Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2025 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from__________ to __________ Commission file number: 001-32550 One E. Washington Street, Suite 1400 Phoenix Arizona 85004 (Address of principal exe ...

Group 1 - Western Alliance Bancorporation (NYSE: WAL) exceeded top line expectations for its second fiscal quarter due to strong net interest income [1] - The company experienced double-digit earnings growth in the second quarter, driven by a favorable interest rate environment [1] - Western Alliance successfully managed to grow both its earnings and net interest income during this period [1]

Financial Data and Key Metrics Changes - Western Alliance Bancorporation reported strong financial results in Q2 2025, with net interest income of nearly $700 million, growing 7.2% quarter over quarter and approximately 29% annualized [11][15] - The bank generated over $1 billion in sequential loan growth for the second consecutive quarter, funded by nearly $2 billion in quarterly deposit growth [11] - Net interest margin increased by six basis points sequentially to above 3.5%, driven by robust average earning asset growth and lower interest-bearing deposit costs [11][18] - Return on average tangible common equity reached 14.9%, and return on average assets was 1.1%, both significantly higher than Q1 [13] Business Line Data and Key Metrics Changes - HFI loans grew by $1.2 billion quarterly, with C&I loans contributing over two-thirds of the growth, particularly from regional banking and innovation sectors [20] - Non-interest income rose 16.4% quarter over quarter to $148 million, with mortgage loan production volume increasing by 25% year over year [15] - The bank's mortgage banking revenue was approximately $78 million, with core mortgage banking revenue tracking flat year over year [15] Market Data and Key Metrics Changes - Deposits increased by $1.8 billion in Q2, with significant growth in non-interest bearing and savings products, while wholesale brokered deposits declined by $300 million [21] - Regional banking deposits rose nearly $800 million, reflecting strong relationship momentum with commercial clients [22] - The digital asset banking program contributed $400 million in quarterly growth, indicating a positive trend in this market segment [22] Company Strategy and Development Direction - The company plans to unify six legacy division bank brands under the Western Bank brand by year-end, enhancing its marketing presence [13] - Management remains focused on achieving organic growth up to the $100 billion large financial institution level over the next 18 months [37] - The bank is optimistic about future deposit growth driven by regulatory changes and new deposit strategies under the new CFO [84] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of asset quality, expecting criticized assets to decline in the coming quarters [12][32] - The bank anticipates net interest income growth of 8% to 10% for the year, supported by strong loan growth and delayed rate cuts [30] - Management highlighted the importance of maintaining a strong capital base, with a CET1 ratio expected to remain above 11% [29] Other Important Information - The bank's total assets increased to $86.7 billion, reflecting strong loan and deposit growth [19] - The transition of CFO responsibilities to Vishal is set for early Q4, with a thorough transition period planned [10] Q&A Session Summary Question: CFO Transition and Focus Areas - Dale Gibbons expressed excitement about the transition, emphasizing the opportunity to focus on deposit services and growth initiatives [35] - Kenneth Vecchione confirmed that the transition does not signal a change in the bank's strategic direction [37] Question: Deposit Growth Outlook - Dale Gibbons provided insights on the expected cadence of deposit flows, indicating confidence in reaching the $8 billion target despite seasonal trends [38] Question: Fee Income Growth - Management anticipates an increase in fee income driven by commercial banking activities, while mortgage-related revenue is expected to remain flat [45][46] Question: Expense Guidance - Kenneth Vecchione explained that the increase in expenses is primarily due to deposit-related costs, with a focus on maintaining efficiency [47] Question: Margin and Deposit Rates - Management indicated that net interest margin is expected to continue improving, with a focus on managing deposit costs effectively [52][54] Question: Allowance for Credit Losses - Management reassured that the allowance for credit losses is adequate, with a focus on conservative valuations of assets [70][73]

Financial Data and Key Metrics Changes - Western Alliance Bancorporation reported over $1 billion in sequential loan growth for the second consecutive quarter, funded by nearly $2 billion in quarterly deposit growth [7][12] - Net interest margin increased by six basis points sequentially, rising above 3.5% due to robust average earning asset growth and lower interest-bearing deposit costs [7][10] - Net interest income grew to almost $700 million, reflecting a 7.2% quarter-over-quarter increase and nearly 29% annualized growth [12][15] Business Line Data and Key Metrics Changes - HFI loans increased by $1.2 billion quarterly, with C&I loans contributing over two-thirds of the growth from both regional and national businesses [18][19] - Non-interest income rose 16.4% quarter-over-quarter to $148 million, driven by a 25% increase in mortgage loan production volume [12][19] - Mortgage banking revenue was approximately $78 million, with core mortgage banking revenue tracking flat year-over-year [12][19] Market Data and Key Metrics Changes - Deposits grew by $1.8 billion in Q2, including a $300 million decline in wholesale brokered deposits, with solid growth in non-interest-bearing and savings products [19][20] - Regional banking deposits increased nearly $800 million, demonstrating continued relationship momentum within commercial clients [20] - Digital asset banking program generated $400 million in quarterly growth, indicating strong demand in the blockchain payments sector [20] Company Strategy and Development Direction - The company plans to unify six legacy division bank brands under the Western Bank brand by year-end to present a unified marketing presence [10] - The focus remains on achieving organic growth up to and through the $100 billion large financial institution level over the next eighteen months [36] - The company is optimistic about the potential for increased deposit growth due to regulatory changes and new deposit strategies under the new CFO [84][86] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of asset quality, expecting criticized assets to decline over the next several quarters [30][21] - The updated guidance for 2025 includes loan and deposit growth outlooks of $5 billion and $8 billion respectively, with net interest income growth revised higher to 8% to 10% [27][28] - Management anticipates that the mortgage business will remain flat year-over-year but expects commercial banking activities to drive the bulk of earnings growth [44][45] Other Important Information - The company announced a planned CFO succession, with Dale transitioning to a new role overseeing deposit initiatives and innovation [4][5] - The total equity grew to $7.4 billion, and tangible book value per share increased to $55.87, reflecting a 15% year-over-year growth [25][26] - The company remains asset sensitive on a net interest income basis but is essentially interest rate neutral on an earnings-at-risk basis [16] Q&A Session Summary Question: Insights on the CFO transition and its timing - Management expressed excitement about the organizational change, emphasizing that it will enhance the team's versatility and capitalize on new opportunities [34][36] Question: Clarification on deposit growth targets - Management indicated that they are on track to meet the $8 billion deposit growth target, with expectations for a more muted seasonal dip in Q4 [37][39] Question: Fee income growth expectations - Management anticipates a rise in fee income driven by seasonal activities in mortgage and growth in commercial banking activities [44][45] Question: Outlook on expenses and investments - Management clarified that the increase in expenses is primarily due to seasonal deposit costs, with planned investments to support growth initiatives [46][49] Question: Credit quality and non-performing assets - Management expressed confidence in asset quality, stating that they believe they are at a peak and expect stabilization in the market [94][96] Question: Loan growth expectations for the second half of the year - Management confirmed that they are maintaining the $5 billion loan growth guidance, with strong pipelines and expectations for loan yields to decrease slightly due to anticipated rate cuts [99][100]

Financial Performance - Earnings per share increased to $2.07 in Q2 2025, compared to $1.79 in Q1 2025 and $1.75 in Q2 2024[5] - Net income reached $237.8 million in Q2 2025, a 22.8% year-over-year increase[5, 6] - Net revenue increased to $845.9 million in Q2 2025, compared to $778.0 million in Q1 2025 and $771.8 million in Q2 2024[5] - Pre-Provision Net Revenue (PPNR) was $331.2 million in Q2 2025, a 16.2% year-over-year increase[5, 6] - Tangible book value per share increased to $55.87, a 14.5% year-over-year increase[5, 6] Balance Sheet and Capital - Total loans increased to $55.939 billion in Q2 2025, a $3.5 billion or 6.7% increase year-over-year[5, 6, 39] - Total deposits increased to $71.107 billion in Q2 2025, a $4.9 billion or 7.3% increase year-over-year[5, 35] - CET1 ratio stood at 11.2% in Q2 2025[5, 6] Asset Quality - Provision for credit losses was $39.9 million in Q2 2025[5] - Net loan charge-offs were $29.6 million in Q2 2025, representing 0.22% of average loans[5] - Non-Performing Loans (NPLs) represented 0.76% of funded HFI loans in Q2 2025[5, 6] Net Interest Income and Margin - Net interest income increased by $47.0 million, or 7.2%, primarily due to a higher average balance of interest earning assets[9, 23] - Net Interest Margin (NIM) increased to 3.53%[5, 23] Non-Interest Expense and Efficiency - Adjusted efficiency ratio (excluding deposit costs) decreased to 51.8%[5, 29] - Deposit costs increased by $10.6 million to $147.4 million[29] Loan Composition - Commercial & Industrial (C&I) loans comprised 44.6% of the loan portfolio, totaling $24.9 billion[39]

Group 1 - Western Alliance Bancorporation (NYSE: WAL) shares have increased by 16% over the past year, indicating solid performance despite market fluctuations [1] - The stock remains below its post-election high but is significantly above its lows during peak volatility [1] - The company has over fifteen years of experience in making contrarian bets based on macro views and stock-specific turnaround stories, aiming for outsized returns with a favorable risk/reward profile [1]

Core Insights - Western Alliance (WAL) reported revenue of $856.1 million for Q2 2025, a year-over-year increase of 9.5% and exceeding the Zacks Consensus Estimate of $848.1 million by 0.94% [1] - The company's EPS for the same period was $2.07, up from $1.75 a year ago, also surpassing the consensus estimate of $2.04 by 1.47% [1] Financial Performance Metrics - Efficiency Ratio stood at 60.1%, higher than the average estimate of 58.5% from four analysts [4] - Net Interest Margin was reported at 3.5%, slightly above the average estimate of 3.4% [4] - Net charge-offs to average loans were annualized at 0.2%, matching the average estimate from four analysts [4] - Average Balance of Total Interest Earning Assets was $80.53 billion, exceeding the estimated $79.16 billion [4] - Total Non-Interest Income reached $148.3 million, above the average estimate of $138.63 million [4] - Service Charges and Fees were reported at $36.9 million, below the average estimate of $39 million [4] - Net Interest Income was $697.6 million, surpassing the average estimate of $689.28 million [4] - Net Gain on Loan Origination and Sale Activities was $39.4 million, below the average estimate of $59.48 million [4] - Other Non-Interest Income was $8.3 million, below the average estimate of $15.06 million [4] - Net Interest Income (FTE) was $707.8 million, slightly above the average estimate of $703.17 million [4] - Net Loan Servicing Revenue was reported at $38.3 million, exceeding the average estimate of $24.72 million [4] Stock Performance - Shares of Western Alliance have returned +13.8% over the past month, outperforming the Zacks S&P 500 composite's +4.2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Viewpoint - Western Alliance (WAL) is expected to report a quarterly earnings per share (EPS) of $2.02, marking a 15.4% increase year-over-year, with revenues projected at $848.1 million, reflecting an 8.5% increase compared to the same period last year [1]. Earnings Estimates - The consensus EPS estimate has been revised downward by 1.3% over the past 30 days, indicating a reassessment by analysts [2]. - Revisions to earnings projections are crucial for predicting investor behavior and are linked to short-term stock price performance [3]. Key Metrics Projections - Analysts predict a 'Net Interest Margin' of 3.4%, down from 3.6% in the same quarter last year [5]. - The estimated 'Efficiency Ratio' is 58.5%, compared to 62.3% in the same quarter of the previous year [5]. - 'Average Balance - Total interest earning assets' is forecasted to reach $79.16 billion, up from $73.87 billion year-over-year [5]. Income Projections - 'Total non-interest income' is expected to be $138.64 million, an increase from $115.20 million in the same quarter last year [6]. - 'Service charges and fees' are projected at $39.00 million, significantly higher than the $10.80 million reported a year ago [6]. - 'Net interest income' is anticipated to reach $689.27 million, compared to $656.60 million in the same quarter last year [7]. - 'Net gain on loan origination and sale activities' is expected to be $59.48 million, up from $46.80 million year-over-year [7]. - 'Other non-interest income' is projected at $15.06 million, compared to $8.10 million last year [8]. - 'Net loan servicing revenue' is expected to be $24.72 million, down from $38.10 million in the same quarter last year [8]. Stock Performance - Shares of Western Alliance have increased by 18.5% over the past month, outperforming the Zacks S&P 500 composite, which rose by 4% [8].

Core Viewpoint - The market anticipates Western Alliance (WAL) will report a year-over-year increase in earnings driven by higher revenues for the quarter ended June 2025, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - The upcoming earnings report is expected on July 17, with a consensus EPS estimate of $2.02, reflecting a +15.4% year-over-year change, and revenues projected at $847.65 million, an increase of 8.4% from the previous year [3][2]. Estimate Revisions - Over the last 30 days, the consensus EPS estimate has been revised down by 1.27%, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model shows a positive Earnings ESP of +0.87% for Western Alliance, suggesting analysts have recently become more optimistic about the company's earnings prospects [12]. Historical Performance - In the last reported quarter, Western Alliance exceeded the expected EPS of $1.78 by delivering $1.79, resulting in a surprise of +0.56%. The company has beaten consensus EPS estimates in three out of the last four quarters [13][14]. Investment Considerations - While a potential earnings beat is a positive indicator, other factors may influence stock performance, making it essential to consider the broader context [15][17].

Financial Performance - Net income for the three months ended March 31, 2025, was $199.1 million, compared to $177.4 million for the same period in 2024, reflecting an increase of 12.8%[13] - Earnings per share (EPS) for Q1 2025 was $1.80, up from $1.61 in Q1 2024, indicating a year-over-year growth of 11.8%[13] - Comprehensive income attributable to controlling interest for Q1 2025 was $254.3 million, compared to $132.7 million in Q1 2024, reflecting a substantial increase of 91.8%[15] - Net income for the three months ended March 31, 2025, was $199.1 million, an increase from $177.4 million in the same period of 2024, representing a growth of 11.0%[21] - Revenue from contracts with customers for the three months ended March 31, 2025, was $23.0 million, up from $13.5 million in the same period of 2024[208] Asset and Liability Management - Total assets increased to $83,043 million as of March 31, 2025, up from $80,934 million at December 31, 2024, representing a growth of 2.75%[11] - The company’s total liabilities were reported at $75,828 million as of March 31, 2025[204] - Total deposits increased to $69,322 million as of March 31, 2025, compared to $66,341 million at December 31, 2024, representing a growth of 4.5%[11] - The allowance for credit losses was $389 million as of March 31, 2025, compared to $374 million at December 31, 2024, an increase of 4.0%[11] Income and Expense Analysis - Total interest income rose to $1,095.6 million in Q1 2025, compared to $1,055.0 million in Q1 2024, marking an increase of 3.8%[13] - Non-interest income totaled $127.4 million in Q1 2025, slightly down from $129.9 million in Q1 2024, a decrease of 1.9%[13] - Total non-interest expense for Q1 2025 was $500.4 million, up from $481.8 million in Q1 2024, indicating an increase of 3.3%[13] - The company’s interest expense for the same period was $445.0 million, leading to a net interest income after provision for credit losses of $619.4 million[204] Credit Quality and Loss Provisions - Provision for credit losses increased to $31.2 million in Q1 2025, up from $15.2 million in Q1 2024, reflecting a significant rise of 105.3%[13] - The total allowance for credit losses (ACL) on loans held for investment (HFI) increased from $373.8 million as of December 31, 2024, to $388.6 million as of March 31, 2025, reflecting a net increase of $14.8 million[83] - The provision for credit losses for the three months ended March 31, 2025, was $40.6 million, compared to $13.4 million for the same period in 2024, indicating a significant increase in provisions[85] Loan Portfolio and Performance - Total loans held for sale (HFS) increased to $3,238 million, up from $2,286 million as of December 31, 2024, representing a growth of approximately 42%[63] - The total loans held for investment (HFI) as of March 31, 2025, amounted to $54,761 million, an increase from $53,676 million as of December 31, 2024, reflecting a growth of approximately 2%[66] - Total loans as of March 31, 2025, amounted to $54.761 billion, with past due loans totaling $662 million[71] - Nonaccrual loans totaled $451 million as of March 31, 2025, with $319 million classified as past due 90 days or more and still accruing[67] Securities and Investments - The Company reported significant unrealized losses in available-for-sale debt securities, totaling $671 million as of March 31, 2025[46] - The Company reported a total of $1,536 million in held-to-maturity securities with a fair value of $1,359 million as of March 31, 2025, reflecting unrealized losses of $178 million[44] - The fair value of available-for-sale (AFS) debt securities was reported at $14,231 million as of March 31, 2025, with $4,046 million from quoted prices in active markets and $10,185 million from significant observable inputs[177] Capital Management - The company issued $1,200.0 million in long-term debt during Q1 2025, compared to no issuances in Q1 2024[22] - The company paid cash dividends of $45.0 million on common and preferred stock in Q1 2025, slightly up from $43.9 million in Q1 2024[22] - The Company declared and paid a quarterly cash dividend of $0.38 per share, totaling $41.8 million for the three months ended March 31, 2025, compared to $40.7 million in the same period of 2024[127] Tax and Regulatory Matters - The effective tax rate for the three months ended March 31, 2025, was 19.2%, down from 23.5% in the same period of 2024[152] - The net deferred tax asset (DTA) balance as of March 31, 2025, was $272 million, a decrease of $9 million from $281 million at December 31, 2024[153] Derivatives and Risk Management - The net loss on derivatives for the three months ended March 31, 2025, was $37.1 million, compared to a net gain of $7.1 million for the same period in 2024[149] - The Company utilized interest rate swaps to manage interest rate risk, converting fixed rates to variable rates and vice versa[133] - The Company had a notional amount of $28.268 billion in forward contracts as of March 31, 2025, with a fair value of $21 million[146]