Western Alliance Bancorporation(WAL) - 2021 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Glossary of Entities and Terms This section defines acronyms and abbreviations for entities, divisions, and key financial terms used in the Form 10-Q - The glossary defines acronyms and abbreviations for entities/divisions (e.g., ABA, AMH, WAB) and financial terms (e.g., AFS, CECL, LIBOR) used in the 10-Q report[9][10] Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements, offering a condensed view of the company's financial position and performance Consolidated Balance Sheets Consolidated Balance Sheets Overview | Metric | Sep 30, 2021 (in millions) | Dec 31, 2020 (in millions) | Change (in millions) | | :--------------------------------- | :------------------------- | :------------------------- | :------------------- | | Total assets | $52,775.1 | $36,461.0 | +$16,314.1 | | Cash, cash equivalents and restricted cash | $917.9 | $2,671.7 | -$1,753.8 | | Investment securities - AFS | $6,383.6 | $4,708.5 | +$1,675.1 | | Loans HFS | $6,534.3 | — | +$6,534.3 | | Net loans held for investment | $34,555.0 | $26,774.1 | +$7,780.9 | | Total deposits | $45,282.6 | $31,930.5 | +$13,352.1 | | Non-interest-bearing demand deposits | $21,058.2 | $13,463.3 | +$7,594.9 | | Total liabilities | $48,261.1 | $33,047.5 | +$15,213.6 | | Total stockholders' equity | $4,514.0 | $3,413.5 | +$1,100.5 | Consolidated Income Statements Consolidated Income Statements Summary | Metric | 3 Months Ended Sep 30, 2021 (in millions) | 3 Months Ended Sep 30, 2020 (in millions) | Change (in millions) | 9 Months Ended Sep 30, 2021 (in millions) | 9 Months Ended Sep 30, 2020 (in millions) | Change (in millions) | | :--------------------------------------- | :---------------------------------------- | :---------------------------------------- | :------------------- | :---------------------------------------- | :---------------------------------------- | :------------------- | | Total interest income | $442.8 | $304.8 | +$138.0 | $1,175.4 | $930.2 | +$245.2 | | Total interest expense | $32.4 | $20.1 | +$12.3 | $77.2 | $78.1 | -$0.9 | | Net interest income | $410.4 | $284.7 | +$125.7 | $1,098.2 | $852.1 | +$246.1 | | Provision for (recovery of) credit losses | $12.3 | $14.6 | -$2.3 | ($34.6) | $157.8 | -$192.4 | | Total non-interest income | $138.1 | $20.6 | +$117.5 | $293.8 | $47.0 | +$246.8 | | Total non-interest expense | $233.8 | $124.1 | +$109.7 | $613.6 | $359.4 | +$254.2 | | Income before provision for income taxes | $302.4 | $166.6 | +$135.8 | $813.0 | $381.9 | +$431.1 | | Income tax expense | $65.5 | $30.8 | +$34.7 | $159.8 | $68.9 | +$90.9 | | Net income available to common stockholders | $236.9 | $135.8 | +$101.1 | $653.2 | $313.0 | +$340.2 | | Basic EPS | $2.29 | $1.36 | +$0.93 | $6.39 | $3.12 | +$3.27 | | Diluted EPS | $2.28 | $1.36 | +$0.92 | $6.35 | $3.11 | +$3.24 | | Dividends declared per common share | $0.35 | $0.25 | +$0.10 | $0.85 | $0.75 | +$0.10 | Consolidated Statements of Comprehensive Income Consolidated Statements of Comprehensive Income Summary | Metric | 3 Months Ended Sep 30, 2021 (in millions) | 3 Months Ended Sep 30, 2020 (in millions) | 9 Months Ended Sep 30, 2021 (in millions) | 9 Months Ended Sep 30, 2020 (in millions) | | :--------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Net income | $236.9 | $135.8 | $653.2 | $313.0 | | Unrealized gain (loss) on AFS securities, net of tax effect | ($21.8) | $7.6 | ($49.0) | $53.2 | | Net other comprehensive (loss) income | ($21.9) | $4.9 | ($49.7) | $53.6 | | Comprehensive income | $215.0 | $140.7 | $603.5 | $366.6 | Consolidated Statements of Stockholders' Equity Consolidated Statements of Stockholders' Equity Summary | Metric | Sep 30, 2021 (in millions) | Dec 31, 2020 (in millions) | Change (in millions) | | :--------------------------------- | :------------------------- | :------------------------- | :------------------- | | Total Stockholders' Equity | $4,514.0 | $3,413.5 | +$1,100.5 | | Preferred Stock | $294.5 | — | +$294.5 | | Common Stock and additional paid in capital | $1,695.8 | $1,390.9 | +$304.9 | | Retained earnings | $2,567.0 | $2,001.4 | +$565.6 | | Accumulated other comprehensive income | $42.6 | $92.3 | -$49.7 | - Preferred stock issuance, net, contributed $294.5 million to equity in the nine months ended September 30, 2021[23] - Common stock issuance, net, contributed $279.0 million to equity in the nine months ended September 30, 2021[23] - Dividends paid totaled $87.6 million for the nine months ended September 30, 2021, compared to $76.1 million for the same period in 2020[23] Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows Summary | Metric | 9 Months Ended Sep 30, 2021 (in millions) | 9 Months Ended Sep 30, 2020 (in millions) | Change (in millions) | | :--------------------------------------- | :---------------------------------------- | :---------------------------------------- | :------------------- | | Net cash (used in) provided by operating activities | ($3,269.0) | $450.1 | -$3,719.1 | | Net cash (used in) investing activities | ($10,668.0) | ($5,591.9) | -$5,076.1 | | Net cash provided by financing activities | $12,183.2 | $6,125.9 | +$6,057.3 | | Net (decrease) increase in cash, cash equivalents, and restricted cash | ($1,753.8) | $984.1 | -$2,737.9 | | Cash, cash equivalents, and restricted cash at end of period | $917.9 | $1,418.7 | -$500.8 | - Purchases and originations of loans held for sale amounted to $41,336.4 million for the nine months ended September 30, 2021[27] - Net increase in deposits provided $13,352.1 million in cash from financing activities for the nine months ended September 30, 2021[28] - Cash consideration paid for the AMH acquisition, net of cash acquired, was $1,013.4 million for the nine months ended September 30, 2021[27] Notes to Unaudited Consolidated Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Western Alliance Bancorporation (WAL) is a bank holding company providing deposit, lending, mortgage banking, treasury management, international banking, and online banking services through its subsidiary, Western Alliance Bank (WAB)[31] - WAB operates several full-service banking divisions (ABA, BON, FIB, Bridge, TPB) and expanded its capabilities with the acquisition of AmeriHome Mortgage Company, LLC on April 7, 2021[32] - The company's accounting policies adhere to GAAP, and financial statements are prepared on a condensed, unaudited basis, consistent with the annual 10-K[33][45] - Loans held for sale (HFS) are reported at fair value or the lower of cost or fair value, depending on the acquisition source, with changes in fair value reported in current period income[59] - Loans held for investment (HFI) are reported at amortized cost, adjusted for net deferred fees and costs, premiums, discounts, and an allowance for credit losses[64] 2. MERGERS, ACQUISITIONS AND DISPOSITIONS - Western Alliance Bancorporation acquired AmeriHome Mortgage Company, LLC (AMH) on April 7, 2021, for a total cash consideration of approximately $1.2 billion[157][160] - The acquisition is expected to expand mortgage-related offerings and diversify the company's revenue profile by increasing non-interest income[157] - The transaction resulted in the recognition of $173.1 million in goodwill, allocated to the Consumer Related segment, and $141.0 million in identifiable intangible assets (correspondent relationships, operating licenses, and trade name)[162][163] Pro Forma Financial Information (Nine Months Ended September 30, 2020) | Metric | Pro Forma 9 Months Ended Sep 30, 2020 (in millions) | Actual 9 Months Ended Sep 30, 2020 (in millions) | | :---------------- | :---------------------------------------- | :---------------------------------------- | | Interest income | $976.9 | $930.2 | | Non-interest income | $694.9 | $47.0 | | Net income | $661.3 | $313.0 | 3. INVESTMENT SECURITIES Investment Securities Overview | Category | Sep 30, 2021 (Fair Value, in millions) | Dec 31, 2020 (Fair Value, in millions) | Change (in millions) | | :------------------------- | :------------------------------------- | :------------------------------------- | :------------------- | | Held-to-maturity (HTM) | $1,092.0 | $611.8 | +$480.2 | | Available-for-sale (AFS) | $6,383.6 | $4,708.5 | +$1,675.1 | | Equity securities | $178.4 | $167.3 | +$11.1 | | Total Investment Securities | $7,654.0 | $5,487.6 | +$2,166.4 | - At September 30, 2021, AFS debt securities had gross unrealized losses of $59.8 million, primarily due to changes in interest rates and market conditions, not credit-related issues[166][171] - No credit losses were recognized on AFS securities for the three and nine months ended September 30, 2021 and 2020, as the company does not intend to sell them and expects recovery[176] Allowance for Credit Losses on HTM Debt Securities (Tax-exempt) | Period | Balance, Beginning of Period (in millions) | Recovery of Credit Losses (in millions) | Balance, End of Period (in millions) | | :--------------------------------- | :----------------------------------------- | :-------------------------------------- | :----------------------------------- | | 3 Months Ended Sep 30, 2021 | $6.0 | ($1.5) | $4.5 | | 9 Months Ended Sep 30, 2021 | $6.8 | ($2.3) | $4.5 | 4. LOANS HELD FOR SALE Loans Held for Sale by Type (September 30, 2021) | Loan Type | Amount (in millions) | | :------------------------------ | :------------------- | | Government-insured or guaranteed | $3,104.6 | | Agency-conforming | $3,427.1 | | Non-agency | $2.6 | | Total loans HFS | $6,534.3 | Net Gain on Loan Purchase, Origination, and Sale Activities | Metric | 3 Months Ended Sep 30, 2021 (in millions) | April 7 - Sep 30, 2021 (in millions) | | :--------------------------------------- | :---------------------------------------- | :----------------------------------- | | Mortgage servicing rights capitalized upon sale of loans | $230.4 | $512.7 | | Net proceeds from sale of loans | ($107.4) | ($251.0) | | Change in fair value of derivatives related to loans HFS | ($11.9) | ($57.7) | | Net gain on loan origination and sale activities | $121.0 | $253.0 | 5. LOANS, LEASES AND ALLOWANCE FOR CREDIT LOSSES Held for Investment Loan Portfolio Composition | Loan Type | Sep 30, 2021 (in millions) | Dec 31, 2020 (in millions) | Change (in millions) | | :------------------------------ | :------------------------- | :------------------------- | :------------------- | | Total loans HFI | $34,801.9 | $27,053.0 | +$7,748.9 | | Residential | $7,412.7 | $2,378.5 | +$5,034.2 | | Equity fund resources | $3,194.0 | $1,145.3 | +$2,048.7 | | Warehouse lending | $4,759.9 | $4,340.2 | +$419.7 | | Construction and land development | $2,927.5 | $2,429.4 | +$498.1 | | Allowance for credit losses | ($246.9) | ($278.9) | +$32.0 | Nonperforming Loan Balances | Metric | Sep 30, 2021 (in millions) | Dec 31, 2020 (in millions) | Change (in millions) | | :--------------------------------- | :------------------------- | :------------------------- | :------------------- | | Total Nonaccrual Loans | $78.1 | $115.2 | -$37.1 | | Nonaccrual loans to funded HFI loans | 0.22% | 0.43% | -0.21% | - Troubled Debt Restructuring (TDR) loans totaled $55.1 million at September 30, 2021, down from $61.6 million at December 31, 2020[196] Allowance for Credit Losses on HFI Loans Activity (9 Months Ended Sep 30, 2021) | Metric | Balance, Dec 31, 2020 (in millions) | Provision for (Recovery of) Credit Losses (in millions) | Write-offs (in millions) | Recoveries (in millions) | Balance, Sep 30, 2021 (in millions) | | :--------------------------------------- | :---------------------------------------- | :-------------------------------------- | :----------------------- | :----------------------- | :------------------------------------ | | Total | $278.9 | ($27.5) | $7.7 | ($3.2) | $246.9 | - Net charge-offs to average loans outstanding were 0.04% for the three months ended September 30, 2021, and 0.02% for the nine months ended September 30, 2021[203][204] 6. MORTGAGE SERVICING RIGHTS Changes in Fair Value of Mortgage Servicing Rights | Metric | 3 Months Ended Sep 30, 2021 (in millions) | 9 Months Ended Sep 30, 2021 (in millions) | | :--------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Beginning balance | $726.2 | — | | Acquired in AMH acquisition | — | $1,376.3 | | Additions from loans sold with servicing rights retained | $230.4 | $512.7 | | Reductions from sales | ($327.5) | ($1,199.0) | | Change in fair value | $14.9 | $21.5 | | Realization of cash flows | ($39.2) | ($106.7) | | Balance, September 30, 2021 | $604.8 | $604.8 | - The company completed sales of MSRs and related servicing advances with an aggregate net sales price of $1.2 billion for the period from acquisition date through September 30, 2021[210] - The unpaid principal balance of mortgage loans serviced for others was $47,211.4 million as of September 30, 2021[210] 7. OTHER BORROWINGS Other Borrowings Summary | Category | Sep 30, 2021 (in millions) | Dec 31, 2020 (in millions) | Change (in millions) | | :----------------------- | :------------------------- | :------------------------- | :------------------- | | Total short-term borrowings | $445.9 | $21.0 | +$424.9 | | Total long-term borrowings | $557.6 | — | +$557.6 | | Total other borrowings | $1,003.5 | $21.0 | +$982.5 | - Short-term borrowings at September 30, 2021, included $400.0 million in federal funds purchased and $29.8 million in secured borrowings from AMH loans HFS[215][216][218] - Long-term borrowings included $318.3 million in AmeriHome senior notes (6.50% interest, due 2028) and $239.3 million in credit linked notes (LIBOR + 5.50% interest, due 2024)[215][222][223] 8. QUALIFYING DEBT Subordinated Debt Overview | Description | Issuance Date | Maturity Date | Interest Rate | Principal (in millions) | | :------------------------ | :------------ | :------------ | :------------ | :---------------------- | | WAL fixed-rate | June 2016 | July 1, 2056 | 6.25% | $175.0 | | WAL fixed-to-floating-rate | June 2021 | June 15, 2031 | 3.00% | $600.0 | | WAB fixed-to-floating-rate | May 2020 | June 1, 2030 | 5.25% | $225.0 | - The company issued $600.0 million in new subordinated debt in June 2021 and redeemed $75.0 million of subordinated debt in July 2021[225][227] - Junior subordinated debt, valued at fair value, was $79.9 million at September 30, 2021, with a weighted average interest rate of 2.47%[232] 9. STOCKHOLDERS' EQUITY - The company issued 12,000,000 depositary shares of 4.250% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Shares, Series A, generating net proceeds of $294.5 million in September 2021[238] - Common stock issuances, including 700,000 shares under an ATM program and 2.3 million shares in a registered direct offering, generated aggregate net proceeds of $279.0 million for the nine months ended September 30, 2021[239][241] - Cash dividends paid on common stock increased to $0.35 per share in Q3 2021, totaling $87.6 million for the nine months ended September 30, 2021, up from $76.1 million in the prior year[243] Stock-Based Compensation Expense | Type of Award | 3 Months Ended Sep 30, 2021 (in millions) | 3 Months Ended Sep 30, 2020 (in millions) | 9 Months Ended Sep 30, 2021 (in millions) | 9 Months Ended Sep 30, 2020 (in millions) | | :-------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Restricted stock awards | $5.0 | $4.5 | $17.2 | $15.3 | | Performance stock units | $3.1 | $1.8 | $7.7 | $5.3 | 10. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Changes in Accumulated Other Comprehensive Income (Loss) | Metric | Sep 30, 2021 (in millions) | Dec 31, 2020 (in millions) | Change (in millions) | | :--------------------------------------- | :------------------------- | :------------------------- | :------------------- | | Balance, beginning of period | $92.3 | $25.0 | +$67.3 | | Unrealized holding gains (losses) on AFS securities, net of tax effect | ($49.0) | $53.2 | -$102.2 | | Net current-period other comprehensive (loss) income | ($49.7) | $53.6 | -$103.3 | | Balance, end of period | $42.6 | $92.3 | -$49.7 | 11. DERIVATIVES AND HEDGING ACTIVITIES - The company uses interest rate swaps as fair value hedges for fixed-rate loans and subordinated debt to mitigate interest rate risk[251][253] - Post-AmeriHome acquisition, the company significantly increased its use of non-designated derivative financial instruments (forward sale commitments, interest rate futures) to economically hedge interest rate risk related to Interest Rate Lock Commitments (IRLCs) and Mortgage Servicing Rights (MSRs)[255] Notional Amount of Derivatives | Category | Sep 30, 2021 (in millions) | Dec 31, 2020 (in millions) | Sep 30, 2020 (in millions) | | :--------------------------------------- | :------------------------- | :------------------------- | :------------------------- | | Derivatives designated as hedging instruments | $1,546.5 | $1,689.9 | $692.3 | | Derivatives not designated as hedging instruments | $481,135.4 | $122.7 | $42.4 | | Total Notional Amount | $482,681.9 | $1,812.6 | $734.7 | Net Gains (Losses) on Derivatives (9 Months Ended Sep 30, 2021) | Income Statement Classification | Net Gain (Loss) (in millions) | | :------------------------------ | :---------------------------- | | Net gain (loss) on loan origination and sale activities | ($57.7) | | Net loan servicing revenue | $26.2 | 12. EARNINGS PER SHARE Earnings Per Share Calculation | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income available to common stockholders (in millions) | $236.9 | $135.8 | $653.2 | $313.0 | | Weighted average shares - basic (in millions) | 103.3 | 99.9 | 102.3 | 100.3 | | Basic EPS | $2.29 | $1.36 | $6.39 | $3.12 | | Diluted EPS | $2.28 | $1.36 | $6.35 | $3.11 | | Dividends declared per common share | $0.35 | $0.25 | $0.85 | $0.75 | 13. INCOME TAXES Effective Tax Rate | Period | Effective Tax Rate (2021) | Effective Tax Rate (2020) | | :-------------------------- | :------------------------ | :------------------------ | | 3 Months Ended Sep 30 | 21.7% | 18.5% | | 9 Months Ended Sep 30 | 19.7% | 18.1% | - The net deferred tax asset (DTA) decreased by $20.8 million to $10.5 million at September 30, 2021, from $31.3 million at December 31, 2020, mainly due to AmeriHome acquisition adjustments, increases in mortgage servicing rights, and decreases in deferred insurance premiums[269] - Investments in Low-Income Housing Tax Credit (LIHTC) and renewable energy projects totaled $508.8 million at September 30, 2021, generating federal tax credits and deductions[271] 14. COMMITMENTS AND CONTINGENCIES Unfunded Commitments and Letters of Credit | Type of Commitment | Sep 30, 2021 (in millions) | Dec 31, 2020 (in millions) | Change (in millions) | | :--------------------------------------- | :------------------------- | :------------------------- | :------------------- | | Commitments to extend credit | $11,162.3 | $9,425.2 | +$1,737.1 | | Credit card commitments and financial guarantees | $296.6 | $291.5 | +$5.1 | | Letters of credit | $167.0 | $186.9 | -$19.9 | | Total | $11,625.9 | $9,903.6 | +$1,722.3 | - The allowance for credit losses on unfunded loan commitments and letters of credit was $32.1 million at September 30, 2021[277] - Commercial Real Estate (CRE) related loans accounted for approximately 31% of total loans at September 30, 2021, down from 38% at December 31, 2020[278] 15. FAIR VALUE ACCOUNTING - The company uses a three-level valuation hierarchy (Level 1: quoted prices in active markets; Level 2: observable inputs other than quoted prices; Level 3: unobservable inputs) for fair value measurements[128] - Unrealized losses from fair value changes on junior subordinated debt, recorded in OCI, totaled ($0.6 million) for the nine months ended September 30, 2021[285] Fair Value Measurements (September 30, 2021) | Asset/Liability | Level 1 (in millions) | Level 2 (in millions) | Level 3 (in millions) | Total Fair Value (in millions) | | :-------------------------- | :-------------------- | :-------------------- | :-------------------- | :----------------------------- | | AFS debt securities | $38.4 | $6,345.2 | — | $6,383.6 | | Equity securities | $143.9 | $34.5 | — | $178.4 | | Loans HFS | — | $4,589.3 | $4.8 | $4,594.1 | | Mortgage servicing rights | — | — | $604.8 | $604.8 | | Derivative assets | — | $81.3 | $15.2 | $96.5 | | Junior subordinated debt | — | — | $66.7 | $66.7 | | Derivative liabilities | — | $135.1 | $5.9 | $141.0 | - Loans HFI measured at fair value on a nonrecurring basis (collateral dependent loans) had an estimated fair value of $178.5 million at September 30, 2021, utilizing Level 3 inputs[307] 16. SEGMENTS - The company's three reportable segments are Commercial, Consumer Related, and Corporate & Other, each focusing on distinct products and services[323][399] - Equity capital is allocated to segments based on the risk profile of their assets and liabilities, with goodwill assigned a 100% weighting[318] Segment Pre-tax Income (Loss) | Segment | 3 Months Ended Sep 30, 2021 (in millions) | 3 Months Ended Sep 30, 2020 (in millions) | 9 Months Ended Sep 30, 2021 (in millions) | 9 Months Ended Sep 30, 2020 (in millions) | | :---------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Commercial | $193.2 | $161.3 | $623.1 | $366.3 | | Consumer Related | $176.0 | $63.9 | $361.1 | $153.3 | | Corporate & Other | ($66.8) | ($58.6) | ($171.2) | ($137.7) | | Consolidated | $302.4 | $166.6 | $813.0 | $381.9 | Segment Loans HFI and Deposits (September 30, 2021) | Segment | HFI Loans, net (in millions) | Deposits (in millions) | | :---------------- | :--------------------------- | :--------------------- | | Commercial | $22,823.9 | $28,409.9 | | Consumer Related | $11,978.0 | $15,751.2 | | Corporate & Other | — | $1,121.5 | | Consolidated | $34,801.9 | $45,282.6 | 17. REVENUE FROM CONTRACTS WITH CUSTOMERS - The majority of the company's revenue streams are outside the scope of ASC 606, with service charges and fees, debit/credit card interchange fees, and success fees being within scope[326] Revenue from Contracts with Customers (9 Months Ended Sep 30, 2021) | Revenue Category | Consolidated (in millions) | Commercial (in millions) | Consumer Related (in millions) | | :--------------------------------------- | :------------------------- | :------------------------- | :----------------------------- | | Service charges and fees | $21.2 | $19.7 | $1.5 | | Debit and credit card interchange | $4.8 | $4.7 | $0.1 | | Success fees | $1.0 | $1.0 | — | | Total revenue from contracts with customers | $27.6 | $26.0 | $1.6 | - Success fees are variable consideration, recognized only upon the occurrence of a triggering event (e.g., borrower obtaining funding, acquisition, public offering)[333] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, operations, liquidity, and capital, highlighting the AmeriHome acquisition and COVID-19 impact Recent Developments: Closing of AMH Acquisition - Western Alliance Bancorporation acquired AmeriHome Mortgage Company, LLC (AMH) on April 7, 2021, for approximately $1.22 billion in cash[342] - The acquisition is intended to complement national commercial businesses with a national mortgage franchise, expanding offerings and diversifying revenue sources[342] - AMH's operating results have been included in the company's consolidated results starting April 7, 2021[343] Recent Developments: COVID-19 and the CARES Act - The company recorded a credit loss provision of $12.3 million for the three months ended September 30, 2021, and a recovery of $34.6 million for the nine months, a significant decrease from prior year provisions, reflecting an improved economic outlook[345][388] Exposure to COVID-19 Impacted Industries (September 30, 2021) | Industry | Loan Balance (in millions) | Percent of Total Loan Portfolio | | :---------------- | :------------------------- | :------------------------------ | | Hotel | $2,364.2 | 5.7% | | Investor dependent | $967.3 | 2.3% | | Retail | $723.4 | 1.8% | | Gaming | $587.8 | 1.4% | | Total | $4,642.7 | 11.2% | - The company funded $602.5 million in loans under the second round of the PPP and received $1.4 billion in payoffs on the first round and $44.5 million on the second round for the nine months ended September 30, 2021[348] - As of September 30, 2021, the company had **$189.7