Western Alliance Bancorporation Reports Fourth Quarter and Full Year 2025 Financial Results

Western Alliance Bancorporation (NYSE:WAL):

¹See Reconciliation of Non-GAAP Financial Measures.

Income Statement

Net interest income totaled $766.2 million in the fourth quarter 2025, an increase of $15.8 million, or 2.1%, from $750.4 million in the third quarter 2025, and an increase of $99.7 million, or 15.0%, compared to the fourth quarter 2024. The increase in net interest income from the third quarter 2025 was largely due to higher average interest earning asset balances. The increase in net interest income from the fourth quarter 2024 was driven by an increase in average interest earning asset balances and lower rates on interest bearing liabilities, partially offset by decreased yields on interest earning assets.

The Company recorded a provision for credit losses of $73.0 million in the fourth quarter 2025, a decrease of $7.0 million from $80.0 million in the third quarter 2025, and an increase of $13.0 million from $60.0 million in the fourth quarter 2024. The provision for credit losses during the fourth quarter 2025 was primarily driven by higher net charge-offs of $44.6 million and loan growth.

The Company's net interest margin was 3.51% in the fourth quarter 2025, a decrease from 3.53% in the third quarter 2025, and an increase from 3.48% in the fourth quarter 2024. Net interest margin decreased from the third quarter 2025 due to lower yields on interest earning assets, partially offset by lower rates on deposits and short-term borrowings. The decrease in net interest margin from the fourth quarter 2024 was primarily driven by the impact of a lower rate environment on interest earning asset yields, partially offset by lower rates on interest bearing liabilities.

Non-interest income was $214.7 million for the fourth quarter 2025, compared to $187.8 million for the third quarter 2025, and $171.9 million for the fourth quarter 2024. The increase in non-interest income of $26.9 million from the third quarter 2025 was primarily due to increases in service charges and fees of $33.1 million and net gain on mortgage loan origination and sale activities of $15.6 million. These increases were partially offset by a decrease in net loan servicing (loss) revenue of $20.5 million. The increase in non-interest income of $42.8 million from the fourth quarter 2024 was primarily driven by increases in service charges and fees, net gain on mortgage loan origination and sale activities, and other non-interest income, primarily due to an increase in rental income from OREO properties. These increases were partially offset by a decrease in net loan servicing (loss) revenue.

Net revenue totaled $980.9 million for the fourth quarter 2025, an increase of $42.7 million, or 4.6%, compared to $938.2 million for the third quarter 2025, and an increase of $142.5 million, or 17.0%, compared to $838.4 million for the fourth quarter 2024.

Non-interest expense was $552.2 million for the fourth quarter 2025, compared to $544.4 million for the third quarter 2025, and $519.0 million for the fourth quarter 2024. The increase in non-interest expense of $7.8 million from the third quarter 2025 was primarily due to increases of $8.2 million in salaries and employee benefits and $5.5 million in both legal, professional, and directors' fees and business development and marketing expenses, partially offset by decreases of $7.7 million in other non-interest expense, primarily related to OREO properties, and $6.8 million in insurance costs. The increase in non-interest expense of $33.2 million from the fourth quarter 2024 was primarily attributable to increased salaries and employee benefits of $36.3 million and data processing costs of $9.6 million, partially offset by decreased insurance costs of $19.0 million. The Company's efficiency ratio, adjusted for deposit costs¹, was 46.5% for the fourth quarter 2025, compared to 47.8% in the third quarter 2025, and 51.1% for the fourth quarter 2024.

Income tax expense was $62.5 million for the fourth quarter 2025, compared to $53.3 million for the third quarter 2025, and $42.5 million for the fourth quarter 2024. The increase in income tax expense from the third quarter 2025 and the fourth quarter 2024 was primarily driven by increased pre-tax income.

Net income was $293.2 million for the fourth quarter 2025, an increase of $32.7 million from $260.5 million for the third quarter 2025, and an increase of $76.3 million from $216.9 million for the fourth quarter 2024. Earnings per share totaled $2.59 for the fourth quarter 2025, compared to $2.28 for the third quarter 2025, and $1.95 for the fourth quarter 2024.

The Company believes its pre-provision net revenue¹ ("PPNR") is a key metric for assessing the Company's earnings power, which it defines as net revenue less non-interest expense. For the fourth quarter 2025, the Company's PPNR¹ was $428.7 million, up $34.9 million from $393.8 million in the third quarter 2025, and up $109.3 million from $319.4 million in the fourth quarter 2024.

The Company had 3,769 full-time equivalent employees and 57 offices at December 31, 2025, compared to 3,701 full-time equivalent employees and 57 offices at September 30, 2025, and 3,524 full-time equivalent employees and 56 offices at December 31, 2024.

¹ See Reconciliation of Non-GAAP Financial Measures.

Balance Sheet

HFI loans, net of deferred fees, totaled $58.7 billion at December 31, 2025, compared to $56.6 billion at September 30, 2025, and $53.7 billion at December 31, 2024. The increase in HFI loans of $2.0 billion from the prior quarter was primarily driven by an increase of $2.2 billion in commercial and industrial loans, partially offset by a decrease in commercial real estate non-owner occupied loans of $147 million. The increase in HFI loans of $5.0 billion from December 31, 2024 was primarily driven by increases of $4.8 billion, $472 million, and $326 million in commercial and industrial, commercial real estate non-owner occupied, and residential real estate loans, respectively, partially offset by decreases of $424 million and $142 million in construction and land development and commercial real estate owner occupied loans, respectively. HFS loans totaled $3.5 billion at December 31, 2025 and September 30, 2025, and $2.3 billion at December 31, 2024. The increase in HFS loans of $1.2 billion from December 31, 2024 was primarily driven by increases of $793 million, $204 million, and $132 million in government-insured or guaranteed, agency-conforming, and non-agency mortgage loans, respectively.

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 0.78%, 0.78%, and 0.70% at December 31, 2025, September 30, 2025, and December 31, 2024, respectively. The allowance for credit losses, which includes the allowance for unfunded loan commitments, to funded HFI loans ratio was 0.87% at December 31, 2025, 0.85% at September 30, 2025, and 0.77% at December 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 $8.1 billion, $8.2 billion, and $8.6 billion as of December 31, 2025, September 30, 2025, and December 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 $11.8 million as of December 31, 2025 and September 30, 2025, and $11.4 million as of December 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 1.01% at December 31, 2025, 1.00% at September 30, 2025, and 0.92% at December 31, 2024.

Deposits totaled $77.2 billion at December 31, 2025, a decrease of $88 million from September 30, 2025, and an increase of $10.8 billion from $66.3 billion at December 31, 2024. By deposit type, the decrease from the prior quarter is primarily attributable to a decrease of $2.3 billion from non-interest bearing deposits, partially offset by increases of $2.0 billion and $234 million in interest-bearing demand deposits and certificates of deposit, respectively. The modest $88 million decrease reflects not only changes in customer deposit mix, but also the fourth-quarter seasonal runoff in mortgage related balances, which accounted for a $3.1 billion decrease. From December 31, 2024, non-interest bearing, savings and money market, and interest-bearing demand deposits increased $5.5 billion, $3.4 billion, and $2.5 billion, respectively, partially offset by a decrease in certificates of deposit of $605 million. Non-interest bearing deposits totaled $24.4 billion at December 31, 2025, compared to $26.6 billion at September 30, 2025, and $18.8 billion at December 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 76.0% at December 31, 2025, compared to 73.3% at September 30, 2025, and 80.9% at December 31, 2024.

Borrowings totaled $5.2 billion at December 31, 2025, $3.9 billion at September 30, 2025, and $5.6 billion at December 31, 2024. Borrowings increased $1.4 billion from September 30, 2025 driven by a $2.9 billion increase in short-term borrowings, partially offset by a $1.5 billion decrease in long-term borrowings. Borrowings decreased $333 million from December 31, 2024, reflecting a $1.0 billion decrease in long-term borrowings, partially offset by an increase in short-term borrowings of $696 million.

Qualifying debt totaled $1.1 billion at December 31, 2025, compared to $681 million and $899 million at September 30, 2025 and December 31, 2024, respectively. The increase in qualifying debt from September 30, 2025 was primarily due to the issuance of $400 million of subordinated debt during the quarter ended December 31, 2025. The increase in qualifying debt from December 31, 2024 was primarily due to the issuance of $400 million of subordinated debt, partially offset by the repayment of $225 million of subordinated debt during the quarter ended June 30, 2025.

Total equity was $7.9 billion at December 31, 2025, compared to $7.7 billion at September 30, 2025, and $6.7 billion at December 31, 2024. The increase in total equity from the prior quarter was primarily due to net income of $293.2 million and net AOCI gains of $65 million, partially offset by cash dividends paid during the fourth quarter, comprised of $46.1 million or $0.42 per common share, $3.2 million or $0.27 per depositary share, and $7.1 million on preferred stock of the Company's REIT subsidiary. In addition, the Company repurchased 0.7 million shares for $57.5 million during the fourth quarter of 2025 under the Company's $300 million share repurchase program. The increase in equity from December 31, 2024 was primarily driven by net income and the issuance of preferred stock from the Company's REIT subsidiary, partially offset by dividends to stockholders and share repurchases.

The Company's common equity tier 1 capital ratio was 11.0% at December 31, 2025, compared to 11.3% at September 30, 2025 and December 31, 2024. At December 31, 2025, tangible common equity, net of tax¹, was 7.3% of tangible assets¹ and total capital was 14.5% of risk-weighted assets. The Company's tangible book value per share¹ was $61.29 at December 31, 2025, an increase of 4.7% from $58.56 at September 30, 2025, and an increase of 17.3% from $52.27 at December 31, 2024. The increase in tangible book value per share from September 30, 2025 and December 31, 2024 was primarily attributable to net income.

Total assets increased $1.8 billion, or 2.0%, to $92.8 billion at December 31, 2025 from $91.0 billion at September 30, 2025, and increased 14.6% from $80.9 billion at December 31, 2024. The increase in total assets from September 30, 2025 was primarily driven by increased HFI loans and investment securities, partially offset by a decrease in cash. The increase in total assets from December 31, 2024 was primarily driven by increases in HFI and HFS loans and investment securities.

Asset Quality

Provision for credit losses totaled $73.0 million for the fourth quarter 2025, compared to $80.0 million for the third quarter 2025, and $60.0 million for the fourth quarter 2024. Net loan charge-offs in the fourth quarter 2025 totaled $44.6 million, or 0.31% of average loans (annualized), compared to $31.1 million, or 0.22%, in the third quarter 2025, and $34.1 million, or 0.25%, in the fourth quarter 2024.

Nonaccrual loans decreased $22 million to $500 million during the quarter and increased $24 million from December 31, 2024. Loans past due 90 days and still accruing interest totaled $66 million at December 31, 2025, $49 million at September 30, 2025, and zero at December 31, 2024 (excluding government guaranteed loans of $290 million, $282 million, and $326 million, respectively). Loans past due 30-89 days and still accruing interest totaled $108 million at December 31, 2025, a decrease from $196 million at September 30, 2025, and an increase from $92 million at December 31, 2024 (excluding government guaranteed loans of $145 million, $149 million, and $183 million, respectively). Criticized loans of $1.3 billion decreased $15 million during the quarter and decreased $73 million from December 31, 2024.

Repossessed assets totaled $137 million at December 31, 2025, compared to $130 million at September 30, 2025, and $52 million at December 31, 2024. Classified assets of $1.1 billion at December 31, 2025 decreased $41 million from September 30, 2025, and increased $79 million from December 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 13.3% at December 31, 2025, compared to 14.3% at September 30, 2025, and 14.2% at December 31, 2024.

¹ See Reconciliation of Non-GAAP Financial Measures.

² The allowance for credit losses used in this ratio is calculated in accordance with regulatory capital rules.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live webcast to discuss its fourth quarter and full year 2025 financial results at 12:00 p.m. ET on Tuesday, January 27, 2026. Participants may access the call by dialing 1-833-470-1428 and using access code 336835 or via live audio webcast using the website link https://events.q4inc.com/attendee/372994694. 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 January 27th through 1:00 p.m. ET February 3rd by dialing 1-866-813-9403, using access code 931710.

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, including our deposits, liquidity and funding, changes in economic conditions and related impacts on the Company's business, 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 and the Company's subsequent Quarterly Reports on Form 10-Q, each as filed with the Securities and Exchange Commission; adverse developments in the financial services industry generally 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; any adverse determination by a court regarding the Cantor Group V loan and any adverse economic or other events impacting the collateral, borrower or guarantors with respect to such loan; 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 applicable law. 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

Western Alliance Bancorporation (NYSE:WAL) is one of the country's top-performing banking companies. Its primary subsidiary, Western Alliance Bank, Member FDIC, is a leading national bank for business that puts customers first, delivering tailored business banking solutions and consumer products backed by outstanding, personalized service and specific expertise in more than 30 industries and sectors. With $90 billion in assets and offices nationwide, Western Alliance has ranked as a top U.S. bank by American Banker and Bank Director since 2016. In 2025, Western Alliance Bancorporation was #2 for Best CEO, Best CFO and Best Company Board of Directors on Extel's All-America Executive Team Midcap Banks list. For more information on offerings, subsidiaries and affiliates, visit www.westernalliancebank.com or follow Western Alliance Bank on LinkedIn