Western Alliance Bancorporation Reports First Quarter 2026 Financial Results

Western Alliance Bancorporation (NYSE:WAL):

FIRST QUARTER 2026 FINANCIAL RESULTS

Income Statement

The Company's first quarter 2026 financial results reflect the impact to provision for credit losses, arising from the charge-off of the remaining $126.4 million balance of the LAM loan. This impact was partially offset by $50.5 million in gains from security sales for the quarter. For reconciliations of the non-GAAP financial measures that exclude the effects of these actions, refer to the reconciliations.

Net interest income totaled $766.3 million in the first quarter 2026, which was relatively flat from $766.2 million in the fourth quarter 2025, but represented an increase of $115.7 million, or 17.8%, compared to the first quarter 2025. The slight increase in net interest income from the fourth quarter 2025 was primarily due to lower deposit and borrowing costs and an increase in average interest bearing assets, which were largely offset by declining yields on interest earning assets. The increase in net interest income from the first quarter 2025 was driven by an increase in average interest earning asset balances and lower rates on interest bearing liabilities, partially offset by an increase in average interest bearing liabilities balances and declining yields on interest earning assets.

The Company recorded a provision for credit losses of $213.2 million in the first quarter 2026, an increase of $140.2 million from $73.0 million in the fourth quarter 2025, and an increase of $182.0 million from $31.2 million in the first quarter 2025. The provision for credit losses during the first quarter 2026 was primarily driven by higher net charge-offs totaling $208.5 million, which included a charge-off of $126.4 million for the remaining balance of the LAM loan and a $26.1 million charge-off from the specific reserve previously established on the Cantor loan.

The Company's net interest margin was 3.54% in the first quarter 2026, an increase from 3.51% in the fourth quarter 2025, and an increase from 3.47% in the first quarter 2025. Net interest margin increased from the fourth quarter 2025 due to lower rates on deposits and short-term borrowings, partially offset by declining yields on interest earning assets. The increase in net interest margin from the first quarter 2025 was primarily driven by a reduction in interest bearing liability costs resulting from a lower rate environment, partially offset by declining yields on interest earning assets.

Non-interest income was $252.6 million for the first quarter 2026, compared to $214.7 million for the fourth quarter 2025, and $127.4 million for the first quarter 2025. The increase in non-interest income of $37.9 million from the fourth quarter 2025 was primarily due to increases in gain on sales of investment securities of $43.1 million and service charges and fees of $14.9 million, partially offset by a lower net gain on mortgage loan origination and sale activities of $18.4 million. The increase in non-interest income of $125.2 million from the first quarter 2025 was primarily driven by increases in gain on sales of investment securities, service charges and fees, net gain on mortgage loan origination and sale activities, and income from equity investments. These increases were partially offset by a decrease in net loan servicing revenue.

Net revenue totaled $1.0 billion for the first quarter 2026, an increase of $38.0 million, or 3.9%, compared to $980.9 million for the fourth quarter 2025, and an increase of $240.9 million, or 31.0%, compared to $778.0 million for the first quarter 2025.

Non-interest expense was $574.4 million for the first quarter 2026, compared to $552.2 million for the fourth quarter 2025, and $500.4 million for the first quarter 2025. The increase in non-interest expense of $22.2 million from the fourth quarter 2025 was primarily due to an increase of $21.2 million in other non-interest expense and $7.0 million in insurance costs. The increase in other non-interest expense was primarily driven by costs associated with Juris banking, which had comparable growth in service charges and fees within non-interest income, as well as OREO-related charges. Insurance costs increased primarily due to a reduction in the FDIC special assessment recognized in the fourth quarter 2025. These increases were partially offset by a $7.9 million reduction in deposit costs. The increase in non-interest expense of $74.0 million from the first quarter 2025 was primarily attributable to increased deposit costs of $26.5 million, increased salaries and employee benefits of $23.1 million, and a $19.4 million increase in other non-interest expense largely related to Juris banking. These increases were partially offset by decreased insurance costs of $13.2 million. The Company's efficiency ratio was 55.8% for the first quarter 2026, compared to 55.7% for the fourth quarter 2025, and 63.5% for the first quarter 2025. The Company's efficiency ratio, adjusted for deposit costs¹, was 47.5% for the first quarter 2026, compared to 46.5% in the fourth quarter 2025, and 55.8% for the first quarter 2025.

Income tax expense was $42.1 million for the first quarter 2026, compared to $62.5 million for the fourth quarter 2025, and $47.3 million for the first quarter 2025. The decrease in income tax expense from the fourth quarter 2025 and the first quarter 2025 was primarily driven by lower pre-tax income.

Net income was $189.2 million (or $251.3 million, as adjusted¹) for the first quarter 2026, a decrease of $104.0 million from $293.2 million for the fourth quarter 2025, and a decrease of $9.9 million from $199.1 million for the first quarter 2025. Earnings per share totaled $1.65 (or $2.22, as adjusted¹) for the first quarter 2026, compared to $2.59 for the fourth quarter 2025, and $1.79 for the first quarter 2025.

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 first quarter 2026, the Company's PPNR¹ was $444.5 million, up $15.8 million from $428.7 million in the fourth quarter 2025, and up $166.9 million from $277.6 million in the first quarter 2025.

¹ See Reconciliation of Non-GAAP Financial Measures.

Balance Sheet

HFI loans, net of deferred fees, totaled $59.1 billion at March 31, 2026, compared to $58.7 billion at December 31, 2025, and $54.8 billion at March 31, 2025. The increase in HFI loans of $465 million from the prior quarter was primarily driven by increases of $295 million and $113 million in commercial and industrial loans and residential real estate loans, respectively. The increase in HFI loans of $4.4 billion from March 31, 2025 was primarily driven by increases of $4.1 billion, $490 million, and $304 million in commercial and industrial, residential real estate, and commercial real estate non-owner occupied loans, respectively, partially offset by a decrease of $424 million in construction and land development loans. HFS loans totaled $3.9 billion at March 31, 2026, $3.5 billion at December 31, 2025, and $3.2 billion at March 31, 2025. The increase in HFS loans of $438 million from December 31, 2025 was primarily driven by increases of $345 million and $113 million in government-insured or guaranteed and agency-conforming mortgage loans, respectively. The increase in HFS loans of $698 million from March 31, 2025 was primarily driven by increases of $689 million and $110 million in government-insured or guaranteed and non-agency mortgage loans, respectively, partially offset by a $167 million decrease in agency-conforming mortgage loans.

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% at both at March 31, 2026 and December 31, 2025, and 0.71% , and March 31, 2025. The allowance for credit losses, which includes the allowance for unfunded loan commitments, to funded HFI loans ratio was 0.87% at both March 31, 2026 and December 31, 2025, and 0.77% at March 31, 2025. 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 $7.9 billion, $8.1 billion, and $8.5 billion as of March 31, 2026, December 31, 2025, and March 31, 2025, 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 $11.2 million as of March 31, 2026, $11.8 million as of December 31, 2025, and $11.9 million as of March 31, 2025. 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 1.00% at March 31, 2026, 1.01% at December 31, 2025, and 0.92% at March 31, 2025.

Deposits totaled $82.7 billion at March 31, 2026, an increase of $5.6 billion from December 31, 2025, and an increase of $13.4 billion from $69.3 billion at March 31, 2025. By deposit type, the increase from the prior quarter is primarily attributable to increases of $3.7 billion, $969 million, and $828 million from non-interest bearing deposits, interest-bearing demand deposits and savings and money market accounts, respectively. From March 31, 2025, non-interest bearing deposits, interest-bearing demand deposits, and savings and money market accounts increased $6.1 billion, $3.9 billion, and $3.7 billion, respectively. Non-interest bearing deposits totaled $28.1 billion at March 31, 2026, compared to $24.4 billion at December 31, 2025, and $22.0 billion at March 31, 2025.

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 71.5% at March 31, 2026, compared to 76.0% at December 31, 2025, and 79.0% at March 31, 2025.

Borrowings totaled $5.6 billion at March 31, 2026, $5.2 billion at December 31, 2025, and $4.2 billion at March 31, 2025. Borrowings increased $370 million from December 31, 2025 driven by a $676 million increase in short-term borrowings, partially offset by a $307 million decrease in long-term borrowings. Borrowings increased $1.5 billion from March 31, 2025, reflecting an increase in short-term borrowings of $2.0 billion, partially offset by a $529 million decrease in long-term borrowings.

Qualifying debt totaled $1.1 billion at March 31, 2026, consistent with the balance at December 31, 2025, and up from $898 million at March 31, 2025. The increase in qualifying debt from March 31, 2025 was primarily due to the issuance of $400 million of subordinated debt during the quarter ended December 31, 2025, 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 March 31, 2026, relatively flat from December 31, 2025, and up from $7.2 billion at March 31, 2025. Total equity was flat from the prior quarter, primarily due to net income of $189.2 million, partially offset by changes in accumulated other comprehensive income of $112 million and cash dividends paid during the first 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 $50.0 million during the first quarter of 2026 under the Company's $300 million share repurchase program. The increase in equity from March 31, 2025 was primarily driven by net income, partially offset by dividends to stockholders and share repurchases.

The Company's common equity tier 1 capital ratio was 11.0% at March 31, 2026 and December 31, 2025, compared to 11.1% at March 31, 2025. At March 31, 2026, tangible common equity, net of tax¹, was 6.8% of tangible assets¹ and total capital was 14.4% of risk-weighted assets. The Company's tangible book value per share¹ was $61.14 at March 31, 2026, relatively flat from $61.29 at December 31, 2025, and an increase of 13.0% from $54.10 at March 31, 2025. The increase in tangible book value per share from March 31, 2025 was primarily attributable to net income.

Total assets increased $6.1 billion, or 6.6%, to $98.9 billion at March 31, 2026 from $92.8 billion at December 31, 2025, and increased 19.0% from $83.0 billion at March 31, 2025. The increase in total assets from December 31, 2025 was primarily driven by increased cash as well as HFI and HFS loans. The increase in total assets from March 31, 2025 was primarily driven by increased cash, investment securities, and HFI and HFS loans.

¹ See Reconciliation of Non-GAAP Financial Measures.

Asset Quality

Provision for credit losses totaled $213.2 million for the first quarter 2026, compared to $73.0 million for the fourth quarter 2025, and $31.2 million for the first quarter 2025. Net loan charge-offs in the first quarter 2026 totaled $208.5 million, or 1.45% of average loans (annualized), compared to $44.6 million, or 0.31%, in the fourth quarter 2025, and $25.8 million, or 0.20%, in the first quarter 2025. Net loan charge-offs for the first quarter 2026 included charge-offs for the LAM and Cantor loans totaling $152.5 million. Excluding these two fraud-related charge-offs, net loan charge-offs¹ were $56.0 million, or 0.39% of average loans (annualized)¹ in the first quarter 2026.

Nonaccrual loans decreased $8 million to $492 million during the quarter and increased $41 million from March 31, 2025. Loans past due 90 days and still accruing interest totaled $56 million at March 31, 2026, $66 million at December 31, 2025, and $44 million at March 31, 2025 (excluding government guaranteed loans of $288 million, $290 million, and $275 million, respectively). Loans past due 30-89 days and still accruing interest totaled $157 million at March 31, 2026, an increase from $108 million at December 31, 2025, and a decrease from $182 million at March 31, 2025 (excluding government guaranteed loans of $94 million, $145 million, and $161 million, respectively). Criticized loans of $1.4 billion increased $75 million during the quarter and decreased $254 million from March 31, 2025.

Repossessed assets totaled $123 million at March 31, 2026, compared to $137 million at December 31, 2025, and $51 million at March 31, 2025. Classified assets of $1.1 billion at March 31, 2026 decreased $18 million from December 31, 2025, and decreased $125 million from March 31, 2025.

The ratio of classified assets to Tier 1 capital plus the allowance for credit losses², a common regulatory measure of asset quality, was 13.0% at March 31, 2026, compared to 13.3% at December 31, 2025, and 15.9% at March 31, 2025.

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 first quarter 2026 financial results at 12:00 p.m. ET on Wednesday, April 22, 2026. Participants may access the call by dialing 1-888-596-4144 and using access code 9350603 or via live audio webcast using the website link https://events.q4inc.com/attendee/403697580. 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 1:00 p.m. ET April 29th by dialing 1-800-770-2030, using access code 9350603.

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, 2025, 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; technological risks and developments and cyber threats, attacks or events; emerging external focus among regulators and other officials related to risks in connection with the development and use of artificial intelligence; 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; the outcome of legal proceedings regarding the Cantor Group V loan and the Leucadia Asset Management LLC loan, the amount of funds and/or collateral that may be available for repayment of such loans, and any adverse economic or other events impacting the collateral, borrower or guarantors with respect to such loans; 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.