was primarily driven by increases in HFI and HFS loans and bank owned life insurance.

Asset Quality

Provision for credit losses totaled $31.2 million for the first quarter 2025, compared to $60.0 million for the fourth quarter 2024, and $15.2 million for the first quarter 2024. Net loan charge-offs in the first quarter 2025 totaled $25.8 million, or 0.20% of average loans (annualized), compared to $34.1 million, or 0.25%, in the fourth quarter 2024, and $9.8 million, or 0.08%, in the first quarter 2024.

Nonaccrual loans decreased $25 million to $451 million during the quarter and increased $52 million from March 31, 2024. Loans past due 90 days and still accruing interest totaled $44 million at March 31, 2025, zero at December 31, 2024, and $6 million at March 31, 2024 (excluding government guaranteed loans of $275 million, $326 million, and $349 million, respectively). Loans past due 30-89 days and still accruing interest totaled $182 million at March 31, 2025, an increase from $92 million at December 31, 2024, and from $117 million at March 31, 2024 (excluding government guaranteed loans of $161 million, $183 million, and $224 million, respectively).

Repossessed assets totaled $51 million at March 31, 2025, compared to $52 million at December 31, 2024, and $8 million at March 31, 2024. Classified assets totaled $1.2 billion at March 31, 2025, an increase of $186 million from $1.0 billion at December 31, 2024, and an increase of $414 million from $781 million at March 31, 2024.

The ratio of classified assets to Tier 1 capital plus the allowance for credit losses², a common regulatory measure of asset quality, was 15.9% at March 31, 2025, compared to 14.2% at December 31, 2024, and 12.0% at March 31, 2024.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live webcast to discuss its first quarter 2025 financial results at 12:00 p.m. ET on Tuesday, April 22, 2025. Participants may access the call by dialing 1-833-470-1428 and using access code 146564 or via live audio webcast using the website link https://events.q4inc.com/attendee/859895963. The webcast is also available via the Company’s website at www.westernalliancebancorporation.com. Participants should log in at least 15 minutes early to receive instructions. The call will be recorded and made available for replay after 3:00 p.m. ET April 22nd through 11:59 p.m. ET April 29th by dialing 1-855-762-8306, using access code 474821.

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.

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. 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, 2024, as filed with the Securities and Exchange Commission; adverse developments in the financial services industry generally and any related impact on depositor behavior; risks related to the sufficiency of liquidity; changes in international trade policies, tariffs and treaties affecting imports and exports, trade disputes, barriers to trade or the emergence of other trade restrictions, and their related impacts on macroeconomic conditions and customer behavior; the potential adverse effects of unusual and infrequently occurring events and any governmental or societal responses thereto; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; the impact on financial markets from geopolitical conflicts such as the wars in Ukraine and the Middle East; 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; increased foreclosures and ownership of real property; changes in management’s estimate of the adequacy of the allowance for credit losses; legislative or regulatory changes or changes in accounting principles, policies or guidelines; supervisory actions by regulatory agencies which may limit our ability to pursue certain growth opportunities, including expansion through acquisitions; additional regulatory requirements resulting from our continued growth; management’s estimates and projections of interest rates and interest rate policy; the execution of our business plan; and other factors affecting the financial services industry generally or the banking industry in particular.

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, except to the extent required by federal securities laws. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this press release might not occur, and you should not put undue reliance on any forward-looking statements.

About Western Alliance Bancorporation

With more than $80 billion in assets, Western Alliance Bancorporation (NYSE:WAL) is one of the country’s top-performing banking companies. Through its primary subsidiary, Western Alliance Bank, Member FDIC, clients benefit from a full spectrum of tailored commercial banking solutions and consumer products, all delivered with outstanding service by industry experts who put customers first. Major accolades include being ranked as a top U.S. bank in 2024 by American Banker and Bank Director and receiving #1 rankings on Extel’s (previously Institutional Investor’s) All-America Executive Team Midcap 2024 for Best CEO, Best CFO and Best Company Board of Directors. Serving clients across the country wherever business happens, Western Alliance Bank operates individual, full-service banking and financial brands with offices in key markets nationwide. For more information, visit westernalliancebank.com.