Western Alliance Bancorporation Takes Decisive Action on LAM Trade Finance Loan

Core Viewpoint - Western Alliance Bancorporation has taken decisive action regarding a $126.4 million trade finance loan, including filing a legal complaint against Jefferies Financial Group and Leucadia Asset Management for breach of contract and fraud, while also implementing measures to mitigate financial impact through securities sale gains and expense reductions [1] Financial Impact - The company is charging off the remaining balance of $126.4 million on the LAM I loan due to non-payment as per the forbearance agreement [1] - The charge-off will be offset by an expected $100 million from securities sale gains and expense reductions, with $45 million already realized [1] - The pre-tax impact of the charge-off represents less than 6% of the 2025 pre-provision net revenue of $1.43 billion [1] - The after-tax impact will reduce the year-end 2025 CET1 ratio by only 7 basis points, maintaining a strong capital position with CET1 capital at $7.0 billion or 11.0% [1] Legal Action - A complaint has been filed in New York Supreme Court against the defendants for breach of contract and fraud related to the loan collateralized by accounts receivable from First Brands Group [1] - The legal action follows the defendants' failure to make the final two principal payments due in the first quarter of 2026 [1] Operational Strategy - The company plans to pursue $50 million in securities gains and implement $50 million in incremental expense savings to mitigate the financial impact of the charge-off [1] - Despite the challenges, the company continues to project another profitable quarter, supporting stable capital levels [1] Balance Sheet Strength - As of March 5, 2026, the company has approximately $230 million remaining in its $300 million share repurchase program and off-balance sheet borrowing capacity of $20 billion, enhancing liquidity to over $40 billion [1] - The company holds $21.5 billion in unencumbered high-quality liquid assets, representing about 23.2% of year-end 2025 assets [1] - Insured and collateralized deposits account for approximately 75% of total deposits as of March 3, 2026 [1]