Financial Data and Key Metrics Changes - Western Alliance Bancorporation reported earnings of $1.80 per share for Q3 2024, reflecting solid performance amid a changing rate environment [3] - Net interest income increased by $40 million from Q2 to $697 million, representing nearly 25% annualized growth due to higher average earning asset balances [7][12] - Non-interest income rose by $11 million or 10% quarter-over-quarter, totaling $126 million, although tempered by a decline in mortgage banking income [5][7] - Tangible book value per share increased by 19% year-over-year to $51.98 [5][15] - Asset quality remained stable, with non-performing assets to total assets declining by 6 basis points to 45 basis points [5][13] Business Line Data and Key Metrics Changes - HFI loan growth was $916 million, or 7% annualized, with significant contributions from regional banking and mortgage warehouse lending [3][10] - Mortgage loan production increased by 21% from Q2 and 10% year-over-year, although loan servicing revenue was negatively impacted by prepayment speeds [7][8] - The bank's C&I loans grew over $4 billion year-over-year, now accounting for 42% of the held for investment loan portfolio [10] Market Data and Key Metrics Changes - The bank experienced healthy deposit growth of $1.8 billion or 11% annualized, driven by seasonal inflows in mortgage warehouse deposits [3][10] - Juris Banking deposits decreased by $2.7 billion due to a large distribution of bankruptcy settlement funds [9][10] - The cost of interest-bearing deposits increased by 3 basis points due to $1.3 billion of quarterly deposit growth in the consumer digital channel [11] Company Strategy and Development Direction - The company aims to achieve loan growth of approximately $1.25 billion in Q4 2024, maintaining a focus on safe and sound lending practices [17] - Western Alliance plans to manage deposit costs actively, anticipating a decline of approximately 25% in ECR-related deposit costs in Q4 [18] - The bank's strategy includes diversifying its loan portfolio while focusing on commercial loans to enhance risk-adjusted returns [3][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the bank's ability to sustain strong deposit growth and deploy liquidity into attractive commercial loans [3] - The outlook for Q4 includes expectations for a decline in net interest income by approximately 3% due to market-tied variable loans repricing ahead of funding costs [17] - Management remains optimistic about the bank's performance in 2025, citing a robust balance sheet and effective credit origination platforms [70] Other Important Information - The adjusted efficiency ratio for the quarter was 53%, reflecting modestly higher operating expense growth compared to revenue growth [13] - The CET1 ratio increased approximately 20 basis points to 11.2%, positioning the bank in the top quartile of its asset class peers [15] Q&A Session Summary Question: Clarification on deposit seasonality and impact on NII - Management clarified that a large settlement from the Juris Banking Group impacted Q3 deposits, and typical seasonal declines are expected in Q4, leading to a projected $2 billion decline in deposits [21][22] Question: Outlook for non-interest income growth in Q4 - Management indicated that non-interest income is expected to grow by 8% to 12% in Q4, driven by commercial banking fees and improved mortgage banking income [28] Question: Loan growth opportunities and sustainability - Management highlighted strong pipelines in note financing, MSR lending, and warehouse lending as key areas for continued loan growth, projecting $1 billion in quarterly loan growth [34] Question: Expectations for ECR-related costs in 2025 - Management expects ECR-related costs to decline significantly in Q4 and continue to decrease in 2025, with a projected $50 million decline from Q3 to Q4 [41] Question: ROE potential in a down rate environment - Management believes ROE potential is not heavily dependent on the rate environment, aiming for an efficiency ratio that begins with a four on an adjusted basis [66]

Core Insights - Western Alliance (WAL) reported revenue of $833.1 million for Q3 2024, a year-over-year increase of 14.9% [1] - The EPS for the same period was $1.80, down from $1.97 a year ago, with a surprise of -5.26% compared to the consensus estimate of $1.90 [1] - The reported revenue exceeded the Zacks Consensus Estimate of $811.4 million, resulting in a surprise of +2.67% [1] Financial Metrics - Efficiency Ratio was 64.5%, higher than the estimated 59.1% [2] - Net Interest Margin stood at 3.6%, surpassing the average estimate of 3.4% [2] - Net charge-offs to average loans were 0.2%, matching the estimate [2] - Average Balance of Total interest earning assets was $77.80 billion, exceeding the estimate of $76.26 billion [2] - Tier 1 Leverage Ratio was 7.8%, below the average estimate of 8.1% [2] - Total non-interest income reached $126.20 million, above the estimate of $116.12 million [2] - Net interest income was $696.90 million, compared to the estimate of $685.35 million [2] - Net loan servicing revenue was $12.30 million, significantly lower than the estimate of $37.42 million [2] - Service charges and fees totaled $30.10 million, exceeding the estimate of $10.97 million [2] - Net Interest Income (FTE) was $706.90 million, above the estimate of $694.74 million [2] - Net gain on loan origination and sale activities was $46.30 million, slightly below the estimate of $49.69 million [2] - Other non-interest income was $18.60 million, significantly higher than the estimate of $7.07 million [2] Stock Performance - Shares of Western Alliance have returned +8.1% over the past month, outperforming the Zacks S&P 500 composite's +3.8% change [2] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [2]

Company Overview - Western Alliance (WAL) is expected to report a year-over-year decline in earnings of -3.6%, with an estimated earnings per share (EPS) of $1.90 for the quarter ended September 2024 [3] - Revenues are projected to be $811.4 million, reflecting an increase of 11.9% compared to the same quarter last year [3] Earnings Expectations - The earnings report is scheduled for release on October 17, 2024, and the stock price may rise if actual results exceed expectations, while a miss could lead to a decline [2] - The consensus EPS estimate has been revised 1.91% higher in the last 30 days, indicating a reassessment by analysts [4] Earnings Surprise Prediction - The Zacks Earnings ESP (Expected Surprise Prediction) model indicates that the Most Accurate Estimate for Western Alliance is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -0.57% [10] - This negative Earnings ESP suggests analysts have become bearish on the company's earnings prospects, making it challenging to predict an earnings beat [10] Historical Performance - In the last reported quarter, Western Alliance had an EPS of $1.75, surpassing the expected $1.71, resulting in a surprise of +2.34% [11] - Over the past four quarters, the company has beaten consensus EPS estimates three times [12] Industry Context - In the Zacks Banks - West industry, Preferred Bank (PFBC) is expected to report an EPS of $2.39, which represents a year-over-year decline of -11.8% [16] - Preferred Bank's revenue is anticipated to be $68.8 million, down 9.4% from the previous year [16] - The consensus EPS estimate for Preferred Bank has been revised 1.2% lower, but a higher Most Accurate Estimate has resulted in an Earnings ESP of 0.94% [17]

Core Insights - Western Alliance Bancorporation (WAL) reported a significant year-over-year growth in total loans of $4.6 billion, with a notable increase in Commercial and Industrial (C&I) loans, which rose by $5.03 billion year-over-year [3][12] - The bank's deposit base also saw a substantial increase, with total deposits rising by $4 billion in the last quarter, primarily driven by non-interest-bearing deposits [6][16] - The overall loan quality remains strong, with WAL maintaining a lower Cumulative Net Charge-Offs/Average Nonperforming Loans ratio compared to many peers [5][24] Loan Portfolio - The loan portfolio increased by $1.7 billion from the previous quarter and $4.6 billion year-over-year, primarily due to C&I loans [12][11] - Management anticipates a loan portfolio of $54.8 billion by 2024, an increase of $500 million from previous guidance [4] Deposit Growth - Total deposits increased to $66.2 billion, with a quarterly change of $4 billion, reflecting a strong demand for non-interest-bearing deposits [6][16] - The guidance for deposits was raised to an expected increase of $14 billion over 2023, up from a previous estimate of $11 billion [7] Profitability and Net Interest Income - Net interest income improved by $57.7 million over the previous quarter, with net interest margin increasing by 3 basis points [27] - The updated guidance for net interest income is expected to rise between 9% and 14%, compared to a previous estimate of 5%-10% [28] Capital and Risk Management - WAL is well-capitalized, with a CET1 ratio adjusted for AOCI close to the 75th percentile, indicating strong financial health [19] - The bank's loss mitigation strategy is supported by strong underwriting standards, with an allowance for credit losses exceeding the peer median [24] Market Performance - Since the last article, WAL has outperformed the S&P 500 by approximately 22%, indicating strong market confidence in the bank's performance [10] - The price per share has seen significant appreciation, with expectations that it could reach a fair value of $98.54 in the coming months [31]

Core Viewpoint - Western Alliance Bancorporation reported strong second quarter results, highlighting significant growth in net interest income, loan momentum, and deposit generation [3]. Financial Performance - The company achieved a net income of $193.6 million and earnings per share of $1.75 for Q2 2024, surpassing the analyst consensus estimate of $1.71 per share [4]. - Quarterly sales reached $771.80 million, exceeding the analyst consensus estimate of $737.64 million [4]. - The return on tangible common equity was reported at 14.3% [3]. - Pre-provision net revenue grew by 22% on a linked quarter annualized basis, excluding the impact of the FDIC special assessment [3]. - Tangible book value per share increased by 13.2% year-over-year to $48.79, with a CET1 ratio of 11.0% [3]. Market Reaction - Following the earnings announcement, Western Alliance shares rose by 7.9%, closing at $76.72 [5]. - Analysts from Piper Sandler and Barclays maintained an Overweight rating on the stock, with Piper Sandler raising the price target from $76 to $93 and Barclays increasing it from $86 to $92 [5].

Financial Data and Key Metrics Changes - The company reported a net interest income growth of 39% annualized, driven by higher average earning assets and an expanding net interest margin (NIM) [10] - The tangible book value per share increased to $48.79, reflecting a growth rate of 3% from the previous quarter [19] - The pre-provision net revenue adjusted for FDIC special assessments is 22% annualized, indicating a positive trend [10] Business Line Data and Key Metrics Changes - Mortgage loan production rose by 14%, while interest rate commitment volume increased by 24%, although the gain on sale margin compressed by 3 basis points [32] - Loans held-for-investment (HFI) grew by $1.7 billion to $52.4 billion, while deposits increased by $4 billion to $66.2 billion at quarter-end [19] - The cost of interest-bearing deposits increased by 6 basis points from the first quarter, while the total cost of funds declined by 3 basis points to 2.79% [33] Market Data and Key Metrics Changes - The yield on total securities increased by 21 basis points to 4.87%, recovering two-thirds of the prior quarter's decline [8] - The company experienced outsized core deposit growth of $4 billion, with HFI loan growth of $1.7 billion or 14% on an annualized basis from Q1 [16] - Non-ECR, non-interest-bearing deposits have shown three consecutive quarters of growth, indicating a positive trend in deposit channels [53] Company Strategy and Development Direction - The company aims to maintain a CET1 capital ratio at or above 11%, supporting forecasted increases in loan volume [24] - The strategy focuses on thoughtful balance sheet growth, enhancing liquidity profiles, and capital bases to drive earnings growth [29] - The company is positioned to proactively lower the effective cost of deposits as interest rate cuts approach, particularly in the warehouse lending segment [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the quarter's performance and highlighted the importance of their proactive approach to risk management and liquidity [6] - The outlook for net interest income growth is projected at 9% to 14% from the Q4 2023 annualized jumping-off point, with expectations of two 25 basis-point cuts in the latter half of the year [24] - Management noted that asset quality is normalizing, with net charge-offs expected to remain low by industry standards at 15 to 20 basis points of average loans for the year [38] Other Important Information - The company has a strong focus on low-loss loan categories, which has resulted in a reserve level lower than some peers [21] - The company is actively working on initiatives to manage deposit costs and improve service levels in the warehouse lending space [80] - The Corporate Trust business is showing positive traction, with expectations for continued growth in deposits and services offered [133] Q&A Session Summary Question: What is the outlook for loan growth and deposit growth? - Management expects loan growth to continue at $1 billion per quarter, with total loans projected to grow by $4.5 billion for the year, and deposits expected to grow by $14 billion [37] Question: How does the company plan to manage deposit costs in a changing interest rate environment? - The company plans to leverage its strong balance sheet to lower effective costs of deposits as rates decline, particularly in the warehouse lending segment [80] Question: What is the company's strategy regarding the Corporate Trust business? - The Corporate Trust business is expected to grow significantly, with positive ratings actions from agencies and a strong pipeline of deals [133]

Core Insights - The article emphasizes the importance of key financial metrics in assessing a company's financial health, which can provide a clearer picture than just revenue and earnings changes year-over-year [1] Company Performance - Western Alliance reported revenue of $781.7 million for the quarter ended June 2024, reflecting a 15.3% increase compared to the same period last year [4] - The company achieved an EPS of $1.75, down from $1.96 in the year-ago quarter [4] - The reported revenue exceeded the Zacks Consensus Estimate of $736.28 million by 6.17%, and the EPS also surpassed the consensus estimate of $1.71 by 2.34% [2] Key Financial Metrics - Efficiency Ratio: 62.3%, slightly above the average estimate of 61.6% [3] - Net Interest Margin: 3.6%, compared to the average estimate of 3.4% [3] - Average Balance of Total Interest Earning Assets: $73.87 billion, exceeding the estimated $72.12 billion [3] - Net Charge-offs to Average Loans (annualized): 0.2%, higher than the estimated 0.1% [3] - Tier 1 Leverage Ratio: 8%, slightly below the average estimate of 8.1% [3] - Total Non-Interest Income: $115.20 million, above the estimated $112.09 million [3] - Net Interest Income: $656.60 million, surpassing the estimated $618.81 million [3] - Net Loan Servicing Revenue: $38.10 million, exceeding the estimated $33.23 million [3] - Net Gain on Loan Origination and Sale Activities: $46.80 million, below the estimated $48.83 million [3] - Service Charges and Fees: $10.80 million, above the estimated $9.92 million [3] - Commercial Banking Related Income: $6.70 million, slightly above the estimated $6.47 million [3] - Income from Equity Investments: $4.20 million, significantly lower than the estimated $9.52 million [3] Stock Performance - Shares of Western Alliance have returned +23.3% over the past month, significantly outperforming the Zacks S&P 500 composite's +2.1% change [5] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [5]

Core Viewpoint - Western Alliance (WAL) reported quarterly earnings of $1.75 per share, exceeding the Zacks Consensus Estimate of $1.71 per share, but down from $1.96 per share a year ago [1][6] Financial Performance - The company posted revenues of $781.7 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 6.17%, compared to $678 million in the same quarter last year [6] - The earnings surprise for the quarter was 2.34%, with a previous quarter's earnings of $1.72 per share exceeding expectations of $1.69 per share by 1.78% [5] Market Performance - Western Alliance shares have increased approximately 11.5% since the beginning of the year, while the S&P 500 has gained 17.2% [2] - The company has surpassed consensus EPS estimates three times over the last four quarters [6] Earnings Outlook - The estimate revisions trend for Western Alliance is currently unfavorable, leading to a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [4] - The current consensus EPS estimate for the upcoming quarter is $1.92 on revenues of $778.48 million, and for the current fiscal year, it is $7.41 on revenues of $3.05 billion [12] Industry Context - The Banks - West industry, to which Western Alliance belongs, is currently ranked in the bottom 36% of over 250 Zacks industries, suggesting potential challenges ahead [9] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact investor sentiment [8]

Financial Performance - Net income for Q2 2024 was $193.6 million, up $16.2 million from Q1 2024, but down $22.1 million from Q2 2023[19]. - Net income for the three months ended June 30, 2024, was $193.6 million, an increase from $177.4 million in the previous quarter[32]. - Net income available to common stockholders was $190.4 million in Q2 2024, a decrease of 10.4% from $212.5 million in Q2 2023[55]. - Net income for the six months ended June 30, 2024, was $371.0 million, compared to $210.4 million in the same period last year, showing a significant increase of approximately 76.5%[67]. - Net income for the quarter was $357.9 million, an increase from $299.0 million year-over-year[69]. Asset Growth - Total assets increased to $80,581 million as of June 30, 2024, up 18.2% from $68,160 million in June 30, 2023[1]. - Total assets rose by 4.7% to $80.6 billion at June 30, 2024, from $77.0 billion at March 31, 2024, and increased by 18.2% from $68.2 billion at June 30, 2023[44]. - Total assets grew to $78.55 billion, up from $72.68 billion in the prior period[78]. Loan and Deposit Metrics - HFI loans, net of deferred fees, rose to $52,430 million, reflecting a 9.5% increase from $47,875 million year-over-year[1]. - Total deposits reached $66,244 million, marking a 29.8% increase from $51,041 million in June 30, 2023[1]. - HFI loans totaled $52.4 billion, an increase of $1.7 billion or 3.4% from the previous quarter[13]. - Total deposits reached $66.2 billion, up $4.0 billion or 6.5% compared to the previous quarter[13]. - Total loans held for investment (HFI) amounted to $50,251 million, with a yield of 6.78%, compared to $49,351 million and a yield of 6.38% in the previous year[64]. Income and Expense Analysis - The net interest income for the three months ended June 30, 2024, was $656.6 million, with a net interest margin of 3.63%[6]. - Total interest income was $1,147.5 million for the three months ended June 30, 2024, an increase from $1,055.0 million in the previous quarter[32]. - Total non-interest income was $115.2 million for the three months ended June 30, 2024, a decrease from $129.9 million in the previous quarter[32]. - Total non-interest expense was $486.8 million for the three months ended June 30, 2024, an increase from $481.8 million in the previous quarter[32]. - Non-interest expenses rose to $735.3 million, up 27.3% from $283.6 million in the previous year[69]. Capital and Equity - Common Equity Tier 1 capital stood at 11.0% as of June 30, 2024, compared to 10.1% a year earlier[7]. - Stockholders' equity rose to $6,334 million, an 11.4% increase from $5,685 million in June 30, 2023[1]. - Stockholders' equity increased to $6.3 billion at June 30, 2024, compared to $6.2 billion at March 31, 2024, and $5.7 billion at June 30, 2023, driven by net income[44]. - Total tangible common equity rose to $5,375 million, compared to $5,211 million in the previous quarter[86]. Credit Quality - Nonaccrual loans amounted to $401 million, with a ratio of nonaccrual loans to funded HFI loans at 0.76%[8]. - The provision for credit losses was $37.1 million, up $21.9 million from the previous quarter, primarily due to loan growth and net charge-offs of $22.8 million[40]. - Annualized net loan charge-offs to average loans outstanding was 0.18%, compared to 0.06% in the previous quarter[13]. - The allowance for credit losses stood at $349 million, compared to $314 million in the previous year, indicating a strengthening of reserves[64]. Operational Efficiency - The efficiency ratio, adjusted for deposit costs, improved to 51.5% in Q2 2024 from 57.3% in Q1 2024[19]. - The company's ratio of HFI loans to deposits was 79.1% at June 30, 2024, down from 81.5% in the previous quarter[43]. - Non-interest income reached $245.1 million, up from $234.8 million, indicating a growth of approximately 4.0% year-over-year[67]. Market Position and Recognition - The company received top rankings in 2023 for Best CEO, Best CFO, and Best Investor Relations Team, highlighting its strong market position[6]. - The company plans to continue expanding its market presence and investing in new technologies to enhance operational efficiency[80].

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements for Western Alliance Bancorporation as of March 31, 2024, show significant asset and deposit growth, alongside increased net income [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2024, total assets and deposits significantly increased, accompanied by growth in investment securities and a modest rise in net loans Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$76,989** | **$70,862** | | Cash and cash equivalents | $3,550 | $1,576 | | Investment securities (AFS & HTM) | $15,962 | $12,586 | | Net loans held for investment | $50,360 | $49,960 | | **Total Liabilities** | **$70,817** | **$64,784** | | Total deposits | $62,228 | $55,333 | | Other borrowings | $6,221 | $7,230 | | **Total Stockholders' Equity** | **$6,172** | **$6,078** | [Consolidated Income Statements](index=5&type=section&id=Consolidated%20Income%20Statements) For Q1 2024, net income available to common stockholders significantly increased, driven by a substantial recovery in non-interest income despite higher expenses Consolidated Income Statement Highlights (in millions, except per share data) | Account | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net interest income | $598.9 | $609.9 | | Provision for credit losses | $15.2 | $19.4 | | Total non-interest income | $129.9 | $(58.0) | | Total non-interest expense | $481.8 | $347.9 | | Net income | $177.4 | $142.2 | | **Net income available to common stockholders** | **$174.2** | **$139.0** | | **Diluted EPS** | **$1.60** | **$1.28** | [Notes to Unaudited Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on the company's accounting policies and financial items, essential for understanding the primary financial statements [Note 2. Investment Securities](index=13&type=section&id=Note%202.%20Investment%20Securities) As of March 31, 2024, total investment securities increased, with a portfolio shift towards high-quality liquid assets and significant unrealized losses on AFS securities Investment Securities Portfolio (Amortized Cost, in millions) | Security Type | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Available-for-Sale (AFS)** | | | | U.S. Treasury securities | $7,019 | $4,853 | | Residential MBS issued by GSEs | $4,928 | $2,328 | | Private label residential MBS | $1,301 | $1,320 | | CLO | $0 | $1,407 | | **Total AFS Debt Securities** | **$15,251** | **$11,849** | | **Held-to-Maturity (HTM)** | | | | Tax-exempt | $1,278 | $1,243 | | **Total HTM Securities** | **$1,461** | **$1,429** | - The company sold its **Collateralized Loan Obligation (CLO) portfolio** during Q1 **2024** as part of an effort to shift the investment portfolio mix toward high-quality liquid assets[68](index=68&type=chunk) - At March **31**, **2024**, there were **770 AFS debt securities** in an unrealized loss position, with total gross unrealized losses of **$754 million**, mainly due to changes in interest rates[50](index=50&type=chunk)[52](index=52&type=chunk) [Note 4. Loans, Leases and Allowance for Credit Losses](index=19&type=section&id=Note%204.%20Loans%2C%20Leases%20and%20Allowance%20for%20Credit%20Losses) The HFI loan portfolio grew slightly, with an increase in nonaccrual loans and a stable allowance for credit losses Loan Portfolio Composition (HFI, in millions) | Loan Category | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Warehouse lending | $6,915 | $6,618 | | Other commercial and industrial | $7,754 | $7,452 | | Other CRE - non-owner occupied | $6,365 | $5,974 | | Residential | $13,078 | $13,287 | | Construction and land development | $4,746 | $4,862 | | **Total loans HFI** | **$50,700** | **$50,297** | Asset Quality Metrics | Metric | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Nonaccrual Loans | $399 million | $273 million | | Nonaccrual Loans / Total Loans HFI | 0.79% | 0.54% | | Allowance for Credit Losses (ACL) | $340.3 million | $336.7 million | | ACL / Total Loans HFI | 0.67% | 0.67% | [Note 6. Deposits](index=30&type=section&id=Note%206.%20Deposits) Total deposits surged significantly, driven by growth in non-interest-bearing demand deposits and strategic use of reciprocal networks Deposit Composition (in millions) | Deposit Type | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Non-interest-bearing demand | $18,399 | $14,520 | | Interest-bearing transaction | $16,965 | $15,916 | | Savings and money market | $16,194 | $14,791 | | Time deposits | $10,670 | $10,106 | | **Total deposits** | **$62,228** | **$55,333** | - The company actively uses deposit placement services to offer expanded FDIC insurance, with reciprocal deposits totaling **$14.5 billion** at quarter-end, up from **$13.3 billion** at year-end **2023**[100](index=100&type=chunk) [Note 16. Segments](index=50&type=section&id=Note%2016.%20Segments) The company operates through Commercial, Consumer Related, and Corporate & Other segments, with both Commercial and Consumer Related segments contributing positively to net income - The company's reportable segments are Commercial, Consumer Related, and Corporate & Other, aggregated based on products and services offered[200](index=200&type=chunk)[205](index=205&type=chunk) Segment Financial Highlights (Three Months Ended March 31, 2024, in millions) | Segment | Total Assets | Total Deposits | Net Income (Loss) | | :--- | :--- | :--- | :--- | | Commercial | $30,080 | $25,146 | $109.9 | | Consumer Related | $25,182 | $30,481 | $71.0 | | Corporate & Other | $21,727 | $6,601 | $(3.5) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=53&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported strong Q1 2024 results with increased net income, significant deposit growth, and improved non-interest income, despite net interest margin compression and higher expenses Q1 2024 Financial Highlights vs. Q1 2023 | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Income (common) | $174.2M | $139.0M | | Diluted EPS | $1.60 | $1.28 | | Net Revenue | $728.8M | $551.9M | | PPNR | $247.0M | $204.0M | | Net Interest Margin | 3.60% | 3.79% | - Total deposits grew by **$6.9 billion** (**12.5%**) during the quarter, reaching **$62.2 billion**, driven by a **$3.9 billion** increase in non-interest bearing demand deposits[226](index=226&type=chunk) - Non-interest expense rose by **$133.9 million** YoY, primarily due to a **$50.1 million** increase in deposit costs and a **$43.2 million** increase in insurance costs, which includes a **$17.6 million** FDIC special assessment[249](index=249&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=77&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages interest rate risk through simulation models, with its balance sheet positioned to benefit from rising rates while remaining within approved limits Sensitivity of Net Interest Income (Next 12 Months) | Parallel Shift Scenario | % Change from Base | | :--- | :--- | | Up 200 bps | +13.6% | | Up 100 bps | +6.8% | | Down 100 bps | -6.9% | | Down 200 bps | -14.1% | Sensitivity of Economic Value of Equity (EVE) | Interest Rate Scenario | % Change from Base | | :--- | :--- | | Up 200 bps | -11.6% | | Up 100 bps | -6.4% | | Down 100 bps | +6.4% | | Down 200 bps | +10.1% | [Controls and Procedures](index=79&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and found them to be effective as of March **31**, **2024**[319](index=319&type=chunk) - No changes occurred during the quarter ended March **31**, **2024**, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[320](index=320&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=79&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material pending legal proceedings, with any ongoing litigation considered routine and without expected material financial impact - There are no material pending legal proceedings involving the Company or its properties[321](index=321&type=chunk) [Risk Factors](index=80&type=page&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes to the risk factors disclosed in the **2023** Form **10-K** have occurred[323](index=323&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=80&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2024, the company purchased shares from employees to satisfy tax withholding obligations on vested restricted stock awards, without a formal repurchase program - The Company purchased **122,597 shares** during Q1 **2024** from employees to cover tax withholding on vested restricted stock awards[324](index=324&type=chunk) - The Company does not have a publicly announced common stock repurchase program[325](index=325&type=chunk) [Exhibits](index=81&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO as required by the Sarbanes-Oxley Act, and interactive data files (XBRL)